Senate Bill to Revise and Reassess GRAS Program

  • On May 27, Senator Edward J. Markey (D-Mass.), alongside Senators Richard Blumenthal (D-Conn.) and Elizabeth Warren (D-Mass)., introduced the Ensuring Safe and Toxic-Free Foods Act, which is described as “comprehensive legislation that ensures the Department of Health and Human Services (HHS) fulfills its responsibility to promote the health and well-being of American families by directing the Food and Drug Administration (FDA) to strengthen the Substances Generally Recognized as Safe (GRAS) Rule, which exempts companies from seeking pre-market approval for food chemicals.” A summary of the legislation is available here.
  • The legislation would prohibit manufacturers from independently designating substances as GRAS (or manufacturing or selling food containing those substances) without supplying notice and supporting information to the Secretary of HHS. Substances that are carcinogenic or that have evidence of reproductive or developmental toxicity would be prohibited from receiving a GRAS designation. Further, the legislation would require that a GRAS Notice and all supporting information be publicly available online and subject to a 90-day review period.
  • The legislation would also direct the Secretary to create an Office of Food Chemical Safety Reassessment within FDA’s CFSAN. The new office would be responsible for reassessing the safety of existing food additives, food contact substances, color additives, and substances that had already received GRAS status. The office would be required to reassess at least 10 substances (or class of substances) once every three years. As included in the bill, the first 10 substances to be reviewed would be:
    • Perfluoroalkyl substances and polyfluoroalkyl substances
    • Ortho-phthalates
    • The class of bisphenols
    • Titanium dioxide
    • Potassium bromate
    • Perchlorate
    • Butylated hydroxyanisole (BHA)
    • Butylated hydroxytoluene (BHT)
    • Brominated vegetable oil (BVO)
    • Propyl paraben
  • With regard to the legislation, Senator Markey has said “The FDA too often falls short on their responsibility to promote food safety, highlighted recently by the baby formula crisis where FDA’s deputy commissioner for food policy did not learn about the whistleblower complaint for four months. It is long past time we revise existing food safety measures and close the loophole allowing manufacturers to self-regulate what new substances can enter our food supply.”

Article By Food and Drug Law at Keller and Heckman of Keller and Heckman LLP

For more biotechnology, life sciences, food and drug law news, click here to visit the National Law Review.
© 2022 Keller and Heckman LLP

Uyghur Forced Labor Prevention Act Is Coming… Are You Ready? CBP Issues Hints at the Wave of Enforcement To Come

US Customs and Border Protection (CBP) has issued some guidance relating to its enforcement of the Uyghur Forced Labor Prevention Act (UFLPA) prior to June 21, 2022, the effective date of the rebuttable presumption.

What to Know

  • US Customs and Border Protection (CBP) has issued some guidance relating to its enforcement of the Uyghur Forced Labor Prevention Act (UFLPA) prior to June 21, 2022, the effective date of the rebuttable presumption.
  • The new guidance imposes tighter timelines and a higher burden of evidence on importers to rebut the presumption that merchandise was produced with forced labor. If CBP does not make a decision within specific timeframes, goods will automatically be deemed excluded.
  • CBP is expected to issue additional technical guidance at the end of May or early June. The Department of Homeland Security (DHS) is also expected to issue guidance closer to June 21, 2022.
  • CBP is scheduled to host informational webinars detailing their UFLPA guidance in the coming weeks.

What’s New: Tighter Timelines  

While US importers were eagerly anticipating the issuance of technical guidance regarding implementation of the UFLPA from CBP last week, which is now expected this week, CBP did post a new guidance document summarizing the UFLPA and forced labor Withhold Release Orders (WRO) enforcement mechanisms. Specifically, CBP’s authority to detain merchandise under the UFLPA will be pursuant to 19 CFR § 151.16, which provides for a much different timeline for the detention of merchandise than the WRO process. Under this process, if Customs does not make a timely decision regarding admissibility, goods are automatically excluded.

UFLPA Timeline Enforcement under 19 CFR § 151.16

Number of Days

Actions
5 Days from Presentation for Examination

CBP must decide whether to release or detail merchandise

  • If the merchandise is not released, it is detained
5 Days after Decision to Release or Detain

CBP will issue a notice to importer advising them of:

  • The initiation of detention
  • Date merchandise examined
  • Reason for detention
  • Anticipated length of detention
  • Nature of tests and inquiries to be conducted
  • Information to accelerate disposition
  Upon written request, CBP must provide importer with testing procedures, methodologies used, and testing results
Within 30 Days of Examination

CBP will make a final determination as to the admissibility of merchandise

  • If CBP does not make a determination within the 30-day period, the merchandise will be deemed excluded
  • This means any submission to rebut the presumption should be made before this 30 day period
Within 180 Days of CBP Determination/Exclusion Importers may protest CBP’s final determination
Within 30 Days After Protest Submitted The protest is deemed denied if CBP does not grant or deny the protest within 30 days
Within 180 Days after the Date the Protest is Denied

The importer may commence a court action contesting the denied protest (28 U.S.C. § 1581(a))

  • In a court action, CBP must establish by a preponderance of the evidence that an admissibility decision has been reached for good cause
  • Customs can decide to grant the protest after the deemed denial but before a court case is filed

This is a much shorter timeline than the WRO process. Importantly, a company contesting CBP’s detention of merchandise pursuant to the UFLPA would be required to submit documentation to rebut the presumption within the 30-day period that CBP is assessing admissibility, whereas the WRO process permits 90 days. Like the WRO process, the importer may also file a protest 180 days after CBP makes its final determination regarding the exclusion.

CBP Listening Session: A Higher Burden of Evidence 

On Tuesday, May 24, 2022, CBP provided information regarding the publication of guidance and enforcement of the UFLPA:

  • CBP Publication of Guidance. CBP’s guidance regarding its enforcement of the rebuttable presumption and the UFLPA is scheduled to be published the week of May 30.
  • DHS Publication of Guidance. DHS guidance will be published on or about June 21, 2022, which will include information relating to supply chain due diligence, importer guidance, and the entity lists.
  • Clear and Convincing Evidence Required to Rebut the Presumption that Merchandise was Produced with Forced Labor. It was confirmed that the UFLPA will have a much higher burden of evidence required to rebut the presumption that merchandise was produced with forced labor than that of a WRO. Any exception to the rebuttable presumption must be reported to Congress, and thus the level of evidence that will be required to overcome the rebuttable presumption is very high. As a practical matter, it appears that very few detained entries will be released. Importers are advised to start conducting due diligence on supply chains in order to ensure that they will be able to obtain documentation should merchandise be detained once the rebuttable presumption goes into effect. Importantly, products that are subject to an existing WRO from Xinjiang will now be enforced under the UFLPA process instead of the WRO process.
  • Evidence Required if Merchandise is Detained. The forthcoming guidance will set forth information regarding how an importer may meet the exception to the rebuttable presumption and to demonstrate that merchandise was not produced with forced labor, by meeting the following three criteria:
    • Demonstrate compliance with the Forced Labor Enforcement Task Force/DHS strategy;
    • Demonstrate compliance with CBP’s guidance and any inquiries that CBP raises; and
    • Provide clear and convincing evidence that the supply chain in question is free of forced labor.
  • Binding Rulings. Importers may apply for a binding ruling to confirm or request an exception to the rebuttable presumption under the UFLPA. Although CBP is still finalizing the process for importers to apply for a binding ruling, importers would be required to prove by clear and convincing evidence that merchandise is not produced with forced labor. If the ruling is granted, it applies to future shipments for the specific supply chain in question.
  • Known Importer Letters and Detention Notices. Going forward, CBP will not issue Known Importer letters, and CBP will notify importers that merchandise is subject to the UFLPA through the issuance of detention notices.
  • Detention of Merchandise. If goods are detained by CBP because they are suspected of having a nexus to Xinjiang Uyghur Autonomous Region (XUAR) of the People’s Republic of China (PRC), importers may either provide clear and convincing evidence that merchandise was not produced with forced labor or export the products. If detained products that fall under the UFLPA are comingled with other products that are not subject to the UFLPA, importers may request the segregation of the merchandise that is not subject to the UFLPA.
  • Chain of CBP Review for Importer Submissions Relating to Detained Merchandise. Chain of CBP review for the request of an exception to the rebuttable presumption has not been finalized yet. However, importers will be required to submit evidence that rebuts the presumption that merchandise was produced with forced labor to the applicable CBP Port Director. For the moment, the CBP Commissioner is the final individual who can ultimately make an exception to the rebuttable presumption, but CBP is deciding if it will delegate this responsibility to any additional persons.

Upcoming CBP Informational Webinars

CBP will be holding three webinar sessions, all covering the same material, to discuss and review its guidance relating to the UFLPA. The dates of the webinars and the registration links are listed below.

Article By Angela M. Santos, Christine E. Hintze, and Jodi Tai of ArentFox Schiff LLP

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

© 2022 ArentFox Schiff LLP

How to Create an Impactful and Authentic Pride Month Social Media Campaign for Your Company

June is Pride Month, which offers companies of all kinds a unique opportunity to celebrate, show support and raise awareness for LGBTQIA+ rights on their social media channels.

Businesses of all kinds and sizes can get involved, raise awareness and give back for Pride Month regardless of their budget or reach.

While Pride is most definitely a celebration, an impactful Pride campaign should include education, awareness, and center around people.

Celebrating Pride and showing your support for the LGBTQIA+ community is not a trend— and it shouldn’t be treated as such.

Here’s how to create and implement an impactful and genuine Pride Month social media campaign at your company.

The Do’s and Don’ts of Pride Month social media planning

Before you dive head-first into planning your corporate Pride initiatives, it’s important to get a wide range of employees involved in the planning process.

If your company has an LGBTQIA+ affinity group or diversity committee, collaborate with them or if you don’t have a group, consider convening a committee of employee volunteers of diverse backgrounds to serve as a sounding board and provide their input as your plans begin to take shape.

Please note: these volunteers should be compensated for their time and efforts in some meaningful way (vacation time, bonuses, gift cards, etc.). While it may be too late to do this for this year’s campaign, activate or assemble the group now for your 2023 initiative.

Don’t: Exploit social initiatives and conversations as a means to reach business goals.

Celebrating Pride and showing your support for the LGBTQIA+ community is not a trend— and it shouldn’t be treated as such.

If you’re simply posting rainbow-branded imagery (rainbow washing) during the month or posting about your commitment to the cause without having any real initiatives or actions to back it up, you’re just paying lip service to and perhaps exploiting yet another social initiative. Make sure your company can really walk the walk before you talk the talk. Performative allyship can backfire, alienating your employees, your clients, recruits, and others.

Remember that everyone (employees, clients, and the general public) is watching what you post online, even if they don’t actually like or comment on it.

Do: Ask yourself why you’re supporting this initiative and have a clear purpose.

Before publishing Pride-related content, ask yourself, are we actually adding value to this conversation? What are we hoping to gain from inserting ourselves into this conversation? What are our motivations? Is our company an actual safe space or inclusive environment that includes active and engaged allies?

Remember, Pride Month should not be about your business goals. You also don’t have to have accomplished all of your LGBTQIA+ related inclusion goals to commemorate Pride, but your efforts should be more than surface level.

Do: Support LGBTQIA+ initiatives year-round.

If you don’t already take steps to support the LGBTQIA+ community year-round, take the opportunity to discuss doing so with management and staff before Pride. June is only one month out of the year, a month where it’s arguably the “most acceptable” to show support for the LGBTQIA+ community. To be a true ally, it’s important to show this level of support year-round. Work to ensure that your company’s policies and practices are inclusive and address the needs of your LGBTQIA+ employees.

In addition to internally focused actions, consider how your true commitment can be reflected externally. There are many organizations to which you can donate and volunteer. Solicit voluntary feedback from your LGBTQIA+ employees and clients to ensure that they feel involved and included in the process.

Do: Educate yourself and those around you on the origins and history of Pride Month.

Pride Month has a rich, political history that companies often fail to understand and recognize as they participate in Pride Month. Pride Month is celebrated in June to honor the 1969 Stonewall Uprising in Manhattan — a tipping point for the Gay Liberation Movement in the United States.

Not only is Pride a time to recognize the progress that’s been made since the Stonewall Riots, but it’s just as important to acknowledge how far we still must go as a society, particularly considering recent efforts to overturn or narrow the progress that has been made. A successful Pride campaign should have education and awareness at its core.

Do: Make education and awareness the core of your campaign.

Ideas for content for your Pride Campaign can include educating your followers on the meaning behind the Pride flag, using posts to tell the history of the Pride flag, and what Pride means to your employees, and run their answers in Q&A posts.

Another idea is to create posts to help followers better understand Pride Month and provide resources to help people better educate themselves on the cause and support those of the LGBTQIA+ community.

In addition, spotlighting members of the LGBTQIA+ community is a helpful way to educate your followers and amplify the contributions of individuals.

No matter what you choose, create a campaign that is rooted in improving awareness and education amongst your community.

Do: Let inclusivity be at the core of your all campaigns.

Inclusivity should be an active mission as part of your Pride campaign, and for your future marketing efforts too. Aim to have better representation on social media for your community — that means including people of all marginalized or otherwise underrepresented voices.

If you really want to reach, represent, and support your diverse community, it’s time to make active shifts towards better inclusive marketing year-round. It’s less about what you need to do for Pride today and instead, how are you supporting LGBTQIA+ folks year-round?

Do: Put your money (and time) where your mouth is.

Instead of treating Pride like a marketing campaign, put your efforts toward an activity that will positively impact the LGBTQIA+ community.

While monetary donations can be helpful, volunteering at community events or spending time with LGBTQIA+ advocacy organizations can be more impactful for your employees.

Consider hosting or taking part in LGBTQIA+ programming and donating to local charities doing work in your community to support LGBTQIA+ initiatives.

Do: Use the right hashtags to be discovered

  • #lgbtqia
  • #lgbtqpride
  • #lgbtqhumanrights
  • #equality
  • #pridemonth
  • #loveislove
  • #pride

Every organization that wants to support Pride on social media can find a way to do so, we challenge you to do it in a way that is authentic, genuine, and impactful to your brand and most importantly, to your employees and your clients. The world is watching you, so challenge yourself by doing the right thing.

This article was authored by Stefanie Marrone of Stefanie Marrone Consulting, and Paula T. Edgar, Esq, the CEO of PGE Consulting Group LLC, a firm that provides training and education solutions at the intersection of professional development and diversity, equity and inclusion. 

For more legal marketing and law office management news, click here to visit the National Law Review.

Copyright © 2022, Stefanie M. Marrone. All Rights Reserved.

Supreme Court Holds That Judges Can’t Invent Rules Governing Arbitration Waiver

Litigators who defend cases brought under the Fair Labor Standards Act (“FLSA”), particularly ‘collective actions” alleging wage-and-hour violations, often have been able to counter, or even sometimes support, allegations that arbitration agreements have been waived where the conduct of a party has caused prejudice to the other side. In the case of Morgan v. Sundance, Inc., a unanimous Supreme Court has now held that the determinant of waiver is solely dependent upon the nature and magnitude of the actions of the party that might be inconsistent with arbitration, without respect to alleged prejudice.

Morgan thus is an important case for any civil litigator, but it is especially significant for those who deal with employment disputes potentially governed by arbitration agreements, and for those who draw up such agreements in the first place. As is well known, the Court has, in recent years, frequently upheld the primacy of arbitration agreements pursuant to the Federal Arbitration Act (FAA). In the Morgan case, a unanimous Court does it again. Ms. Morgan was an hourly employee at a Taco Bell franchise who had signed an arbitration agreement intended to govern employment disputes. Notwithstanding the arbitration agreement, Morgan went to federal court to bring a nationwide “collective action” arguing that her employer had violated the Fair Labor Standards Act. Sundance, a franchisee of Taco Bell, initially defended against the lawsuit as if the arbitration agreement didn’t exist—filing a motion to dismiss (which the District Court denied) and engaging in mediation (which was unsuccessful). Next, Sundance moved to stay the litigation and compel arbitration under the FAA—almost eight months after Morgan filed the suit. Morgan then expectedly opposed on grounds of waiver of the right to arbitrate.

The governing precedent in the Eighth Circuit, where the case was litigated below, conditioned a finding of waiver of an arbitration agreement on whether the party knew of the right, “acted inconsistently with that right,” and—critical here– “prejudiced the other party by its inconsistent actions.” In deciding that issue, the Court below, as had eight other circuits, invoked “the strong federal policy favoring arbitration” to decide the matter of waiver. Two circuits rejected that rule, and the Supreme Court granted cert. to resolve that split. Justice Kagan, writing for all of the Justices, agreed with those two circuits.

Holding that “the FAA’s ‘policy favoring arbitration’ does not authorize federal courts to invent special, arbitration-preferring procedural rules,” and deciding no other issue with respect to the merits, the Court remanded the case for further proceedings that focus on the whether the employer relinquished its right to arbitrate by its actions that were inconsistent with it. Whatever an employer might otherwise have preferred (given the prior law in most courts of appeals), given the Supreme Court’s holding that any presumption of arbitration and the fact of prejudice are irrelevant, the Morgan case gives clear guidance in several regards, particularly demanding arbitration, if applicable, at the outset of a formal dispute, and resisting any discovery, to the extent possible, until the issue of arbitrability is decided. A defense against waiver simply based on prejudice is not going to fly.

Article By Stuart M. Gerson of Epstein Becker & Green, P.C.

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

©2022 Epstein Becker & Green, P.C. All rights reserved.

“My Lawyer Made Me Do It” is Not an Absolute Defense to Bankruptcy Court Sanctions

Last year, we offered a lesson and a moral from a North Carolina district court decision reversing a $115,000 sanctions order by a North Carolina bankruptcy court.

The lesson from the case was that the bankruptcy court cannot sanction a creditor if there is an objectively reasonable basis for concluding that the creditor’s conduct is lawful.

The moral was that a creditor can avoid the time, expense, and risk associated with litigating contempt and sanctions issues by taking basic steps to ensure that confirmed Chapter 11 plans are clear and precise.  The moral is even more glaring now because a recent decision from the Fourth Circuit Court of Appeals reveals that the parties continue to fight in court over the easily-avoidable sanctions order.  The decision also clarifies when and why a bankruptcy court can sanction a creditor.

Factual Background

In 2009, the Beckharts filed Chapter 11.  At the time, they were almost a year behind on a loan secured by the property at Kure Beach.  The loan servicer objected to planning confirmation because it did not specify how post-petition mortgage payments would be applied to principal and interest.  The bankruptcy court confirmed the plan without clarifying the issue, but the servicer did not ask the court to reconsider its order, nor did it appeal.

The Beckharts paid for five years.  Shellpoint acquired the loan from the original servicer and treated it as in default based on unpaid accrued arrearages.  Periodically, Shellpoint sent default letters to the Beckharts, who disputed the default.  Counsel for Shellpoint advised that the confirmation order had not changed the loan contract terms and that the loan remained in default.  The matter escalated with the Beckharts filing complaints with the Consumer Financial Protection Bureau.  Shellpoint commenced foreclosure, then represented to the Beckharts that it was ceasing foreclosure, but then posted a foreclosure hearing notice on the Beckharts’ door (allegedly due to error).

Litigation

In January 2020, the Beckharts moved the bankruptcy court to find Shellpoint in contempt and award them monetary sanctions.  The court held a hearing in June and, in September 2020, found Shellpoint in contempt.  The court tagged Shellpoint with $115,000 in sanctions for lost wages, “loss of a fresh start,” attorney’s fees, and travel expenses.

Bankruptcy courts have the power to hold a party in civil contempt and to impose sanctions for violation of a confirmed plan.  The test for liability is based on a recent United States Supreme Court decision — Taggart v. Lorenzen.  The Taggart test prohibits sanctions if there was an “objectively reasonable basis for concluding that the creditor’s conduct might be lawful.” There can be contempt for violating the discharge injunction only “if there is no fair ground of doubt as to whether the order barred the creditor’s conduct.”

In reversing the bankruptcy court, the district court noted that the plan and confirmation order did not state how much the debtors would owe on confirmation, did not say how the $23,000 in arrears would be paid, and did not set the amount of the first payment.  Confusingly, the confirmation order also said that the original loan terms would remain in effect, except as modified.  Finally, the district court pointed out that Shellpoint was repeatedly advised by counsel that their behavior was authorized, and reliance on the advice of outside counsel is a sufficient defense to civil sanctions.  Based on all these facts, the district court found that Shellpoint acted in good faith and interpreted the confirmation order in a manner consistent with the contractual terms of the loan, and that was objectively reasonable.

Taggart was a Chapter 7 case involving a discharge violation, but the Fourth Circuit held that the “no fair ground of doubt” test applied broadly in bankruptcy – including in Chapter 11 cases.

But the Fourth Circuit disagreed with the district court’s decision to reverse the bankruptcy court because the creditor had requested and received legal advice from outside counsel.  The Fourth Circuit held that advice of counsel is not an absolute defense in civil contempt.   The Court suggested that, under the Taggart test, advice of counsel “may still be considered in appropriate circumstances as a relevant factor” and “a party’s reliance on guidance from outside counsel may be instructive, at least in part, when determining whether that party’s belief that she was complying with the order was objectively unreasonable.”

The Fourth Circuit held that both lower courts had made mistakes and sent the case back to the bankruptcy court to “reconsider the contempt motion under the correct legal standard, including any additional fact-finding that may be necessary.”

Creditors can take some comfort in the “no fair ground of doubt” test, which is more forgiving than a strict liability standard.  But creditors can’t blame their lawyer for perilous conduct and expect the court to exonerate them.

But the most important takeaway hasn’t changed:  Creditors should insist on clear and specific plan terms.  After over two years of litigation, Shellpoint remains in peril of sanctions.  All of this could have been avoided had the loan servicer insisted the plan specify how the Beckharts’ payments would be applied to satisfy the arrearage.

Article By Lance P. Martin of Ward and Smith, P.A.

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

© 2022 Ward and Smith, P.A.. All Rights Reserved.

Employers Beware: Take-Home COVID Cases are on the Rise (US)

You’ve just been informed that an employee who apparently contracted COVID-19 from exposure in your workplace brought the virus home, and now his spouse, who is in a high-risk category, has contracted the virus and is in the hospital.  Do you as the employer face potential liability for the spouse’s illness?

More than two dozen so-called “take-home” COVID-19 lawsuits have been filed across the country, including against some of the largest employers in the US. This alarming pattern has prompted trade groups to warn employers of the potential for lawsuits stemming from COVID infections filed not only by workers’ family and friends but by anyone infected by that circle of people, creating a seemingly endless chain of liability for employers. Some states have enacted laws shielding employers from such suits, but where that is not the case, the legal theories and procedural paths under which these suits have proceeded vary – including some being brought in state courts, some in federal courts, and others brought under claims within the worker’s compensation system.

The issue is currently being tested in California, where the US Court of Appeals for the Ninth Circuit recently certified questions to the California Supreme Court seeking guidance on the state’s laws. The case, Kuciemba v. Victory Woodworks, Inc., arose after Mr. Kuciemba allegedly was exposed to COVID-19 through his work at one of his employer’s job sites.  According to the Kuciembas, Victory knowingly transferred workers from an infected construction site to the job site where Mr. Kuciemba was assigned without following the safety procedures required by the San Francisco Health Order. He was forced to work in close contact with these employees, and soon developed COVID-19, which he brought back home. His wife is over 65 years old and was at high risk from COVID-19, and the family had been careful to limit their exposure to the virus, with the exception of Mr. Kuciemba going to work. Mrs. Kuciemba subsequently tested positive for the disease and was hospitalized for over a month after developing severe symptoms. The Kuciembas filed suit, alleging that Victory caused Mrs. Kuciemba’s injuries by violating the Health Orders, and negligently allowed COVID-19 to spread from its worksite into their household.

The lower court dismissed the case, which was then appealed to the federal appeals court. After hearing the argument, the court asked the California Supreme Court to answer two questions of state law. First, whether Mrs. Kuciemba’s illness was an “injury” that was “derivative” of Mr. Kuciemba’s work-related injury, and therefore, Mrs. Kuciemba’s claims would be subject to the exclusive jurisdiction of the Worker’s Compensation Act (“WCA”); and second, assuming that the WCA is not the exclusive remedy, whether the employer owed a duty to the households of its employees to exercise ordinary care to prevent the spread of COVID-19. Neither question has been squarely answered by the California Supreme Court, although, as noted by the federal appeals court, in a somewhat analogous situation, California courts have allowed suits against employers who negligently allowed their employees to carry asbestos fibers home to their families.

While the Kuciemba case was pending, a California Court of Appeal in another case, See’s Candies v. Superior Court, ruled that the derivative injury doctrine does not bar third-party COVID-related claims. Under a similar fact pattern, the court allowed the negligence case to go forward while noting that the plaintiff would still need to prove that the employer owed a duty of care to non-employees infected with COVID-19 due to an employee contracting the virus at work. Acknowledging that an analysis of this duty “appear[s] worthy of exploration,” the state appellate court said the analysis would include an assessment of “public policy concerns that might support excluding certain kinds of plaintiffs or injuries from relief.” The California Supreme Court declined to review the See’s case, meaning that it’s holding still stands.

The California Supreme Court has not yet announced whether it will use its discretion to respond to the Ninth Circuit’s certified questions in the Kuciembas’ case. In the meantime, California employers cannot automatically rely on the exclusive remedial scheme provided under the worker’s compensation system to cover these claims and are not necessarily shielded from COVID-19 lawsuits brought by employees’ family members (and perhaps others). That said, even if employers owe their employees’ families a duty of care, affected employees will still have to prove that it was the employer’s negligence that caused the illness and that the virus was not contracted from another source – a tall order for a highly transmissible virus like COVID-19. In the meantime, however, it behooves all California employers to continue maintaining health and safety measures to prevent the spread of COVID-19, and react quickly and appropriately in the event of an outbreak of COVID-19 in the workplace.

Article By Karen E. Wentzel and Cristen R. Hintze of Squire Patton Boggs (US) LLP

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

© Copyright 2022 Squire Patton Boggs (US) LLP

How Changing Beneficial Ownership Reporting May Impact Activism

The SEC in February proposed amendments to Regulation 13D-G to modernize beneficial ownership reporting requirements. Adoption of the amendments as proposed will accelerate the timing – and expand the scope – of knowledge of certain activist activities. The deadline for comments on the proposed rules was April 11 and final rules are expected to be released later this year.

The current reporting timeline creates an asymmetry of information between beneficial owners on the one hand and other stockholders and issuers on the other. The SEC proposal is seeking to eliminate this asymmetry and address other concerns surrounding current beneficial ownership reporting. The accelerated beneficial ownership reporting deadlines will result in greater transparency in stock ownership, allowing market participants to receive material information in a timely manner and potentially alleviating the market manipulation and abusive tactics used by some investors.

The shortened filing deadlines should benefit a company’s overall shareholder engagement activities. The investor relations team at a company will have a more accurate and up-to-date picture of its institutional investor base throughout the year, which should result in more timely outreach to such shareholders.

INVESTOR ACCUMULATION OF SHARES BEFORE DISCLOSURE

Although issuers will likely view the proposed rules as beneficial, many commentators have predicted a negative impact on shareholder activism. Under the current reporting requirements, certain activist investors may benefit by having both additional time to accumulate shares before disclosing such activities and potentially more flexibility in strategizing with other investors.

Many commentators have argued that the proposed shorter timeline for beneficial ownership reporting will negatively impact an activist shareholder’s ability to accumulate shares of an issuer at a potentially lower price than if market participants had more timely knowledge of such activity and intent. In many cases a company’s stock price is impacted once an investor files a Schedule 13D with clear activist intent. This can even occur in some cases once a Schedule 13G is filed by a known activist investor without current activist intent.

If the shorter reporting deadlines reduce such investors’ profit, it is expected that an investor’s incentive to accumulate stock in order to initiate change at a company will also be reduced. Activists instead may be encouraged to engage more with management. In other words, the shorter reporting period may deter short-term activists and encourage more long-term focused activism.

TIMING OF ISSUER RESPONSE

The shorter reporting deadlines are also expected to result in management having earlier notice of any takeover attempt and to give a company the opportunity to react more quickly to any such attempt. There is potential for this to lead to increased use of low-threshold poison pills. But the SEC stated in the proposed rules release that it believes the risk of abundant reactionary low-threshold poison pills is overstated due to scrutiny of such poison pills from courts and academia, limitations imposed by state law and the unlikelihood that the beneficial ownership would trigger the low-threshold poison pills.

Companies that have low-threshold poison pills – such as one designed to protect a company’s net operating losses – may want to review them to confirm that the proposed rules would not be expected to have any impact. For example, such poison pills may link the definition of beneficial ownership to the SEC rules, including Schedule 13D and 13G filings.

‘GROUP’ REPORTING

Another proposed change expected to affect shareholder activism is the expanded definition of ‘group’ for the purposes of reporting under Schedule 13D. The current rules require an explicit agreement between two or more persons to establish a group for purposes of the beneficial ownership reporting thresholds.

Commentators believe that under the current rules, certain investors seeking change at a company may share the fact that they are accumulating shares of a company with other shareholders or activists, which can then act on this information before the general public is aware; in other words, before public disclosure in and market reaction to the Schedule 13D filing. This activity may result in near-term gains for the select few involved before uninformed shareholders can react.

Under the SEC’s proposed amended Rule 13d-5, persons who share information with another regarding an upcoming Schedule 13D filing are deemed to have formed a group within the meaning of Section 13(d)(3) regardless of whether an explicit agreement is in place, and such concerted action will trigger reporting requirements. This proposed change is expected to benefit companies and shareholders overall by preventing certain investors from acting in concert on information not known to a company and its other shareholders.

The full impact of the proposed rule changes on shareholder activism cannot be accurately predicted, but we believe that at a minimum, issuers will find it beneficial to have more regularly updated information on their institutional investor base for, among other things, their shareholder engagement efforts.

Article By Alexandra Clark Layfield and Rachel Solino of  Jones Walker LLP

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

© 2022 Jones Walker LLP

Monkeypox—Do Employers Need to Worry?

Several cases of monkeypox have now been found in the United States. We do not yet know whether employers will need to worry about monkeypox in the context of their workforces and workplace, but it may be wise to be informed.

Monkeypox is a viral illness that has symptoms including body aches, headaches, fatigue, and, notably, a bumpy skin rash. It is primarily found in Africa, most particularly in the Democratic Republic of the Congo. Monkeypox has an incubation period that generally lasts 7-14 days but can be as long as 5-21 days. It has now recently been found in the United States, according to the U.S. Centers for Disease Control and Prevention (CDC). The first case reported was in Massachusetts in a man who had been to Canada. The second was in New York City by another individual who had a virus similar to monkeypox. And the third was a “presumptive case” involving a Broward County, Florida, man who had traveled internationally, the CDC said.

Unlike what we have been through with COVID-19, wearing a mask will likely not be an issue with monkeypox. It is spread through infected animals, prolonged person-to-person contact, direct contact with lesion materials, or indirect contact through contaminated items, such as contaminated clothing. Avoiding these will help avoid the possibility of infection. Since frequent handwashing continues to be a good hygiene practice, continuing to make this an easy and frequent practice for employees is generally a good health practice, according to health officials.

Monkeypox has also recently been found in Australia, Belgium, Canada, France, Germany, Italy, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom. According to public health officials, the risk of exposure remains low although there are expected to be more cases in the United States. Health officials believe the smallpox vaccination will offer some amount of protection from monkeypox.

Employers that have employees who are soon to travel internationally, either for personal or business reasons, may want to consider educating them on the symptoms, how the virus is transmitted, and the fact that they may wish to consult with their own healthcare practitioners about the smallpox vaccination. There is no indication that travel should be avoided or prohibited.

Article By Katherine Dudley Helms of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

For more labor and employment legal news, click here to visit the National Law Review.

© 2022, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

USCIS to Implement Premium Processing for Certain Previously Filed Form I-140 Petitions

On May 24, 2022, U.S. Citizenship and Immigration Services (USCIS) announced that it would begin implementing premium processing for certain petitioners who have a pending Form I-140 under the EB-1 and EB-2 classifications.

As explained in our previous alert, USCIS had announced that it will expand its premium processing service to include additional immigration benefit case types, pursuant to a final rule issued by the Department of Homeland Security (DHS). The rule is intended to implement the Emergency Stopgap USCIS Stabilization Act passed by Congress and is part of USCIS’s efforts to reduce existing backlogs and provide needed relief to Employment Authorization Document (EAD) cardholders.

While the rule will become effective on May 31, 2022, it will be implemented in a phased approach over a three-year period. USCIS has now begun implementing these changes to premium processing, starting with certain Form I-140 classifications: EB-1C (classification as a multinational executive or manager) and EB-2 (classification as a member of professions with advanced degrees or exceptional ability seeking a national interest waiver (NIW)).

This expansion will occur in the following phases:

  • Beginning June 1, 2022, USCIS will accept premium processing requests for EB-1C multinational executive and manager petitions received on or before January 1, 2021.
  • Beginning July 1, 2022, USCIS will accept premium processing requests for EB-2 NIW petitions received on or before June 1, 2021, and EB-1C multinational executive and manager petitions received on or before March 1, 2021.

USCIS will only accept premium processing requests for currently pending cases based on their date of filing, as noted above. USCIS is not accepting new Form I-140 petitions in these categories with a premium processing request at this time. We anticipate that USCIS will expand premium processing requests for more recently filed EB-1 and EB-2 petitions in the future.

Article By Shannon N. Parker of Mintz

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

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

Small Businesses Don’t Recognize Risk of Cyberattack Despite Repeated Warnings

CNBC surveys over 2,000 small businesses each quarter to get their thoughts on the overall business environment and their small business’ health. According to the latest CNBC/SurveyMonkey Small Business Survey, despite repeated warnings by the Cybersecurity and Infrastructure Security Agency and the FBI that U.S.- based businesses are at an increased risk of a cyber-attack following Russia’s invasion of Ukraine, small business owners do not believe that it is an actual risk that will affect them, and they are not prepared for an attack. The latest survey shows that only five percent of small business owners reported cybersecurity to be the biggest risk to their company.

What is unfortunate, but not surprising, is the fact that this is the same percentage of small business owners who recognized a cyber attack as the biggest risk a year ago. There has been no change in the perception among business owners, even though there are repeated, dire warnings from the government. Also unfortunate is the statistic that only 33 percent of business owners with one to four employees are concerned about a cyber attack this year. In contrast, 61 percent of business owners with more than 50 employees have the same concern.

According to CNBC, “this general lack of concern among small business owners diverges from the sentiment among the general public….In SurveyMonkey’s polling, 55% of people in the U.S. say they would be less likely to continue to do business with brands who are victims of a cyber attack.” CNBC’s conclusion is that there is a disconnect between business owners’ appreciation of how much customers care about data security and that “[s]mall businesses that fail to take the cyber threat seriously risk losing customers, or much more, if a real threat emerges.” Statistics show that threat actors are targeting small to medium-sized businesses to stay under the law enforcement radar. With such a large target on their backs, business owners may wish to make cybersecurity a priority. It’s important to keep customers.

Article By Linn F. Freedman of Robinson & Cole LLP

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

Copyright © 2022 Robinson & Cole LLP. All rights reserved.

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