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Executive Immunity and Impeachment: Any Precedent for President Trump’s Strategy?

With the fourth presidential impeachment hearings in our country’s history underway; the National Law Review thought it timely to look at some of the issues related to impeachment; specifically involving executive privilege and how the Trump administration’s invocation of executive privilege and how presidential immunity fits in historically with other impeachments in recent memory.

Sol Wisenberg, a Deputy Independent Counsel from the Starr Investigation, is a white-collar attorney who was written and spoken about the procedures surrounding impeachment and the constitutional law issues in play. He was generous with his time and spoke with the Lead Writer of the National Law Review, Eilene Spear, on executive privilege, recent litigation related to executive privilege, and the ever-present intersection of public opinion, constitutional law, and politics.  Below are excerpts of the conversation, featuring Mr. Wisenberg’s analysis and opinion on the proceedings at hand. This is the second article in this series, the first focusing on comparing and contrasting the Clinton impeachment with the impeachment investigation into President Trump.

ES:  Is it appropriate for Democrats to imply that if a witness in the impeachment investigation refuses to testify that they are trying to undermine the impeachment proceedings?

I mean, look, it’s their show, they are the majority in the House. Adam Schiff came out and said “if you do not appear, then we’ll infer that your testimony would have been favorable to our impeachment inquiry.” Those weren’t his exact words, but that was the essence. Is it appropriate? I would say that it depends on the circumstances. Charles M. Kupperman, President Trump’s former deputy national security adviser, was subpoenaed by House Democrats to testify, but the White House, prior to Mr. Kupperman’s House testimony, said that the President had invoked Presidential Immunity, leaving Mr. Kupperman uncertain about how to proceed.  Kupperman went to the federal district court and basically said: ‘Hey, I’ve got Congress issuing a subpoena and telling me I’m going to be in contempt if I don’t answer. But I also went to the White House Counsel and he’s sent me this letter here saying I’m absolutely forbidden to appear. I want to follow the law. Tell me what to do court.’ I believe he did exactly what you’re supposed to do in that situation. Kupperman’s lawsuit also raised questions about John Bolton’s possible future testimony, as Kupperman’s lawyer, Charles Cooper, also represents Bolton, President Trump’s former national security advisor.  According to CNN, while it remains to be seen if Kupperman or Bolton will ultimately end up testifying, their actions are widely viewed as intertwined, with one source telling CNN that the two men are “simpatico.”

As a purely legal proposition, Adam Schiff’s assertion about inferences to be drawn from refusing to testify or show up is preposterous in Kupperman’s case. The only time a trier of fact is allowed to make a negative inference from the invocation of a privilege is the Fifth Amendment privilege against self-incrimination, and even that is only in a civil proceeding. The Fifth Amendment gives a criminal defendant the right not to testify, and the judge and jurors are not permitted to take this refusal to testify into consideration when deciding whether he or she is guilty See Ohio v. Reiner 532 US 17 (2001).   The people who aren’t testifying or showing up at the House are not, so far, taking the Fifth. These are people saying, “I’ve got a constitutional argument or the President does, and that’s why I shouldn’t appear.” But keep in mind that impeachment is a political remedy. If a majority of the House wants to construe a refusal to appear or testify, even on Constitutional grounds, against the President, they are going to do it.

A Bit of Background:

Executive privilege has been asserted frequently by past presidents, though it’s not explicitly written into the Constitution.  George Mason University professor Mark Rozell explained in a 1999 law review article that executive privilege is “the right of the president and high-level executive branch officers to withhold information from Congress, the courts, and ultimately the public.” This power can be used in two circumstances, he continues: “(1) certain national security needs and (2) protecting the privacy of White House deliberations when it is in the public interest to do so.” It’s the second part that is especially valuable, as it allows presidential advisors to freely speak their minds without the threat of a subpoena. The problem is it’s not precisely clear who this privilege covers.

In United States v. Nixon, 418 U.S. 683 (1974), the Supreme Court addressed a subpoena duces tecum during the Nixon impeachment process to produce documents, including full copies of the Watergate tapes which contained meetings between President Nixon and others indicted in Watergate situation or had ties to the Nixon administration.  President Nixon did turn over edited transcripts of some of the conversations included in the subpoena. Before the Supreme Court, Nixon claimed he had an absolute executive privilege to protect communications between “high government officials and those who advise and assist them in carrying out their duties.” The Supreme Court held presidential privilege as to materials subpoenaed for use in a criminal trial did not override the needs of the judicial process on the grounds of a generalized interest in confidentiality.  The large difference is that the Nixon case involved the subpoena of documents, the Trump impeachment subpoenas addressed above involve subpoenas for live testimony only.

Also, in U.S. v. Nixon’s majority opinion, Chief Justice Burger stated, “[n]either the doctrine of separation of powers, nor the need for confidentiality of high-level communications, without more, can sustain an absolute, unqualified presidential privilege of immunity from judicial process under all circumstances.” The immunity claimed by both President Trump and other presidents comes from the position of the executive branch as a co-equal branch alongside the judiciary and legislative branches.

ES:  What do Executive Privilege and Absolute Presidential Immunity cover and do they  apply to people other than the president?

Executive privilege is invoked in the name of the president, but it can cover any executive officer. It is a privilege recognized by the Supreme Court. Presidential immunity purports to cover anyone who works in the White House, or the Executive Office of the president. The theory is that Congress can no more summon a White House employee to appear than it could summon the president.  One reason officials like Kupperman are seeking clarification is that executive privilege and presidential immunity in impeachment proceedings are not open and shut issues. Every president at least since Nixon has claimed immunity–for himself and his key White House aides–from even having to show up in the House or Senate to answer questions, claiming that White House employees are in the same position as the president and are immune from having to appear. This doctrine makes me shake my head a little, and, as noted, is far from settled law in the courts.

No court has ever accepted the absolute immunity argument, to my knowledge. Only one court has ruled directly on it, and that was in the George W. Bush administration. Committee on Judiciary v. Miers 575 F. Supp. 2d 201 (D.D.C. 2008) addressed a House Judiciary Committee’s subpoena to Harriet Miers, former Counsel to President Bush, seeking to compel her to produce documents and to appear and testify about the forced resignation of  U.S Attorneys, and that court ruled against the White House. In the Harriet Miers case, federal district judge John Bates stated “there is no judicial support whatsoever” that a president’s advisers have absolute immunity from testimony, and that such a view “would eviscerate Congress’ historical oversight function.” But the case was settled and has no precedential value, except in Bates’ court. I think the opinion is of some significance, however, because Bates was a Bush appointee and in general a strong supporter of executive privilege.

ES:  Is there any type of immunity from testimony that may apply if executive privilege isn’t applicable? 

There are other forms of privilege that might come up.  I suppose somebody could take the Fifth, you can take the Fifth right in front of the House committee. So that’s always available. There’s attorney-client privilege. To be precise; this idea that if you work at the White House–and are therefore in the same shoes as the president–you don’t even have to show up, that’s technically not executive privilege. That is a presidential immunity argument based upon the separation of powers.  For example, you could put that to a judge and the judge could throw it out, say there is no such thing, and the court rejects that doctrine. Then the individual could go over to Congress and get asked a question, and he could claim executive privilege and he would be completely within his rights.

The Obama administration took the identical position with David Simas, an employee in the Obama White House, that President Trump did in the case of Kupperman and former White House Counsel Don McGahn.  Simas was head of the Office of Political Strategy and Outreach and was subpoenaed in relation to Congressional oversight of Hatch Act compliance. White House Counsel W. Neil Eggleston asserted executive immunity, defying a subpoena from House Oversight and Government Reform Chairman Darrell Issa.  His letter referenced the Office of Legal Counsel’s opinion, saying: “The Executive Branch’s longstanding position, reaffirmed by numerous Administrations of both political parties, is that the President’s immediate advisers are absolutely immune from the congressional testimonial process.” There are examples in every administration, and each party wants to find examples where the other party did the same or a more extreme version of what they are trying to do because people forget and people are partisan.

ES:  That said, how do politics impact the perception of a President’s claim of executive privilege?

Once again, it depends on the circumstances. In the context of an impeachment inquiry with an unpopular President and an opposing party in charge of one or both branches, politics can affect absolutist doctrines fairly quickly. Look at Nixon again.  In April 1973, before the Senate Watergate Committee hearings began, he vowed that his aides would not testify. Nixon’s Attorney General, Dick Kleindienst, told Senator Ed Muskie,  “You do not have the power to compel me to come up here if the President directs me not to, and even if you would attempt to compel me, I would not come here.” If the Senate didn’t like it, Kleindienst smirked to Senator Sam Ervin, “you have a remedy, all kinds of remedies: cut off appropriations, impeach the President.” That was in April. By May 22, with public opinion starting to move against him, Nixon completely capitulated. Ervin called Nixon’s bluff, referring to his broad claims of Executive privilege as“executive poppycock.” Nixon didn’t have Trump’s political power. He had short coattails and both houses of Congress were in Democratic hands. Trump is stronger with his House and Senatorial base, and his party in control of the Senate, so he can pull off that attitude for now. But again, attitudes and public opinion can change quickly, and we’ve already seen the needle move a little bit in terms of public opinion in the last week alone.

You also have the issue of aides, former aides, and Executive Branch officials who simply ignore Presidential directives not to appear or testify. This happened to Nixon, as people like John Dean and Jeb Magruder finally started telling the truth to DOJ Prosecutor Earl Silbert, and ultimately to Ervin’s Watergate Committee. It is happening to Trump now with some State Department and DOD officials–and at least one mid-level OMB employee–talking to the House. I believe this is how Madison and some of the other Framers expected things to play out. It is checks and balances at work. It is one thing to have a nice little formalistic theory of executive privilege or presidential immunity. It is quite another to try to enforce it in the real rough-and-tumble world of politics.

Many thanks again to Mr. Wisenberg for his time, insights and perspective.

Copyright ©2019 National Law Forum, LLC

Third Thursdays with Ruthie: The Intersection of Religion and Labor Law [PODCAST]

In this episode of the Third Thursdays podcast, Ruthie Goodboe examines how religious discrimination and accommodation intersect with traditional labor law. She will cover religious accommodation under Title VII of the Civil Rights Act of 1964, best practices for handling requests for religious accommodation when an employee is governed by a collective bargaining agreement, and how Section 7 of the National Labor Relations Act comes into play with religious accommodation.

© 2019, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

For more labor law developments see the Labor & Employment law page on the National Law Review.

Appellate Court Tells CitiMortgage It Can’t Force “Repurchase” Of What No Longer Exists

A recent decision by the United States Court of Appeals for the Eighth Circuit offers some vindication for mortgage companies still facing “repurchase” demands made by the banks to which they sold residential mortgages in the years leading up to the financial crisis that began in 2007 and accelerated in 2008.  In CitiMortgage, Inc. v. Equity Bank, N.A., No. 18-1312 (8th Cir. 2019), the Eighth Circuit (which has appellate jurisdiction over the federal district courts of Arkansas, Iowa, Minnesota, Missouri, Nebraska, and the Dakotas) reached the common-sense conclusion that a plaintiff cannot require a defendant loan originator/seller to “repurchase” a loan extinguished by foreclosure.  In such a circumstance, the court reasoned, there simply is nothing left to repurchase.  In so holding, the Eighth Circuit affirmed the judgment of the United States District Court for the Eastern District of Missouri  — a court that, despite being CitiMortgage’s consistently chosen forum for repurchase and contractual indemnification claims against loan sellers, had granted summary judgment to the defendant, Equity Bank, on this issue.

The relevant factual background is as follows. CitiMortgage filed suit against Equity, demanding that Equity repurchase 12 residential mortgage loans. CitiMortgage had notified Equity that it needed to take action under the cure-or-purchase provision in the parties’ Agreement.  The Eighth Circuit affirmed the district court’s holding that Equity’s duty to repurchase was limited to the six loans that had not gone through foreclosure. For the loans that had not gone through foreclosure, the court affirmed the district court’s holding that Equity breached the Agreement. The court rejected Equity’s claims that CitiMortgage’s letters lacked the necessary detail to trigger its duty to perform, and that CitiMortgage waited too long to exercise its rights. But, as to the six loans that had gone through foreclosure, the court affirmed the district court’s holding that Equity owed nothing to CitiMortgage.

As part of its analysis detailing the reasons that Equity could not be required to repurchase loans already foreclosed upon, the Eighth Circuit faulted CitiMortgage for never explaining what, exactly, Equity was supposed to repurchase. We have regularly made that argument when defending clients against repurchase claims and likewise, have never gotten a satisfactory response as to what our client could repurchase.   Typically, in tacit acknowledgment of the merit of that argument, plaintiffs make sure to do something that the appellate court intimated CitiMortgage should have done in this case.  That is to seek instead what is usually an alternative contractual remedy, indemnification.   Perhaps because it considered the repurchase provision in its contract with Equity more likely to generate a significant damages award (this contract’s repurchase provision established a “repurchase price formula” favorable to CitiMortgage), CitiMortgage opted in this case to seek only the remedy of “repurchase.”

To be sure, a plaintiff’s decision to seek an “indemnification” remedy also creates obstacles to recovery in most cases of this type.  Among those obstacles are many of the same statute of limitations problems that parties asking for repurchase face, as well as substantial questions about the circumstances under which the party seeking indemnification incurred the liability for which it is seeking payment.  Relatedly, whether a particular alleged loan defect can fairly be said to have caused the plaintiff’s monetary loss is typically very much in question when a plaintiff aggregator seeks indemnification from a defendant loan seller. Many battles over such issues remain to be fought, but, in the meantime, the Eighth Circuit’s recognition that a party cannot repurchase what no longer exists is a welcome development for residential mortgage loan originators.

© 2019 Bilzin Sumberg Baena Price & Axelrod LLP

CMS Issues Final Regulations For Hospital Price Transparency

On November 15, 2019, the U.S. Department of Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS) announced final regulations implementing greater price transparency requirements for hospitals. Issued on the heels of a Trump Administration Executive Order directing HHS to propose regulations on increased price transparency, the new regulations modify and finalize CMS’ earlier guidance implementing section 2718(e) of the Public Health Service Act, to further expand price transparency requirements for hospitals. (See our previous analysis of the Executive Order here.) Effective January 1, 2021, the new regulations will be located at 45 C.F.R. 180.00 et. seq. and will require hospitals to make accessible specific “standard charge” pricing data for all “items and services” provided. Furthermore, the regulations include special requirements for posting pricing information about “shoppable services.” Key details are summarized below:

Important Definitions (45 CFR 180.20)

  • Hospital. The regulations apply to any institution licensed as a hospital under applicable state law.
  • Items and Services. The regulations require pricing data on all items and services “including individual items and services and service packages, that could be provided by a hospital to a patient in connection with an inpatient admission or an outpatient department visit for which the hospital has established a standard charge.”
  • Shoppable Service. The regulations define a shoppable service as a service that a consumer can schedule in advance.
  • Standard Charge. Hospitals must post the following five standard charges:
    1. Gross charge – The price on the hospital’s chargemaster with no discounts.
    2. Payer-specific negotiated charge – The charge negotiated with a third-party payer.
    3. De-identified minimum negotiated charge – The lowest charge the hospital has negotiated with all third-party payers for an item or service.
    4. De-identified maximum negotiated charge – The highest charge the hospital has negotiated with all third-party payers for an item or service.
    5. Discounted cash price – The charge for an individual who pays cash for an item or service.

Substantive Requirements (45 CFR 180.40-180.60)

All hospitals must now make public two items related to pricing; (a) a machine-readable file containing a list of all standard charges for all items and services, and (b) a consumer-friendly list of standard charges for a limited set of shoppable services. Each of these components are described in more detail below.

  • All Items and Services. Each hospital must establish a list of standard charges for all items and services they provide. This list must include a description of each item or service, the five standard charges (applicable to both inpatient and outpatient services), and any common identifier billing or accounting code used by the hospital. This information must be published on a publicly accessible website in a single searchable digital file without any barriers to access. The posting requirement will apply to each hospital location operating under the same license if the location has different standard charges.
  • Shoppable Services. Each hospital must establish a list of standard charges for 300 shoppable services. This list must include any of the 70 CMS-specified shoppable services the hospital provides and as many additional shoppable services determined by the hospital as needed to reach the 300-service threshold (unless the hospital does not provide 300, then all must be published). The list must include a plain language description of the service, indicators of CMS shoppable services that are not offered, the standard charges – except for the gross charge – for all shoppable services (the gross charge only needs to be posted if the hospital does not offer a discounted cash price), the locations where the shoppable service is provided and any location-specific pricing, and any common identifier billing or accounting code used by the hospital. The hospital may choose the format of publication, but it must be on the internet, accessible without barriers, and prominently located. Compliance with this requirement can occur if a hospital maintains an internet-based price estimator tool for the relevant services.

Enforcement (45 CFR 180.70-180.90)

CMS will monitor compliance by fielding complaints about hospitals, reviewing individuals’ or entities’ analysis of noncompliance, and auditing hospital websites. If noncompliance is detected, CMS will have the authority to issue warning letters, request a corrective action plan, and potentially impose civil monetary penalties up to a maximum of $300 per day.

The regulations go into effect January 1, 2021, giving hospitals a little more than a year to develop a plan for compliance.

Copyright © 2019 Robinson & Cole LLP. All rights reserved.

More on CMS & HHS regulations on the National Law Review Health Law & Managed Care page.

Legal Industry Trends for November 2019: Law Firm News, Diversity Awards and Legal Technology Updates

As we march on to the end of 2019 and into the holiday season, the legal industry continues to buzz with constant development and innovation.  Read on to learn about a few of the highlights happening in law firms across the United States, legal technology developments that are changing the way law is practiced, and things to anticipate in 2020.

Law Firm Developments, Hires and Moves

Buchalter recently announced the formation of a new Cannabis & Hemp Industry Law Group  This, in many ways, is formalizing a group that has been operating for several years. In 2013, it all began when a client of the firm was tasked with operating a medical cannabis collective.  Since then, the group has expanded to over 100 clients in the industry utilizing over twenty-five lawyers across each of its practice groups, demonstrating the broad reach of the cannabis industry.  Building on those early experiences, Buchalter’s Cannabis & Hemp Industry law group will assist businesses in the industry across a variety of areas, including intellectual property, tax, real estate and financing.  Oren Bitan, Shareholder in the LA office will co-chair the group with Martin P. Florman, Managing Shareholder of the Orange County office.  Florman says, “We anticipate significant growth of this industry over the next decade while we continue to offer clients unparalleled expertise in distressed assets, banking and the Bank Secrecy Act, and real estate related concerns in this rapidly evolving industry.”

Davis Graham & Stubbs LLP, in Denver, Colorado announced the addition of four associates Omeed M. Azmoudeh (Trial Department); Stephanie Block-Guedez (Finance & Acquisitions Department); Molly Kokesh (Trial Department); and Rob McCary (Finance & Acquisitions Department).  These additions will bolster the firm’s litigation and finance and acquisitions department, and two of the associates, Azmoudeh and McCary, were formerly summer associates at the firm.

Jeff Cody Norton Rose Fulbright
Jeff Cody of Norton Rose Fulbright

Norton Rose & Fulbright recently announced the election of Jeff Cody as its U.S. Managing Partner, effective Jan. 1, 2020.  Cody will also serve as Chair of the U.S. Management Committee.  The outgoing managing partner, Daryl Lansdale, says: “Jeff has a passion for our firm, its people and our clients. Our partnership has the utmost confidence in Jeff to provide leadership and vision during a time of change and innovation in the legal profession.”

Cody has been a partner with the firm since 2001, and is based in Norton Rose’s Dallas office.  He has significant experience in complex commercial disputes in healthcare, financial and information technology industries; specifically healthcare reimbursement matters, complex stock and asset purchase and sale agreements, and information systems development projects.  Cody: “I am proud and honored to be entrusted by my partners with this leadership responsibility. I am confident in the firm and optimistic about our future in this dynamic legal landscape. With leading lawyers across the U.S. and around the world, we stand committed to delivering a superior client experience with high-quality and high-value legal advice.”

Manatt, Phelps & Phillips, LLP announced that digital health regulatory advisor Yarmela Pavlovic will join the firm as a partner in its Health and Digital and Technology Groups. Yarmela has extensive experience working with digital health, software as a medical device and assisting life sciences companies as they navigate the FDA approval process. Lisa Suennen, who leads Manatt’s Digital and Technology practice, says: “Healthcare products and services companies at the intersection of technology and health are facing increasingly complex and rapidly changing regulatory processes, requiring expert counsel to plan and engage with the regulatory bodies that make it possible for high-quality health innovations to come to market. Yarmela’s experience will be a tremendous value-add to our already significant capabilities in the digital realm.”  Pavlovic, who describes her work as  “a mix of legal and consulting” is excited to join Manatt, and says: “Manatt is the ideal next step in the growth of my practice and will help me provide an even wider array of capabilities to both startups and large companies that engage with the FDA.”

Calfee, Halter & Griswold LLP recently announced the hiring of Phillip A. Casey to co-chair Calfee’s Public Utility Regulatory practice group.  Casey has more than 25 years of experience in energy law focusing on public utilities, both in house and within a law firm.  His experience includes economic regulatory matters, corporate governance, new entrant certification, and regulatory strategies across jurisdictions.  Additionally, he has incident response experience and major litigation management in this field.  Casey calls Calfee’s energy practice “an incredibly talented group of experienced attorneys” and he says, “I look forward to demonstrating Calfee’s capabilities and leadership beyond Ohio and throughout the Midwest in this new role.”

Law Firm Awards, Recognition and Achievements

Benchmark Litigation, designed to feed the need for specialized study in the labor and employment practice area, provides rankings based on law firm questionnaires, peer review interviews and client reviews.  The publication recently announced its second annual Labor and Employment guide and included three attorneys from Ward & Smith as “Labor and Employment” Stars: Ken Gray, Will Oden, and Devon Williams.  Oden and Williams lead the firm’s Workplace Safety and Health Practice and the firm’s Labor and Employment practice, respectively.  Gray focuses his practice on employment-related litigation, advising clients from start-ups to Fortune 500 companies on breach of employment contracts, employment discrimination and wrongful discharge matters.

Ballard Spahr was recently named the “Law Firm of the Year” recognition for Litigation – First Amendment in 2020 Best Law Firms by U.S. News & World Report. This was on top of the 25 National Tier 1 rankings the firm achieved across a variety of areas, and especially noteworthy as only one law firm per legal practice earns that designation.  Firm Chair Mark Stewart sees the award rankings as evidence of the success of the firm’s efforts to grow nationally in depth and experience.  Stewart: “By executing our plan to expand thoughtfully and strategically, and keeping our focus on legal excellence and client value, we are serving more clients better than ever before.”

Jeff White Robinson Cole
Jeff White of Robinson Cole

Jeff White of Robinson Cole was recently named a  “New England Trailblazer” in the inaugural list by Law.com and Connecticut Law Tribune for demonstrating an ability to “move the needle in the legal industry.”  White, the chair of Robinson Cole’s Manufacturing Industry Practice, has significant experience on national and international issues related to the manufacturing industry, and this recognition is further evidence of his understanding of the challenges and need for change in some areas facing the industry. White: “With technological advances driving the boom in manufacturing, we need to continue to innovate in the kinds of things we’re focusing on. Our job as lawyers is to stay on top of these developments, because they’re going to have major implications that manufacturers deal with going forward.”

Under White’s leadership of Robinson Cole’s Manufacturing practice group, the group has risen to prominence as a leader in the field.  One of his signature achievements was the creation of the  Manufacturing Law Blog, which focuses on issues related to manufacturing rather than casting a wider, more business in general, net. In further recognition of his leadership in the manufacturing industry, in May of 2019 Robinson+Cole was recognized with the President’s “E” Award for Export Service by the United States Secretary of Commerce. The “E” award, established by President John F. Kennedy in 1961 is the highest recognition any U.S. entity can receive for making a significant contribution to the expansion of U.S. exports. Robinson+Cole was the only law firm in the country to receive the honor in 2019.

Law Firm Diversity Recognition

The law firm of Bryan Cave Leighton Paisner was recognized for its long-standing commitment to diversity by the Leadership Council on Legal Diversity, or LCLD.  The organization named the firm a 2019 Top Performer and a 2019 Compass Award winner, one of only 21 member organizations that earned both designations this year. The awards indicate a participation in the organization’s programs, such as the Fellows and Pathfinder programs, as well as at least one pipeline program (Mentoring or 1L Scholars).

Bryan Cave is a long-standing member of LCLD, having been a member since the organization began.  BCLP participates in the organization’s Fellows and Pathfinder programs, as well as the 1L LCLD Scholars Program and the LCLD Success in Law School Mentoring Program. The recognition came recently at LCLD’s Annual Meeting in Washington, D.C.

In more good news about legal industry diversity,  the Diversity and Flexibility Alliance recognized fifty-one law firms for having a partner class in 2019 comprised of 50% or more female partners.  These firms “tipped the scales” and were identified in the New Partner Report.  The Report, a compilation of publicly available information and reported sources, revealed that 41.3 percent of new partners in 138 major U.S. law firms in 2019 were women, an increase of just over 2% from 2018.  As well as the annual increase, the New Partner Report showed that women promoted to partnership is on an upswing overall, with an 8.1% increase since 2012, and more firms across the board are promoting partner classes that are more than 50% women, showing a trend towards “tipping the scales.”  Click here for a full list of firms that were recognized for their 2019 Partner Class.

Law Firm Accomplishments and Deals

Sherin and Lodgen’s Renewable Energy Team represented Cambridge Savings Bank in developing a portfolio construction bridge and term loan for three ground-mounted solar facilities in Massachusetts.  The project, built by Kearsarge Energy, will generate 8.8 MW of energy and features a 1.6 MW advanced technology battery storage component and will be one of the first to be implemented under the SMART program.  The battery storage component is especially exciting, as industry analysts think this type of storage has the power to transform the renewable energy development and distribution in the near future.  Sherin and Lodgen’s renewable team was led by Bethany A. Bartlett, renewable energy chair, and  Colleen V. Collins, of counsel, and Tyler N. Ballew, and included syndicate partners Eastern Bank and Middlesex Savings Bank.

Global law firm DLA Piper represented  SunTrust Robinson Humphrey and SunTrust Bank in closing of U.S. $60 million credit facility for Electric Entertainment.  Electric Entertainment is a LA based production company founded by Dean Devlin.  Devlin is a well-known producer, whose credits include films such as Stargate and Independence Day, and television series like The Librarian and Leverage.  The credit facility will finance upcoming projects on WGN and the CW, and develop other film and television projects. The DLA Piper team representing SunTrust Robinson Humphrey and SunTrust Bank was led by partner Tom Ara, co-chair of the firm’s Entertainment Transactions and Finance practices, and included partner Afshin Beyzaee and associates Greg Young, Payvand Coyle and Rahul Sajnani (all of Los Angeles).

Looking at Pro-Bono work, during National Pro Bono Week in the United Kingdom, and Hogan Lovells ranked number one in Legal Week’s survey for the firm’s pro bono efforts in the UK.  The firm did a total of 27,704 pro bono hours in the UK for 2018, and the publication also recognized the firm’s contribution to a variety of projects, including the Westminster and London Bridge inquests.  Yasmin Waljee, International Pro Bono Director of Hogan Lovells called the recognition “fantastic.”  She said: ” It is not the hours of pro bono that matter but the remarkable impact of the work undertaken by all the firms listed and those that were not.”

Legal Industry Trends, Research and Upcoming Events

Legal Technology company InCloudCounsel announced two new software automation enhancements powered by proprietary research in AI and machine learning.  The developments are an Automated initial contract review; that automatically scans and flags clauses that conflict with negotiation requirements, helping to ease the negotiation stage and expedite the review process.  The next piece comes into play when negotiation is finished–an AI-powered scorecard creates an abstract summary of key terms in the agreement, scanning the final agreement identifying the key terms in the common clauses.  These tools were developed with InCloudCounsel’s proprietary technology, and assist attorneys in working more efficiently and accurately, maximizing their efforts to deliver legal services to their clients.

Hadayat Seddiqi, led the innovation process in his role as director of machine learning at InCloudCounsel.  Hadayat’s resume includes work on space exploration robots at NASA, quantum computing at the Department of Energy and DNA sequencing software with a biotech startup. He says,  “Our artificial intelligence models bring valuable tools to a field that historically has been very difficult to build similar solutions for.  Our models are understanding increasingly complex abstract language and concepts – allowing our proprietary AI to automate a growing number of narrow tasks.”

The Legal Marketing Association released its agenda for the organization’s annual meeting in Denver, Colorado on March 25 -March 27, 2020.  The committee putting the conference together, led by Kristen Bateman Leis of Parker Poe and Jonathan Mattson of BakerHostetler LLP, have put together an agenda focused around the organization’s body of knowledge, with an emphasis on wellness and mental health.  The keynote speaker, Baratunde Thurston, a comedian, writer and cultural critic whose resume includes work with the satirical Onion, advisor to the Obama White House and work on The Daily Show with Trevor Noah.

Future Marketing Insights recently released a new intelligence report, projecting that legal transcription investments will increase, and those investments will focus on automation of legal transcription services.  The demand for legal transcription solutions is global, and accounts for revenues worth 3 billion, indicated by the FMI insights report.  This is anticipated to grow at a Compound annual growth rate of  ~6% for the next ten years.  The report indicated a heavy investment in legal tech startups in Asia Pacific, driving innovation.  Additionally, new and improved Automation and Machine Learning technologies, coupled with Natural Language Processing are expected to fuel growth. Challenges include diverse pricing models and legal formats, and customers are demanding predictability and pricing consistency.  The market is fragmented and major players are still jockeying for regional dominance–and focusing on innovation, to make the most of the technologies available.

That’s what we’ve got for now.  Stay warm and enjoy the upcoming Holiday Season!

Copyright ©2019 National Law Forum, LLC

For more recent law firm news see the National Law Review Law Office Management page.

California Board Gender Quota Law Challenged In Federal Court

Cydney Posner at Cooley LLP wrote last week about a new challenge to California’s Board Gender Quota law.  The lawsuit, Creighton Meland v. Alex Padilla, Secretary of State of California, was reportedly filed in federal district court in California by a shareholder of OSI Systems, Inc.  According to OSI’s most recently filed Form 10-Q, the company is incorporated in Delaware, its principal executive offices are in California, and its shares are traded on The Nasdaq Global Select Market.  The lawsuit alleges violation of the equal protection clause of the Fourteenth Amendment and seeks declaratory and injunctive relief.

As this case progresses, one question might be whether the plaintiff’s claim is direct or derivative.  OSI is not named as a party to the lawsuit and the plaintiff alleges that the law injures his “right to vote for the candidate of his choice, free from the threat that the corporation will be fined if he votes without regard to sex”.  The Delaware Supreme Court’s test for whether a stockholder’s action for breach of fiduciary duty is derivative or direct asks two questions:

“Who suffered the alleged harm–the corporation or the suing stockholder individually–and who would receive the benefit of the recovery or other remedy?”

Tooley v. Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031 (Del. 2004).  Although the corporation will be fined and the fine suffered by all of the stockholders, the plaintiff is alleging that he is being injured by being denied the freedom to vote without regard to sex.  Presumably, that injury would be removed if the law is enjoined.

Interestingly, OSI does not appear in the California Secretary of State’s listing of SB 826 corporations published earlier this year.  According to the proxy statement filed by OSI last month, all of the current directors are men, but a female has been nominated for election at the upcoming meeting.

© 2010-2019 Allen Matkins Leck Gamble Mallory & Natsis LLP

More on Corporate Board diversity rules on the Corporate & Business Organizations law page of the National Law Review

USCIS Announces More Fees and Fee Increases

Nearly 96% of the USCIS budget derives from fees. In our coverage of Congress, appropriations, continuing resolutions, and government shutdowns, we are reminded that USCIS is a fee-driven agency, as it does not depend on appropriations for its operations and, for example, remains open during government shutdowns over appropriations. We wrote last week about a $10.00 fee for H-1B Registration.

On Nov. 8, USCIS published a notice of proposed rulemaking for an adjustment of fees to meet operational needs. Among the diversity and breadth of fees addressed in the Examinations Fee Accounts 300+ page posting, a few proposed fees have received a lot of public attention:

  • DACA renewal fee from $495 to $765;

  • $50 dollar asylum application fee; and

  • Citizenship application fee from $640 to $1170.00, among others.

As we enter public discourse on the current Continuing Resolution and related Congressional discussions, we remind readers that in all likelihood USCIS will be fee-funded and open for business!

©2019 Greenberg Traurig, LLP. All rights reserved.

For more USCIS news, see the National Law Review Immigration Law page.

Reinsurance and the Death Master File

In a traditional life insurance and reinsurance relationship, a life insurance company issues a policy to a policyholder and reinsures the policy (usually via a block of business consisting of the same or similar policies) with its reinsurer either by coinsurance or on a yearly renewable term basis (or otherwise).  When the insured person dies, a death certificate is presented to the policy issuing company and the policy benefits are paid to the beneficiary.  That triggers an indemnity claim under the reinsurance contract and the reinsurer is obligated to pay its share of the policy benefits to the ceding company. Simple.

But what happens if the insured person dies, but no one files a death certificate and makes a claim against the policy?  Who gets the policy benefits?  Does the insurer get to avoid paying any benefits out on the policy or does the state have an interest in this abandoned property?  This has been a huge issue over the past several years, with regulators entering into settlements with life insurance companies about searching the Social Security Administration’s Death Master File or using some other method to determine death.  Of course, all these abandoned life insurance benefits escheat to the state when no one claims the benefits, which is why state regulators were so keen to press this issue.

In a recent case, a New York federal court had to address these issues in a petition to confirm a reinsurance arbitration award.

In Park Avenue Life Ins. Co. v. Allianz Life Ins. Co. of N.A., No. 19-cv-1089 (JMF) (S.D.N.Y. Sep. 25, 2019), the dispute was over a life reinsurer’s obligations to pay for costs and claims arising out of an agreement with regulators to pay death benefits that would be escheated to the government after a Death Master File search indicated that the insured person died.  By majority, the arbitration panel mostly found for the reinsurer (the award, which is now public on PACER, found that the reinsurer was not responsible under the coinsurance agreement for the costs and expenses associated with the Death Master File searches or regulatory dispute).  In a paragraph addressing the reinsurer’s continuing obligations, the majority made the following pronouncement:

[The reinsurer] shall continue to be obligated to indemnify [the cedent] for all death benefits paid under the terms of the [policies] covered by the Coinsurance Agreement.  Notice of any deaths can arise pursuant to claims made by Policy owners or beneficiaries, or by way of periodic searches of the Death Master File or any other death data base search tool by [either party].

The reinsurer argued that the award required reimbursement of only those death benefit payments that arise from claims made by beneficiaries.  The cedent argued that the award continued to require the reinsurer to reimburse payments that arise from claims made either by designated beneficiaries or by escheatment. Both asked the court to confirm the award based on each side’s different interpretation.

The court found that the award was susceptible of two meanings and was unable to say that one or the other of the two interpretations presented was definitively correct.  The court remanded the matter back to the arbitration panel to clarify certain questions addressing escheatment claims, but suggested that the panel should “broadly aim to underscore the meaning and effect of the award so that the court will know exactly what it is being asked to enforce.”

Notably, and consistent with the recent trend in many courts, the court denied the parties’ request to keep the arbitration award and related materials under seal.

© Copyright 2019 Squire Patton Boggs (US) LLP

For more on the topic, see the Insurance, Reinsurance & Surety law page on the National Law Review.

“OK, Boomer!”: Not Okay In the Office

As recently highlighted by the New York Times, a new phrase emblematic of the real or perceived “War Between the Generations” has gone viral: “OK, Boomer!”  The phrase, popularized on the Internet and, in particular, Twitter by Generation Z and Millennials, has been used to dismiss baby boomers’ thoughts and opinions, sometimes viewed by younger generations as paternalistic or just out of step.

And, the phrase isn’t just living in Twitter feeds and the comments sections of opinion pieces.  There is “OK, Boomer!” merchandise and, just last week, a 25 year-old member of the New Zealand Parliament used the phrase to dismiss a fellow lawmaker’s perceived heckling during a debate about climate change.

While many may find “OK, Boomer!” a harmless way to point out generational differences, the phrase’s popularity could lead to problems once it creeps into the workplace.  Age (over 40) is a protected category under both California law (i.e., the Fair Employment and Housing Act) and federal law (i.e., the Age Discrimination in Employment Act).  Whether the speaker is well-intentioned or not, dismissive attitudes about older workers could form the basis of claims for discrimination and/or harassment.  And, as one radio host recently opined, the phrase “OK, Boomer!” may be regarded by some as an outright slur.

Generation Z and Millennial employees understand that using derogatory or dismissive comments related to gender, race, religion, national origin, disability and sexual orientation are inappropriate.  Yet, for some reason, some may not have made the leap with regard to insidious/disparaging comments about a co-worker’s age.  Given the prevalence of age discrimination lawsuits, employers should take heed and consider reminding their workforce about the impropriety of this and other age-related phrases, and train their employees to leave the generation wars at the door.

© 2019 Proskauer Rose LLP.

For more on employment discrimination see the National Law Review Labor & Employment law page.

AI and Evidence: Let’s Start to Worry

When researchers at University of Washington pulled together a clip of a faked speech by President Obama using video segments of the President’s earlier speeches run through artificial intelligence, we watched with a queasy feeling. The combination wasn’t perfect – we could still see some seams and stitches showing – but it was good enough to paint a vision of the future. Soon we would not be able to trust our own eyes and ears.

Now the researchers at University of Washington (who clearly seem intent on ruining our society) have developed the next level of AI visual wizardry – fake people good enough to fool real people. As reported recently in Wired Magazine, the professors embarked on a Turing beauty contest, generating thousands of virtual faces that look like they are alive today, but aren’t.

Using some of the same tech that makes deepfake videos, the Husky professors ran a game for their research subjects called Which Face is Real? In it, subjects were shown a real face and a faked face and asked to choose which was real. “On average, players could identify the reals nearly 60 percent of the time on their first try. The bad news: Even with practice, their performance peaked at around 75 percent accuracy.” Wired observes that the tech will only get better at fooling people “and so will chatbot software that can put false words into fake mouths.”

We should be concerned. As with all digital technologies (and maybe most tech of all types if you look at it a certain way) the first industrial applications we have seen occur in the sex industry. The sex industry has lax rules (if they exist at all) and the basest instincts of humanity find enough participants to make a new tech financially viable. Reported by the BBC, “96% of these videos are of female celebrities having their likenesses swapped into sexually explicit videos – without their knowledge or consent.”

Of course, given the level of mendacity that populism drags in its fetid wake, we should expect to see examples of deepfakes offered on television news soon as additional support of the “alternate facts” ginned up by politicians, or generated to smear an otherwise blameless accuser of (faked) horrible behavior.  It is hard to believe that certain corners of the press would be able to resist showing the AI created video.

But, as lawyers, we have an equally valid concern about how this phenomenon plays in court. Clearly, we have rules to authenticate evidence.  New Evidence Rule 902(13) allows authentication of records “generated by an electronic process or system that produces an accurate result” if “shown by the certification of a qualified person” in a particular way. But with the testimony of someone who was wrong, fooled or simply lying about the provenance of an AI generated video, the false digital file can be easily introduced as evidence.

Some Courts under the silent witness theory have allowed a video to speak for itself. Either way, courts will need to tighten up authentication rules in the coming days of cheap and easy deepfakes being present everywhere. As every litigator knows, no matter what a judge tells a jury, once a video is seen and heard, its effects can dominate a juror’s mind.

I imagine that a new field of video veracity expertise will arise, as one side tries to prove its opponent’s evidence was a deepfake, and the opponent works to establish its evidence as “straight video.” One of the problems in this space is not just that deepfakes will slip their way into court, damning the innocent and exonerating the guilty, but that the simple existence of deepfakes allows unscrupulous (or zealously protective) lawyers to cast doubt on real, honest, naturally created video. A significant part of that new field of video veracity experts will be employed to cast shade on real evidence – “We know that deepfakes are easy to make and this is clearly one of them.” While real direct video that goes to the heart of a matter is often conclusive in establishing a crime, it can be successfully challenged, even when its message is true.  Ask John DeLorean.

So I now place a call to the legal technology community.  As the software to make deepfakes continues to improve, please help us develop parallel technology to be able to identify them. Lawyers and litigants need to be able to clearly authenticate genuine video evidence to clearly strike deepfaked video as such.  I am certain that somewhere in Langley, Fort Meade, Tel Aviv, Moscow and/or Shanghai both of these technologies are already mastered and being used, but we in the non-intelligence world may not know about them for a decade. We need some civilian/commercial help in wrangling the truth out of this increasingly complex and frightening technology.

Copyright © 2019 Womble Bond Dickinson (US) LLP All Rights Reserved.

For more artificial intelligence, see the National Law Review Communications, Media & Internet law page.