Category: Litigation

Seventh Circuit Reverses Course on Reassignment Accommodation, Leaving United Airlines Grounded

An article by R. Holtzman Hedrick of Barnes & Thornburg LLP regarding Reassignment Accommodations, recently appeared in The National Law Review:

 

In arguably its most significant decision under the Americans with Disabilities Act (ADA) in years, the Seventh Circuit, in EEOC v. United Airlines, Inc., reversed its own previous holdings regarding the viability of competitive transfer policies for disabled employees. The case can be found here.

For over a decade, employers in the Seventh Circuit have been able to rely onEEOC v. Humiston-Keeling, 227 F.3d 1024 (7th Cir. 2000), to adopt perfectly valid policies allowing for disabled employees who can no longer perform the essential functions of their current jobs to be considered for reassignment on a competitive basis.  In other words, if a more qualified candidate sought the same position as the disabled candidate, the employer could select the best-qualified candidate without running afoul of the ADA.  No longer, says the Seventh Circuit.

The circuit court held that under the Supreme Court precedent of U.S. Airways, Inc. v. Barnett, 535 U.S. 391 (2002) (requiring an employee to show that an accommodation is reasonable on its face, which then shifts the burden to the employers to demonstrate case-specific undue hardship), reassignment of a disabled but qualified employee to a vacant position is mandatory in the absence of an undue hardship.  Despite reaffirming its best-qualified candidate rule even after Barnett was decided (reasoning that that ADA does not require preferential treatment and that violating facially-neutral employment policies creates an undue hardship), the Seventh Circuit decided last week that it had been wrong all along:  the “ADA does indeed mandate that an employer appoint employees with disabilities to vacant positions for which they are qualified, provided that such accommodations would be ordinarily reasonable and would not present an undue hardship to that employer.”

The importance of this new automatic reassignment interpretation cannot be overstated.  Indeed, questions about an employer’s reassignment obligations are among the most frequently received inquiries by attorneys under the ADA.  United Airlines, whose policy in question provided for preferential treatment of disabled employees, although not for automatic reassignment for those who were qualified – meaning the company actually went beyond what the Seventh Circuit required it to do before last week – must feel blindsided by the court.  Indeed, this Seventh Circuit panel issued an earlier version of an opinion in this case dismissing the lawsuit under Humiston-Keeling before vacating that decision and issuing a new opinion.

Obviously, employers in the Seventh Circuit (and likely beyond, as the D.C. and Tenth Circuits provide for automatic reassignment, and the Eighth Circuit relied onHumiston-Keeling in deciding that competitive transfer policies were legal) will need to adjust their reassignment policies for disabled employees.  In light of this new ruling, it is critical to consult with experienced counsel to navigate what is likely uncharted territory.

© 2012 BARNES & THORNBURG LLP

D.C. Circuit Vacates CSAPR, Instructs USEPA to Continue Administering CAIR

Schiff Hardin LLP‘s Environmental Group recently had an article regarding CSAPR published in The National Law Review:

 

In a 2-1 decision, the Court of Appeals for the D.C. Circuit vacated the United States Environmental Protection Agency’s (“USEPA”) Cross-State Air Pollution Rule (“CSAPR” or the “Transport Rule”), USEPA’s attempt to “fix” the Clean Air Interstate Rule (“CAIR”) to regulate downwind state air pollution under the Clean Air Act (“CAA”). EME Homer City Generation LP v. EPA, D.C. Cir. No. 11-1302 (Aug. 21, 2012). In 2008, the D.C. Circuit struck down and remanded CAIR, with instructions to USEPA to continue administration of the CAIR until the replacement rule was implemented. Here, in light of the vacatur of the CSAPR, the D.C. Circuit has instructed USEPA to “continue administering CAIR pending [USEPA’s] promulgation of a valid replacement.”

By way of background, USEPA promulgated the Transport Rule in August 2011 in response to the court’s order in North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008) remanding the CAIR, and to address the 2006 24-hour national ambient air quality standard (“NAAQS”) for fine particulate matter. The Transport Rule established an interstate program to require power companies in 28 “upwind” states to reduce emissions of sulfur dioxide (“SO2”) and nitrogen oxides (“NOx”) to enable downwind states to achieve and maintain NAAQS for ozone and fine particulate matter. Following challenges by affected states and industry, the D.C. Circuit stayed the Transport Rule on December 30, 2011. The stay remained in effect until today’s decision on the merits, where the D.C. Circuit provided two independent grounds for vacatur.

First, the court found that USEPA exceeded its statutory authority granted under Section 110(a)(2)(D), the so-called “good neighbor” provisions of the CAA, by potentially requiring an upwind state to reduce emissions in excess of its contribution to a downwind states exceedance of air quality standards. In so ruling, the court explained that USEPA may require an upwind state to “eliminate only its own ‘amounts which will . . . contribute significantly’ to a downwind State’s ‘nonattainment,'” and “may not require any upwind State to ‘share the burden of reducing other upwind states’ emissions.'” Moreover, while the court acknowledged that USEPA may consider the cost of pollution reductions to lessen the burden upon an upwind state, it may not, as the court found USEPA did in establishing emission reductions under the Transport Rule, use cost considerations to impose pollution reduction obligations above and beyond what was necessary for downwind states to meet air quality standards.

Second, the D.C. Circuit struck USEPA’s decision to require that each state comply with a federal implementation plan (“FIP”) to implement the emission reductions mandated by the Transport Rule rather than allowing each state to determine how best to achieve the reductions within the state, i.e., the FIP-first approach included in the Transport Rule. By imposing a FIP prior to allowing states to implement their own plans, USEPA had usurped a role that was clearly designated by statute to the states. With regard to the “good neighbor” provision, the court held that USEPA must first inform states of their reduction obligations and then provide the states time to develop and submit SIPs, just as it does for new NAAQS. USEPA may not impose a FIP that directs each state on how to achieve the requirements of the Transport Rule without first providing each state a “reasonable time to implement that requirement [under a state implementation plan] with respect to sources within the State.”

The D.C. Circuit advised that its “decision … should not be interpreted as a comment on the wisdom or policy merits of EPA’s Transport Rule” and that USEPA should “proceed expeditiously” to promulgate yet another replacement for CAIR consistent with this decision and, presumably, with the North Carolina decision. The decision in this case further clarifies USEPA’s role and obligations regarding identifying states’ air quality impacts on downwind states. It also emphasizes that the cooperative federalism concept embodied in the CAA is vital to successful implementation of the Act.

© 2012 Schiff Hardin LLP

Gearing Up Electronic Discovery to Handle the New Generation of Smart Devices

The National Law Review recently published an article regarding Electronic Discovery written by Marcus Evans Summits:

New technologies are presenting Chief Litigation Officers (CLOs) with additional challenges during eDiscovery, which was an already daunting, time-consuming and expensive process, says Jay Hagan, Chief Executive Officer, DriveSavers Data Recovery. As more people make use of smart phones, tablets and storage devices based on Solid-State Drive (SSD) and NAND flash technologies, CLOs are facing a new set of failure issues and recovery challenges, he adds.

Jay Hagan discusses the data vulnerabilities that new devices are adding to the eDiscovery equation and how to handle them.

What are the data storage vulnerabilities that CLOs should be aware of?

There is heightened demand for document preservation, fueled by changes to the Federal and State Rules of Civil Procedure, proliferation of Electronically Stored Information (ESI) and the growing number of information storage devices. It is imperative that documents of all types receive proper handling and storage throughout the eDiscovery process, as the failure to properly preserve and produce ESI in litigation can result in serious consequences, including court sanctions, loss of reputation and financial implications.

What new challenges do SSD technologies present for CLOs during eDiscovery?

Smart phones, tablets and other storage devices based on SSD and NAND flash technologies often contain digital records, forensic footprints, personal information and business-critical intellectual property. SSD technology continues to be in the design of mobile products for its many advantages to the user, but it presents a whole new set of failure issues and recovery challenges that adds variables to the eDiscovery equation.

While traditional magnetic data storage is well understood and reverse engineered with great success, we have far fewer “tools in the toolbox” for the new technologies. They are more difficult to reverse engineer or obtain cooperation, trust and proprietary tools from the original manufacturers. Vendor-specific SSD designs and encryption technologies, whether in the controller or in the NAND itself, are likely to be the norm and are creating new challenges from the data recovery perspective.

As the amount of valuable data stored increases, so does the impact of device failure and data loss. This is driving the need for a certified, secure, data recovery solution as part of the eDiscovery package.

How can CLOs minimize the cost of eDiscovery?

When making decisions on how to collect, preserve and produce ESI, CLOs will be required to balance convenience and security of the relevant data. For example, ensuring that ESI is protected from a breach during the eDiscovery process – from data collection and data analysis to data processing – is integral to a successful litigation, regulatory or investigation.

To avoid excessive cost, disputes, sanction or fine, a CLO must seek experts and consultants who can offer solutions customized to their case or specific project requirements. They also need to be prepared to not only utilize the best technology available, but also explain to the court or jury how and why it works for the case at issue.

It is impossible to achieve eDiscovery without the expertise, technology and methodology to successfully retrieve data from all storage devices, including smart phones and tablets.

 What are the data storage vulnerabilities that CLOs should be aware of?

There is heightened demand for document preservation, fueled by changes to the Federal and State Rules of Civil Procedure, proliferation of Electronically Stored Information (ESI) and the growing number of information storage devices. It is imperative that documents of all types receive proper handling and storage throughout the eDiscovery process, as the failure to properly preserve and produce ESI in litigation can result in serious consequences, including court sanctions, loss of reputation and financial implications.

What new challenges do SSD technologies present for CLOs during eDiscovery?

Smart phones, tablets and other storage devices based on SSD and NAND flash technologies often contain digital records, forensic footprints, personal information and business-critical intellectual property. SSD technology continues to be in the design of mobile products for its many advantages to the user, but it presents a whole new set of failure issues and recovery challenges that adds variables to the eDiscovery equation.

While traditional magnetic data storage is well understood and reverse engineered with great success, we have far fewer “tools in the toolbox” for the new technologies. They are more difficult to reverse engineer or obtain cooperation, trust and proprietary tools from the original manufacturers. Vendor-specific SSD designs and encryption technologies, whether in the controller or in the NAND itself, are likely to be the norm and are creating new challenges from the data recovery perspective.

As the amount of valuable data stored increases, so does the impact of device failure and data loss. This is driving the need for a certified, secure, data recovery solution as part of the eDiscovery package.

How can CLOs minimize the cost of eDiscovery?

When making decisions on how to collect, preserve and produce ESI, CLOs will be required to balance convenience and security of the relevant data. For example, ensuring that ESI is protected from a breach during the eDiscovery process – from data collection and data analysis to data processing – is integral to a successful litigation, regulatory or investigation.

To avoid excessive cost, disputes, sanction or fine, a CLO must seek experts and consultants who can offer solutions customized to their case or specific project requirements. They also need to be prepared to not only utilize the best technology available, but also explain to the court or jury how and why it works for the case at issue.

It is impossible to achieve eDiscovery without the expertise, technology and methodology to successfully retrieve data from all storage devices, including smart phones and tablets.

Interview with: Jay Hagan, Chief Executive Officer, DriveSavers Data Recovery

© Copyright 2012 marcus evans

Chief Litigation Officer Summit – September 13-15, 2012

The National Law Review is pleased to bring you information about the upcoming Chief Litigation Officer Summit:

The Chief Litigation Officer Summit will highlight the current challenges and opportunities through visionary conference sessions and keynote presentations delivered by your most esteemed peers and thought leaders from America’s leading corporations. The one-on-one meetings with leading service providers will offer vast expertise in the area of litigation. All this, seamlessly integrated with informal networking opportunities over three days, will provide a unique interactive forum. Do not miss this opportunity to network, establish new connections, exchange ideas and gain knowledge.

Chief Litigation Officer Summit – September 13-15, 2012

The National Law Review is pleased to bring you information about the upcoming Chief Litigation Officer Summit:

The Chief Litigation Officer Summit will highlight the current challenges and opportunities through visionary conference sessions and keynote presentations delivered by your most esteemed peers and thought leaders from America’s leading corporations. The one-on-one meetings with leading service providers will offer vast expertise in the area of litigation. All this, seamlessly integrated with informal networking opportunities over three days, will provide a unique interactive forum. Do not miss this opportunity to network, establish new connections, exchange ideas and gain knowledge.

‘Your Baby Can Read,’ Targeted for Dubious Ads, Closes Its Doors

An article by Rachel Hirsch of Ifrah Law, ‘Your Baby Can Read,’ Targeted for Dubious Ads, Closes Its Doors, was recently featured in The National Law Review:

After nearly a decade of persuading hundreds of thousands of parents that their babies were geniuses, the popular company, Your Baby Can Read, is shutting its doors. Its demise is the result of an FTC investigation prompted by the Campaign for a Commercial-Free Childhood advocacy group, which challenged claims by the company that newborns have the ability to absorb reading and spelling skills when they are as young as three months old. According to the company’s website, the cost of fighting these legal battles has left the company with no option but to close.

Your Baby Can Read consists of interrelated videos, flash cards and books designed to teach infants as young as three months old to read. Developed in the late 1990s by Robert Titzer, an educator with a Ph.D. in human performance from Indiana University, the product claims that babies have a small window in which they absorb spelling at an extraordinary pace. Although these claims have never been substantiated through any kind of credible research, fans of the products, which are priced at $200, have given them glowing reviews. More than a million families have used the products, which the company extensively advertised on TV, at exhibitions, and on its own website, Facebook page and YouTube channel.

In April 2011, a class of consumers who purchased the educational programs filed a class action complaint against the company in California challenging the effectiveness of the product. Additionally, the Boston-based Campaign for a Commercial-Free Childhood (CCFC) filed a complaint against the company with the FTC, leading the way for a series of campaigns against what critics call the “genius baby” industry. The national watchdog group previously successfully campaigned against the way that the “Baby Einstein” program marketed its products. In its complaint with the FTC, CCFC argued that Your Baby Can Read’s claims of teaching infants to read lacked scientific support. The group requested that the FTC stop the company from continuing its allegedly deceptive marketing practices and that the company offer full refunds to “all parents who have been duped.” According to CCFC director Dr. Susan Linn, the company “exploited parents’ natural tendency to want what’s best for their children” by making grandiose promises that find no support in science.

The problem with these types of educational products appears to be twofold. First, doctors and scientists who have tested the products have reportedly found that infants using the products are not reading, but rather are memorizing the shapes of the letters presented. Second, as the CCFC points out, the program can actually be harmful to children, as it encourages them to sit in front of television screens and computer monitors, getting them “hooked on screens” too early in life. In fact, the group notes that if parents follow the “Your Baby Can Read” instructions, by nine months, babies would have spent more than a full week of 24-hour days in front of a screen.

Although the company is going out of business, the FTC will not automatically cease its investigation. The FTC says it aims to protect the most vulnerable classes in society — and perhaps none are more vulnerable than young children, or, in this case, their overachieving parents who just want their bragging rights. It will be interesting to see which group of consumers will come out on top in the FTC investigation – the thousands of parents who were satisfied with the product or the class-action parents whose children were perhaps not as smart as they believed them to be.

© 2012 Ifrah PLLC

Chief Litigation Officer Summit – September 13-15, 2012

The National Law Review is pleased to bring you information about the upcoming Chief Litigation Officer Summit:

The Chief Litigation Officer Summit will highlight the current challenges and opportunities through visionary conference sessions and keynote presentations delivered by your most esteemed peers and thought leaders from America’s leading corporations. The one-on-one meetings with leading service providers will offer vast expertise in the area of litigation. All this, seamlessly integrated with informal networking opportunities over three days, will provide a unique interactive forum. Do not miss this opportunity to network, establish new connections, exchange ideas and gain knowledge.

Postal Service Must Pay Reasonable Royalty for Copyright Infringement

Considering the proper measure of damages under 28 U.S.C. § 1498(b), the U.S. Court of Appeals for the Federal Circuit vacated the trial court’s damages award and remanded to the Court of Federal Claims to determine the fair value of a license for the full scope of the Postal Service’s infringing use.  Gaylord v. U.S., Case No. 11-5097 (Fed. Cir., May, 14,2012) (Moore,  J.).

Frank Gaylord is the creator and holder of a copyright interest in “The Column,” a group of nineteen stainless steel sculptures representing a platoon of solders.  “The Column” is the centerpiece of the Korean War Veterans’ Memorial on the National Mall in Washington, D.C.  In 2002, the United States Postal Service issued a postal stamp and sold retail goods commemorating the 50th anniversary of the Korean War, featuring a photograph of “The Column.”  In 2006, Mr. Gaylord sued the United States under § 1498(b), which waives sovereign immunity for copyright infringement.  In a previous appeal, the Federal Circuit held that the Postal Service was liable for copyright infringement and identified three general classes of infringing items: stamps that were used to send mail, unused stamps retained by collectors and retail goods featuring an image of the stamp.  In the prior case, the Federal Circuit remanded for damages.

On remand, the Court of Federal Claims rejected Mr. Gaylord’s claim for a 10 percent royalty on about $30.2 million in revenue allegedly generated by the Postal Service, as well as his claim for prejudgment interest.  In determining damages, the lower court employed a “zone of reasonableness” standard to determine the copyright owner’s actual damages.  Applying this framework, the lower court determined that the “zone of reasonableness” for the value of a license on Mr. Gaylord’s copyright was between $1,500 and $5,000 based on evidence of prior postal services licenses.

The Federal Circuit rejected the lower court’s approach and adopted the same approach to damages under § 1498(b) that its predecessor court adopted for damages under § 1498(a), which waives sovereign immunity for patent infringement.  The Federal Circuit determined that the “reasonable and entire compensation” provided for (in both §§ 1498(a) and (b)), entitled a copyright holder compensatory damages only, not to non-compensatory damages.

In this case, the Court determined that the appropriate measure of compensatory damages under § 504 of the Copyright Law was the fair market value of a license covering the defendant’s use and that the proper value of this license should be calculated based on a hypothetical arms-length negotiation between the parties.  The lower court erred by restricting its focus to the Postal Services’ past payments and internal policies and was instructed on remand to consider all evidence relevant to a hypothetical negotiation, including Mr. Gaylord’s past royalties of between 8 percent and 10 percent.  The Federal Circuit also instructed that the lower court may conclude that different license fees are appropriate for the three categories of infringing goods identified in its prior opinion.

In addition, the Federal Circuit vacated and remanded the lower court’s denial of prejudgment interest, holding that sovereign immunity does not limit prejudgment interest under 28 U.S.C. § 1498(b).

© 2012 McDermott Will & Emery

What Does One Need to ‘Know’ to Commit a Federal Crime?

The National Law Review recently featured an article by Sarah Coffey of Ifrah Law regarding Federal Crimes:

On July 2, 2012, the U.S. Court of Appeals for the 11th Circuit tackled an interesting question of statutory interpretation that centered on the precise usage by Congress of the word “knowingly” in a federal criminal law that prohibits luring people under 18 years old into prostitution.

In United States v. Daniels, the appeals court was reviewing the conviction of Robert Daniels, a pimp who had induced a 14-year-old girl to become a prostitute. One of Daniels’ arguments was that he didn’t know the girl was under 18 and thus could not be convicted under the wording of the statute.

The statute provides that anyone who “knowingly persuades, induces, entices, or coerces any individual who has not attained the age of 18 years, to engage in prostitution or any sexual activity for which any person can be charged with a criminal offense” can be convicted of a federal crime. The question before the court was whether the adverb “knowingly” applies to the age of the person lured into prostitution, or only to the persuading, inducing, enticing or coercing. In other words, in order for someone to be guilty of the crime, does he have to know that the prostitute was under age?

The court ruled that in order to sustain a conviction, the prosecution does not have to prove that the perpetrator knew the prostitute was under 18.

The court reasoned that although in general, criminal law applies a presumption that a knowledge requirement “applies to every element in a statute,” it is also the case that laws “concerned with the protection of minors are within a special context, where that presumption is rebutted.” The goal, the court wrote, is to honor “the congressional goal of protecting minors victimized by sexual crimes.”

Delicate issues relating to the meaning of a statute are not limited to questions relating to prostitutes and pimps, of course. In statutes defining white-collar crimes such as fraud or illegal gaming, or setting forth the punishments for such crimes, there are often ambiguous terms or complicated sentence structures.

One thing that we can learn from the Daniels opinion in the 11th Circuit is that appeals courts don’t always follow strict rules of interpretation based on the placement of an adverb or of a comma. They often look at the broad purpose of the statute and the goals that Congress sought to achieve in passing it and creating the crime. It will be interesting to see how the Daniels opinion and similar cases will be applied in the white-collar context.

© 2012 Ifrah PLLC

Federal Authorities Obtain First-Ever Criminal Conviction Regarding Fraudulent Generation of Renewable Fuel Credits

An article by Susan M. Cooke and Bethany K. Hatef of McDermott Will & Emery regarding Renewal Fuel Credits appeared in The National Law Review:

 

 

On June 25, 2012, a federal jury in Maryland found the owner of a fraudulent clean energy production company guilty of wire fraud, money laundering and violations of the Clean Air Act (CAA). Rodney Hailey, the owner of Clean Green Fuels, LLC, was convicted of eight counts of wire fraud, 32 counts of money laundering and two counts of CAA violations in connection with his sale of fraudulent biodiesel renewable fuel credits. Mr. Hailey’s sentencing is scheduled for October 11, 2012. He faces imprisonment of up to 20 years for each wire fraud conviction; up to 10 years for each money laundering conviction; and up to two years for each CAA violation. While Mr. Hailey’s case marks the first criminal prosecution concerning the fraudulent generation of such renewable fuel credits, the Environmental Protection Agency (EPA) is currently investigating other cases where similar enforcement action may be taken.

As required by the Renewable Fuel Standard Program, EPA each year establishes the minimum volume of renewable fuel (Renewable Volume Obligation) to be produced or imported by refiners, importers, and most blenders of nonrenewable transportation fuel (obligated parties). Under EPA’s regulations which are set forth at 40 C.F.R. Part 80, Subparts K and M, a Renewable Identification Number (RIN) is assigned to each volume of renewable fuel that is produced, and the RIN is registered with EPA. After the associated fuel is obtained by an obligated party or blended into motor vehicle fuel, the RIN can be traded as a renewable fuel credit, either bilaterally or in private organized markets, and all transfers must be tracked on a system established by EPA and used to meet an obligated party’s Renewable Volume Obligation.

From March 2009 to December 2010, Clean Green Fuels, sold more than 32 million fraudulent RINs representing over 23 million gallons of renewable biodiesel fuel. In 2010, EPA received a complaint that Mr. Hailey’s company was selling fraudulent RINs. This sparked an investigation by EPA’s Air Enforcement Division in July 2010, and the U.S. Attorney’s Office for the District of Maryland filed charges against Mr. Hailey in October 2011 with respect to his fraudulent sale of RINs and his registration of Clean Green Fuels with EPA as a biodiesel producer when that company never produced any fuel.

In addition to its criminal prosecution of Mr. Hailey, EPA issued Notices of Violation to gasoline and diesel refiners, blenders, and importers that utilized Clean Green Fuels RINs to demonstrate compliance with their Renewable Fuel Obligations. EPA maintains that entities submitting false RINs for compliance purposes are subject to enforcement, regardless of whether they knew or had reason to know that the RINs were invalid. During April 2012, EPA settled with 28 of those parties, requiring them to replace the fraudulent RINs with valid RINs and to pay civil penalties.

© 2012 McDermott Will & Emery