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Latest I-9 Virtual Flexibility Guidance

On Oct. 11, 2022, the Department of Homeland Security (DHS) and U.S. Immigration and Customs Enforcement (ICE) announced an extension to compliance flexibilities governing Form I-9. The extension permits continued remote verification and additional Form I-9 flexibilities until July 31, 2023.

ICE initially implemented the policy in March 2020, presumably responding to increased remote employment due to COVID-19. These flexibilities were narrowly and exclusively applied to employers and workplaces that were 100 percent remote, reflecting the agency’s long-standing resistance to remote I-9 verification. ICE granted some discretion in the physical presence requirements associated with Form I-9, allowing employers to inspect documentation remotely. Employers were instructed to state “COVID-19” in Section 2 on Form I-9.

Many employers have since implemented telework arrangements to adapt to changes brought about by the COVID-19 pandemic. ICE’s guidance since March 2020 has been revised to suggest that positions that are remote, even if other positions at the same employer are not remote, are eligible for remote I-9 verification. Further reflecting the changing nature of the workplace, on Aug. 18, 2022, DHS announced a Notice of Proposed Rulemaking (NPRM) intended to explore alternative regulatory options, including making some of the current pandemic-related flexibilities permanent.

The proposal includes a pilot program and framework allowing the DHS secretary to authorize optional alternative documentation examination procedures in the event of heightened security needs or a public health emergency. Moreover, DHS proposed adding boxes to Form I-9 that allow employers to report alternative procedures used to complete Section 2 or Section 3, as well as updates to form instructions to clarify the purposes of these boxes.

Importantly, this NPRM doesn’t itself adopt a specific remote I-9 procedure – it is intended to formalize DHS’ authority to make some form of remote I-9 verification permanent. Subsequent adoption of I-9 remote verification procedures would require separate rulemaking.

Article By Tejas Shah and Mandira Sethi of Barnes & Thornburg LLP

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© 2022 BARNES & THORNBURG LLP

Global Dispute Resolution: The Future of Virtual Legal Proceedings Is Shaped by Soaring Travel Costs

While we may have passed through the worst of the global pandemic, it has unquestionably left a deep and lasting impact on our personal and professional lives. Restrictions that left everyone housebound for months on end resulted in adaptations to daily behaviors and how we do business—some of which are here to stay.

Progress in the Form of Virtual Proceedings

During the pandemic, keeping businesses afloat was challenging across the board in all industries. Videoconferencing was often the only option to connect with colleagues or to participate in a meeting of any kind, and the use of platforms like Zoom skyrocketed. Like most other businesses and professional organizations, legal forums around the world were closed for a time. When they began to reopen, they discovered a new (virtual) operational environment that arose out of necessity.

International arbitration centers and courts across the globe followed suit, reopening with a mandate to conduct business remotely. While they had already developed protocols for using technology to increase accessibility and efficiency before 2020, the use of videoconferencing in international arbitration centers and courtrooms took off rapidly and pervasively once the pandemic hit. The ramped-up schedule of online proceedings continues in international arbitration centers and courts now that they are increasingly comfortable with the virtual format, and protocols have been developed and vetted.

 

 

 

Many believe that these recent technological developments were long overdue. The pandemic essentially propelled the justice system to modernize its administrative and operational policies. Remote Courts Worldwide (a website created during the pandemic to encourage the global community of justice workers to exchange ideas related to remote alternatives to traditional court proceedings) documents that virtual hearings, arbitrations, and court proceedings are embraced by stakeholders in many countries.1 The consensus is that smart, efficient, industry-disrupting change has brought the international justice system into the twenty-first century. Virtual proceedings are a welcome change for many reasons, not the least of which is the prohibitively high cost of in-person attendance.

International Travel Costs & Virtual Legal Proceedings

The cost of air travel has increased markedly in 2022. Demand issues, inflation, and high fuel costs have driven up per-person airfares. According to the 2022 Global Business Travel Association’s Business Travel Index Outlook – Annual Global Report and Forecast, total international business travel spending is downby 50% from pre-pandemic levels, but individual airfares are on track to rise nearly 50% this year over 2021 and are predicted to continue to rise in 2023.2

An intercontinental long-haul business class ticket from the United States will usually average between $3,000 and $5,000 roundtrip onboard major national carriers. Fares are often the highest on flights longer than twelve hours (i.e., to the Middle East, Australia, or Southeast Asia) and may range from $5,000 to $12,000.3

COMPARING COSTS FOR IN-PERSON ATTENDANCE

The following is an example of a business travel cost profile for an international arbitration hearing taking place in London and involving three US attorneys, two Paris attorneys, two local witnesses, and three litigation support personnel. The average business trip to London is 5.8 days4, during which these travelers will require accommodations for five nights, food for six days, and ground transportation for six days.

INTERNATIONAL BUSINESS TRAVEL EXPENSES & TRAVEL TIME TO LONDON FOR ONE LEGAL PROCEEDING

 

 

Person Traveling Number Originating City Airfare Travel Time Hotel Food Ground Total
US Lawyers 3 Chicago $3,079 $5,850 $2,200 $750 $400 $36,837
Paris Lawyers 2 Paris $325 $1,950 $2,200 $750 $400 $11,250
Witnesses 2 London $0 $0 $1,500 $350 $250 $4,200
Trial Consultant 1 New York $2,325 $2,400 $2,200 $750 $400 $8,075
Trial Presenter 1 Los Angeles $3,944 $3,300 $2,200 $750 $400 $10,594
Graphic Designer 1 Dallas $3,079 $3,000 $2,200 $750 $400 $9,429
Total In-Person Attendance               $80,385

 

Notes: Airfares based on Delta business class in November 2022. Travel time based on Chicago to London 9hr. x 2(RT) @$325/hr.; Paris to London 3hr. x 2(RT) @$325/hr.; NY to London 8hr. x 2(RT) @$150/hr.; LA to London 11hr. x 2(RT) @$150/hr.; Dallas to London 10hr. x 2(RT) @$150/hr. 

As demonstrated in the chart above, the cost of travel time can be as much or more than the cost of flights to attend an international arbitration or other legal hearing. Spending many hours traveling to and returning from the various steps of an international proceeding is not only an expense for a client, but productivity is also lost for the legal professionals involved.

If time is money, there could not be a more direct equivalency than the legal industry’s billable hour, and often lawyers apply the same hourly rate for travel hours as for work hours. When complex matters demand a legal team, these costs are multiplied. Then there is the issue of witnesses who would need to travel and perhaps wait around to testify, not to mention the time commitment and expenses related to other on-site billers and support staff. Add in the unpredictability of airline delays, and costs will continue to mount.

VIRTUAL HEARINGS SAVE MONEY (AND THEY’RE HERE TO STAY)

 

 

 

With the cost of international air travel rising sharply, remote hearings are a practical alternative to in-person proceedings. International travel is expensive, and the virtual option means that it is no longer necessary to count travel as a “cost of doing business” when pursuing an international dispute. The widespread use of technology in global dispute resolution proceedings gives attorneys and their clients the option to participate remotely, which is a compelling cost saver for all parties.

Industry news reports tell the story:

Technology has become ubiquitous in international arbitration.5 Japan expedites court proceedings with Microsoft Teams.6 Beijing’s “Internet Court” enables people to file lawsuits online.7 In India, 19.2 million cases have been heard virtually in the High Court and district courts.8

Such reports are convincing evidence of the commitment to the continuation of virtual proceedings in legal forums around the globe. Remote and hybrid proceedings in the international legal setting appear to have a very secure future.

Put Your Best Foot Forward in Virtual Legal Proceedings

Technology in the courtroom is not particularly a new concept, and international arbitration centers were working in the direction of modernizing when they had to fast-track guidelines to convert to primarily virtual hearings.9 The wholesale adoption of online proceedings may have caught some firms unprepared from a technical production standpoint.

References:

  1. See www.remotecourts.org.
  2. See gbta.org.
  3. Keyes, Scott. The Complete Guide to Business Class Flights. Scott’s Cheap Flights. April 28, 2022.
  4. Johnson, Georgia-Rose. Business Travel Statistics. Finder.com. February 18, 2021.
  5. Vishnyakov, Mikhail. CIArb Guidelines on the Use of Technology, The Law Society Gazette. March 18, 2021.
  6. Yates-Roberts, Elly. Japan expedites court proceedings with Microsoft Teams. Technology Record. February 4, 2020.
  7. China: Beijing’s ‘Internet Court’ enables people to file lawsuits online. Remote Courts Worldwide. September 20, 2022.
  8. Harris, Joanne. Access to justice: India leads post-Covid shift in courts’ use of technology. International Bar Association. October 12, 2022.
  9. Caroni, Barnardo. Fast Track Arbitration and Virtual Protocols in the COVID-19 ERA: Some Suggestions from Asia. October 20, 2022.

Article By IMS Consulting & Expert Services

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Top Legal Industry Highlights for November 2022: Law Office Hiring and Expansion, Industry Awards and Recognition, and the Latest Updates in Diversity and Inclusion

Happy Holidays from the National Law Review! We hope you are remaining safe and healthy as Thanksgiving rolls around. Read more below for the latest in law firm hiring and expansion, noteworthy industry awards and recognitions, and the latest news in law firm diversity, equity, and inclusion efforts.

Additionally, please be sure to check out the latest Legal News Reach podcast episode from the NLR: “What’s New In Law Firm Thought Leadership? with Alistair Bone, Vice President for Passle.”

Law Firm Hiring and Expansion

Oblon, McClelland, Maier & Neustadt, LLP has added attorney Mark Nagumo as Of Counsel in the firm’s Chemical Patent Practice Group. Mr. Nagumo, who is a former U.S. Patent and Trademark Office administrative patent judge, has a great deal of experience in chemical research, particularly with regard to biomolecules, materials, and a wide range of other analytical techniques.

“We are thrilled to welcome Mark to our firm,” said Oblon Managing Partner Philippe Signore. “Mark is an extremely knowledgeable and respected chemical patent attorney whose many years of experience at the USPTO offers tremendous value and benefits to our clients. He is a great addition to our team.”

Polsinelli PC has appointed two new co-chairs of the firm’s Business Department: Jane Arnold and Kolin Holladay. Ms. Arnold, an experienced attorney in mergers and acquisitions, is based in the St. Louis office, where she currently serves as Office Managing Partner. Mr. Holladay, who also focuses his practice on mergers and acquisitions, is a Shareholder in the firm’s Nashville office.

“The selection of Arnold and Holladay as Business Department Co-Chairs reflects the firm’s long-standing commitment to inclusion, representation, and geographic diversity at every level,” said Chase Simmons, Chairman and Chief Executive Officer of Polsinelli. “Both are leaders who are highly respected within our firm and the industries in which they practice. Under their leadership, the Business Department will continue to create meaningful opportunities for our lawyers and clients, all consistent with our strategic priorities.”

James M. Tartaglia has rejoined Steptoe & Johnson PLLC as Of Counsel in the firm’s Charleston office. With a background in mineral title opinions and due diligence, Mr. Tartaglia joins the firm’s Energy Group , where he will focus his practice on energy contract law.

“We’re looking forward to having Jim back at the firm,” said Steptoe & Johnson CEO Christopher L. Slaughter. “His skill set and knowledge of the oil and gas industry strengthens our energy contracts practice and will be an asset to our clients.”

As of November 1st, 2022, Proskauer Rose LLP has promoted 33 of its attorneys – 25 to partner, and 8 to senior counsel. This class of promotions is the firm’s largest to date, and it includes attorneys from nine different offices around the world.

“We are delighted to promote this talented group of lawyers, whose values, entrepreneurial spirit and drive represent the best of the Firm,’” said Steven M. Ellis, Chairman of Proskauer. “We congratulate each of these new partners and senior counsel on this milestone and wish them continued success as they support our clients, secure historic victories, set precedents and serve as strategic partners.”

The following attorneys have been promoted to partner: Michelle Annese, Kimberly Braun, Ryan Carpenter, Aliza Cinamon, Grant Darwin, Christopher Elson, Nolan Goldberg, Laura Goldsmith, Oliver Howley, John Ingrassia, Philip Kaminski, Christine Lazatin, Shawn Ledingham, Matthew Levy, Stéphanie Martinier, Richard Miller, Bharat Moudgil, Adam Nelson, Caroline Robbins, Cameron Roper, Bradley Schecter, Adam Scoll, Sean Spence, Scott Patrick Thurman, and Harriet West.

The following attorneys have been promoted to senior counsel: Stephen Chuk, Pinchos Goldberg, Allison Lynn Martin, Jennifer Rigterink, Jurate Schwartz, Jennifer Yang, Edward Young, and Oleg Zakatov.

Frost Brown Todd has combined with California-based law firm Alvarado Smith, effective January 1, 2023. The combined firm will have more than 575 attorneys in 17 offices across nine states and Washington, D.C, with AlvaradoSmith’s addition providing strategic expansion into the Los Angeles, Orange County, and San Francisco markets.

“AlvaradoSmith is known for successfully taking on matters and clients often associated with big firms, while FBT has the resources of a large firm with the culture of a boutique shop,” said AlvaradoSmith Managing Shareholder Ruben Smith. “That’s why we’re confident this combination will be an excellent fit, allowing us to grow our capacity and resources while still retaining our deep connection to clients and community. We look forward to a very productive future with Frost Brown Todd.”

“This merger is a natural next step and tremendous growth opportunity for both Frost Brown Todd and AlvaradoSmith,” said FBT Chief Executive Officer Adam Hall. “As one of the largest and most influential economies in the world, California intersects with every one of Frost Brown Todd’s practice groups and many of our offices. We know our clients will benefit greatly from the extensive knowledge and relationships that AlvaradoSmith attorneys have cultivated throughout the state for decades. We look forward to working with them as we significantly expand our presence in California and strengthen Frost Brown Todd’s preeminent industry teams.”

Legal Industry Awards and Recognition

Ballard Spahr has received 26 National Tier 1 rankings in the 2023 Best Law Firms and a total of 160 rankings across all Best Law Firms categories. Best Law Firms rankings are gathered based on surveys from clients and professional references. To qualify, a law firm must have one attorney who is recognized in the current edition of Best Lawyers in a Best Law Firms-ranked practice area or metro area.

Ballard Spahr received National Tier 1 rankings in the following categories:

  • Banking and Finance Law
  • Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law
  • Commercial Litigation
  • Copyright Law
  • Corporate Law
  • Criminal Defense: White-Collar
  • Employment Law – Management
  • Environmental Law
  • Labor Law – Management
  • Land Use & Zoning Law
  • Litigation – Banking & Finance
  • Litigation – Bankruptcy
  • Litigation – First Amendment
  • Litigation – Intellectual Property
  • Litigation – Labor & Employment
  • Litigation – Patent
  • Litigation – Real Estate
  • Media Law
  • Mergers & Acquisitions Law
  • Patent Law
  • Public Finance Law
  • Real Estate Law
  • Securities / Capital Markets Law
  • Securities Regulation
  • Trademark Law
  • Trusts & Estates Law

Lauren Wachtler, partner at Barclay Damon’s New York office, will be honored with the prestigious Hon. Shira A. Scheindlin Award for Excellence in the Courtroom by the New York State Bar Association’s Commercial & Federal Litigation Section. Ms. Watchler’s practice focuses on commercial and business litigation matters, and she advocates for women’s equality in the legal profession as well as mentoring and educating young attorneys.

The Scheindlin Award is presented annually on or around November 6, the date women were granted the right to vote in 1917 in New York state. “It is a true honor to receive the Scheindlin Award,” said Ms. Wachtler. “Judge Scheindlin was a gifted jurist and continues to be a role model for women in our profession.”

The award honors its namesake Shira A. Scheindlin, the Commercial & Federal Litigation Section’s former chair and former district judge for the Southern District of New York. Scheindlin said, “I extend my sincerest congratulations to Lauren for being selected to receive the Scheindlin Award. Her commitment to the legal profession and mentoring young women attorneys is truly inspiring and continues to grow year after year. Women litigators still face adversity in the courtroom; however, Lauren’s work will hopefully pave the way for future generations of women litigators.”

Foley & Lardner LLP has received the Corporate Citizen Award from the Three Harbors Boys Scouts of America Council, which seeks to honor a particular organization that exemplifies the Scout Law through community service and upstanding business practices. The award will be presented at the Distinguished Citizen Award Dinner in Milwaukee on November 17, 2022.

Foley was selected for its long-standing support of Scouting, as well as the firm’s significant pro bono support through Partner Peter Fetzer to Three Harbors Council. Mr. Fetzer is a partner in the firm’s Milwaukee office, where he focuses his practice on securities regulation, mergers and acquisitions, corporate governance and general corporate counseling to mutual funds, exchange traded funds, publicly traded investment advisers and public companies.

Diversity, Equity, and Inclusion in the Legal Profession

Womble Bond Dickinson attorneys Britt Biles and Stephanie Yarbrough have been selected for inclusion on Women We Admire’s 2022 Top 50 Women Leaders in the Law list, which celebrates influential and successful women in the legal field.

Ms. Biles is a Litigation Group Partner who played a key role in the federal government’s response to the Covid-19 pandemic. After her time as Associate White House Counsel and SEC senior enforcer, Biles became Senior Counsel of the Small Business Administration, where she was principal legal advisor to the CARES Act Administrator and an active participant in drafting guidance for the Paycheck Protection Program. At Womble Bond Dickinson, she focuses her practice on business litigation and government investigations.

Ms. Yarbrough is a Womble Bond Dickinson Global Board Member and Economic Development Team Co-Chair who has spent her two-decade legal career aiding economic development in the southeastern United States by helping domestic and international companies expand their operations to Charleston and surrounding regions. Yarbrough’s role in creating thousands of new jobs and billions in investments has led her to become an industry thought leader, speaking at local and national events and appearing in a 2017 New York Times article about Charleston’s economy.

Bradley Arant Boult Cummings LLP Partner Gary L. Howard has been selected to serve a one-year term as Vice Chair of the Defense Research Institute’s Diversity and Inclusion Committee. The Birmingham, Alabama attorney has been active with DRI for many years, previously serving as Diversity Expo Chair, Diversity for Success Seminar & Corporate Expo Program Chair, and Annual Meeting Steering Committee Member. Howard’s appointment comes on the heels of his 2021 Albert H. Parnell Outstanding Program Chair Award, which he received for creating engaging educational programming for DRI.

Mr. Howard’s 25-year legal career has seen him managing commercial litigation related to class actions, mass torts, contract disputes, insurance cases, and related matters. He has argued in state and federal courtrooms and is admitted to practice in more than ten states.

Moore & Van Allen have announced the creation of a new Civil Rights & Racial Equity Assessments Practice within their White Collar, Regulatory Defense & Investigation Practice. Fifteen of MVA’s most experienced investigative attorneys will harness the firm’s ESG, internal and cross-border probe, and human trafficking prevention expertise to conduct public-facing racial equity and civil rights audits. These reviews will assist businesses interested in improving their internal and external diversity practices.

Valecia M. McDowell, who will be leading the new practice, commented, “Our Civil Rights & Racial Equity Assessments Practice brings together our deep experience and bench strength in key areas to help our clients strategically assess their internal and external practices, programs, and policies to more thoroughly and thoughtfully address diversity, equity, and inclusion (DEI).”

Article By Chandler Ford, Shelby Garrett, and Crissonna Tennison of The National Law Review / The National Law Forum LLC

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Copyright ©2022 National Law Forum, LLC

SEC Ramps Up Enforcement against Public Companies and Subsidiaries in FY 2022

The SEC imposed $2.8 billion in monetary settlements, the largest total in any fiscal year recorded in the Securities Enforcement Empirical Database.

New York—The U.S. Securities and Exchange Commission (SEC) filed 68 enforcement actions against public companies and subsidiaries in the first full fiscal year of Chair Gary Gensler’s tenure. Monetary settlements imposed in public company or subsidiary actions reached $2.8 billion, according to a report released today by the NYU Pollack Center for Law & Business and Cornerstone Research.

The report, SEC Enforcement Activity: Public Companies and Subsidiaries—Fiscal Year 2022 Update, analyzes information from the Securities Enforcement Empirical Database (SEED). The 68 enforcement actions in FY 2022, which ended September 30, reflected a 28% increase from the previous fiscal year.

The SEC imposed monetary settlements on 97% of the 75 public company and subsidiary defendants that settled in FY 2022. Both the dollar amount and the percentage were the largest of any fiscal year recorded in SEED, which covers actions beginning in FY 2010.

“The number of defendants that settled in FY 2022 with admissions of guilt increased substantially from the previous fiscal year. This was driven by actions involving Broker Dealer allegations brought by the SEC in September,” said Stephen Choi, the Bernard Petrie Professor of Law and Business at New York University School of Law and director of the Pollack Center for Law & Business. “The 16 defendants admitting guilt was double the largest number in any previous fiscal year in SEED.”

The $2.8 billion in monetary settlements imposed in public company or subsidiary enforcement actions in FY 2022 was $921 million more than in FY 2021 and $321 million more than in any other fiscal year in SEED. The median monetary settlement in FY 2022 was $9 million, the largest in SEED. The average settlement was $42 million.

“The increase in monetary settlements is consistent with the SEC’s public statements that ‘robust remedies’ are an enforcement priority,” said report coauthor Sara Gilley, a Cornerstone Research vice president. “The $1.2 billion in monetary settlements with 16 public broker-dealer subsidiaries for recordkeeping failures represents 44% of total monetary settlements in the fiscal year.”

Issuer Reporting and Disclosure continued to be the most common allegation type in FY 2022, accounting for 38% of actions. Allegations in the SEC’s Broker Dealer classification were the second most common for the first time since FY 2018. Nearly 70% of the 16 Broker Dealer actions were filed against financial institutions for recordkeeping failures.

Click here to read the full report from Cornerstone Research.

Article By Sara E. Gilley, Lindsay Schick, and Heather B. Lazur of Cornerstone Research

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Copyright ©2022 Cornerstone Research

REI PFAS Consumer Fraud Lawsuit Continues Trend of Similar Lawsuits

On October 28, 2022, a PFAS consumer fraud class action lawsuit was filed in Washington against REI over alleged PFAS content in various articles of waterproof clothing sold by the company. The REI PFAS consumer fraud lawsuit is but the latest in a growing line of PFAS lawsuits that allege that certain consumer goods contain PFAS, that the products or company’s values were marketed as healthy or environmentally friendly, and that consumers would not have purchased the products if they knew that the products contained PFAS.

As we predicted in early 2021, the increased attention on PFAS content in consumer goods in the scientific community and media presented significant risks to various industries, including the apparel and cosmetics industry, and our prediction was that the developments would lead to a significant number of lawsuits alleging consumer fraud. Consumer goods industries, insurers, and investment companies interested in the consumer goods vertical with niche interest in cosmetics companies must pay careful attention to the cosmetics lawsuits and the increasing trend of lawsuits targeting the industry.

REI PFAS Consumer Fraud Lawsuit

On October 28, 2022, plaintiffs Jacob Krakauer and Joyce Rockwood filed a lawsuit in Washington federal court seeking a proposed class action against REI. The lawsuit alleges that REI markets the company and its products as environmentally friendly and sustainable. Further, the lawsuit cites to statements made by REI that the company is taking proactive steps with respect to chemical use in its products to argue that such statements were false, misleading or induced consumers to purchase products when the presence of PFAS in the products was not disclosed.

In the Complaint, plaintiffs allege the following counts against REI:

  • Violation of state consumer protection laws and the federal Magnuson-Moss Warranty Act

  • Breach of warranty (implied and express)

  • Fraud (actual and constructive)

  • Fraudulent inducement

  • Money had and received

  • Fraudulent omission or concealment

  • Fraudulent misrepresentation

  • Negligent misrepresentation

  • Unjust enrichment

  • Negligent failure to warn

The plaintiffs seek certification of a nationwide class action lawsuit, with subclasses defined as consumers n Washington and Arizona. In addition, the lawsuit seeks damages, fees, costs, the establishment of medical monitoring, and a jury trial.

Just the Beginning For Consumer Products Companies

With studies underway, legislation pending that targets consumer goods, and increasing media reporting on PFAS in consumer goods and concerns over human health, product manufacturers should be increasingly wary of lawsuits similar to the REI lawsuit being filed against them. There are an increasing number of PFAS consumer fraud cases being filed, with some of the below as representative of recent trends:

  • Cosmetics industry:

    • Brown v. Cover Girl, New York (April 1, 2022)

    • Anderson v. Almay, New York (April 1, 2022)

    • Rebecca Vega v. L’Oreal, New Jersey (April 8, 2022)

    • Spindel v. Burt’s Bees, California (March 25, 2022)

    • Hicks and Vargas v. L’Oreal, New York (March 9, 2022)

    • Davenport v. L’Oreal, California (February 22, 2022)

  • Food packaging industry:

    • Richburg v. Conagra Brands, Illinois (May 6, 2022)

    • Ruiz v. Conagra Brands, Illinois (May 6, 2022)

    • Hamman v. Cava Group, California (April 27, 2022)

    • Azman Hussain v. Burger King, California (April 11, 2022)

    • Little v. NatureStar, California (April 8, 2022)

    • Larry Clark v. McDonald’s, Illinois (March 28, 2022)

  • Feminine hygiene products:

    • Gemma Rivera v. Knix Wear Inc., California (April 4, 2022)

    • Blenis v. Thinx, Inc., Massachusetts (June 18, 2021)

    • Destini Canan v. Thinx Inc., California (November 12, 2020)

As the above is indicative of, several major companies now find themselves embroiled in litigation focused on PFAS false advertising, consumer protection violations, and deceptive statements made in marketing and ESG reports. The lawsuits may well serve as test cases for plaintiffs’ bar to determine whether similar lawsuits will be successful in any (or all) of the fifty states in this country. Companies must consider the possibility of needing to defend lawsuits involving plaintiffs in all fifty states for products that contain PFAS.

It should be noted that these lawsuits would only touch on the marketing, advertising, ESG reporting, and consumer protection type of issues. Separate products lawsuits could follow that take direct aim at obtaining damages for personal injury for plaintiffs from consumer products. In addition, environmental pollution lawsuits could seek damage for diminution of property value, cleanup costs, and PFAS filtration systems if drinking water cleanup is required.

Conclusion

It is of the utmost importance that businesses along the whole supply chain in the consumer products industry evaluate their PFAS risk. Public health and environmental groups urge legislators to regulate PFAS at an ever-increasing pace. Similarly, state level EPA enforcement action is increasing at a several-fold rate every year. Now, the first wave of lawsuits take direct aim at the consumer products industry. Companies that did not manufacture PFAS, but merely utilized PFAS in their manufacturing processes, are therefore becoming targets of costly enforcement actions at rates that continue to multiply year over year. Lawsuits are also filed monthly by citizens or municipalities against companies that are increasingly not PFAS chemical manufacturers.

For more Environmental Law news, click here to visit the National Law Review.

©2022 CMBG3 Law, LLC. All rights reserved.

Is Crypto Collapsing?

November 11, 2022, brought news of yet another massive crypto bankruptcy filing. One of the largest crypto exchanges, FTX, filed a petition for bankruptcy protection in Delaware. FTX, Alameda, and other affiliates estimated in their filings that they have more than 100,000 creditors. With their estimated range of between $10 and $50 billion worth of assets and liabilities, this could well be the largest crypto-related bankruptcy ever filed.

This follows a slew of other big names in crypto which have filed bankruptcy petitions recently, including lender Three Arrows Capital (3AC) and the Celsius crypto exchange. Others have sought similar protections overseas, such as Zipmex’s proceeding in Singapore.

Why are these companies filing bankruptcy? The reasons vary.

  • Business models built on unsustainable growth rates in cryptocurrency prices
  • Collapse in cryptocurrency prices, leading to “runs on the bank”
  • Financial irregularities

Is your crypto safe? That depends on what it is and where you park it. Some newer tokens and wallet software may not have been extensively tested, and so may have weak points that an attacker might exploit. Even “safe” currencies like Bitcoin can be hacked if stored in a hot wallet. Of particular interest, customers of a bankruptcy exchange may find it difficult to recover their crypto deposits because their investments may be treated as mere unsecured claims against the exchange, drastically reducing the odds of recovery.

Filings by crypto-based entities come with a host of thorny issues. The most obvious is whether a crypto exchange’s bankruptcy estate owns the tokens it holds for others. But there are many others, including privacy concerns with respect to what previously were anonymous transactions and questions about the propriety of large financial withdrawals by high-ranking individuals in the days surrounding the filing of bankruptcy petitions.

For More FinTech Legal News, click here to visit the National Law Review.

© 2022 Miller, Canfield, Paddock and Stone PLC

Biden Administration Proposes That Federal Contractors Must Disclose GHG Emissions

Last Thursday, the Biden Administration proposed that all federal contractors (except those receiving less than $7.5 million annually in contracts) be required to, among other things, disclose their GHG emissions.  Specifically, according to the press release issued by the White House, “Federal contractors receiving more than $50 million in annual contracts would be required to publicly disclose Scope 1, Scope 2, and relevant categories of Scope 3 emissions, disclose climate-related financial risks, and set science-based emissions reduction targets” and “Federal contractors with more than $7.5 million but less than $50 million in annual contracts would be required to report Scope 1 and Scope 2 emissions.”  The Biden Administration further announced that “[t]his proposed rule leverages widely-adopted third party standards and systems . . . including the CDP environmental reporting system, the Task Force on Climate-Related Financial Disclosures (TCFD) Recommendations, and the Science Based Targets Initiative (SBTi) criteria.”  It should be noted that this proposed rule is also quite similar to the climate disclosures proposed by the SEC–an unsurprising observation, as both were proposed by the Biden Administration and relied upon the same third-party standards (e.g., the TCFD).

The significance of this proposed rule–beyond the regulatory burden imposed upon federal contractors, which is substantial–is that the Biden Administration is signaling its commitment to, and reliance upon, climate-related financial disclosures as a key tool to address the challenge of climate change.  Thus, regardless of the legal challenges that the SEC proposal (and any similar regulatory rule) will be subject to, it is clear that the impetus for these types of disclosures will continue, including through other means at the government’s disposal.  Bearing this in mind, it would be rational for companies to take steps to generate the information necessary for these sort of disclosures, and to prepare to issue them–as this regulatory pressure is unlikely to dissipate soon.

“Today, the Biden-Harris Administration is taking historic action to address greenhouse gas emissions and protect the Federal Government’s supply chains from climate-related financial risks. In support of President Biden’s Executive Orders on Climate-Related Financial Risk and Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability, the Administration is proposing the Federal Supplier Climate Risks and Resilience Rule, which would require major Federal contractors to publicly disclose their greenhouse gas emissions and climate-related financial risks and set science-based emissions reduction targets.”

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©1994-2022 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

Colorado Legalizes Therapeutic Psychedelics – Now What?

Ten years after Coloradans voted for their state to be one of the first to legalize recreational cannabis, Colorado is again making history as the second state in the country to legalize therapeutic psychedelics for adults.

Colorado voters narrowly approved Proposition 122 with nearly 53% of the votes (as of the morning of November 14th 97% of the votes have been counted). Their vote thus enacted the Natural Medicine Health Act of 2022 (NMHA) which legalizes supervised or facilitated therapeutic sessions for adults twenty-one years and older using certain psychedelic plants and fungi. Click here for our initial takeaways and a high-level summary of key provisions of the NMHA.

Now that therapeutic psychedelics are legal in Colorado, what should be expected next? Below are key dates and next steps as Colorado navigates implementation of the NMHA.

  • The Colorado Department of Regulatory Agencies (DORA) must establish the Natural Medicine Advisory Board (Board) and appoint initial members to the Board by January 31, 2023. The Board must have 15 members who will be appointed by the Governor with the consent of the Colorado Senate. The primary role of the Board is to advise DORA as to implementation of the NMHA program.
  • By September 30, 2023, and annually thereafter, the Board must make recommendations to DORA on certain areas related to natural medicine, such as recommendations related to product safety, herm reduction, and cultural responsibility, training programs, educational and experiential qualifications for facilitators, regulatory considerations for each type of natural medicine and the rules to be promulgated by DORA.
  •  DORA has until January 1, 2024 to adopt rules and establish the qualifications, education and training requirements that facilitators must meet prior to providing natural medicine services to participants.
  • By September 30, 2024, DORA must adopt rules to implement the NMHA program and begin accepting applications for licensure of facilitators, healing centers, entities to test natural medicines, and any categories of licensure as determined by DORA.
  • Once applications are accepted, DORA must make decisions on licensure applications within 60 days of receiving an application.
  • From the launch of the NMHA program until June 1, 2026, “natural medicines” are limited to psilocybin and psilocyn. After June 1, 2026, upon recommendation by the Board, DORA may add one of more of the following to types of natural medicines that can be provided under the NMHA program: dimethyltryptamine, Ibogaine, and Mescaline (excluding peyote).

A notable takeaway and something to watch for in the forthcoming rules is a focus on social equity. Seemingly applying lessons learned from the rollout of the state’s cannabis program, the NMHA expressly requires DORA to prioritize equity and inclusivity as it establishes rules to implement the NMHA program. Specifically, DORA is required to adopt rules which: (i) establish procedures, policies and programs to ensure the NMHA program is equitable and inclusive; (ii) promote the licensing of and provision of natural medicine services to (a) persons from communities that have been disproportionally harmed by high rates of controlled substances (including cannabis); (b) persons who face barriers to access to health care; (c) persons who have traditional or indigenous history with natural medicines; and (d) persons who are veterans by, offering, at a minimum reduced fees for licensure and training, incentivizing the provision of natural medicine services at a reduced cost to low income individuals, and incentivizing geographic and cultural diversity in licensing and the provision of and availability of natural medicine services.

In addition, DORA is prohibited from imposing unreasonable financial or logistical barriers that would prevent individuals with lower income from applying for a license and individuals are limited to having a financial interest in five healing centers. Currently, the definition of “individuals” does not include corporations. However, DORA could establish a rule which includes corporations in this limitation and would arguably level the playing field in this budding market.

We will continue to monitor developments and closely follow the rulemaking process as Colorado designs and implements this historical new program.

Article By Lauren P. Carboni of Foley & Lardner LLP

For more biotech, food, and drug legal news, click here to visit the National Law Review.

© 2022 Foley & Lardner LLP

Attorney Mindfulness When Addressing Emails and Texts: ABA Formal Opinion Provides Ethical Guidance to Lawyers on Electronic Communications

In their roles as advisors, advocates, counselors, negotiators, and client representatives, lawyers communicate extensively though electronic means, particularly email and increasingly text messages. However, the fact that use of these electronic communication tools is commonplace in legal practice doesn’t mean that attorneys shouldn’t exercise caution when crafting their communications. The American Bar Association (“ABA”) Standing Committee on Ethics and Professional Responsibility published a formal opinion this month that advises lawyers to refrain generally from including their clients on emails and texts sent to opposing counsel.

ABA Formal Opinion 503 focuses on ABA Model Rule 4.2, often referred to as the “no-contact” rule. Under this model rule, a lawyer who is representing a client may not communicate about the subject of the representation with a represented person absent the consent of that person’s lawyer unless the law or court order authorizes such as communication. Most states’ codes of professional legal ethics draw heavily upon the ABA Model Rules, so many states have similar “no-contact” rules for lawyers.

The new formal opinion states that lawyers would not be deemed to violate ABA Model Rule 4.2 if they send a “reply all” response to a group email or text sent by an opposing counsel, even if that communication includes the opposing counsel’s client. The opinion states that, “[a]bsent special circumstances, lawyers who copy their clients on emails or other forms of electronic communication to counsel representing another person in the matter impliedly consent to a ‘reply all’ response from the receiving counsel,” the opinion said. “Accordingly, the reply all communication would not violate Model Rule 4.2.”

As a practical matter, Formal Opinion 503 provides a number of options to lawyers who wish to avoid creating an implied presumption of consent to such “reply all” communications from opposing counsel to their clients. These options include:

  • forwarding the electronic communication separately to the client without including opposing counsel as an addressee,
  • informing receiving counsel expressly and in advance that including the client on the electronic communication does not constitute a consent to a “reply all” response, or
  • sending the communication through other means (such as a mailed hard copy letter) where different norms are in place regarding responding to all addressees.

The full text of ABA Formal Opinion 503 is available here.

Article By Electronic Discovery at K&L Gates

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Copyright 2022 K & L Gates

What Brokers, Company Insiders, and Others Need to Know about Securities Litigation

Individuals, companies, and firms involved in all aspects of the securities industry face litigation risks daily. From whistleblower lawsuits and U.S. Securities and Exchange Commission (SEC) enforcement actions to Financial Industry Regulatory Authority (FINRA) arbitration and private-right-of-action cases under the Securities Exchange Act of 1934, all types of securities litigation present risks for civil liability. In some cases, securities litigation can present risks for criminal penalties as well.

With this in mind, there is a lot that brokers, company insiders, investment advisers, and others need to know when targeted in lawsuits and investigations. When brokers, company insiders, and others make informed decisions based on the advice of experienced counsel, they can significantly mitigate their risk in both private and governmental securities litigation.

“Securities litigation can present substantial risks for individuals, companies, and firms. Whether facing allegations in civil litigation, SEC enforcement proceedings, or FINRA arbitration, the key to mitigating these risks is to build and execute a comprehensive, strategic and forward-thinking defense.” – Dr. Nick Oberheiden, Founding Attorney of Oberheiden P.C. law firms.

Answers to 10 Frequently Asked Questions (FAQs) about Securities Litigation

Here are answers to 10 frequently asked questions (FAQs) about securities litigation:

1. What Are Some of the Most Common Claims Against Brokers and Brokerage Firms in Securities Litigation?

Brokers and brokerage firms have faced a growing volume of litigation in recent years. This includes private litigation involving individual investors as well as litigation involving the SEC. Investigations, lawsuits, and arbitration filings targeting brokers and brokerage firms primarily focus on acts and omissions constituting investor fraud, though brokers and brokerage firms can face a variety of other claims in securities litigation as well.

Some examples of common claims against brokers and brokerage firms in securities litigation include:

  • Making unsuitable investment recommendations

  • Unauthorized trading and account churning

  • Charging excessive fees and commissions

  • Failing to disclose or misconstruing material information (especially in connection with structured products and other high-risk investments)

  • Failure to supervise or implement adequate internal controls

2. What Are Some of the Most Common Claims Against Company Insiders and Issuers in Securities Litigation?

Securities fraud lawsuits and enforcement actions targeting company insiders and securities issuers can also involve an extremely broad range of allegations. These cases are typically very different from those targeting brokers and brokerage firms; and, while both falls under the umbrella of “securities litigation,” the resemblances between the two categories are minimal. Some examples of common claims against company insiders and issuers in securities litigation include:

  • Accounting and recordkeeping violations

  • Submitting false SEC filings

  • Insider trading

  • Market manipulation

  • Selling unregistered securities and conducting unregistered IPOs

3. What Are Some of the Most Common Triggers for Securities Fraud Lawsuits and Investigations?

Many securities fraud lawsuits and investigations result from investor complaints. Typically, investors will have concerns about losses in their portfolios that they believe cannot be explained by ordinary market forces. These concerned investors will contact plaintiffs’ lawyers to help them file claims alleging fraud in federal courts, district courts or FINRA arbitration.

In some cases, concerned investors will file whistleblower claims with the SEC. The SEC has an obligation to investigate all whistleblower complaints that meet the basic filing requirements, and SEC whistleblowers can receive substantial compensation awards.

The SEC also initiates investigations on its own. Questionable EDGAR filings, market activity, media reports, and referrals from other federal law enforcement agencies can all trigger SEC investigations that may lead to civil or criminal enforcement action. The SEC also monitors activity on social media and other online platforms, and activity on these platforms is increasingly serving as the basis for SEC enforcement activity.

4. What Types of Claims Are Most Likely to Lead to Class Action Securities Litigation?

While all securities litigation presents liability risks for the individuals or entities targeted, companies and firms targeted in class action litigation face risk on an entirely different scale. Class action lawsuits lead to devastating liability that can threaten companies’ and firms’ viability as a going concern.

The types of claims that are most likely to lead to class action securities litigation are those that involve violations affecting large groups of investors. Inadequate brokerage controls that lead to systemic unsuitable investment recommendations, omitting material information from companies’ 10-K or 10-Q filings, mismanagement of investors’ funds, and market manipulation resulting in widespread losses are all examples of issues that can lead (and have led) to securities-related class action lawsuits.

5. How Does the SEC’s Whistleblower Program Work?

The SEC’s Office of the Whistleblower accepts tips from company employees, investors, and others who believe they have information about securities fraud. When a whistleblower complaint spurs enforcement action resulting in sanctions of $1 million or more, the whistleblower can receive between 10% and 30% of the amount collected.

As a result, individuals have a strong financial incentive to come forward and work with the SEC. Additionally, even if the SEC declines to pursue enforcement action based on a whistleblower’s tip, the whistleblower can still choose to pursue a claim directly, and whistleblower compensation awards are higher in these cases. Due to these incentives, whistleblower litigation is a key component of the SEC’s overall securities law enforcement strategy.

6. When Is It Advantageous to Settle a Securities Fraud Lawsuit or Arbitration Claim?

When facing substantiated allegations of securities fraud, settling will often prove to be the most cost-effective solution. However, targeted individuals and entities must be careful not to settle too soon, as there are numerous ways to fight securities fraud allegations even in scenarios that seem highly unfavorable (more on this below).

So, when is it advantageous to settle? Simply put, the costs of settling need to be less than the costs of any other alternative. This includes not only legal costs and any potential judgment liability, but reputational and administrative (i.e. suspension or debarment) costs as well.

7. When Can the U.S. Department of Justice Pursue Criminal Securities Fraud Litigation?

The U.S. Department of Justice (DOJ) pursues criminal securities fraud litigation in cases involving intentional (or apparently intentional) securities law violations. According to the DOJ’s website, the Department’s Market Integrity and Major Frauds (MIMF) Unit, “focuses on the prosecution of complex securities, commodities, cryptocurrency, and other financial fraud and market manipulation cases.” In criminal securities fraud cases, the DOJ can seek penalties ranging from substantial fines to long-term imprisonment for company executives and other insiders.

8. What Remedies Can Investors Seek in Securities Litigation?

In private securities litigation and FINRA arbitration, retail investors can seek compensatory damages for their fraudulent investment losses. An investor’s losses may be deemed fraudulent if they result from either: (i) broker fraud or mismanagement (i.e., making unsuitable investment recommendations), or (ii) a drop in the value of their securities that is not attributable to ordinary market forces. Along with the recovery of their lost principal and investment earnings, investors can seek to recover interest, fees, and other costs as well.

9. What Remedies Can the SEC Seek in Securities Litigation?

When pursuing enforcement actions against brokers, brokerage firms, company insiders, and issuers, the SEC can seek a range of civil and administrative penalties. These include fines, disgorgement, and restitution as well as cease-and-desist orders, suspension, and debarment from the securities industry.

10. What Defenses Can Individuals, Companies, and Firms Use to Protect Themselves in Securities Litigation?

While securities litigation can involve a broad range of allegations and present substantial risk for liability and other penalties, targeted individuals and entities may be able to successfully defend themselves by several means. Whether securing a favorable result means avoiding liability entirely or negotiating a favorable settlement, the key to success is making informed decisions in light of the available opportunities.

For brokers and brokerage firms, some examples of potential defenses include:

  • Misguided Allegations – In many cases, investors (and their counsel) simply lack an adequate understanding of the law. Demonstrating that an investor’s allegations are misguided can serve as an efficient and complete defense against liability.

  • Investor Authorization – One particular area of confusion for many investors is the area of authorization (including discretionary authorization). If an investor is challenging a trade that he or she authorized, providing documentation of authorization can be sufficient to avoid liability.

  • Statutory and Regulatory Compliance – Brokers and brokerage firms will also be able to successfully defend against securities fraud allegations by demonstrating compliance with the relevant statutes, regulations, or FINRA rules.

For company insiders and issuers, some examples of potential defenses include:

  • Compliance with Pre-Arranged Trading Plans – In cases involving insider trading allegations, company insiders can avoid liability by demonstrating compliance with a pre-arranged trading plan.

  • Good-Faith Disclosure – Issuers accused of withholding material information or publishing incomplete or misleading information can often defend against fraud allegations by demonstrating good-faith efforts to maintain disclosure compliance.

  • Qualifying for a Registration Exemption – Issuers can qualify for registration exemptions in various scenarios. If security is exempt, then offering security without registration is 100% permissible.

The fact that these are just examples cannot be overemphasized. Securities litigation can involve an extraordinarily broad range of allegations under numerous laws, rules, and regulations. In many cases, targeted companies and individuals will be able to assert a successful defense by focusing on discrete elements of the plaintiff’s or SEC’s burden of proof. From asserting the applicable statute of limitations to preventing class certification, several technical defenses can prove highly effective in securities litigation as well. As with all types of litigation, the key is to explore all viable defenses, build a comprehensive and cohesive defense strategy, and then execute that strategy while remaining prepared to adapt as necessary.

Article By Dr. Nick Oberheiden of Oberheiden P.C.

For more securities and SEC legal news, click here to visit the National Law Review.

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