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Arbitration
In a significant development for international litigants and practitioners, a New York court recently enforced as a court judgment a $25 million award that had been issued by a tribunal from the Bahrain Chamber for Dispute Resolution. The decision provides a preview of issues that are likely to confront a growing number of courts around the world, as an increasing number of disputes are adjudicated by quasi-judicial bodies.
A US court recently refused to recognise and enforce an arbitral award issued against two entities from the People's Republic of China on the basis that the court lacked personal jurisdiction over those entities. The ruling is significant because it confirms that most US jurisdictions will allow personal jurisdiction defences in actions to enforce foreign arbitral awards under the New York Convention.
In a recent decision the US Court of Appeals for the Eighth Circuit compelled arbitration and upheld a class arbitration waiver in the face of arguments that a federal labour statute rendered that waiver unenforceable. The decision is significant for international arbitration practitioners because it reaffirms US federal courts' trend of favouring the enforceability of arbitration agreements and class arbitration waivers.
A US district court has permitted an applicant to obtain evidence from a third party under Title 28, Section 1782 of the US Code to support claims that the applicant had brought in a North American Free Trade Agreement (NAFTA) arbitration. The ruling represents a developing area of NAFTA practice and demonstrates the increasing importance of 1782 applications in international arbitration.
A federal district court in New York recently sanctioned the losing party's counsel for filing what the court deemed to be a frivolous application to set aside an international arbitral award. The ruling represents another decision in the emerging trend of US federal courts to sanction parties and/or their counsel for asserting improper challenges to arbitral awards.
Recent Supreme Court decisions indicate that unless parties to an arbitration agreement agreed to allow a class arbitration, the parties cannot be required to participate in a class arbitration. However, franchisors have wondered whether they should include a 'no class action' clause in their agreements. A recent decision underscores the continuing importance of including carefully drafted clauses in franchise agreements.
Asset Finance
Perfection and Priority of Deposit Accounts
Revised Article 9 of the Uniform Commercial Code has solved the problems associated with perfection of a security interest in a deposit account. It makes it cleaner and easier for a lender or other secured party to establish exclusive control over collateral for purposes of perfection of its interests in a deposit account and hence to protect the collateral from the claims of third parties.
A Lessor’s Damages for a Lessee's Default
If a lessee defaults on a lease agreement, the lessor has a variety of options under Sections 2A-527 and 2A-528 of the Uniform Commercial Code. Assuming the default meets certain statutory requirements, and assuming the parties have not contracted for a specific manner in which to calculate damages, the lessor can retain the goods or dispose of the goods.
The Cape Town Convention and Aircraft Protocol provide a sound legal framework for cross-border secured financing of aircraft equipment. The convention subjects mobile security interests, enforcement mechanisms and priority claims and rights to a uniform body of law. It is hoped that this will reduce the costs of aviation credit and thus boost investor and creditor confidence.
Aviation
Overview
Including: Regulation of aviation operations; Aircraft; Airports; Liability and accidents; Competition law; Financial support and state aid; Other issues; Emerging trends.
The registration of aircraft in the United States is the responsibility of the Federal Aviation Administration. Under the Transportation Code and the Federal Aviation Regulations, an aircraft is eligible for registration only if its owner is a US citizen and the aircraft is not registered under the laws of a foreign country. The citizenship requirement applies to both individuals and corporations, provided that certain conditions are fulfilled.
A New York court has reaffirmed the enforceability of liquidated damages clauses for holdover rent in aircraft leases that are in addition to damages for failure to comply with return conditions. Such clauses will be upheld if the fixed amount is a reasonable measure of the probable actual damages incurred in the event of a breach and the actual loss is impossible or difficult to determine with precision at the time of lease execution.
The US Court of Appeals for the Second Circuit recently made clear what it had hinted at two years ago in a similar decision: the federal government has field pre-emption over state regulation of air safety. While the court used Goodspeed Airport as the platform to rule that the federal government pre-empts the field of aviation safety, the actual facts did not support an ultimate holding of federal pre-emption.
In a recent decision the US Court of Appeals for the District of Columbia sided with the Federal Aviation Administration (FAA) in that federal agency's dispute with the city of Santa Monica. However, although the court upheld the FAA's decision to reject a city ordinance prohibiting large business jets from landing at Santa Monica Municipal Airport, it limited its holding exclusively to the contractual arguments.
Following the Federal Aviation Administration's (FAA) notice of proposed rulemaking on the re-registration of existing aircraft registrations and renewals of existing and new registrations on a three-year continuing basis, the FAA recently issued a final rule. Pursuant to the final rule, over a three-year period all aircraft registered before October 1 2010 will be terminated and must re-register to maintain US civil aircraft status.
A recent Second Circuit decision has important implications for holders of tax indemnification agreement (TIA) claims arising from aircraft leveraged leasing transactions. The court took a big-picture view of the situation and understood the importance of recovery by owner participants under TIAs as a basic part of the leveraged lease structure.
Banking
Overview
Including: Basel IA and Basel II; Correspondent and Private Banking Accounts; Revised Examination Manual; Deposit Insurance Reform; Industrial Loan Companies; Cross-Border Wire Transfers.
CFPB finalises remittance rule
The Consumer Financial Protection Bureau (CPFB) has released a final rule implementing the remittance transfer provisions in Section 1073 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The final rule provides important new flexibility for remittance transfer providers, especially in open-loop environments such as international wire transfers. The CFPB also extended the effective date of the final rule to October 28 2013.
CFPB tackles discrimination in auto lending
The Consumer Financial Protection Bureau (CFPB) recently issued guidance stating that it intends to use its regulatory tools, including enforcement lawsuits, to address discriminatory practices in auto lending. The CFPB bulletin represents an important development for the exercise of its fair-lending authority, as well as its authority over auto loans.
The Financial Crimes Enforcement Network recently issued guidance on how the Bank Secrecy Act applies to users, administrators and exchangers of 'convertible virtual currency'. Companies engaged in activities involving such currencies should assess the impact of the guidance on their obligations. Administrators and exchangers of such currencies should re-evaluate their status under money transmitter licensing laws.
The Federal Financial Institutions Examination Council has issued a request for comment on proposed guidance entitled "Social Media: Consumer Compliance Risk Management Guidance". Once finalised, institutions will be expected to use the guidance in developing and implementing risk management policies and practices to manage and control risks associated with social media.
The Federal Reserve Board has issued a notice of proposed rule making which would implement the enhanced prudential standards and early remediation requirements in Sections 165 and 166 of the Dodd-Frank Wall Street Reform and Consumer Protection Act for certain foreign banking organisations (FBOs). The new rules are designed to respond to vulnerabilities in FBO activities observed during and after the financial crisis.
The Consumer Financial Protection Bureau has released a proposed rule and request for comments outlining a limited set of revisions to its previously published final rule on international money transfers, and an extension of the date on which the rule would become effective. The proposal would amend the rule implementing Section 1073 of the Dodd-Frank Wall Street Reform and Consumer Protection Act on remittance transfers.
Capital Markets
At a recent conference, Securities and Exchange Commission (SEC) Chairman Mary Schapiro and senior enforcement officials vowed to increase investor protection through the SEC's expanded authority under the Dodd-Frank Act and initiatives designed to help the SEC enforcement staff to detect proactively and prevent securities law violations.
The Division of Enforcement of the Securities and Exchange Commission is examining how private equity sponsors do business, including how they value assets and communicate such information to investors. Enforcement Division head Robert Khuzami has said that it is "using risk analytics and unconventional methods to help achieve the holy grail of securities law enforcement - earlier detection and prevention".
The Securities and Exchange Commission has announced that it will not seek rehearing of or appeal to the Supreme Court the panel decision of the US Court of Appeals for the District of Columbia Circuit, which invalidated Rule 14a-11 of the 1934 Securities Exchange Act. However, companies should begin to prepare now for the possibility of proxy access proposals from eligible shareholders for the 2012 proxy season.
The Securities and Exchange Commission (SEC) has voted three to two to approve new Regulation 21F implementing the whistleblower bounty programme and anti-retaliation provisions mandated by Section 922(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The most controversial aspect is the absence of a requirement that corporate whistleblowers report internally before going to the SEC.
Auditor independence in public offerings
Any company undertaking an initial public offering, or a high-yield offering that will result in a subsequent registered exchange offer, should ensure that it has engaged independent auditors. The confirmation of auditor independence should be done early in the offering process. This update offers a brief discussion on some of the issues related to the auditor independence requirement.
New rules for private fund reporting
The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission have jointly proposed rules to implement reporting requirements for advisers to private funds (including hedge funds, liquidity funds and private equity funds). The proposed SEC rule would require investment advisers registered with the SEC that advise one or more private funds to file Form PF with the SEC.
Commercial Property
Overview
Including: Ownership; Transfers; Mortgages; Leasing; Construction; Taxes.
The US District Court for the Central District of Illinois recently overturned a Bankruptcy Court decision, providing real estate mortgage lenders with certainty that a mortgage encumbering Illinois real estate need not explicitly state the interest rate and the maturity date on its face in order to provide constructive notice under Illinois law. A statutory amendment has since been made to the Conveyances Act.
Applicable law may often require the seller of residential real property to disclose known material defects to prospective buyers. Recently the Pennsylvania Superior Court considered whether the psychological damage to a residential property caused by the past occurrence of an in-home murder-suicide in the property was considered to be a material defect that should have been disclosed by the seller to the buyer.
California has implemented a new requirement that owners or operators of non-residential buildings disclose a building's past energy use data to prospective buyers, lessees or lenders of the building before the sale, lease, financing or refinancing of the property. Recently adopted regulations set down the schedule according to which building owners must begin making such disclosures.
Following a mortgage loan default, many lenders will not engage in workout discussions with a borrower unless the borrower first executes a pre-negotiation agreement. In a recent decision the US District Court for the Southern District of New York upheld the enforceability of pre-negotiation agreements.
A recent court decision held that a foreclosure in Massachusetts that a clear chain of title must be established to show that the party foreclosing is the valid holder of the mortgage. Although the decision is binding only in Massachusetts, the case illustrates the importance for lenders and securitisation trustees of understanding state foreclosure laws and hold all relevant documents before entering foreclosure proceedings.
Two recent decisions confirm that under Illinois law, a mortgagee has the right to be placed in possession of a mortgage property prior to entry of a judgment of foreclosure where it can show that the mortgage authorises possession and is likely to prevail on a final hearing, and that the mortgagor has not established any good cause to remain in possession of the property.
Company & Commercial
In a recent decision the Delaware Chancery Court fashioned an extraordinary remedy by converting the convertible preferred stock issued by Loral Space and Communications Inc to its controlling stockholder into non-voting common stock based upon a court-determined 'fair price' for Loral common stock.
Two recent decisions of the Delaware Court of Chancery, the nation’s pre-eminent business court, concern one of a corporation’s key tools to regulate investor activism: advance notice bylaws, which control the process and timing for shareholder nominations to the board.
Investors acquiring significant equity positions in a company typically try to negotiate agreements which will allow them to protect their investment - the most desirable protection is often thought to be the right to designate a director to the company’s board. Although it may seem that a designated director will benefit the investor, such a designation carries with it considerable risks and uncertainties.
Shareholder proposals continue to be the focus of investor activism, boardroom attention and Securities and Exchange Commission (SEC) reform. Two forces appear to be shaping the 2008 proxy season: the SEC’s rulemaking and the trend towards more meaningful corporate engagement with investor groups.
Competition
Overview
Including: Federal Antitrust Agencies; Federal Merger Enforcement; Federal Non-merger Civil Enforcement; State Antitrust Enforcement; Private Antitrust Litigation
The Kansas legislature recently enacted a law that re-establishes that resale price maintenance (RPM) agreements are subject to a rule-of-reason analysis under Kansas antitrust law. The legislation was a direct response to a Kansas Supreme Court decision which held that contrary to a leading US Supreme Court's decision, RPM agreements are still considered per se unlawful under Kansas antitrust law.
The US Department of Justice's Antitrust Division recently announced that the division will change its practice and no longer publicly list the names of individuals excluded (or 'carved out') from the protections afforded by corporate plea agreements. In the statement, the division also announced that in the future it will limit its use of carve-outs to individuals whom it suspects may be guilty of a crime.
The Supreme Court recently rejected a class of millions of Comcast subscribers seeking nearly $1 billion in antitrust damages, holding that at the class certification stage, district courts must conduct a rigorous, merits-based analysis of any damages model that purports to show that damages are "measurable on a class-wide basis through use of a common methodology".
In a unanimous and favourable decision for the Federal Trade Commission (FTC), the Supreme Court has found that the state action immunity doctrine does not shield Phoebe Putney Health System's acquisition of Palmyra Park Hospital from antitrust scrutiny, sending the parties back to FTC administrative litigation to battle over the legality of the hospital merger.
The Department of Justice has filed a lawsuit against Bazaarvoice Inc's acquisition of PowerReviews Inc, despite the transaction's relatively small size and the fact that the parties completed it over six months ago. The suit underscores the federal agencies' increased scrutiny of completed mergers and acquisitions in recent years, as well as the significance of so-called 'hot' documents to investigations.
The Federal Trade Commission has released the annual jurisdictional adjustments for pre-merger notification filings made pursuant to Section 7A of the Clayton Act, known as the Hart-Scott-Rodino Antitrust Improvements Act 1976, as well as for Section 8 of the Clayton Act. The new thresholds for Hart-Scott-Rodino notification will become effective on February 11 2013.
Construction
An Illinois circuit court recently issued an opinion which illustrates some of the consequences of the Illinois mechanics' lien law and the perils that a real estate lender can face when working out a defaulted loan. In Illinois, a prior recorded mortgage has no priority over the mechanics' lien claims of contractors, subcontractors and material suppliers which supplied work and material for a construction project.
Major Changes in the 2007 AIA Documents
The American Institute of Architects has published the latest revisions to its standard forms of agreement to be used in the design and construction of projects in which architectural design plays a prominent role. Key changes have been made to the owner-architect and owner-contractor agreements.
The discovery of environmental contamination which must be remedied before construction can commence or proceed can lead to claims against the civil engineering firms that prepared pre-construction environmental reports. A recent Seventh Circuit Court of Appeals decision has clarified the issues surrounding the calculation of damages in such cases.
Subcontractors that have claims for economic damages against prime contractors frequently enter into agreements to pass those claims through the contractor in order to carry out a joint prosecution with the contractor against the project owner. Such agreements are popular in the United States as they allocate potential liability efficiently and avoid duplicate litigation.
The American Institute of Architects publishes form agreements which are widely used in the US construction industry and which influence the architectural and engineering forms used in other countries. The latest revisions will be released in both paper and electronic format in Autumn 2007 and make major changes to dispute resolution procedures.
Agreements between owners and developers or construction contractors, and between contractors and trade subcontractors or material vendors, often contain terms that permit a party to terminate the contract upon the insolvency or bankruptcy of the other party. Such termination provisions, however, are generally void and unenforceable under the US Bankruptcy Code.
Corporate Finance/M&A
The availability of energy sources – whether conventional or unconventional – and the need for infrastructure have created unprecedented demand for capital in the upstream and midstream/downstream oil and gas industry, opening the door for investment by private equity funds. Joint ventures are a hot trend for private equity investors seeking to enter the oil and gas sector and add significant value to their portfolios.
Two years ago, M&A representations ('reps') and warranties insurance was not a major issue for private equity sponsors and M&A lawyers. This is no longer the case: reps and warranties insurance has become an important tool to win bids and close deals in today's challenging environment.
The private equity beat goes on
In 2012 private equity deal volume was flat compared with 2011. New funds continued to be raised at a modest pace and there were no particularly interesting new developments in the deal market. However, despite the challenges facing the industry and the harsh spotlight put on it by the presidential campaign, private equity continued to thrive - and is expected to continue to do so in 2013.
A recent decision by the Delaware Supreme Court serves as a reminder to buyers and sellers of the important role that non-disclosure agreements can play in fixing the limits of potential liability for sellers during the pre-contracting, diligence phase of a transaction. In drafting disclaimers of reliance in non-disclosure agreements, sellers of businesses should insist on broad disclaimers of reliance and waivers of claims.
A recent Delaware Chancery Court case serves as a reminder to parties negotiating non-disclosure agreements and their legal counsel about the importance of non-disclosure agreements to the M&A process and how such agreements may prohibit a party receiving confidential information from engaging in a hostile transaction, even if an explicit standstill provision is not included.
Corporate Immigration
CBP to automate processing of I-94 cards
US Customs and Border Protection has published a rule that will eliminate the issuance of Form I-94 at the time of admission at all air and sea ports of entry. This new rule will have an impact on how foreign nationals document their status and apply for various government benefits. It will likely create challenges for several parties. Foreign nationals and employers are advised to monitor this developing issue.
H-1B cap petition closure for FY2014
US Citizenship and Immigration Services (USCIS) has reported that it has received enough H-1B cap petitions for the 2014 fiscal year to meet the 65,000 quota. In addition, it has received enough H-1B master's degree cap petitions to meet the 20,000 quota. For the first time since 2008, USCIS has reached the H-1B cap quotas within the first week of the filing period.
USCIS issues new Form I-9
Form I-9 (Employment Eligibility Verification) is issued by US Citizenship and Immigration Services (USCIS) and used by US employers to document the identity and employment authorisation of each new employee that is placed on the employer's payroll. Form I-9 is required to be completed by both the employer and employee. USCIS recently issued a new version of the form.
The Department of Labour recently held a stakeholders' meeting, in which it provided information updates regarding its processing of Programme Electronic Review Management (PERM) labour applications and Labour Condition Applications. The filing of a PERM labour application by a US employer is often the first step in the US green card application process for many foreign nationals.
In recent weeks a bi-partisan draft Senate immigration bill has been circulated. If enacted this session, the bill will result in some major changes for H-1B and other business visas. This comprehensive immigration reform legislation promises to be the best chance for a substantial legislative reshaping of H-1B and immigration law for many years.
The H-1B non-immigrant category is heavily used by US employers to bring professionals into the United States to work temporarily in a specialty occupation. With the slow but gradual improvement in the US economy, since the recession the cap has been reached earlier in each of the last three fiscal years. Thus, the H-1B cap quota for fiscal year 2014 is likely to be reached much earlier in 2013 than in prior years.
Corporate Tax
Two recent judicial decisions addressing the so-called 'global netting' of interest in tax cases potentially offer corporate taxpayers new opportunities. Taxpayers may be able to obtain at least partial netting relief on underpayments and overpayments of federal tax in some circumstances where it had been commonly assumed to be unavailable.
The Internal Revenue Service (IRS) recently released a revenue procedure setting down formal correction procedures for sponsors of 403(b) plans that missed the deadline set out in the original regulations. Sponsors considering a voluntary submission under the IRS Employee Plans Compliance Resolution System to correct a failure to adopt timely a written 403(b) plan document must bear in mind a number of issues.
Internal Revenue Service (IRS) computer programs routinely locate disparities between amounts reported on a tax return and amounts reported to the IRS via information returns and other sources. When this occurs, the IRS may contact the taxpayer, generally via mail, to inquire about the disparity and, when appropriate, propose an adjustment. If a taxpayer knows the process used in deficiency cases, he or she can avoid surprises.
With the recent release of a discussion draft on proposed revisions to Chapter IV of its transfer pricing guidelines, the Organisation for Economic Cooperation and Development is poised to reverse course and endorse the use of transfer pricing safe harbours in appropriate situations. Comments from top officials indicate that the Internal Revenue Service is moving in the same direction.
The Internal Revenue Service (IRS) has announced that donors may claim charitable deductions for their contributions to domestic disregarded limited liability companies that are wholly owned and controlled by US charities. However, the IRS remains silent on the position of disregarded entities organised under foreign law, leaving their treatment to be determined under the existing regulations.
Challenging foreign tax credit generators
Actions by lenders in the 1990s and early 2000s resulted in a variety of transactions that the Internal Revenue Service (IRS) has disparagingly called 'foreign tax credit generators'. The IRS has had little success in challenging these transactions on technical grounds; instead, it has resorted to challenging them on the generic grounds of 'no business purpose' and 'no profit motive'.
Derivatives
Off to the Races: Credit Default Swaps
The credit default swap (CDS) market is the most significant component of the credit derivatives market and has grown considerably in recent years. However, the market has been identified by some commentators as contributing to the financial crisis. This update summarizes the situation regarding the CDS market and the calls for its tighter regulation.
In light of serious disruptions suffered by the capital markets, there is a growing sentiment that the credit default swap market must be regulated. The fundamental question is whether the market should be segmented from a regulatory point of view, with a portion subject to one or more state insurance regulators and the remainder subject to federal or industry regulation, or subject to a single regulator.
Ramifications of the CSX Decision Explained
The defendants in CSX Corporation v The Children’s Investment Fund Management (UK) LLP had acquired a significant portion of their interest in CSX through the purchase of cash-settled total return equity swaps. As a result, the court considered whether the defendants acquired “beneficial ownership” of the reference CSX stock through their swap positions.
The two questions in determining the tax characterization of a structured note are whether the note is principal protected and whether the note bears a current periodic coupon. Characterizing Type 1 and Type 2 notes is relatively straightforward, but for Type 3 notes issuers and investors have developed a de facto rule to apply in the face of uncertainty.
Recent Development in Tier 1 Hybrids
The Federal Reserve has approved a new variation on the Wachovia Income Trust Securities structure for Tier 1 bank holding company capital. It previously required that the maturity of the forward purchase agreement be at least five years, but has now approved a transaction with a forward three-year stock purchase date.
The Internal Revenue Service (IRS) and the Treasury Department have published a ruling and notice which serve as a warning that the IRS is inclined to require current accrual of income on instruments such as exchange-traded notes (ETNs). The ruling is expected to have an immediate impact only on a narrow class of single currency-linked ETNs.
E-commerce
In the first quarter of 2006 unsolicited commercial email (spam) accounted for approximately 80% of all email traffic on the Internet. It seems that the Controlling the Assault of Non-solicited Pornography and Marketing Act 2003 has failed to slow down spam as intended.
Senator John McCain has introduced federal legislation that would require commercial websites and personal blogs to report illegal images or videos posted by their users, or face fines of up to $300,000. However, US free speech advocacy groups have expressed concern that the bill would curb legitimate communication on the Internet.
A US district court has rejected KinderStart.com's claim that Google violated the free speech rights of various websites, engaged in anti-competitive behaviour and misled the public by projecting itself as an objective source of internet content, while it was actually penalizing certain websites for unexplained reasons related to the sites’ efforts to improve their Google ranking.
In a ruling that could have a significant impact on the rights of online publishers and bloggers, a California court of appeal has held that the identities of anonymous employees of Apple Computer, Inc who leaked trade secrets of Apple to online news magazines (also known as 'e-zines') were protected from discovery.
The executive and legislative arms of the federal government are actively attempting to stamp out offshore online gambling sites. Most recently, an online sports betting company headquartered in Costa Rica stopped taking US bets after the US Department of Justice charged it with operating an illegal gambling operation. A bill aimed at eliminating many forms of online gambling has also been tabled.
Google Battles Private and Public Plaintiffs
The search engine Google continues to make legal news in the US federal courts. In the most recent decision of note, a court ruled that Google need only disclose something over 50,000 random uniform resource locators (URLs) to the government, which initially had sought to compel Google to turn over billions of URLs and two months' worth of search queries.
Employment & Labour
Overview
Including: Employment Relationship; Discrimination; Family and Medical Leave Act; Worker Adjustment and Retraining Notification Act; Whistleblower Protection; Employee Privacy and Individual Rights; Workplace Tort Claims; Restrictive Covenants; Wage and Hour Laws; Employee Benefits; Immigration; Occupational Safety and Health Act
The Equal Employment Opportunity Commission (EEOC) has issued new guidance on the consideration of arrest and conviction records in employment decisions. Although the guidance is not legally binding, it is intended to be a resource for employers, applicants, employees and EEOC enforcement staff in assessing whether an employer's use of criminal history may violate Title VII.
The National Labour Relations Board (NLRB) has staked out new positions that are contrary to the common business practices of both large and small employers. While it is prudent for employers to keep abreast of developments in the NLRB, there are virtually no court decisions addressing the NLRB's recent expansive interpretation of the National Labour Relations Act.
The US District Court for the Eastern District of New York has issued an opinion that may frustrate employers' efforts to minimise unfavourable media attention caused by lawsuits brought against them. In D'Annuzio the court held that the plaintiffs' comments at a press conference on alleged sexual harassment to which they claimed to have been subjected at their former employer were protected by the New York Civil Rights Law.
Given the state of the economy, companies are finding it easier to attract unpaid interns with impressive credentials. However, the recent filing of several class action lawsuits claiming that businesses misclassified workers as unpaid interns in order to minimise labour costs makes it clear that employers sponsoring internship programmes must be diligent in order to ensure compliance with federal and state laws.
In recent years, Congress and state legislatures have expanded the reach of disability laws. However, the courts have resisted attempts by employees seeking to broaden these laws further. Decisions issued by the courts underscore the importance of drafting and implementing sound attendance policies and job descriptions, and not excusing misconduct simply because it may have resulted from a disability.
The New York Court of Appeals has again reaffirmed the strength of New York's at-will employment doctrine in rejecting a wrongful discharge claim. The decision represents a positive development for employers, who can rest assured that New York courts continue to be reluctant to expand the narrow Wieder exception to the robust employment at-will doctrine.
Energy & Natural Resources
The Environmental Protection Agency (EPA) has proposed new rules on verifying the validity of transferred or purchased renewable fuel identification numbers. The proposed rules represent a major step in the EPA's effort to support the expansion of production and consumption of renewable fuels. Parties which participate in this market would be well advised to monitor the development of these rules.
A bipartisan group of US senators has introduced legislation to amend Section 3(c) of the Natural Gas Act and broaden the scope of countries that would receive expedited treatment in the review process for proposals to export liquefied natural gas (LNG). If passed into law, the act would require the Department of Energy to approve, on an expedited basis, proposals to export LNG to certain countries.
The Federal Energy Regulatory Commission (FERC) has dismissed a request for authorisation under Section 3 of the Natural Gas Act, finding that the proposed project did not constitute a liquefied natural gas (LNG) terminal as envisioned under the act, and required no other authorisation from FERC. The Gas Company, LLC proposed to import LNG from the Continental United States to Hawaii for regasification and distribution to end-use customers.
Recently the Texas Commission on Environmental Quality explicitly affirmed that equipment that avoids polluting emissions solely by improving efficiency may constitute "pollution control equipment" entitled to whole or partial exemption from ad valorem property taxation. Owners of listed property should be especially zealous in pursuing any pollution control exemption that they may be entitled to under that statute.
Recently, the Texas Railroad Commission (RRC) approved several amendments to the Texas Administrative Code relating to drilling, casing, cementing, well control and the commercial recycling of produced water and/or hydraulic fracturing flowback fluid. These changes reflect the transfer of the Texas Commission on Environmental Quality's Groundwater Advisory Unit to the RRC.
Although hydraulic fracturing has been utilised in the United States for decades, in the past two years the process and its alleged impact on water quality have received increasing attention and scrutiny. At the heart of these concerns are the additives used in fracturing fluids, which some argue contain potentially toxic substances. Most of the recent lawsuits that implicate hydraulic fracturing are still in the early stages of litigation.
Environment
Continuing a message from his January 2013 inaugural speech, President Obama devoted a portion of his State of the Union address to climate change. He surprised many with his request that Congress enact "market-based" climate change legislation. In addition, Environment and Public Works Committee Chair Barbara Boxer recently held a public briefing focused on the science surrounding climate change.
The Environmental Protection Agency has issued two new guidance documents on the use of institutional controls at contaminated sites regulated under the Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act, brownfields programmes and other federal programmes. Institutional controls are often an important part of the clean-up at such sites.
EPA finalises pending actions
The Environmental Protection Agency (EPA) recently focused on finalising various priorities. As well as releasing a progress report on its study regarding the environmental safety of hydraulic fracturing, the EPA issued its long-awaited boiler maximum achievable control technology rule and final amendments to the 2010 cement manufacturing clean air standards.
Two Republican bicameral lawmakers have indicated that they will introduce and advance a concurrent resolution that would express the sense of Congress that a carbon tax is not in the best interest of the United States. While non-binding, such a vote could publicly gauge the support for a carbon tax.
The Environmental Protection Agency has issued the PCB Bulk Product Waste Reinterpretation, which addresses the regulatory status of building debris that has been in contact with non-liquid polychlorinated biphenyls (PCBs), such as PCB-containing caulk and paint. This reinterpretation should be taken into account in planning building maintenance or demolition projects.
The Federal Trade Commission (FTC) has issued its revised Guides for the Use of Environmental Marketing Claims – known as its 'Green Guides' – which contain guidance on how product marketers should use environmental claims in their advertising and packaging. The FTC intends these revisions to encourage marketers to support clearly claims of their products' environmental benefits.
Franchising
In preparation for the upcoming renewal season, increased efficiency is likely to be a top priority for any franchise system. Tips to help franchisors save time and money in preparing for a successful 2012 renewal season include talking to a certified public accountant before the end of the fiscal year to establish whether additional capitalisation is needed to avoid the imposition of financial assurances.
Smart communication tips for franchisors
Franchisors need to embrace the principles of, and train their entire organisation in, smart communication. Smart communication is the art of communicating with franchisees and others in a way that will decrease the risk of litigation and help to win a case should litigation arise. This update outlines the six basic principles of smart communication.
Arbitration clauses are prevalent in many form contracts, including franchise agreements. The Supreme Court recently examined "whether the [Federal Arbitration Act] prohibits States from conditioning the enforceability of certain arbitration agreements on the availability of classwide arbitration procedures" in AT&T Mobility LLC v Concepcion. The case may have major implications for franchisor/franchisee relations.
A franchisor that attempts to sell franchises in the United States must comply with a patchwork of federal and state laws that regulate franchising. These involve detailed disclosure of the franchise opportunity at the federal level, as well as additional disclosure obligations at the state level. A basic understanding of the purpose and scope of these laws is a necessary component of any US expansion plan.
The Iowa Supreme Court has handed down its decision in KFC Corporation v Iowa Department of Revenue, upholding the state's ability to tax out-of-state franchisors without a physical presence in the state. Although not unexpected, this decision will lead to increased enforcement efforts in Iowa and perhaps other states.
Mitigating risk in a land of opportunity
Franchising in healthcare requires compliance with franchise laws and numerous state and federal healthcare laws. Landmines await the unwary franchisor. Franchisors that proactively anticipate the complexity of this regulatory landscape – and design appropriate models – will be well positioned to take advantage of unprecedented market opportunities.
Healthcare & Life Sciences
The Department of Health and Human Services has published final regulations for health insurance issuers offering non-grandfathered coverage in the individual or small-group markets to ensure that it includes an essential health benefit package. As there are no annual limits on these for plan years beginning on and after January 1 2014, it is important for all employers to know what benefits are considered essential.
A new era of federal privacy regulation
The Office for Civil Rights of the Department of Health and Human Services has released a highly anticipated final rule which makes sweeping changes to the privacy, security and enforcement regulations promulgated under the Health Insurance Portability and Accountability Act, with the aim of building patient confidence in the security of electronic health records.
The Treasury Department recently published proposed excise tax regulations under Section 4980H of the Internal Revenue Code of 1986, which was added to the code by the Affordable Care Act. These excise taxes are among the more controversial aspects of the Affordable Care Act, perhaps surpassed only by the mandate that practically every individual lawfully in the United States obtain adequate health coverage or pay a penalty.
The Centres for Medicare and Medicaid Services (CMS) recently released both the Medicare physician fee schedule and hospital outpatient prospective payment system final rules with comment period. The final rules generally took effect on January 1 2013. In the final rules, CMS commented on and/or finalised a number of significant proposals relating to pharmaceutical and biological products.
The Office for Civil Rights (OCR) has issued important new guidance regarding the two existing methods by which covered entities may de-identify protected health information in accordance with the privacy rule promulgated under the Health Insurance Portability and Accountability Act. The guidance may signal that the OCR will make proper de-identification of protected health information an enforcement priority.
In a widely anticipated ruling the US Court of Appeals for the Second Circuit recently reversed the conviction of pharmaceutical sales representative Alfred Caronia for misbranding under the Federal Food, Drug and Cosmetic Act, based on alleged off-label promotion. The court agreed with Caronia that the government's prosecution had been based solely on speech promoting off-label uses.
Information Technology
The Federal Trade Commission has issued a press release announcing that, by a five-to-zero vote, the commissioners have approved a settlement with Twitter, stemming from charges that the social media and social networking site had deceived consumers by failing to protect personal information and potentially compromising their privacy.
Insolvency & Restructuring
Overview
Including: Orderly Liquidation Authority; Cramdown notes; Inter-creditor rights and credit bidding rights; Debtor-in-possession financing; Other developments.
In a significant victory for secured creditors, the US Court of Appeals for the Seventh Circuit held that a bankruptcy court cannot confirm a Chapter 11 plan providing for the sale of the debtor's assets where dissenting secured creditors did not have an opportunity to 'credit bid' for their collateral during the auction process.
The Supreme Court recently held that a bankruptcy court lacks the constitutional authority to enter final judgment on a counterclaim asserted by a debtor where the counterclaim is unrelated to the underlying claim. The decision distinguished between core and non-core counterclaims, and makes clear that only core counterclaims can be adjudicated with finality by bankruptcy courts.
The Second Circuit recently issued an opinion that addressed two separate appeals. The first ruling could make it more difficult for a secured creditor to resolve disputes with junior constituents over plan distributions, while the second may provide leverage to debtors in negotiations with strategic investors attempting to block or propose a plan of reorganisation.
A recent decision by the Fifth Circuit Court of Appeals is the first in which a US court has permitted a foreign representative in a Chapter 15 case to bring avoidance actions under foreign law. If widely adopted, it could significantly enhance the ability of foreign representatives to recover assets transferred from their home states to the United States.
The US Court of Appeals for the Third Circuit's recent opinion in In re Visteon Corp is a victory for retirees whose rights could be impaired in a Chapter 11 case. Following the decision, a debtor whose retiree benefits plans include the unilateral right to terminate such plans at any time will nevertheless be required to comply with Section 1114 of the Bankruptcy Code in order to terminate such plans post-petition.
Insurance & Reinsurance
JP Morgan is the latest legal instalment concerning the plain and ordinary meaning of the exhaustion requirement contained in an excess insurance policy. While recent case law has served to crystallise the issues concerning the interpretation of underlying exhaustion requirements, the burdens that may be placed on the insured and its underlying insurers have also become more certain.
Directors' and officers' and other liability insurers are concerned about US litigation. Even those insurers focusing on non-US companies must bear in mind the possible extraterritorial reach of US laws. The scope of one such law will soon be addressed by the Supreme Court, whose decision could confirm or remove liability exposure affecting directors, officers and employees of both US and non-US corporations
A district court decision holding the US Army Corps of Engineers liable for certain damages caused by Hurricane Katrina because of its grossly negligent maintenance and operation of a manmade shipping channel is now under appeal. If the government's liability is upheld, insurers who paid claims to their insureds for Hurricane Katrina damages may be able to take action against the government for recovery of the payment.
A New York district court has ruled that a comprehensive general liability policy issued clearly excluded coverage for the claims against the insured. The court concluded that the plaintiff's complaint should be dismissed for failing to state a claim upon which relief could be granted pursuant to Federal Rule of Civil Procedure 12(b)(6).
New York's reputation as a stable insurance market for over 40 years has served to discourage litigation for allegations of bad-faith claims handling by insurers. However, two recent decisions of the New York Court of Appeals mark a decisive change in this landscape and have given insurers cause to take notice.
Many employment practices liability and directors' and officers' liability policies contain Fair Labour Standards Act exclusions that eliminate coverage under the act and a variety of other federal statutes. However, the specific wording of the exclusion in a particular policy is integral in determining whether the exclusion purports to exclude similar and/or related state laws.
Intellectual Property
It is a common misconception that fashion in the United States is unprotected by IP law. Proponents of an amendment to the Copyright Act are frequently heard to make this case. However, protection for fashion designs does exist within the current parameters of US IP law, although it is frequently misunderstood or vastly underused (as in the case of design patents).
The Federal Circuit's recent decision in General Electric Co v Int'l Trade Comm'n vindicates the right of a losing party to appeal any issue noticed for review by the International Trade Commission (ITC), regardless of whether the ITC actually decides the issue in its final determination.
The House of Representatives has reignited the debate regarding the extension of copyright protection to fashion design through the introduction of the Innovative Design Protection and Piracy Prohibition Act. Policymakers are being urged to pass legislation by sectors of the fashion industry seeking additional tools to enforce IP rights against copyists and counterfeiters.
The war of the rose-coloured shoes
A high-profile trademark litigation brought by Christian Louboutin against Yves Saint Laurent pits French couture footwear house against French couture fashion house, but the decision will affect the entire fashion industry, from high-end to mass market. At stake is the freedom to use colour for fashion versus the rights of a trademark owner to stake a claim and build a brand.
The Second Circuit recently ruled that copyright owners may block the importation of articles that they made and sold overseas, dealing with an issue that divided the Supreme Court last term. It decided the issue in the same way as the Ninth Circuit decided the Omega v Costco case, meaning that two of the most influential circuits in the copyright arena are in agreement regarding the first sale doctrine.
The US International Trade Commission (ITC) has concluded a prolonged patent investigation, issuing a general exclusion order prohibiting the import of footwear that infringes Crocs Inc's utility and design patents. The general exclusion order serves as the remedy resulting from a finding by the ITC in April 2011 that Crocs' patents were enforceable and that remaining respondents had violated the Tariff Act of 1930.
Litigation
The Supreme Court has frequently declined to engage in issues of personal jurisdiction. However, it recently granted review and certiorari in a pair of personal jurisdiction cases, both of which are of significant interest to businesses, as personal jurisdiction delimits a court's ability to hail a defendant into court and subject that defendant to the court's power and punishment. Decisions are expected no later than June 2014.
The Sixth Circuit recently issued its decision in Fulgenzi v PLIVA, Inc, a case involving a state law claim for failure to warn against a generic drug manufacturer. The court held that a failure-to-warn claim could proceed against a generic manufacturer that had failed to follow the brand-name label in a timely manner, creating a narrow exception to the pre-emption defence established by PLIVA, Inc v Mensing.
The Supreme Court recently heard oral arguments in the much-anticipated Mutual Pharmaceuticals v Bartlett case. The court is to determine what most thought had already been decided by PLIVA, Inc v Mensing: whether design defect claims against generic drug manufacturers are pre-empted by federal law, and whether manufacturers can be held liable when their only other option is to withdraw from the market.
The Supreme Court recently issued a much-anticipated decision in Amgen, holding that securities class action plaintiffs do not have to prove that alleged misrepresentations or omissions were material at the class certification stage. The ruling has substantial implications for future securities fraud class actions, where materiality could otherwise have proven a significant hurdle for plaintiffs.
The Ninth Circuit recently created a new state law cause of action against medical device manufacturers: failure to warn the Food and Drug Administration. This new cause of action opens the door, at least in the Ninth Circuit, to claims against all medical device and drug manufacturers, and could defeat the Mensing pre-emption of failure to warn claims against generic drug manufacturers.
The Supreme Court recently issued its opinion in the closely watched case of Already, LLC v Nike, Inc. In a decision that is almost certain to affect patent owners as well, the court unanimously affirmed the Second Circuit's opinion and ended the speculation of commentators that trademark holders might no longer have the ability to dismiss an invalidity challenge by entering into a covenant not to sue.
Media & Entertainment
The director of the Food and Drug Administration (FDA) Office of Prescription Drug Promotion recently indicated that long-awaited draft guidance on the promotion of medical products using the Internet and social media is forthcoming. However, some scepticism is warranted because the industry has been listening to the FDA's promises about forthcoming internet-related guidance for almost two decades.
FTC: do-not-track system is "long overdue"
Federal Trade Commission Chairwoman Edith Ramirez recently spoke to members of the advertising industry, urging them to provide "effective and meaningful privacy protection" to consumers with respect to online tracking. She said that consumers feel "unease" with online tracking, and that they are still awaiting "an effective and functioning do-not-track system".
The governor of Nevada has signed legislation that enables the state to enter into agreements with other states that legalise interstate online poker. The move follows a memorandum from the Department of Justice suggesting that it no longer believes that non-sports related online betting and wagering (eg, online poker) is prohibited by the Wire Act.
A new twist to Chubby Checker
Iconic music entertainer Chubby Checker is suing Hewlett-Packard for trademark infringement based on a mobile app named "The Chubby Checker". The suit alleges that purchasers of the app had been misled into believing that Checker had endorsed the app and that the use of his name would confuse users who might reasonably conclude that the singer had some association with the app bearing his name.
California court protects Middle Earth
A California court has granted the motion picture studios and producer behind The Hobbit: An Unexpected Journey a temporary restraining order against Global Asylum, blocking the release of Age of the Hobbits. Asylum has a history of creating low-budget films with parodied titles of Hollywood blockbusters timed to coincide with the release of their major motion picture counterparts.
Almax SpA's new EyeSee Mannequin contains a camera incorporating facial recognition technology that allows retailers to record information about the individuals passing by their shop fronts. In the coming years and months retailers, regulators and lawyers alike will have to grapple with the legal implications of such technology in advertising and marketing.
Offshore Services
Overview
Including: Gift tax; Estate tax; Generation-skipping transfer tax; Income tax; Income tax residency and transfer tax domicile; Anti-avoidance rules; US citizens and green card holders living abroad; Expatriation; Taxation of trusts; Increased reporting obligations.
Latest transfer tax and FATCA developments
The American Taxpayer Relief Act 2012, which was signed into law by the president on January 2, provides some certainty for international families as they address their succession planning and begin to move wealth to the next generation. In addition, clarification of the Foreign Account Tax Compliance Act has been provided by new final regulations, but the full impact on foreign trusts and their offshore trustees is still to be determined.
What to expect in 2013
Advisers to international families know that the US tax laws will change in the new year and that the implementation of expanded reporting obligations will continue. In this uncertain environment, advisers do their best to help with investment and succession-planning decisions involving complex questions of law, tax and business planning.
The Tax Relief, Unemployment Insurance Reauthorisation and Job Creation Act of 2010 created advantageous tax and wealth-planning opportunities that are scheduled to expire on December 31 2012. Advisers to international families should be aware of these opportunities as it may be advantageous for US family members to take advantage of them while they still exist.
Significant planning opportunities now exist for both US and non-US trusts using state decanting laws. State initiatives are responding to the need to provide flexibility in trust administration, while the tax authorities are studying the tax implications of trustee distributions of all or a portion of the principal of an irrevocable trust to another irrevocable trust.
The Internal Revenue Service has released Form 8938 – Statement of Specified Foreign Financial Assets. Certain individual US taxpayers must use the form to report information about specified foreign financial assets for the 2011 tax year. Advisers to international families should bring this filing requirement to the attention of US beneficiaries of foreign trusts, as certain interests in foreign trusts are considered specified foreign financial assets.
The Dodd-Frank Act removed an exemption from registration previously available for investment advisers with fewer than 15 clients to enable the Securities and Exchange Commission to regulate private fund advisers. A family office falling within the definition of 'investment adviser' has until March 30 2012 either to register or to qualify for the new single family office exemption.
Product Liability
Strategic use of Lone Pine motions
Causation is frequently a dispositive issue in product liability and mass tort cases. 'Lone Pine' orders require plaintiffs to set forth their causation theory and support it with expert and other evidence early in the case. Lone Pine orders have been employed in a wide variety of personal injury, medical monitoring and property damage cases. However, they are underutilised and often not well understood.
Pharmaceutical defendants considering removal of product liability cases to federal court should not overlook opportunities to remove cases in which the parties are diverse quickly after the filing of a complaint, before a forum defendant is served with process. Passage of the Federal Courts Jurisdiction and Venue Clarification Act and recent case law provide mounting support for the theory.
Can a plaintiff's prior bankruptcy filing be used to achieve a favourable result in a product liability case? Defence counsel may be able to bring a summary judgment motion based on a debtor's lack of standing in cases where the debtor filed a lawsuit based on a cause of action that belongs to the bankruptcy estate. However, a number of questions arise when assessing the viability of such a motion.
The forum ‑ federal or state court ‑ can often be decisive in product liability cases. As the scope of government regulation and control of the economy increases, the possibility that a corporate defendant may be deemed to be acting under a federal agency in making or selling a product may provide a means to remove the entire litigation to federal court.
In recent months a number of courts have been called upon to interpret and apply the US Supreme Court's holding in that federal pre-emption bars failure-to-warn claims against a generic drug manufacturer whose labelling mirrors the Food and Drug Administration approved labelling for the brand-name counterpart of the generic product. As they have done so, a number of themes have emerged.
Twombly/Iqbal prove potent in products cases
As the US Supreme Court's most recent articulation of the federal pleading standard, Twombly and Iqbal have received their due attention in case law. A group of recent appellate decisions suggest that in the product liability arena, the rulings are proving effective tools for defence counsel seeking to dismiss cases or narrow claims.
Securitisation & Structured Finance
The Obama administration's plans for overall regulatory reform of the financial system in response to the ongoing financial crisis would dramatically increase the federal government's role in the capital markets, although changes affecting the securitization markets may be less significant than some had anticipated.
The parties which are blamed the most consistently for the current economic downturn are the three major credit rating agencies. The European Parliament recently approved a new registration and ongoing oversight regime for credit rating agencies active in the European Union. It is hoped that the United States will follow this lead and attempt to reform ratings, rather than remove minimum ratings requirements.
The Federal Reserve's Term Asset-Backed Securities Loan Facility (TALF) has now begun operation. The Treasury Department and the Federal Reserve have announced the schedule for TALF borrowings and published revised terms designed to address concerns that market participants had expressed about the programme.
A joint initiative of the US Department of the Treasury and the Federal Reserve based on the Term Asset-Backed Securities Loan Facility will provide up to $1 trillion of financing for asset-backed securities and commercial mortgage-backed securities. The new Consumer and Business Lending Initiative will provide non-recourse loans secured by asset-backed securities.
The Department of Education has established the first federally guaranteed student loan asset-backed commercial paper conduit programme. Under the programme, beneficial owners of fully disbursed FFELP Stafford and PLUS Loans, for which the first disbursement was made between certain dates, may sell such eligible student loans to their newly created, bankruptcy-remote special purpose entities.
The Federal Reserve has released revised terms of the Term Asset-Backed Securities Loan Facility (TALF) that extend the term of TALF loans from one year to three years, make financing available to all eligible borrowers and clarify the collateral eligibility requirements. The new credit facility is expected to begin operation in February 2009.
Shipping & Transport
The US Court of Appeals for the Fifth Circuit recently affirmed a decision rendered by the US District Court for the Eastern District of Louisiana enforcing a liquidated damages provision in a vessel sales agreement under maritime law. The court analysed the facts and enforced the provision in breach of a non-compete clause that prohibited the buyer from chartering out two tugboats purchased from the seller under the agreement.
The US Fifth Circuit Court of Appeals recently clarified the meaning of the phrase "acting in the course of employment" when considering whether an employer is liable for the negligent acts or omissions of its employee that causes injury to a co-employee in tort cases filed under the Jones Act, which extends the protections of the Federal Employers Liability Act to seamen.
To prevent vessels from operating with inadequate crews, the Coast Guard provides detailed requirements to which all operators of uninspected towing vessels must adhere when manning their vessels. As the costs of non-compliance can be severe, it is important to spend time analysing the make-up of crews to ensure that they comply with the applicable rules and regulations.
As one of the oldest forms of insurance, marine insurance has taken on many shapes and forms. Even under the simplest circumstances, selecting proper insurance can be difficult. In order to make informed decisions when procuring insurance, it is important to understand the basics of what types of insurance are available and what each type of policy covers.
A recent Fifth Circuit Court of Appeals ruling provides a clear example of the factors under consideration when determining whether a structure used in offshore oil and gas exploration can be classified as a vessel in navigation. It also provides an example of the 'sensible' rule, whereby a ship or similar structure should not be considered a vessel in navigation merely because it may sail at some point in future.
The US Court of Appeals for the Fifth Circuit recently examined whether in rem claims asserted under admiralty jurisdiction in the same complaint as in personam claims asserted under diversity jurisdiction must be tried together before a jury when the plaintiff has clearly expressed that the in personam claims are premised on diversity rather than in admiralty.
Telecommunications
The Federal Communications Commission has released a further notice of proposed rulemaking seeking comment on proposed service rules for advanced wireless service spectrum in the 1.9 and 2.1 gigahertz bands, including rules that would require the licensee to provide free public access to a nationwide high-speed wireless broadband internet network.
In mid-June, the Senate unanimously approved Bill HR 3403 that will afford Voice over Internet Protocol (VoIP) providers the same interconnection rights to E911 emergency call services as other voice service providers. VoIP providers will have to register with the Federal Communications Commission in order to identify a 911 point of contact for public safety and government officials.
The Rural Cellular Association has petitioned the Federal Communications Commission for a rulemaking to prohibit exclusive distribution contracts between wireless carriers and manufacturers of wireless handsets. It argues that the lack of competitive handset suppliers prevents many consumers from obtaining premium equipment at reasonable prices.
A new antitrust-based net neutrality bill that would affirmatively require operators to ensure equal treatment of all content, applications and services has been introduced. The Internet Freedom and Non-discrimination Act would amend the Clayton Act to prohibit discrimination, while permitting providers to use non-discriminatory traffic management practices.
The Federal Communications Commission has voted in support of an interim cap on high-cost universal service support for competitive eligible telecommunications carriers (CETCs). The order established a state-by-state limit on total CETC support which will be implemented by means of a state reduction factor.
At its May open meeting the Federal Communications Commission unanimously adopted a further notice of proposed rulemaking seeking comment on how to re-auction the 700 megahertz D Block licence that was not acquired in the recent Auction 73. The notice seeks comment on a wide range of issues, including whether the proposed public-private partnership should be retained and overhauled.
Trade & Customs
The United States and the European Union recently implemented a mutual recognition arrangement for their respective supply chain security programmes. The US Customs-Trade Partnership Against Terrorism is now recognised as equivalent to the European Union's Authorised Economic Operator programme. Programme members receive certain benefits, including expedited EU customs clearance.
Adding a chapter to the long-running controversy over the Department of Commerce's application of the anti-subsidy (countervailing duty) statute to goods imported from non-market economy countries, the US Court of International Trade has rejected constitutional challenges to legislation to provide a retrofitted legal foundation for the department's practice.
United States waives ban on Burmese imports
The US Departments of State and Treasury have announced the issuance of a new general licence that waives a nearly decade-old US import ban on most Burmese-origin goods. The move represents the latest step in a process of targeted easing first proposed by Secretary of State Hillary Clinton. US persons now may import any article that is a product of Burma, subject to certain limitations.
Further sanctions imposed on Iran
The Iran Threat Reduction and Syria Human Rights Act of 2012 has been signed into law. Capping months of congressional debate over Iran's nuclear weapons programme and Syria's crackdown on opposition groups, the new law expands the Iran Sanctions Act of 1996 and the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010. It also codifies various prohibitions recently imposed by executive order.
The Office of Foreign Assets Control recently authorised new investment in and exportation of financial services to Myanmar, easing sanctions that have been in place for over 15 years. The statutory framework for the US sanctions remains in place, thereby permitting the US government to re-impose sanctions should reforms in Myanmar not proceed as hoped.
President Obama recently determined that there is a sufficient supply of petroleum products in world markets to allow countries to reduce their petroleum imports from Iran significantly. The finding clears the way for new sanctions under Section 1245 of the National Defence Authorisation Act on foreign financial institutions that conduct or facilitate financial transactions related to purchases of petroleum products from Iran.
White Collar Crime
Overview
Including: Litigation and settlements; Due diligence and compliance.
The federal government's health fraud enforcement and prevention efforts recovered a record $4.2 billion in fiscal year 2012, according to a press release from the Departments of Justice and Health and Human Services. The agencies credited the improvement to the Healthcare Fraud Prevention and Enforcement Action Team.
The US Department of Justice and the US Securities and Exchange Commission have released their long-awaited Foreign Corrupt Practices Act guidance. While the guidance fails to provide interpretive clarification to address numerous unanswered questions regarding the act's practical application, it does offer some insight into the government's analysis of the law that may prove valuable to multinationals, individuals and practitioners alike.
Olympus Corp recently shared information with the Department of Justice about possible Foreign Corrupt Practices Act violations involving a doctor training programme in Brazil. The act bars companies from offering bribes or other payments to government officials in other countries to secure business. It also requires companies with securities to maintain accurate business records.
The Supreme Court recently provided corporations and their officers and directors with an important new tool in responding to criminal charges by holding that juries, not judges, must find beyond a reasonable doubt all facts that affect the imposition of a fine. Its decision has significant ramifications not only for the conduct of the trial itself, but also for pre-trial negotiations, such as plea negotiations.
A district court judge has vacated the conviction of and dismissed the indictment against Lindsey Manufacturing Company and two individual co-defendants, Keith E Lindsey and Steve K Lee, because of prosecutorial misconduct. It was the first case since the enactment of the US Foreign Corrupt Practices Act in which a corporate defendant was tried and convicted for violations of the act.
A recent Ninth Circuit Court of Appeals decision reiterated that corporations may be held liable under the Alien Tort Statute for violations of international norms. The court also recognised that alien plaintiffs may be required to exhaust local remedies before seeking redress under the statute.
