Category: Administrative & Regulatory

Cloning Decision Could Lead to Copycat Litigation in the World of Racing

Sheppard Mullin 2012

Owners of elite American Quarter Horses may soon be ponying up to create clones of their champions.

On July 31, 2013 a North Texas District Court jury decided that the American Quarter Horse Association’s (“AQHA”) rule prohibiting the registration of cloned American Quarter Horses violates federal and Texas antitrust laws. The AQHA, located in Amarillo, Texas, is the world’s largest equine breed registry and membership organization, with more than 5 million American Quarter Horses registered to nearly 350,000 members.

The American Quarter Horse excels at sprinting short distances and racing of these animals is the third most popular form of horse racing, generating more than $300 million in bets at U.S. racetracks in 2012. American Quarter Horses are bred to run in races of under a quarter-mile and have been clocked at speeds up to 55 mph.

Plaintiffs Jason Abraham and Gregg Veneklasen sued the AQHA for $6 million in damages, arguing that Rule 227(a) of the AQHA, which prohibits the registration of clones, violated both the Sherman Antitrust Act and the Texas Free Enterprise Act, which reflects federal antitrust law.

Plaintiffs alleged that the association’s prohibition of clones violates Section 1 of the Sherman Antitrust Act because the AQHA acted as a conspiracy that unreasonably restrained interstate or foreign trade. In response, the AQHA argued that the association is a single body and that the Board of Directors acted with a single interest, and therefore cannot be a conspiracy. Plaintiffs further alleged that the rule violated Section 2 of the Sherman Antitrust Act because the AQHA acted to maintain its monopoly power in the industry by enacting the rule. In response, the AQHA argued that the rule did not maintain monopoly power, but instead narrowed the association’s reach by reducing the potential universe of its registered horses.

On July 31, the jury found that the AQHA’s Rule 227(a) violated Section 1 and Section 2 of the Sherman Antitrust Act, as well as the equivalent Texas laws. In their decision, the jury awarded no damages, but could lead to the reversal of Rule 227(a) following an order the District Court Judge.

Johne Dobbs, the President of the AQHA’s Executive Committee, is reported as saying that the AQHA will appeal the North Texas District Court decision to the 5th Circuit, though it may be a year before a decision is made on the appeal.

A decision in favor of the AQHA by the 5th Circuit could have a reversing effect on a number of changes to AQHA rules since 2000, while a decision against could further cement the trend toward the AQHA being more inclusive. In 2000, a breeder sued the AQHA regarding the association’s rule that limited one registeredhorse per breeding pair per year, which thereby prohibited the use of embryo transplants to create multiple foals per breeding pair. The court held in an interlocutory order that the rule was an anticompetitive restraint of trade, adopted for the purposes of limiting the supply of registered quarter horses. Before a final order was written, the two parties settled and the AQHA changed its rules to allow for the registration of all embryo transfer foals. Since then, the AQHA has changed its rules to also register horses considered perlinos and cremellos to register, as well as horses deemed to be excessively white. The AQHA may be interested in pursuing a reversal to these changes if the 5th Circuit rules in their favor.

A decision against the AQHA could also lead to other breeder associations, including the American Kennel Club and American Paint Horse Association, to change their rules prohibiting the registration of clones.

An industry able to support quarter horse clones is likely ready to go if the courts side with the plaintiffs. Texas company ViaGen owns the patent that created the infamous cloned sheep, Dolly. The company has already cloned a number of horses, including Royal Blue Boon, the all-time leading dam of cutting horses with personal lifetime earnings of $381,764 and produce earnings of over $2.6 million. Hundreds of American Quarter Horse owners have already gene banked their horses in anticipation of the AQHA changing Rule 227(a).

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Michigan Right to Work – What’s the Effect: A Data Point

barnes

How Michigan’s Right to Work law would ultimately impact union dues payer rolls has been a topic of some debate. Now we have a data point, but it may not tell the whole story.

Michigan’s Right to Work law became effective March 28, 2013. The law gives employees the right to choose to join and/or financially support a union. In other words, it allows employees to retain the representational benefits of their union representation without paying dues. If an employee elects not to pay dues, the employee’s union still must represent the employee with respect to grievances and arbitration. Unions refer to this as “freeloading.”

There has been much speculation about what impact the passage of Michigan’s law would have on the number of dues paying members. Today, an article in the Detroit News reported that, according to the Michigan Education Association, Michigan’s 150,000 member teachers union, only 1 percent of its members have elected to exercise their rights under the Right to Work law and stop paying dues.

Michigan

This, however, likely only tells part of the story because the law does not impact union security provisions in contracts that have not yet expired and some contracts were “rush-renewed” to ensure that they would not be impacted by Right to Work for several more years.

In addition, the Right to Work law did not impact union “check off” provisions which are often tied to a card that is signed by a union member and authorizes the employer to deduct dues from the member’s paycheck and send them to the union. Such cards can serve as an impediment to a member desiring to stop paying dues because they can be irrevocable for a period of time, even if the employee revokes his or her union membership. These agreements, which can be irrevocable for up to a year under federal law, are a hurdle that trip up many employees trying to end dues payments immediately. However, while certain restrictions on dues check off authorizations have been approved under federal law, it is unclear whether the Michigan Employment Relations Commission (MERC) will find such restrictions lawful or violative of Michigan’s Right to Work law.

The point is, MEA’s 1 percent report is only one data point; it will take a lot longer to tell the impact on the number of dues paying members in the MEA and other unions.

See all our previous Right to Work coverage here.

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Immigration Reform Resurfaces Amid Congressional Breakdown Over Funding and Debt Ceiling

GT Law

As the country waits for Congress to resolve the government funding and debt ceiling stalemate, immigration reform simmers in the background. This week, a group of Democrats introduced a Comprehensive Immigration Reform bill, H.R. 15, entitled the “Border Security, Economic Opportunity, and Immigration Modernization Act.” This is not the much awaited work product of the secret bi-partisan Gang of 8 (which has now been disbanded), but rather an almost verbatim reproduction of the Senate passed CIR legislation, S. 744. The new House bill does include provisions from the McCaul-Thompson “Border Security Results Act” (H.R. 1417) reported out of the House Homeland Security Committee and passed this summer with bipartisan support. It also removes the Corker-Hoeven border security amendment, which seeks to add approximately 20,000 border patrol agents, more than 700 additional miles of border fencing, a mandatory E-Verify program nationwide, and an entry/exit tracking system for temporary visitors to the United States.

House Republicans on the Judiciary Committee are working through the normal order and are drafting separate bills to address the future of undocumented immigrants in the U.S., as well as new temporary worker provisions for lesser skilled workers. We expect the Judiciary Committee to take up measures on immigration in the next few weeks. We also expect the “Strengthen and Fortify Enforcement (SAFE) Act” (H.R. 2278) and other border security measures to be brought to the House floor this year.

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Update on Government Shutdown's Impact on Trade

Katten Muchin

The ongoing federal government shutdown is impacting a wide variety of import and export trade activities. While the situation remains fluid as each agency executes its contingency plans, below is a summary of the current impact on trade.

Customs and Border Protection (CBP): The majority of CBP employees are exempt from the furlough as being deemed essential to the country’s security. Most of those exemptions are related to the agency’s ongoing revenue collections. Currently, ports are maintaining their normal hours of service. CBP also seems to be accepting and processing protests, although with some delays. However, CBP appears to have stopped processing ruling requests or responding to any court documents due to the shutdown. Among the CBP personnel not exempted from furlough are technicians and program managers. As a result, certain additional CBP activities, such as bonds and licensing and processing FDA refusals, may also be impacted.

Food and Drug Administration (FDA): FDA continues to perform entry review and to address high-risk recalls, civil and criminal investigations, and other critical public health issues. However, FDA has furloughed personnel as well, resulting in entry review delays. The agency is giving priority to perishable entries, defined as merchandise expiring within 30 days, and to any lifesaving medical product. The agency has generally ceased routine establishment inspections, monitoring of imports, notification programs such as those involving food contact substances and import formula, and its laboratory research activities.

International Trade Commission (ITC): ITC has shut down its investigative activities, including antidumping and countervailing injury investigations and reviews, and intellectual property rights infringement investigations and ancillary proceedings. The schedules and deadlines for all investigative and pre-institution activities are being tolled and all hearings and conferences have been postponed. In addition, ITC’s website is down, so information such as the online Harmonized Tariff Schedule is not available.

International Trade Administration (ITA): ITA’s website—including the online steel licensing system—is down. The agency recommends sending an email to steel.license@trade.gov for manual processing of license requests for shipments that do not have a steel license. Enforcement and Compliance (formerly, Import Administration) intends to uniformly toll all administrative deadlines related to the administration of US antidumping and countervailing duty laws for the duration of the shutdown. These include deadlines for preliminary and final determinations in antidumping and countervailing duty investigations and administrative reviews and deadlines for all actions by parties to these proceedings.

Bureau of Industry and Security (BIS): BIS is no longer accepting advisory opinion requests, classification requests (CCATS), encryption reviews, encryption registrations or export license applications. Similarly, BIS will not issue any final determinations. The SNAP-R application on BIS’s website is not available and will not reopen until the shutdown ends. All pending export license applications, commodity classification requests, encryption reviews, encryption registrations and advisory opinion requests will be held without action by BIS until the shutdown ends. Applicants may request emergency processing of export license applications for national security reasons.

Department of Agriculture (USDA): USDA’s website is down. The Animal and Plant Health Inspection Service (APHIS) is operating in the ports, but personnel will not be available for the renewal and authorization of notifications or permits.

Alcohol and Tobacco Tax and Trade Bureau (ATTTB): ATTTB has halted its regulatory functions, noncriminal investigative activities and audit functions. But it will ensure that all tax remittances are processed because these functions have been deemed necessary for safety and protection of property.

As Congress continues to debate the necessary appropriations to fund the government’s operations, the trade community should expect further impact on trade operations.

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Action Steps NOW To Comply With The Affordable Care Act

Womble Carlyle

Although the one-year delay in the effective date of the pay-or-play provisions of the Affordable Care Act (“ACA”) (until January 1, 2015) gives employer-sponsored health plans more time to prepare for those requirements, many ACA provisions will take effect on January 1, 2014. Employees are asking for information regarding these changes and the Department of Labor is already including ACA requirements in its benefit plan audits. The target keeps moving. Here is what you need to do NOW to ensure that your health plan is in compliance on January 1, 2014 and that you are prepared for what’s coming: 

  • Distribute the required Notice informing your employees about their coverage options by October 1, 2013 and to all new hires after October 1, 2013.
  • Determine if your plan will have “grandfathered” status in 2014.
  • Confirm that required plan design changes are in effect for 2014, including:
  • Elimination of annual limit on essential health benefits.
  • Elimination of pre-existing condition exclusions for new enrollees.
  • Limiting waiting period for enrollment to 90 days.
  • Elimination of restrictions related to participation in clinical trials (non-grandfathered plans only).
  • Conform cost-sharing provisions to ACA requirements (non-grandfathered plans only).
  • Provide coverage for ACA “essential benefit” categories (insured plans in individual and small group markets only).
  • Timely provide updated Summaries of Benefits & Coverage.
  • Develop strategies on how to use the rest of 2013 and 2014 to plan for ACA provisions that will go into effect in 2015, including (1) pay-or-play provisions, such as determination or confirmation of applicable larger-employer status and how to determine full-time employee status; and (2) reporting requirements.
  • Consider alternative options to continuing to provide health care coverage for your various categories of employees.
  • Implement cafeteria plan changes related to ACA and repeal of DOMA.
  • Bring wellness programs into compliance with ACA.
  • Prepare to pay ACA reinsurance fees (self-insured plans only).
  • Make sure you are complying with the final HIPAA rules concerning “protected health information” that went into effect on September 23, 2013.

The Government Shut Down and Its Impact on Public Health

MintzLogo2010_Black

In the early morning of October 1, 2013, the U.S. federal government officially went dark. The shutdown came in the aftermath of the Senate’s decisive vote to reject a House plan that would have kept the government funded for several more months but delayed implementation of key portions of the Affordable Care Act (ACA) for one year.

The impact of the shutdown will be felt across all healthcare sectors as many federal employees face furloughs of unknown duration. In particular, the Department of Health and Human Services (HHS) announced in its Contingency Staffing Plan that over half of its employees will be furloughed. HHS’s Plan is based upon federal guidance that allows agency programs to continue only if they either do not rely on annual appropriations, or they involve the safety of human life or the protection of property.[1] According to HHS, the following programs and services will continue:

  • Funding for Medicaid and the Child Health Insurance Program will continue uninterrupted because funding has already been set aside for these programs.
  • Funding for Medicare will likewise continue uninterrupted but only in the short term. If the political impasse stretches beyond several weeks, the program could be disrupted by the reduction in HHS staff.
  • The Centers for Medicare & Medicaid Services (CMS) will continue to implement the ACA, “including coordination between Medicaid and the Marketplace, as well as insurance rate reviews, and assessment of a portion of insurance premiums that are used on medical services.”[2]
  • State and federal health insurance exchange programs will open as planned, though it is not clear how the information technology (IT) that underpins the exchanges will function since they are operated by government contractors.[3]
  • The National Institute of Health (NIH) will continue to provide patient care for current NIH Clinical Center[4] patients
  • The Food and Drug Administration (FDA) will be able to operate only for “vital activities” such as high risk recalls and other “critical public health issues.”
  • Substance Abuse and Mental Health Services Administration will continue programs such as the Suicide Prevention Lifeline using the balance of available grants.
  • Other programs supported through mandatory funding such as the Centers for Disease Control and Prevention (CDC) Global HIV/AIDS Program will continue.

However, several programs important to public health will be disrupted if a congressional compromise cannot soon be reached. For example:

  • Outside of matters related to “imminent threats to the safety of human life or protection of property,” CMS, FDA, NIH and other federal agencies will not publish regulations or other guidance during the shutdown.
  • CMS will not fund task forces that work to prevent healthcare fraud and abuse, and will scale back on Medicare provider audits.
  • The CDC seasonal influenza program, which tracks flu outbreaks and certain infectious diseases, will come to a halt.
  • No new patients will be admitted to the NIH Clinical Center. NIH-funded researchers may continue to work for as long as their money holds out but additional funds will not be released during the shutdown.
  • The FDA will not be able to support much of its food safety activities, such as routine inspections and public notification programs. The FDA’s laboratory research and some compliance and enforcement activities will be suspended.
  • No action will be taken on any grants related to medical research, improvement of the healthcare system, and monitoring of substance abuse programs.

Although providers can take comfort in the fact that Medicare and Medicaid program reimbursement will proceed, a government shutdown for any period of time beyond three or four weeks could impede certain critical administrative functions, such as Medicare claims processing, and therefore impact their pocketbooks. Likewise, while substantial ACA implementation will continue, long term furloughs could affect certain components of the law (such as the exchanges) because they depend on government employees to help run the IT component, among other aspects of the program. Thus, the magnitude of the shutdown’s impact will depend on how long it endures.

*Copyright 2013, American Health Lawyers Association, Washington, DC. Reprint permission granted.

[1]/ Opinion of the Office of Legal Counsel, Department of Justice, Government Operations in the Event of a Lapse in Appropriations, 1995 WL 17216091 (Aug.16, 1995) at pp. 3-4: see also, Effect of Appropriations for Other Agencies and Branches on the Authority to Continue Department of Justice Functions During the Lapse in the Department’s Appropriations, 19 Op. O.L.C. 337, 1995 WL 917146 (Dec. 13, 1995).

[2]/ Contingency Staffing Plan, pp.2-3.

[3]/ CMS has not publicly stated whether the IT contracts are already issued and funded.

[4]/ The NIH Clinical Center is the agency’s research hospital.

Shutdown Closes National Labor Relations Board (NLRB) Operations

Barnes & Thornburg

As a result of the federal government shutdown, yesterday NLRB operations ground to a halt. Many practitioners and employers during the a.m. hours received contact from Board Agents and Board Lawyers indicating that pending investigations, petition processing and the like were on hold until after the shutdown ends.

The Board’s “Shutdown Plan” indicates that 1,600 of the Board’s 1,611 staff have been furloughed. All regional offices are closed and the only remaining staff are located in the Board’s main office in D.C. Even the Board’s website was shutdown and the resources posted online, including all Board cases, memos, and other guidance, became unavailable. Instead, visitors to the Board’s website were redirected to a landing page explaining “The National Labor Relations Board is currently closed due to a lapse in appropriated funds.”

government shutdown NLRB national labor relations board

The full effect of the shutdown on new and on-going NLRB cases is not completely clear.  The Federal Register Notice on the effect of the closure states that an extension of time to file any documents is granted sua sponte for all affected parties through the end of the shutdown.  However, the Board cannot grant extensions of time to the six-month statute of limitations in Section 10(b) of the National Labor Relations Act that applies to unfair labor practice charges.  The Federal Register Notice states that “the operation of Section 10(b) during an interruption in the Board’s normal operations is uncertain” and encourages effected parties to file their charges via fax, although they will presumably not be processed until after the shutdown concludes.  The Board’s website does provide that actions necessary “to prevent an imminent threat to the safety of human life or the protection of property may be undertaken” during the shutdown, although it is not clear what NLRB actions, if any, would fall into this category.

All ALJ hearings scheduled for this week have been postponed indefinitely, as well as all elections and election hearings scheduled through October 11. The Federal Register Notice provides that if the shutdown continues, additional hearings and elections will be postponed as well. Like the rest of the country affected by the shutdown, all practitioners and employers with business in front of the Board can do now is wait it out.

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2nd Annual FATCA Compliance Conference – November 5-7 2013

The National Law Review is pleased to bring you information about the upcoming 2nd Annual FATCA Compliance Conference.

FATCA%20Nov%205-7

When

5-7 November, 2013

Where

New York, NY

The 2nd Annual FATCA Compliance Conference by marcus evans will bring together industry leaders in tax compliance from across the country to sharpen their comprehension of the complexities of FATCA, implement a platform to ensure high-quality, accurate information, develop client management strategies to maintain positive customer experience, and mitigate risks while striving to become fully compliant by July 2014.

This highly anticipated event takes place approximately 8 months prior to the FATCA compliance deadline of July 1, 2014, providing attendees with a unique opportunity to benchmark their practices against their peers and clarify any complexities with which they are still struggling.

Industry leaders attending this conference will benefit from a dynamic presentation format consisting of workshops, panel discussions and industry-specific case studies that provide accurate, real-world knowledge. Attendees will experience highly interactive conference sessions, 10-15 minutes of Q&A time after each presentation, 4+ hours of networking, and exclusive access to speaker presentations post-event.

Federal Government Shutdown

DrinkerBiddle

For the first time in 17 years, the federal government has officially shutdown.  Late last night, the Administration released a memo to all federal agencies advising them to execute their contingency plans (an agency-by-agency list is available here).

Yesterday the Senate passed a bill that would fund the government through November 15, 2013, but would make no changes to the Affordable Care Act (ACA).  (More information on the Senate vote is available here.)  Last night, by a vote of 228-201, the House passed legislation that would keep the government open through December 15, 2013, but would delay the ACA’s individual mandate requirement and would eliminate health insurance subsidies for Members of Congress, Congressional staff, the President, the Vice President, and political appointees.  By a vote of 54-46 the Senate voted to table, or kill, the legislation.

Following the latest Senate action, the House voted to formally request a conference committee with the Senate.  (Conference committees are joint House-Senate committees that are created to resolve disagreements between the House and Senate versions of a given bill.)  House Speaker Boehner (R-OH) appointed the following members to the conference committee:  House Majority Leader Cantor (R-VA-7), Ways and Means Chairman Camp (R-MI-4), House Budget Committee Chairman Ryan (R-WI-1), House Appropriations Chairman Rogers (R-KY-5), Representative Frelinghuysen (R-NJ-11), Representative Crenshaw (R-FL-4), Representative Carter (R-TX-31), and Representative Graves (R-GA-14).  House Democrats have not appointed conferees.  The Senate voted to table the request for conferees.

While the House and Senate cannot seem to agree on terms to fund the entire government, both chambers have passed H.R. 3210, legislation that would provide payment through the government shutdown for members of the Armed Forces (including reserve personnel) and civilian Department of Defense (DoD) employees and contractors whom the DoD Secretary determines are providing support to members of the Armed Forces.  The legislation passed the House by a unanimous vote, the Senate passed the bill by a voice vote, and was signed into law by President Obama last night.

At this point, both the House and the Senate appear at a stalemate.  Until Members of Congress can reach some agreement, the government shutdown will remain in place.  We will continue to update this blog as events unfold.

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Recent Americans with Disabilities Act (ADA) Decision Might Signal Broadening of the ADA’s Accommodation Provisions

Poyner Spruill

The United States Court of Appeals for the Fifth Circuit recently held that accommodations under the Americans with Disabilities Act (ADA) are not limited to job modifications that enable an employee to perform essential job functions.  In Feist v. Louisiana, a former assistant attorney general for the Louisiana Department of Justice (LDOJ) sued the LDOJ claiming that it discriminated against her in violation of the ADA by declining to provide her with a free on-site parking space to accommodate her disability (osteoarthritis of the knee).  Siding with the employer, the trial court dismissed the case holding that the plaintiff failed to explain how the denial of on-site parking limited her ability to perform “the essential functions” of her job.

The Court of Appeals reversed the trial court’s decision, holding that the text of the ADA does not indicate that an accommodation must facilitate the essential functions of an employee’s position.  The court also relied on federal regulations (which the LDOJ argued were not entitled to deference) which provide that reasonable accommodations may include modifications or adjustments that enable a covered entity’s employee with a disability to enjoy equal benefits and privileges of employment as are enjoyed by its other employees without disabilities.  The court did not express an opinion on whether the employee’s request for a free on-site parking space was “reasonable” under the ADA, but left that determination to the trial court on remand.

This case may indicate a willingness of courts in future cases to broaden the scope of accommodations beyond what employers currently believe are required by the ADA.  Until more courts weigh in on the question, employers should tread carefully and seek legal counsel when responding to requests for accommodations that seem unrelated to an employee’s ability to perform his or her job functions.

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