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Employer Concerns with Employee Substance Abuse and Drug Use: A Q&A with Caroline J. Berdzik of Goldberg Segalla

With headlines and staggering statistics extolling the impact of the opioid epidemic ripping through the United States, and marijuana (medical and recreational) legalized and decriminalized and a patchwork of state, federal and municipal laws across the country; employers dealing with employee substance abuse and drug use issues have a lot of things to consider. Caroline J. Berdzik, a partner with Goldberg Segalla and chair of the firm’s Labor and Employment and Health Care Groups,  focuses on counseling employers on human resources and employment matters, and was kind enough to share her thoughts on the thorny issues of employers navigating employee substance abuse and drug use.  Read on for more insight and ideas on  how employers should proceed when an employee demonstrates some indication of substance abuse, what the concerns are for employers, and some thoughts on how to move forward keeping in mind changing attitudes on addiction and the laws that may apply.

Can you outline some of the dangers employers face when employing an individual who is struggling with addiction?

Unfortunately, substance abuse addiction and its ramifications cannot avoid the workplace. There is an acknowledgment that this is not an issue that has social or economic boundaries, anyone from highly compensated executives to hourly employees may struggle with addiction. Addiction can take many forms including alcohol abuse, opioid dependency, or the use of other illegal or legally prescribed substances. Employers need to be concerned about legal issues when dealing with an employee who is struggling with addiction. It may be difficult to confirm that an employee has an addiction as they may try to hide it and depending on the circumstances, there may be limits of how far an employer can pry into these concerns.

Once the problem is confirmed, some consideration needs to be given as to whether the employee can continue to do their job while working through addiction. If they are unable to perform their job responsibilities, there are options or reasonable accommodations available to the employee or employer (i.e., leave of absence for treatment). Other components to consider include the availability of drug and alcohol testing permitted under the law in their specific jurisdiction; whether the employee’s conduct has violated any company policies; and if the behaviors associated with the employee’s addiction is negatively impacting the quality of their work and interactions with co-workers, supervisors, clients, and others outside the workplace.

What are some of the issues employers must consider when discussing an employee’s addiction problems with an employee? What are the concerns, especially since addiction can be difficult to identify? 

Employers need to be very careful in this regard. Generally, potential addiction is brought to an employer’s attention through observation or by reports from other employees, supervisors, clients, or even customers. If alcohol is the issue, it may be difficult to detect when someone is under the influence, particularly if the consumption is during non-working hours and if the employee is merely coming to work hungover―as opposed to being intoxicated on the job. If the suspected addiction involves drugs (e.g., whether legal or illegal), there are states that don’t allow for reasonable suspicion testing and some states that make it virtually impossible to test at all. Additionally―depending on the nature of the drug―it may also not show up in the drug test depending on when the test is done.

Many times, this is a difficult conversation to have with an employee since they will most likely deny having any issue because they don’t want to jeopardize their income or employment prospects. Employers need to be careful not to potentially run afoul of the Americans with Disabilities Act (ADA) and other state anti-discrimination laws when discussing a suspected substance abuse problem. Merely perceiving the employee as having a disability can open the employer up to legal risk. Therefore, it is critical to proceed with caution and consult internally or externally with legal counsel and human resources on how to best handle the situation.

How does the legality of the substance the employee is addicted to impact the employer’s actions?  For example, an employee addicted to legal opioid painkillers vs. an employee who is addicted to cocaine or other illegal substances?

The laws are greatly evolving in this area, particularly with respect to cannabis. More and more states have legalized medical marijuana and recreational marijuana. With respect to alcohol, it’s legal to drink alcohol as long as the individual is of age; however, alcohol abuse can cause just as many problems as an employee struggling with a substance abuse problem.

While it may seem easier to take certain actions when managing employees with addictions to other substances (e.g., opioids and cocaine), there are still considerations that come into play. For example, employers in some states cannot take actions against employees based on what activities that they do during off-duty hours.

Irrespective of the legality of the substance, the employer needs to focus on whether the employee is impaired at work or at work functions (e.g., on a business trip, attending a conference, meeting with clients, etc.). They also need to consider the impact of those behaviors on the individual, the company, and anyone else involved. Employers also need to be cognizant of the laws in their jurisdictions and the policies the company may have regarding the use of alcohol and drugs in the workplace. If someone is a current user of an illegal substance, there is typically no protection afforded to them under the ADA or similar anti-discrimination laws. However, if an employee can tie their addiction to an underlying mental health disorder, it becomes murkier. For employees who are recovering drug addicts or alcoholics, there is likely more protection afforded under anti-discrimination laws.

The key thing for employers to remember is to not make any knee-jerk decisions when evaluating these issues. Employers should take time to fully analyze the circumstances before taking any action and determine what legal obligations, if any, it may have to try to accommodate employees.

What legal requirements come into play when human resources intervene with an employee struggling with addiction?  For example, can this be a situation where the ADA applies?

The ADA is typically something that would come into play when dealing with an employee struggling with addiction. Human resources should consult with legal counsel while navigating through this type of issue. There are a myriad of laws that are intertwined that could potentially be relevant including the federal Family Medical Leave Act, as well as other state or local counterparts. In many circumstances, the employer may need to provide a reasonable accommodation to assist an employee struggling with addiction. Best practices may dictate this type of documented discussion with the impacted employee, even without a legal requirement to do so.

Attitudes toward addiction are changing with addiction increasingly being seen as a disease that should be treated without judgment–how does this shift change an employer’s reaction to employees with addiction issues?

As these issues become more prevalent, including the revelation that they impact individuals at higher level positions at companies, employers are increasingly willing to work with employees to get them the help they need. I have seen an uptick in counseling calls where employers are genuinely concerned about their employees’ well-being and want to find ways to assist them. However, I have seen situations where employers have gone above and beyond to work with a struggling employee and the employee failed to help themselves with the assistance being offered.

Rates of prescription opioid abuse are skyrocketing. How is this worrisome trend affecting employers, and are there any proactive steps employers can take?

Opioid use is a very serious problem impacting the workplace. Employers are well advised to have employee assistance programs (EAPs) in place. They should also have open-door policies to encourage employees to come to human resources to seek help for their addiction.

Many thanks to Caroline J. Berdzik of Goldberg Segalla for sharing her thoughts and insights on this complicated, yet increasingly relevant employment law issue.

Copyright ©2019 National Law Forum, LLC

More employment law issues on the National Law Review Labor & Employment page.

Of Passion, Prejudice And Punitive Damages

Addressing an issue of damages, the US Court of Appeals for the Ninth Circuit vacated the district court’s grant of punitive damages in favor of the plaintiff, finding “passion and prejudice” mitigated finding of “malice”. Waverly Scott Kaffaga, as Executrix of the Estate of Elaine Anderson Steinbeck v. The Estate of Thomas Steinbeck et al., Case No. 18-55336 (9th Cir. Sept. 9, 2019) (Tallman, J).

The lawsuit related to decades of litigation among the heirs to John Steinbeck’s registered copyrights to his works, including The Grapes of Wrath, Of Mice and Men, East of Eden and The Pearl. When Steinbeck died in 1968, he left interest in his works to his third wife, Elaine. Steinbeck’s two sons by a previous marriage each received $50,000. In the 1970s, the sons obtained rights in their father’s works when interests in works were renewed pursuant to US Copyright law.

In 1983, changes in the law prompted Elaine and the sons to enter into an agreement that provided each of them with an equal share of the royalties and gave Elaine “complete power and authority to negotiate, authorize and take action with respect to the exploitation and/or termination of rights” in the works. In 2003, Elaine passed away, and her daughter, Waverly Kaffaga, assumed the role of successor under the 1983 agreement. The sons challenged the validity of the 1983 agreement, and the US Court of Appeals for the Second Circuit determined that the agreement was valid and enforceable. Despite losing in court, one of the sons, Thomas Steinbeck, along with his wife Gail and Gail’s media company, filed a lawsuit in California asserting rights to the works that the courts had already told them they did not have. The district court held, and the Ninth Circuit affirmed, that the Steinbecks’ claims were barred by collateral estoppel.

Kaffaga countersued Thomas and Gail for their attempts to assert various rights in the works despite having no rights. Those attempts led to multiple Hollywood producers abandoning negotiations with Kaffaga to develop screenplays for the works. The district court granted Kaffaga summary judgment on her breach of contract and slander of title claims, citing many detailed facts it believed supported those claims. The district court let the jury decide on her claim of tortious interference. The jury unanimously found for Kaffaga and awarded $5.25 million in compensatory damages and $7.9 million in punitive damages, including $6 million against Gail individually.

On appeal, the Ninth Circuit found clear support in the record for the lower court’s decisions, save for one—punitive damages. There, the appellate court noted that although Kaffaga had the better argument, and although there was ample evidence of defendants’ malice in the record to support the jury’s verdict, triggering punitive damages, Kaffaga missed one key piece of evidence.

Under California law, there is a “passion and prejudice” standard that measures the amount of punitive damages against the ratio between damages and the defendant’s net worth. It is the plaintiff’s burden to place into the record “meaningful evidence of the defendant’s financial condition” to support a defendant’s ability to pay.” Thus, for the punitive damage award to stand, the record needed to contain sufficient evidence of Gail’s assets, income, liabilities and expenses. Here, Kaffaga failed. Although Gail testified that she received approximately $120,000 to $200,000 per year from domestic book royalties, Kaffaga introduced no estimate of Gail’s potential income from the four television series and six feature films in development, nor did she introduce an estimate of the total value of Gail’s other intellectual property assets. The Ninth Circuit found that Kaffaga failed to meet her burden of placing into the record “meaningful evidence” of Gail’s financial condition showing that she had the ability to pay any punitive damages award as required by California law. The Ninth Circuit therefore vacated the almost $6 million punitive damages award.

Practice Note: When seeking punitive damages in California, the moving party must place “meaningful evidence” of the non-moving party’s financial condition and ability to pay any punitive damages awarded, including their assets, income, liabilities and expenses. If there are problems obtaining such evidence during discovery, procedures such as a motion to compel or proposing an appropriate adverse inference instruction at trial are in order.

© 2019 McDermott Will & Emery

For more copyright inheritance, see the National Law Review Estates & Trusts or Intellectual Property law pages.

California DMV Exposes 3,200 SSNs of Drivers

The California Department of Motor Vehicles (DMV) announced on November 5, 2019, that it allowed the Social Security numbers (SSNs) of 3,200 California drivers to be accessed by unauthorized individuals in other state and federal agencies, including the Internal Revenue Service, the Small Business Administration and the district attorneys’ offices in Santa Clara and San Diego counties.

According to a news report, the access included the full Social Security numbers of individuals who were being investigated for criminal activity or compliance with tax laws. Apparently, the access also allowed investigators to see which drivers didn’t have Social Security numbers, which has given immigration advocates concern.

The DMV stated that the incident was not a hack, but rather, an error, and the unauthorized access was terminated when it was discovered on August 2, 2019. Nonetheless, the DMV notified the 3,200 drivers of the incident and the exposure of their personal information. The DMV issued a statement that it has “taken additional steps to correct this error, protect this information and reaffirm our serious commitment to protect the privacy rights of all license holders.”

 

Copyright © 2019 Robinson & Cole LLP. All rights reserved.
For more on data security, see the National Law Review Communications, Media & Internet law page.

Social Media Scrutiny on Visa Applications

On May 31, 2019, the Department of State added new questions to Forms DS-160/DS-156 Nonimmigrant Visa Application and Form DS-260, Immigrant Visa Application. These additional questions require the foreign national to disclose social media platforms they have used within the past five years, as well as provide their username(s) for each platform. Passwords for these accounts do not have to be disclosed and should not be provided. Additional questions request the visa applicant’s current e-mail and phone number, in addition to contact information for the previous five years. If applicants are unable to recall precise details, they may insert “unknown,” but should be prepared for the possibility of additional screening during the visa process. Please note, this a question that must be answered as fully as possible by the Foreign National. Not providing the requested details could result in denial or quite possibly the denial of subsequent immigration applications.

Forms DS-160/DS-156 and DS-260 are the online applications used by individuals seeking a nonimmigrant or immigrant visa from the U.S. Department of State. Completion of the forms is the first step in the process with the Department of State, and must be submitted before scheduling and attending the visa interview. The Department of State has stated that the changes are intended “to improve … screening processes to protect U.S. citizens, while supporting legitimate travel to the United States,” as well as “vetting … applicants and confirming their identity.”

Further, on September 4, 2019, the Department of Homeland Security proposed a federal rule to add similar social media questions to several forms, including the applications for naturalization, advance parole, adjustment of status, asylum, and to remove conditions on permanent residents, along with many others. Additionally, applicants for the Electronic System for Travel Authorization (ESTA) and the Electronic Visa Update System (EVUS), used for frequent international travel, are included in the proposed rule.

These changes stem from the President’s March 6, 2017 Executive Order, requesting heightened screening and vetting of visa applicants. The March 2017 Executive Order requested that the Secretary of State, the Attorney General, the Secretary of Homeland Security and the Director of National Intelligence create “a uniform baseline for screening and vetting standards and procedures.” The addition of the social media and contact information requirements to these application forms is part of the Department of State’s response to that Order. This represents a step up for the Department of State, which previously only asked that applicants voluntarily provide their social media information.

An individual’s social media content can be easily taken out of context, even more so when the postings are from long ago and/or are in a foreign language. Social media also provides an individual’s history of contacts, associations and preferences. While much (justifiable) concern has been expressed about the scrutiny of foreign nationals’ associations and political speech, many social media platforms and the posts thereon will provide information on a foreign national’s employment history and residency. Employment history and residency information can be particularly relevant in employment-based nonimmigrant and immigrant visa applications, such as the H-1B, L-1A and I-140 petitions. These details can also be very important in that the Department of State can use them to compare the information on social media to the information contained in the visa applications. Any discrepancies in that information can lead to difficulty in successfully obtaining both nonimmigrant and immigrant visas. Possible discrepancies can lead to delays in processing, requests for additional information, increased scrutiny in other areas of the application and even denial.

Additionally, many individuals do not keep their social media accounts up to date. As the requested information covers the last five years of the applicant’s social media history (including those accounts that may be closed at the time of the application) information is likely to be out of date, incomplete and out of context. Further, the tendency to embellish employment history or to inadvertently misstate employer information (e.g., indicating Company A as the employer while actually working for placement agency Company B that has been assigned to Company A) can work against an applicant. Both of these scenarios can result in the Department of State obtaining information contradictory to the nonimmigrant or immigrant form and can create obstacles to obtaining the desired visa.

Accordingly, it is imperative that foreign nationals are cognizant of the information they are posting on their social media accounts regarding their residency and employment history, paying particular attention that information contained on the social media platforms is consistent with the information contained in the visa applications.

© 2019 Vedder Price

For more on visa application requirements, see the National Law Review Immigration Law section.

Ninth Circuit Hears Oral Argument in Gender Bias Case

Whether a gender bias case can proceed as a class action is the question the U.S. Court of Appeals for the Ninth Circuit, in San Francisco, will decide.

The Court heard oral argument in Moussouris v. Microsoft Corp. on November 4. Katherine Moussouris appealed from the District Court’s denial of class certification in the gender discrimination action. U.S. District Judge James Robart of the Western District of Washington held that the proposed putative class members were not shown to be victims of a standard companywide policy. To the contrary, his order from June 25, 2018, holds:

Plaintiffs challenge Microsoft’s policy of allowing discretion by lower-level managers but have not identified a common mode of exercising discretion that pervades the entire company. As in Dukes, without some common direction, it is “quite unbelievable” that all Microsoft managers supervising over 8,600 putative class members “would exercise their discretion in a common way.”

The three-judge panel that heard the oral argument on appeal consisted of Circuit Judges Richard Paez and Johnnie Rawlinson and District Judge Leslie Kobayashi (sitting by designation). Moussouris’s counsel argued the District Court erred in denying class certification, claiming that women were locked into lower pay bands than men, and therefore often were paid less than their male counterparts even where they performed at an equal or higher level. Moussouris’s counsel also argued that employees were placed into peer groups composed of employees with similar skillsets, that each peer group had two pay bands, and that women were disproportionately concentrated in the lower pay bands of each peer group.

The judges, particularly Judge Rawlinson, repeatedly queried Moussouris’s counsel to point out the specific Microsoft corporate policy that allowed women to be placed in lower pay bands than men. Judge Paez also asked Moussouris’s counsel for the specific factors that were taken into consideration when evaluating members of each peer group, and whether these evaluations were discretionary. Moussouris’s counsel replied that while there was managerial discretion in evaluating employee performance, managers were restricted by the pay bands that employees were already locked into under corporate policy when determining how much to pay them. Judge Rawlinson repeatedly stated that she was “having a disconnect” because while she didn’t “necessarily disagree that the statistics are there, [] Dukes tells us that there has to be a policy that has resulted in that disparity that we can say applies across the board to every decision that’s made.” Despite asking several times to point to the specific policy Moussouris was challenging, her counsel did not appear to convince Judge Rawlinson of any specific policy in the record.

Counsel for Microsoft argued that, rather than a corporate policy in place, all decisions were made according to a calibration process in which managers would use their discretion to assess an employee’s relative contributions. Microsoft’s counsel argued that Moussouris’s own expert noted that these calibrations were extraordinarily varied and involved extensive managerial discretion. Microsoft’s counsel also pointed out that the alleged policy at issue seemed to change over time and that the current theory espoused by Mourssouris’s counsel was first introduced to the lower court at the hearing on her Motion for Certification and that the record lacked support for what Microsoft argued was the new theory of the putative class. Moreover, Microsoft’s counsel reiterated the difficult standard Moussouris was required to overcome on appeal: a clear abuse of discretion by the District Court in applying the Rule 23 criteria, and that Judge Robart’s decision contained neither an error of law or fact and that he did not abuse his discretion.

The questioning suggested that, without pinpointing a precise companywide policy that perpetuated discrimination, overturning the denial of class certification will be difficult. As this case relied heavily on the Dukes decision, we will be watching to determine whether the 9th Circuit differentiates this case from Dukes or follows Justice Scalia’s opinion.

 

Jackson Lewis P.C. © 2019

ARTICLE BY Stephanie L. Adler-Paindiris and Arlen Gharibian of Jackson Lewis P.C.
For more pending circuit and state cases, see the National Law Review Litigation & Trial Practice page.

Seventh Circuit: ADA Does Not Prohibit Discrimination Based on Future Impairments

On October 29, 2019, railway operator Burlington Northern Santa Fe Railway Company (“BNSF”) prevailed before the United States Court of Appeals for the Seventh Circuit – which covers Illinois, Indiana, and Wisconsin – in a case in which the company argued that its refusal to hire an obese candidate due to an unacceptably high risk that the applicant would develop certain obesity-related medical conditions incompatible with the position sought did not violate the Americans with Disabilities Act (“ADA”).

Ronald Shell applied for a job with BNSF as a machine operator position.  Per its standard practice when the applied-for position is safety-sensitive, as was the heavy equipment operator position sought by Shell, BNSF required him to undergo a medical examination.  During the medical examination, the examiner determined that Shell’s body mass index (“BMI”) was 47.  BNSF had a practice of refusing to hire individuals with a BMI higher than 40 for safety-sensitive positions.  In Shell’s case, the employer expressed concern that his obesity, although not causing any present disability, would cause Shell disabilities in the future, such as sleep apnea, diabetes, and heart disease.  BNSF asserted that this risk was significant because a sudden onset of any of these conditions could be catastrophic for a heavy machine operator.  BNSF therefore did not place Shell in the position.

Shell sued, arguing that he was “disabled” under the ADA’s definition of that term because BNSF had “regarded him as” having a disability.  The ADA not only protects individuals who are actually disabled or have a record of being disabled, but also protects individuals who have been subjected to an adverse employment action because of an actual or perceived physical impairment, whether or not that impairment substantially limits a major life activity.  Shell argued that by refusing to hire him based on the risk of future disabilities that he was at risk of as a result of his obesity, BNSF essentially treated him as though he currently had those conditions.

The Court ruled that the ADA does not protect non-disabled employees from discrimination based on a risk of future impairments.  The Court cited precedent from the Eighth Circuit, where BNSF also faced challenges to its practice of refusing to hire obese applicants due to the risk of future impairments.  The Eighth Circuit, like the Ninth and Tenth Circuits, also has held that the statutory language of the ADA does not protect non-disabled individuals who have a risk of disability in the future.

Of note, Shell also argued at the trial court level that his obesity constituted an actual disability, rendering BNSF’s refusal to hire him based on this characteristic a violation of the ADA for this reason as well.  However, as you may recall from our blog post from earlier this year, just a few months ago, the Seventh Circuit addressed this argument in another case, Richardson v. Chicago Transit Authority, and held that obesity, by itself, is not a disability for purposes of the ADA unless it is caused by an underlying physiological disorder.  Shell did not present any evidence in his case of such an underlying disorder, and thus could not, therefore, claim that he was actually disabled.  Notably, the federal appellate courts are split on this issue, which may tee it up for consideration by the United States Supreme Court in the future.  In contrast, among the appeals courts that have addressed the issue of future disabilities, all have agreed, thus far, that the ADA’s reach does not extend to potential or likely future disabilities of currently non-disabled individuals.

© Copyright 2019 Squire Patton Boggs (US) LLP

For more ADA litigation, see the National Law Review Labor & Employment law page.

Federal Court Temporarily Blocks Health Insurance Requirement for Immigrant Visa Applicants

On November 2, 2019, the U.S. District Court for the District of Oregon issued a temporary restraining order, blocking the Trump administration from enforcing a recent presidential proclamation requiring health insurance for immigrant visa applicants. The proclamation, which had been scheduled to take effect on November 3, 2019, would have required certain immigrant visa applicants to prove that within 30 days of their entering the United States they would have approved health insurance or that they otherwise possessed the “financial resources” to cover “reasonably foreseeable medical costs.”

The restraining order will remain in effect for 28 days. In the meantime, the court will hear arguments on November 22, 2019, to determine if the proclamation warrants a preliminary injunction.

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

More on immigration on the Immigration Law page of the National Law Review.

In The Weeds: Key Intellectual Property Takeaways For The Cannabis Industry

1. Patent Filings Are Rapidly Increasing

The number of patent filings at the United States Patent and Trademark Office (“PTO”) directly correlates to the rise of cannabis legalization. According to Magic Number, a data analytics company, between 2017 and 2018 the PTO issued almost 250 cannabis-related patents—more than in the previous seven years combined. These filings cover a range of inventions, including medical treatments and pharmaceutical compositions, cultivation techniques, vaporizers, and cannabis-infused products like toothpaste, coffee beans, and alcoholic drinks. With this uptick in patent filings, the volume of cannabis-specific prior art is on the rise as well. Those interested in obtaining patent protection in the cannabis industry should not fall behind their peers nor wait until the prior art field has fully developed. Early filing is critical.

2. Cannabis is Still Illegal Under Federal Law

Despite the growing number of patent filings, it is important to recognize that processing and distributing cannabis is still illegal under the federal Controlled Substance Act. Recent scholarly articles have argued that federal courts should not entertain most cannabis patent infringement suits due to illegality. Nonetheless, some courts have allowed these cases to proceed on the merits. United Cannabis Corporation v. Pure Hemp Collective Inc. is the first trial involving a cannabis patent in federal court. Specifically, the patent in dispute relates to the extraction of pharmaceutically active components from plant materials (e.g., liquid cannabinoid formula including THC). The plaintiff filed a patent infringement suit against a competitor maker of CBD products. In April 2019, a judge ruled in favor of United Cannabis Corporation by rejecting the argument that the plaintiff’s formulations are not patent eligible. Although the legal status of cannabis is not an issue in the case, it is important to remember that cannabis is not legalized at the federal level and that federal case law is still developing.

3. Design Patents can be a Valuable Component of an IP Portfolio

Design patents are a valuable form of protection in the cannabis space and are often a good alternative to utility protection. While 10 percent of patents issued overall are design patents, less than one percent of cannabis-related filings are designated as design patents. Design patents are quicker and cheaper to obtain; this may be desirable for fast-developing and/or cost-conscious companies and particularly for products having short life cycles. Design patents are particularly valuable for covering the ornamental aspects of well-known cannabis-related products, such as vaporizers, to deter wholesale copying. Business owners should consider the role design patents may play in protecting their products.

4. Trademark Filings are Similarly Increasing

Roughly 110 new cannabis-related federal trademark applications are filed each month since Congress approved the 2018 Farm Bill 11 months ago. Among other things, the Farm Bill removed “hemp” from the list of controlled substances under the Controlled Substances Act. This removal created an avenue for federal trademark registrations covering certain goods and services derived from hemp that contain no more than 0.3 percent THC. However, all other cannabis related products are currently ineligible for trademark protection due to its illegality. Namely, trademark law requires that the goods in connection with a particular trademark must be lawfully sold or transferred in commerce. To provide some flexibility given the tension between state and federal law for cannabis, trademark applicants should file applications using broad wording for the goods and services, which can allow applicants to narrow as needed to obtain a trademark registration. To register a cannabis-related trademark at the federal level, the cannabis-related business should be prepared to argue that the goods or services associated with the mark are not illegal under the Controlled Substances Act. Additionally, trademark registrations may be available in certain states for cannabis-related products and services. Although state registrations do not offer nation-wide protection, a company should consider filing for state trademark protection in conjunction with federal trademark flings. Companies should consider filing applications in states where cannabis is legalized.

5. IP Protection Strategy Beyond the United States

As of 2018, more than thirty countries have legalized cannabis, in one form or another, according to Marijuana Business Daily. The World Intellectual Property Organization notes that approximately 10,246 cannabis-related applications have been filed since 1978 under the Patent Cooperation Treaty, with 6,137 applications coming after 2008. Thus, the trends and recommendations above regarding domestic protection of cannabis are, likewise, relevant on the international stage. Likewise, companies should also consider foreign trademark filings in countries that have legalized cannabis. In particular, most foreign countries follow a first-to-file rule when it comes to trademarks. As a result, it is important to consider foreign trademark filings as early as possible.

Closing

With the drastic increase of cannabis-related patent and trademark applications, companies need to act quickly to protect their innovations in this rapidly growing industry. With cannabis-related patents, despite the uncertain legal landscape, early filings may be unexpectedly successful, given the infancy of the prior art field. With cannabis-related trademarks, companies should ensure that the goods or services associated with that trademark are not illegal under the Controlled Substances Act. Companies should also continue to monitor developments on a state-by-state and nation-by-nation basis. Given trends, it is expected that legalization will continue to expand to additional jurisdictions.

 

Copyright 2019 K & L Gates

ARTICLE BY Matthew S. Dicke, Sana Hakim, Kevin T. McCormick and Brittany Kaplan of K&L Gates.
For more in cannabis industry news, see the National Law Review Biotech, Food & Drug law page.

PFAS Rolling into Regulation

Introduction

Per- and polyfluoroalkyl substances, abbreviated as PFAS, are a class of widely dispersed chemicals quickly gaining notoriety in the public health and environmental remediation space. In 2019, rapid developments toward regulation to govern the investigation and cleanup of PFAS contamination to protect human health are occurring in a wide variety of arenas, including federal regulation and congressional action as well as at the state level through both regulation and enacted legislation. This article examines the current state of regulatory developments for PFAS and projects where things are heading in the remainder of 2019, with particular focus on how those developments will incentivize and accelerate the pace of site cleanups and cost recovery, and pose significant challenges to existing sites where other contaminants are already being addressed.

What are PFAS?

PFAS are a class of more than 4,000 synthetic chemicals comprised of carbon-fluorine chains of varying lengths. PFAS have been in use since the late 1940s, due to their unique resistant physical and chemical properties. For example, PFAS have been used in non-stick applications such as cookware, paper packaging, and textiles, as well as in certain types of firefighting foam.[1] The two most widely studied PFAS are perfluorooctane sulfonate or PFOS and perfluorooctanoic acid or PFOA.

Over the past decade, understanding of PFAS and their potential toxicity to humans and the environment has increased. Of particular concern is their stability in the environment. The properties that made PFAS so desirable for commercial and industrial use keep these compounds from degrading in the environment and allow them to pose a long-term threat if not removed from the environment and/or from drinking water supplies. Common exposure to these compounds can come through their product use as well as drinking from contaminated water supplies impacted by their release. Also notable are the very low levels at which these compounds exhibit their toxicity, and the very stringent levels under consideration by the regulatory agencies for controlling these compounds. For example, EPA has set interim screening levels of 70 nanograms per liter (parts per trillion or ppt), and several states have proposed guidance levels of 15 ppt or less. For context, 15 ppt is equivalent to a few droplets in an Olympic-sized swimming pool.

Federal Regulatory Developments

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) authorizes cleanup at sites where hazardous substances have been released, and enables parties conducting cleanups to seek cost recovery from other potentially responsible parties. The ability to potentially recover costs under CERCLA can be an important driver in encouraging impacted parties to investigate and remediate contaminated sites. However, as an emerging contaminant class, PFAS are not currently regulated as hazardous substances under CERCLA.

In February 2019, EPA issued an Action Plan outlining its steps to address PFAS and protect public health.[2] Among its listed priority actions was to propose a national drinking water regulatory determination for the two most widely studied PFAS, PFOA and PFOS, by the end of 2019. This proposed determination would begin the process towards establishment of a maximum contaminant level, or MCL, for these compounds. Another priority action was to initiate the process to list PFOA and PFOS as CERCLA hazardous substances; in April of 2019 at a meeting of state regulators, EPA committed to proposing this hazardous substance designation by the end of 2019.[3] Such a designation will have a multitude of impacts, including 1) PFOA and/or PFOS-contaminated sites will be eligible for listing as Superfund sites; 2) Federal and State authorities will have mechanisms through which they can seek damages or cleanup costs from responsible parties; and 3) Superfund monies will be eligible for use in cleaning up sites contaminated with PFOA and/or PFOS.

This commitment to regulate PFOA and PFOS under CERCLA was reaffirmed in a keynote speech of EPA’s General Counsel on September 12th at the American Bar Association, Section Environment, Energy, and Resources Fall Conference in Boston, Massachusetts. In his speech, the Honorable Matthew Leopold indicated that EPA was actively looking at designating PFOA and PFOS as CERCLA hazardous substances by year’s end. This would represent one of the few times in which new contaminants such as these were regulated under CERCLA.

Concurrent with these EPA actions, congressional legislators have called for increased and expedited federal action to regulate PFOA and PFOS, and in some cases the entire PFAS class of 4000 plus chemicals. There have been several bills proposed in 2019 which would commit EPA to taking expedited action with regards to PFAS, including listing some or all PFAS as hazardous substances, and establishing federal MCLs.[4] Perhaps most notably are two bills regarding appropriations for the Fiscal Year 2020 National Defense Authorization Act. S.1790 (passed by the Senate on June 27, 2019) would require EPA to promulgate drinking water MCLs for PFOA and PFOS within two years of enactment, and H.R.2500 (passed by the House on July 12, 2019) would require EPA to designate all PFAS as hazardous substances within one year of enactment.

State officials have also actively petitioned for more expedited federal action on PFAS. On July 30, 2019, 22 state and territory attorneys general issued a letter to Congress requesting that certain PFAS be designated hazardous substances, in particular, PFOA, PFOS, and a PFOA-replacement chemical known as GenX. In their letter, the attorneys general specifically note that such a designation would promote cleanup efforts, including federal facilities formerly owned or operated by the US Department of Defense.[5]

Based on these developments from multiple agencies and levels of government, it appears likely that in the relatively short term PFOA and PFOS will be designated as hazardous substances under CERCLA. This in turn will open the door for CERCLA regulation of PFAS-contaminated sites. Once designated, the next question will be one of appropriate cleanup levels. Typically, EPA would take the lead with establishment of MCLs that can be used to develop risk-based cleanup levels, and from which states could either adopt or modify. However, the process for proposing and finalizing a federal MCL can take years. Thus, faced with increasing public pressure to respond to PFAS contamination, the states have stepped in to fill this gap.

State Regulatory Developments

In November 2018, New Jersey became the first state to issue an MCL for any individual PFAS, specifically for the chemical perfluorononanoic acid (PFNA).[6] For PFOA and PFOS, there are currently no state MCLs that have been finalized. However, many states have established PFOA and PFOS advisory or screening levels, and several states have begun the MCL rule-making process, with some anticipating finalization this year.

In 2019, three states have proposed MCLs of varying concentrations for PFOA and PFOS:

  • In April, New Jersey proposed an MCL of 14 ppt for PFOA and 13 ppt for PFOS; the public comment period has since closed, and the standard is in the process of finalization;[7]
  • In June, New Hampshire proposed an MCL of 12 ppt for PFOA and 15 ppt for PFOS (they also proposed MCLs for two other PFAS chemicals);[8] those MCLs were approved on July 18,[9] and will become effective on October 1; and
  • In July, New York proposed an MCL of 10 ppt for PFOA and PFOS making them the most protective standards in the nation; the proposal is currently out for public comment, which closes on September 24.[10]

In addition, several other states have provided commitments to establishing MCLs in the near future. These include Massachusetts with an MCL rule proposal anticipated by the end of 2019;[11] Michigan with an MCL rule proposal expected by October with finalization in 2020;[12] and Vermont with a commitment to establishing and adopting MCLs by February 1, 2020.[13] Other states are also moving forward with efforts to regulate PFAS. For example, in August 2019 California established notification levels for PFOS and PFOA in drinking water of 6.5 ppt and 5.1 ppt, respectively, that go into effect January 1, 2020. [14],[15]

Conclusion

With federal and state regulatory action underway, and mounting public pressure to expedite a response, it is clear that regulation of some PFAS under CERCLA is imminent. By the end of the year, it is likely that 1) EPA will have designated, or be close to designating, PFOA and PFOS as hazardous substances; and 2) several states will have finalized MCLs to regulate their remedial response. These two developments will open the door for parties to investigate, cleanup, and ultimately recover the costs associated with PFAS-contaminated sites. In addition, these developments will likely complicate existing sites in terms of both their required remedial response as well as their cost recovery strategy. New PFAS regulation at existing sites will unlock a myriad of cost implications not the least of which involve cost allocation among potentially responsible parties. In the face of these complications and uncertainties, what is clear is that PFAS regulation has rolled off the horizon and directly in front of those involved with protecting public health and the environment.

The opinions expressed are those of the authors and do not necessarily reflect the views of the firm or its clients. This article is for general information purposes and is not intended to be and should not be taken as legal or accounting advice.

[1]  For a more thorough background on the history and usage of PFAS, see the Interstate Technology Regulatory Council fact sheets at https://pfas-1.itrcweb.org/

[2] https://www.epa.gov/newsreleases/epa-acting-administrator-announces-first-ever-comprehensive-nationwide-pfas-action-1

https://www.epa.gov/pfas/epas-pfas-action-plan

[3] https://www.asdwa.org/2019/04/11/cooperative-federalism-pfas-are-top-issues-at-ecos-spring-meeting/

[4]  https://fas.org/sgp/crs/misc/R45793.pdf

[5]  https://portal.ct.gov/-/media/AG/Press_Releases/2019/Multistate-PFAS-Legislative-Letter73019FINAL.pdf

[6]  New Jersey regulated PFNA largely in response to a regional issue relating to specific historic discharges from a chemical manufacturing facility.

[7]  https://www.nj.gov/dep/rules/notices/20190401a.html

[8]  https://www.des.nh.gov/media/pr/2019/20190628-pfas-standards.htm

[9]  https://www.gencourt.state.nh.us/rules/jlcar/minutes/AM7-18-19.pdf

[10]  https://www.governor.ny.gov/news/governor-cuomo-announces-availability-350-million-water-system-upgrades-statewide-and-directs

[11]  https://www.mass.gov/files/documents/2019/06/20/pfas-stakeholder-presentation-20190620.pdf

At the American Bar Association, Section Environment, Energy, and Resources Fall Conference in Boston, Massachusetts, the Commissioner of the Massachusetts Department of Environmental Protection participated in a panel discussion titled “The State of CERCLA Following EPA Reform: More of the Same or Something Super?” In this discussion, Mr. Suuberg indicated that Massachusetts will finalize its PFAS standards by the end of the year, and in an accompanying paper noted that the comment period on the proposed cleanup standard of 20 ppt (for a sum of six PFAS) had closed in July and was currently under review.

[12]       https://www.michigan.gov/egle/0,9429,7-135-3308_3323-494077–rss,00.html

[13]       https://dec.vermont.gov/sites/dec/files/PFAS/Docs/Act21-2019-VT-PFAS-Law-Factsheet.pdf

[14]            https://www.waterboards.ca.gov/drinking_water/certlic/drinkingwater/PFOA_PFOS.html

[15]      California already had notification levels of 14 ppt for PFOA and 13 ppt for PFOS and will continue to have a response level for those drinking water systems exceeding 70 ppt for the total combined concentration of both compounds, consistent with EPA’s advisory level. 

© Copyright Nathan 2019

ARTICLE BY Brian Henthorn and Christopher Loos of Nathan.
For more PFAS Regulation developments, see the National Law Review Environmental, Energy & Resources law page.

PTSD Compensation for First Responders without Associated Physical Injury Revisited by Ohio Legislature in New House Bill

With the recent proliferation of mass shootings and other deadly incidents, several states have taken on the issue of allowing mental and/or emotional impairments caused by post-traumatic stress disorder (PTSD) to be a compensable workers’ compensation condition for first responders without the requirement of a physical injury.

In June 2019, House Bill 80, the budget bill for the Ohio Bureau of Workers’ Compensation, included such a proposal. After the bill passed the House, the Senate stripped the policy provisions on the mental-only diagnosis issue out of the proposed budget. Senate leaders indicated while there may be a reason for a special circumstance, it should be studied and debated separately from the workers’ compensation budget. In July 2019, leadership vowed to consider the legislation later in the year.

True to their word, the issue was revived in September 2019 by Representative Thomas Patton. House Bill 308 reintroduced the issue of PTSD coverage for first responders exposed to traumatic events in the course and scope of their employment. Two hearings on the bill have already occurred, most recently on Oct. 22, 2019. Proponent testimony was offered by several organizations and individuals. The statements reiterated concerns first responders are not able to pursue avenues for compensation under the law set forth by the Supreme Court of Ohio in Armstrong v. John R. Jurgensen Co. Interestingly, one of the organizations offering proponent testimony was the Ohio State Medical Association.

The business community remains opposed to any legislation that would allow for a “mental-mental” avenue for claimants. Rob Brundrett, director of public policy for the Ohio Manufacturers Association, provided testimony on House Bill 80 earlier this summer. Beyond merely the increased cost to employers, if a mental-only diagnosis were allowed, Mr. Brundrett noted the potential expansion of workers’ compensation beyond first responders could be required.

“If we erode the physical-injury requirement for peace offers, firefighters, and emergency medical workers, it may be difficult to justify not doing the same for other professionals who seek equal treatment,” Mr. Brundrett said in his testimony.

How such a proposal would be funded is also a concern of employers. Mr. Brundrett, who is closely following House Bill 308, has indicated that several discussions in the Senate have occurred in recent weeks on a potential bill that would provide PTSD coverage for first responders outside of the Bureau of Workers’ Compensation system. This proposal would, of course, be the preference of the business community.

While passage of this issue in the past has been unsuccessful, the August 2019 mass shooting in Dayton and its impact on first responders may result in this bill moving through the legislature. Dinsmore’s workers’ compensation group will continue to monitor this bill, as its passage would have a profound impact on employers.

If you wish to see the proponent testimony and follow the bill, you can obtain more information here.

© 2019 Dinsmore & Shohl LLP. All rights reserved.

For more on mental health, see the National Law Review Health Law & Managed Care page.