The National Law Forum

Full Ninth Circuit Removes Unwarranted Hurdles to Class Certification in Big Tuna Antitrust Case

Court delivers a necessary course correction in the law of class certification.

There was reason for optimism in August 2021, when the Ninth Circuit Court of Appeals granted rehearing en banc of a 2-1 decision that would have made it more difficult for antitrust claimants to secure class certification. The three-judge panel in Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 993 F.3d 774 (9th Cir. 2021) had determined that Federal Rule of Civil Procedure 23(b)(3) required a district court to find that no more than a de minimis number of class members are uninjured before a class may be certified. Having announced this de minimis rule in its opinion, the court then took the unusual step of inviting the parties to argue whether the full court should rehear the issue en banc.

As we wrote last year when en banc rehearing was granted, with its de minimis rule, “the panel really jumped the median strip.” We argued that the rule conflated the question of whether issues common to the class predominate over issues unique to individual class members with the question of how the class is defined and that the Ninth Circuit’s new and unrealistic de minimis requirement erected an unnecessary procedural hurdle to class certification. Other commentators and amici argued that requiring proof that all but a de minimis number of class members are injured requires a determination on the merits, impermissible at the class certification stage.

In welcome news for claimants and attorneys who bring antitrust class actions, the Ninth Circuit sitting en banc decided against the de minimis rule, for all of the foregoing reasons, in Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, No. 19-56514, 2022 U.S. App. LEXIS 9455 (9th Cir. Apr. 8, 2022).

In a thorough review of the requirements for class certification under Rule 23, the Ninth Circuit held that the movant’s burden is to prove the prerequisites of Rule 23 by a preponderance of the evidence, bringing the Ninth Circuit in line with the law in the First, Second, Third, Fifth, and Seventh Circuits. As for the predominance requirement of a Rule 23(b)(3) class, the court cited In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 311 (3d Cir. 2008) as amended (Jan. 16, 2009), to hold that, when assessing whether a plaintiff has proven that a common question related to a central issue in the claim predominates, a district court is limited to resolving whether the evidence establishes that a common question is capable of class-wide resolution, not whether the evidence in fact establishes that plaintiffs would win at trial.”

In rejecting the de minimis rule, the court began with the notion that class-wide proof is not required for all issues. Thus, the need for individualized assessment of a class member’s damages does not preclude a court from certifying a class. It contradicts this notion to require proof of injury of not more than a de minimis number of class members.

The presence of uninjured class members, the court held, does not defeat predominance. Predominance is defeated only where the class members cannot rely on the same body of common evidence to establish the common issue.

The presence of a large number of uninjured class members, however, could require a district court to consider whether the class definition is “fatally overbroad.” The remedy in that case, the court said, is to “redefine the overbroad class to include only those members who can rely on the same body of common evidence to establish the common issue.” “[T]he problem of a potentially ‘over-inclusive’ class,” the court said, “can and often should be solved by refining the class definition rather than by flatly denying class certification on that basis” (citation and internal quotation omitted).

With that, the Ninth Circuit reversed the three-judge panel and affirmed the certification of the classes by U.S. District Judge Janis L. Sammartino of California’s Southern District*, holding that the district court did not abuse its discretion in concluding that the methodology employed—statistical regression analysis and other expert evidence—”was capable of showing that a price-fixing conspiracy caused class-wide antitrust impact.” [*Judge Sammartino subsequently recused herself and the case was reassigned to Chief Judge Dana Sabraw.]

The 9-2 decision was written by Circuit Judge Sandra S. Ikuta. In a dissenting opinion, Circuit Judge Kenneth K. Lee said as much as a third of the class members were unharmed. This is a “victory to plaintiffs” who will now be able to settle the action without having to prove their case trial, he said.

The suit was brought by direct purchasers of tuna products, indirect purchasers of bulk-sized tuna products, and individual end purchasers against the owners of Bumble Bee Foods LLC (currently in Chapter 11), StarKist Co., and Chicken of the Sea—which sell more than 80 percent of the packaged tuna in the United States. The industry has also been investigated by the Department of Justice in recent years, resulting in criminal guilty pleas by industry executives for participating in a price-fixing conspiracy.

Nothing in Rule 23 suggests that the presence of more than a de minimis number of uninjured class members affects whether questions affecting only individual class members predominate.

The now vacated de minimis rule conflates impact with damages and the predominance inquiry with potential overbreadth in the class definition. The Ninth Circuit’s en banc decision is a model of clear thinking and a welcome course correction in the law of class certification.

Article By Dan Mogin and Jonathan Rubin of MoginRubin

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

Return to Work Considerations – COVID and the ADA

Employers are contending with difficult challenges unlike any time in modern history. Even though many employees, especially in the manufacturing industry, returned to work after working from home during the COVID pandemic, the effects of the increased flexibility seen during the COVID era linger. Many employees enjoyed the benefits of working from home during the last two years, even if only part-time, and do not want to give up the benefit. By contrast, and especially as COVID restrictions ease, employers often desire their workforce return to work in a more consistent and routine capacity. These tensions are further complicated by an extremely competitive labor market. Recruiting and retaining employees is a challenge in the current environment. Against this backdrop, prudent employers will keep in mind employment law considerations when developing return-to-work and work-from-home policies.

Where should an employer look to determine what accommodations it should make for an employee who wishes to work from home, either due to a COVID diagnosis and/or a condition that places the employee at a heightened risk for severe COVID? Early in the pandemic, local or state health orders answered such questions regarding COVID-related leave. As the pandemic continued, many of those local health orders were rescinded or expired. As a result, employers are left without clear local guidance. When local requirements are of no assistance, employers should look to CDC guidance for quarantining and isolating guidelines.

In addition, employers should keep in mind that COVID may qualify as a “disability” depending on the symptoms and their severity. If an employee tests positive for COVID and is experiencing symptoms that require an absence from work that is longer than the CDC recommended quarantine period, employers should involve legal counsel to analyze whether the employee’s COVID diagnosis constitutes a disability under the ADA. If it does constitute a disability, the employer is then required to engage in the interactive process under the ADA with the employee to determine whether a reasonable accommodation for the disability can be made. Leave can be an accommodation under the ADA, as can working from home, in certain circumstance and for certain roles.

Likewise, some disabilities may heighten the risk of severe COVID symptoms. In the event that such a disabled employee requests an accommodation related to this heightened risk of COVID, the employer should treat the request as it would any request for accommodation under the ADA. As always, employers should seek legal counsel and check local requirements regarding COVID leave when considering accommodations for employees in these circumstances.

Employers have many competing and challenging considerations when determining a company’s return-to-work policy. While the labor shortage, industry, and specific role considerations certainly play a part in those decisions, employers should not lose sight of the ADA’s additional requirements. The ADA may play a role on an individual level and affect whether an employee may seek leave, work from home, or is entitled to other accommodations related to a COVID diagnosis or high-risk factors.

Article By Felicia S. O’Connor of Foley & Lardner LLP

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

Legal News Reach – Season 2, Episode 1: Immigration & Its Impacts on the U.S. Labor Market with Raymond Lahoud [PODCAST]

Welcome to our first episode of Season 2! Rachel and Jessica speak with Raymond Lahoud, a Member of Norris McLaughlin, P.A., focusing on immigration law. Immigration issues are complicated enough, but how does that factor into boosting the U.S. economy? Listen to our last episode to find out more.

Be sure to also check out the latest episode of Mr. Lahoud’s podcast, “Immigration Matters.”

We’ve included a transcript of our conversation below, transcribed by artificial intelligence. The transcript has been lightly edited for style, clarity, and readability.

Full Transcript

INTRO 00:02

Hello and welcome to Legal News Reach, the official podcast for The National Law Review. Stay tuned for our discussion on the latest trends, legal marketing, SEO, law firm best practices, and more.

Rachel 00:15

Today’s episode is the first of the second season, where we’re broadening our focus to trending topics in the legal industry. Today we’re speaking with Ray Lahoud, Member of North McLaughlin about the impact of COVID-19 on immigration and labor shortages. Ray, would you like to tell our listeners a little bit about yourself?

Raymond Lahoud 00:30

Well, thanks for having me, Rachel. It’s really awesome to be here on this podcast and to talk about such an interesting area of law right now, in the world, particularly immigration law. I’m a partner at Norris McLaughlin, where I serve as the Chair of the Immigration Law Group here. I handle employment-based immigration matters, removal defense, employment, verification, I noncompliance all types of immigration matters, a broad spectrum with my great team of attorneys, paralegals, and assistants here at North McLaughlin. So thank you again for having me. It’s great to be here.

Rachel 01:05

One of the first topics we wanted to focus on here is immigration’s impact on labor shortages. You’ve written a lot about the impacts on the U.S. economy due to labor shortages. Can you explain how immigration can help remedy the situation?

Raymond Lahoud 01:18

I think we can all agree that without labor without employees, without people to go and work in whatever company, whatever organization, whatever place that exists out there that that needs to provide services or goods to the American public needs, needs employees. Without labor, there’s no economy, immigration right now is really a huge part of the employment demand, or the employment shortage share. There’s a lot of Americans who are able to legally work who just don’t want to work or have you know, taken different decisions or different approaches on life or what they want to do with their life. But we still need people to perform some of these essential functions from farming, to nursing care to handling, you know, mushroom picking to manufacturing, immigration is the way that has long proven to be a way to solve that through temporary visa programs through you know, green card programs that existed out there. And under the Trump administration. And when COVID hit, things really got hit pretty hard and really slowed down the ability for people to bring in international employees to the United States that fill that gap.

Rachel 02:29

This has been an ongoing issue. So are there any policy changes on your radar that will help solve this issue, either through immigration or otherwise?

Raymond Lahoud 02:38

The only way to solve this issue is through comprehensive immigration reform. For over a decade now, we’ve been using the number of 11 million people that are in the country without documentation, I think we can all agree that that number is significantly higher, probably 20, or 30 million people, step one is going to be trying to figure out how we handle those 20 to 30 million people or even Federalists 11 million people that 11 to 20 million people that we have the United States without documentation. And that means that some people are going to have to be deported, who you know, may have certain crimes may have certain issues in terms of their background, but a significant number of these individuals have been in the country for a long time, working without authorization, pleading taxes. So there has to be a process of legalization for those individuals, which is the big issue. We don’t what is legalization for them. And then there also has to be a secure border where people can’t just cross the border without any documentation. I mean, every country has borders, borders are important. We can all see how important borders are right now with what’s happening in Ukraine. You know, comprehensive immigration reform includes having an ability for individuals to come into the United States to work to claim asylum if they have to, to help our employers here in the United States who need employees because people are just not taking part or not applying to Americans are just not applying to take on these jobs. The great resignation has, for some reason taken over the United States and it continues. So what do we need? We need comprehensive immigration reform? How do we get there? It’s getting members of Congress to agree daily, I’m talking to clients who will arrive in Pennsylvania and they’ll say how do I start working here I just crossed the border assuming that because they heard on Facebook before they came up here are on TikTok are though like that it would be very easy for them to claim asylum. So I’m dealing with a lot of clients and potentials and individuals who have just recently crossed the border now feel that they’re stuck in the United States because they can’t leave because they have to go through proceedings and they can’t work. I mean, there’s also in this representation, let’s say that we keep hearing the numbers, millions are coming to the United States. There are millions of encounters. So you may have one person try to come to the United States four or five times and each one is considered an encounter. And this is a problem that we see from President to President, by the way, and this is why I say we need comprehensive immigration reform. Because let’s go back to 1986. Ronald Reagan was going to deal with the immigration problem we had, you know, millions of people here in the United States back then. And he did put three amnesty 1213 14 million people were granted permanent resident status, they say that cost the turn of California to a blue state once they became citizens top political. In the end, they’re like going back to that every President has made immigration, much tougher, actually very tough. Actually, it was the administration that puts some of the toughest policies when it comes to what’s called the public charge rule. The way our system is written right now is that the executive branch just has so much ability and authority discretionary ability and authority over what to do or what not to do, what they can do what they can’t do in terms of immigration. And then every time a new president comes in, something changes drastically. So you had Obama come in, then he puts in place DACA, you know, gives eight 900,000 people, you know, a temporary quote-unquote, status, and you have President Trump come in, and he takes it away. And then you have President Biden come in. Again, it goes back to comprehensive immigration reform. It’s all just been patchwork since after ’86. Now we have 11, 12, 13, 14, 20 million people here. So it’s-I think the distaste is, is that we’re going to grant people status, and it’s just going to happen, again, has to be a two-fold fix as to be true, comprehensive immigration reform where we’re not, you know, 10 years down the road, we don’t have another 15 million people that don’t have documentation here.

Rachel 06:34

What can companies do to help deal with this shortage of immigrant labor or just labor in general?

Raymond Lahoud 06:39

Every day, I probably field 20 to 30 calls from employers who cannot find employees. It’s the biggest problem. I think that’s facing our country right now. And I’m not sure where it comes from, I really don’t understand what this great resignation is, I don’t know how people can live. Right now, there are several legal immigration processes that are available. One is the H Tubi. system, which is a great way of bringing in seasonal employees for farms for landscaping, contractors, painters, manufacturing work, which we bring workers over here year after year. The H1-B lottery is another visa process. So there’s visa processes that are out there, it’s good to avail as an employer to not be afraid of these processes to you know, when you’re recruiting globally recruit, and when you find a candidate, seek out an immigration attorney and say, Hey, is there a way that I can bring this person over legally sponsor them? Is there a pathway and there are. You have companies like the bigger tech companies that are getting all the big H1-B visas, you have the bigger farming companies that are getting all the H2-B visas, because the smaller ones are not really availing themselves, the legalized programs that exist there, we have a lot of people who are coming into the country across the border, these individuals, they’re turning themselves into the Customs and Border Protection. So there’s an expectation at some time that, you know, some of them have fears of returning, I mean, that they’re going to start going through processes. These are individuals that will likely have employment authorization documents, within a year or so don’t forget about the American worker offer good wages, offer good benefits offer time off the world’s change right now in terms of how things work. So if there’s, you know, remote operations that you can offer, do that offer child care services, if you could, but you have to be creative.

Jessica 08:25

So I would love to get your perspective since you’ve been involved in immigration law for so long, and you definitely have a great grasp on the history of a lot of immigration policy changes. I know with COVID, you know, the legal industry got backed up in general; just court cases being rescheduled, I would really like to know what the last two years for immigration law has looked for you how has it changed because of the pandemic updates on border restrictions? I’d love to get your take on that.

Raymond Lahoud 08:52

When the pandemic hit immigration really became incredibly, incredibly busy from the travel restrictions to a title 42 at the border expulsions to people that were detained in immigration custody that were getting COVID It was a disaster for a long time for a lot of people. A lot of people out there who are stuck in other countries, you know, travel bans were coming up and moving and changing by the minute. And companies. You know, the companies that we represent, the employers that we represent that keep operating there were essential. They were central companies and they were healthcare companies. They were companies that do industrial manufacturing or handle electricity and the like, so they needed their employees here. So during COVID, we spent a lot of time trying to figure out the ways to bring a lot of these employees into the United States through the waivers that existed. They’re reaching out to the State Department to seek special exemptions. And then at the same time, you know, the immigration to the deportation defense part of it really came to a halt. court hearings were halted for all like non detained cases, which took an already incredibly backlogged immigration court system and took it about I have four more years behind now. So you’re probably looking at a good 10 years before an immigration judge for a trial. And after continuances and the, like 10 cases COVID really spread pretty heavily, we have to file lots of petitions and requests to try to get clients that were detained by immigration out of custody within the United States. So a lot happened during COVID. And when it came to immigration, in those days, there were nights where I was awake at, you know, two, three in the morning, making sure a client was able to get back in.

Jessica 10:34

We’re in such an interesting environment at this point, especially more recently with the Ukraine crisis, but we also had a changing of the hands in the White House, all the different elections. So there’s been a lot of transition period. And you know, we touched on it a little bit already. But the changes moving forward, I mean, now that the pandemic is having some type of release, besides needing that comprehensive immigration law changes, do you see any other changes now that we’re getting out of the pandemic, whether that’s Ukraine specifically, or just in general? What do you think is gonna happen here?

Raymond Lahoud 11:07

I think that we’ve, we’ve moved on to our next disaster with our next emergency, we’ll say, which is Ukraine right now. This is all that we hear about on the news, there aren’t COVID numbers at, you know, at the bottom, how do people are dying, how many people died and the like, I just feel that, you know, Ukraine has as taken over COVID. Now COVID brought on a time of remote hearings, which are still continuing now. The immigration courts, making fun of them with, you know, video, WebEx hearings in Zoom hearings, are able to move them quicker through the system and the like, and I have some serious issues. When it comes to remote hearings. You know, there’s huge due process concerns and having my client be able to testify in person where the judge can see his or her face. You know, there’s some very serious concerns in that. So they’re changes that, you know, came about from COVID, in terms of remote operations and the like, but I don’t know if they’re necessary to our benefit, even for, you know, immigrants work were coming in. And also, you would think that we really learned how to process things a lot faster. You know, what, we’re kind of hit with the crisis, and we just aren’t, you know, our embassies are still in a huge backlog when it comes to processing visas and, you know, fiance petitions and merit-based petitions and the like, but we are seeing movement here stateside within that, honestly, in terms of change. I mean, you just, it’s all patchwork.

Jessica 12:27

If memory serves me correctly, I know the Biden administration has put more emphasis on visas for STEM. I think people coming either for schooling or for employment, if I’m remembering correctly, do you think that’s a step in the right direction, I know it’s another “patch,” but…

Raymond Lahoud 12:43

The United States has a huge number of international students in the United States, even locally here in what’s called the Lehigh Valley, Pennsylvania, Lehigh, Lafayette, Cedar Crest Moravian, their F huge international student populations and international student populations are critical to cultural diversity to you know, just to the growth of the school and it’s bringing the world together. So as part of it, so students will come here from abroad, Saudi Arabia, countries, China, Japan, Australia, they’ll come to the F1 visa complete their courses here to get a bachelor’s degree. And if they typically, if you come in under the f1 visa, regardless of your degree, you’ll get 12 months of what’s called occupational practical training. And that’s because you 12 months of just training in your, your area of of studies, when you were in school, if you earned a STEM degree science, tech, engineering or math degree, you can get an additional 24 months of occupational practical training. To me, that’s great to me for bringing people here, and we’re educating them, we should keep them here and you know, give them jobs here. I mean, we there’s no reason that you know, we should be training talent and, you know, bringing in talent from across the world, and then just sending them, you know, back to, you know, their home country, particularly if they’re willing to stay and work here and become members of society in good standing that contribute pay taxes. Why not? Even if you were you came in, you knew you were coming in across the border, see, you’re still a kid, and then you turn over all of your information to the government when you’re 17 or 18 years old. And then, you know, four, eight years later, the Trump ministration says that they are going to get rid of it and it goes through courts who put it back in and take it out and put it back in and then there’s an injunction lifted, and these are hundreds of thousands of lives in people’s hands. People really have to recognize that there are faces to these individuals that have deferred action that have temporary protected status that there are faces to them. And it’s more than just politics. But could you imagine if you were in that position with deferred action, not knowing should I finish going to college should I spend the money should I take a job, what do I do next?

Jessica 15:01

COVID already caused a very large limbo feeling if you’re coming from another country, or you’ve been here, and then you might be told, “oh, you gotta go back to where you came from.” And I can’t imagine being young when you come here and then going back to a country you don’t even really know.

Rachel 15:17

So we wanted to get your viewpoints on Ukrainian refugees and immigration, how does this compare to other refugee crises that we’ve had in the past

Raymond Lahoud 15:27

Ukraine refugee crisis has brought the US government to its peak when it comes to refugees, and the like, they’ve acted very quickly, to bring in them what’s called Temporary Protected Status. You compare it to you know, what happened in Afghanistan and the lake, there are a lot of differences, I would say just that how quickly they are granted temporary protected status. You know, if you’re from Ukraine, there’s countries that are setting up policies like Canada to try to bring in people from Ukrainian. And I hope that these policies that these countries are putting together to help refugees in times of crisis will stay for other countries to beyond Ukraine’s. Hopefully this won’t be the last time that you’ll see other countries open their doors to help people. My mom and dad are both born in Lebanon and immigrated here during the civil war in the late 70s. And it was devastating. And the US opened its doors to the Christians from the north, they came in and became an integral part of the society life here in Pennsylvania, it’s good to see that in Ukraine, but we’re going to have other countries that are going to have similar issues. And who knows where, you know, President Putin may stop, we just really have to think long term about it. Because we also have to be realistic. And we can only handle so many people in our country. I hate to say that.

Rachel 16:49

How does that factor into maybe some of the more, like, long-term policy changes that the country could implement? Is there a need to sort of rethink how we bring in refugees, and how many people we can take and how that process really goes?

Raymond Lahoud 17:02

There is, there is, but how do you rethink that? You know, how do you it’s even just saying, you know, how many people can we take in I know you just feel I feel internally bad because you don’t want to turn anybody away, that’s really hurting, you know, and but we have to, thankfully, I’m not in Congress to make up those decisions. But I think there has to be, you know, some sense of reason, and balance. And I’m not really sure what that is.

Rachel 17:29

Like the US has to work together with other countries to make sure that we help them out of people that need to be helped. I don’t think it’s realistic for one country to sort of shoulder most of the burden.

Raymond Lahoud 17:38

It’s very hard to get refugee status. I mean, you don’t just kind of come into the United States and walk-in and may take years to go through I mean, if you’re going to the Iraqi refugee have to go in through the United Nations refugee program, there’s a huge process you have to go through, it’s not easy. The things that happened in Afghanistan kind of made known the issues with our you know, the refugee program and the lake. But it’s not, it’s not an easy process to go through. You can’t just walk into an embassy, US Embassy and say, Hey, I’m I’m afraid of where I’m living, I want to go to United States,

Rachel 18:09

Right, yeah. And I imagine on top of even having to be in a situation where you have to flee your home.

Raymond Lahoud 18:15

Anybody that goes through pain, like a harm or fear, you know, I mean, whether it’s domestic violence, and those are the worst of cases where I have clients who are coming in suffered extreme domestic violence, like at the hands of their spouses and the like, and, and with those, you know, you know, what you do, you can send them back, you know, when that when the spouse is going to kill them on, you know, they’re dead on arrival. And so those are cases that we’re dealing with inside the United States right now. It’s like we have refugees coming in. But we also have asylees, here in the United States that were people who are in here applying affirmatively for asylum, we have a lot of people in the United States that are here on like a protective status we do. We do so much. And other countries are recognizing that if you take a look at Australia, so people are coming into the to Australia, they don’t go into the country, they sit off-island for a long period of time for they claim asylum or anything like that. The other countries that are out there, I think that they all have some pretty unique set of circumstances that are there, and in ours has a lot of issues that we have to really work through.

Rachel 19:16

So you’ve written about policy changes in Pennsylvania aimed at helping undocumented immigrants, you know, entrepreneurs, people who are getting driver’s licenses, things like that. I was curious to get your insight on how you see these changes impacting both immigrants in the state as a whole, like what sort of have been the changes there?

Raymond Lahoud 19:33

Driver’s licenses in Pennsylvania, we’re seeing a movement. New Jersey, just fair aware, they pass legislation in the implement to the driver’s licenses, people who may not have a social security number or the like, right now in Pennsylvania. I believe it’s in the House Committee. It’s being discussed. I don’t see it moving out of there given the current makeup of the legislature. I don’t foresee it happening in Pennsylvania anytime soon. It does keep coming up a lot by members of the State House, I think it’s a good idea because people are driving. Let’s get real. There are people without papers in the United States. I mean, if we don’t realize that, I think that we’re just fooling ourselves. So, you know, it’s if it’s a way for them, they’re voluntarily providing their information, you know, why not register it, they can get their insurance. It’s not a federal issue. It’s a state issue as the as right to get driver’s licenses, it’s state-by-state. Pennsylvania considers that they look at it, they bring it up, but it always fills in committee doesn’t go anywhere. Pennsylvania, has the political planet as a swing state, as we all know, and immigration is a hot topic issue here.

Rachel 20:37

I’m glad to hear that at least it’s even if it’s not, you know, moving forward, I think it being on people’s minds is a good thing. So in terms of changes like that, and maybe large scale changes, like we spoken about how we just need really large scale immigration reform, I was wondering, we could talk about the changes that you think need be made to both attract and retain immigrants in the United States, I think there’s a lot of talk about specifically, after the Trump administration, a lot of international students to stop coming here, you know, the United States is losing talent to countries like Canada and other places like that. So I was curious to get your thoughts on that.

Raymond Lahoud 21:14

COVID-19 opened up a different way of kind of operating, we had spoken earlier, where, you know, these companies are now recognizing that they could get that global talent opened up a facility in India or, you know, have somebody remote in from Canada, or actually just physically move their locations to Canada, or their offices or their manufacturing sites to another country, because it’s easier to bring labor in. I think that other countries are starting to embrace certain kinds of immigration, like I know that Canada is, you know, they’ve implemented that another investment-based immigration system, they’ve made it easier for Indian workers a certain kind of ticket during COVID in the light. So there are countries that are taking no more proactive approach to bringing in people but during the Trump administration, people from abroad really felt they weren’t welcomed in the United States. And I saw that a lot with students, and there was a significant number. It’s coming back, and I’m seeing the numbers come back, and just from the schools locally, that that we’re working with. So in terms of the International Student Program, you know, I do feel that it’s picking back up after COVID. And after the Trump administration, I just think we have to kind of keep going with it to make sure that, you know, we know that the people that we’re inviting into our country, we know that we have to welcome them here and treat them kindly, and work with them. Because we’re just we are one world one people. I’m really just, I think it’s a realist here, and that, you know, you have immigration lawyers who, you know, will just, you know, push things to like an end and say, No, open borders, and you have no people on another end that would say, you know, close everything to anybody. And but I think we have to have recent ability. I mean, you just can’t close the United States to everything. I mean, you can’t close the United States to the globe’s cultures, we just have to find a middle ground. And I hope that, you know, I was able to kind of present some of that reason that no middle ground, that’s there being immigration where it’s hard to take, you know, some things that Trump did weren’t necessarily I’m going to do but if somebody heard me say that, and I will now, you know, they would be shocked at it. But I think that’s what the issue is, is that there’s no meeting of minds. People just become enemies, because somebody has a different political opinion. You know, I think there really has to come a realization that we just can’t shut the borders down completely. And you can’t open the borders up completely. There just has to be a middle ground that we all have to reach in. Our members of Congress really have to grow up and hopefully, they will. And hopefully, they’ll work with the Biden ministration. We’ll get somewhere.

Jessica 23:52

I actually have an interesting question. Since you’re located in Pennsylvania; Lancaster’s, a certified welcoming status for refugees. Do you think that’s helpful in situations like Ukraine? And like if more cities did that, do you see that as a positive direction?

Raymond Lahoud 24:06

I do, I do. I mean, like…Philadelphia has, like a welcome center for Lancaster was one of the counties like that. It’s really what they do with it is, yeah, it certainly hops. The more the better. Governor Wolf has actually taken very proactive actions towards the Ukrainian community here, even locally. But again, there’s more than just the Ukrainian community that are suffering from prosecution. So hopefully, it’ll open our minds to how we deal with other areas and in the future when this happens and how other countries can work together with it. But yeah, it does. It does help because it shows that we care you know, things like that only they can start shows that we care. You know, even if you know, New Jersey, they couldn’t give them give people a real ID driver’s license, but they gave them a license to drive and pencil and they can leave the state drive and add to it, it’s still a driver’s license so they can give What they want to know as much as they can give them and if that’s what Lancaster was able to give them, that’s what it was. They can’t give driver’s licenses but um, you know, that opens up a door for immigrants and to have stuff like that it’s good for them to have programs like that is good.

Rachel 25:14

Well, excellent. Thanks again, Ray for joining us today. We had a great conversation.

Raymond Lahoud 25:20

It’s really been good being here talking about immigration. It’s an interesting topic. And hopefully, we’ll see things changing in the years to come and I’m here to talk to you whenever. Yeah, thank you for having me.

OUTRO 25:40

Thank you for listening to The National Law Review’s Legal News Reach podcast. Be sure to follow us on Apple Podcasts, Spotify, or wherever you get your podcasts for more episodes for the latest legal news. Interested in publishing and advertising with us? Visit www.natlawreview.com. We’ll be back soon with our next episode.

Article By Rachel Popa and Jessica Scheck of The National Law Review / The National Law Forum LLC

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How to Realign Your Law Firm Goals this Spring

Around the new year, many law firms become motivated to set or reevaluate goals, plan for the year ahead, and improve current processes. Unfortunately, time moves quickly. The new year may slip away, but spring is another great time to realign your law firm goals, evaluate what went well or needs improvement, streamline operations, and get a “fresh start” for the rest of the year.

Law firms should take advantage of spring cleaning and use it to freshen up and realign law firm goals.

Law Firm Goals Review

Before law firms can make major “spring cleaning” changes, they should check in on the goals set for the new year. Spring is on the verge of a new quarter, so it’s good for law firms to check in with the goals that were set in the new year and the performance of the first quarter.

If the law firm is on track to reach goals by the end of the year, excellent! If not, this is a time to reevaluate needs, priorities, and goals, and get a pulse on the status of the firm’s health as a whole.

Ideally, the year began with SMART goals (Specific, Measurable, Achievable, Relevant, Time-Bound). These goals are clear and measurable, meaning they’re easy to assess and evaluate.

The key to SMART goals is measurement. Though it may seem obvious, law firms must measure their goals to see if they’re on track to reach the desired outcome, and what can be adjusted to put the firm in a better position to succeed.

Website Updates

Whether large or small, law firms of all sizes need a functional website to grow and evolve. Websites can become outdated quickly, impacting a law firm’s brand and reputation.

Websites should get a refresh regularly, but if a law firm has grown or made major changes in the past year, an update is a must. Perhaps there’s a new practice area or new office for the firm, or a revision to aspects of the brand like the logo or mission statement.

No matter the change, this is an excellent opportunity for law firms to revamp the website and ensure it accurately reflects the brand.

Record Cleanup

A law firm’s records are important for tracking financial activity and transactions. Without clear and accurate books, a law firm can’t make sound business decisions about the future of the firm or its financial health.

Spring is a good time for law firms to “deep clean” the books. They should review the files and accounts, cancel unused subscriptions, and organize receipts and records. While it may be early in the year, there are things your firm can do to prepare for the end-of-year frenzy. Now is the time to evaluate your need and future goals for the remaining of the year. A law practice management solution, like PracticePanther, offers streamlined billing and online payments, and reporting, making record cleanup a simple, straightforward, and fast process. This not only helps with the spring overhaul, but firms can monitor their books more easily throughout the year.

Marketing Strategy

Like goals, marketing strategies need to be evaluated and revamped regularly to stay ahead. Spring offers an opportunity for law firms to refresh marketing strategies and see what’s working (and what isn’t) to develop more effective solutions.

What worked in the past may not work this year, so law firms should consider changes in the new year like:

New marketing trends
Social media account updates
Automated email template updates
New SEO best practices
Site audits
Marketing analytics and KPIs

All firms need marketing, no matter how small or simple the firm or its business development. PracticePanther simplifies tracking your marketing strategy success with features such as legal CRM to keep track of and tag leads based on a custom source.

Inbox Cleanup

Busy law firms can amass a lot of old files, documents, spam, and client correspondence in a physical or email inbox. Left unchecked, the inbox can become disorganized, overwhelming, and more difficult to tackle in a reasonable length of time.

Cleaning the inbox is always time-consuming, but law firms should set aside time in the schedule to completely clean out the inbox (both physical and digital) to bring it back to a “clean slate.”

This is also a good time for law firms to do some additional digital cleanup, such as deleting old files and folders from the computer, updating apps and programs, and running a cleaner program to remove all the “junk” that can slow an operating system down.

Fee Agreement Updates

Fee agreements are ripe for problems with compliance. In the spring, law firms should review and revise fee agreements to ensure they’re still in compliance with the local jurisdiction’s ethical rules. This is especially true if the law firm has added a new practice area in the past year.

Other changes can prompt an update of the fee agreement, such as changes to the forms of payment the law firm accepts, file destruction policies, and more.

Continuing Legal Education (CLE) Status Check

Compliance reporting comes up quickly, and if a law firm isn’t prepared, it can be a mad dash to get everything together. Even if the deadline isn’t until the end of the year, it’s best for law firms to use the spring-cleaning period to check the CLE status.

If the state requires reporting of all courses, and some certificates are available, they can be sent in early. If the state is self-reporting, the certificates should be organized in preparation for a possible audit. It’s important that the certificates are backed up, such as with a cloud-based digital storage solution.

Technology Evaluation

Law firms have a lot of technology at their fingertips, whether in an all-in-one practice management solution or individual apps and subscriptions. All of this can add up, especially if certain apps or features aren’t used enough to make it worthwhile.

Along with the rest of the spring cleanup, law firms should take stock of all technology expenses for the firm and evaluate which options are beneficial. For example, the firm may have tried a subscription service or app on a trial basis (which has since shifted to paid) that no one uses. These costs can slip through the cracks, especially if they’re small.

PracticePanther all-in-one law practice management software eliminates the need for costly subscriptions by keeping many operations in-house. Your firm can process online payments with our built-in payments processor, send documents for signature with native eSignature, and even send text messages to clients with 2-way business text messaging without leaving the platform.

Article By PracticePanther

For more articles on the legal industry, visit the NLR Law Office Management

Leave as a Reasonable Accommodation Continues to Vex Employers

An employee needs time off from work because of a medical issue. The employee is not eligible for leave under the Family and Medical Leave Act (FMLA), so the employer cannot call it FMLA leave.

Since the FMLA does not apply, does the employer have to give the employee leave under the Americans with Disabilities Act (ADA) as a reasonable accommodation? If so, for how long?

The issue of leaves of absence as a reasonable accommodation under the ADA continues to trouble employers. In comparison to the FMLA, which provides fairly bright lines regarding when leave is required and how much leave is permitted, the ADA’s lines are blurry when it comes to leave as a reasonable accommodation.

Medical Leave Can Be a Reasonable Accommodation Under the ADA – Even When In-Person Attendance Is Essential

A very recent decision (April 2022) from the Sixth Circuit Court of Appeals further illustrates this point. In the case of King v. Steward Trumbell Memorial Hospital, Jeanne King worked as an RN for Steward Trumbell Memorial Hospital. King had asthma, and when her asthma flared up badly enough, she needed to miss work. In April 2017, King had an asthma attack that left her unable to breathe, and she continued to suffer from severe asthma-related symptoms for five weeks, which caused her an emergency room stay in the hospital where she worked. During this period of time, she missed her next 14 shifts.

Four days after being released from the ER, King requested FMLA, but King was not an eligible employee under the FMLA as she had not worked 1,250 hours within the prior 12-month period. It took a few weeks for King to find out she was not FMLA eligible, however, and during that period of time, the hospital terminated her for failure to timely apply for a leave of absence. King filed a lawsuit claiming, among other allegations, violations of the ADA for failure to provide medical leave as a reasonable accommodation.

In her lawsuit, King claimed that if she had been given medical leave as a reasonable accommodation, she could have returned to work and satisfactorily performed her job. On the other hand, the hospital argued that regular, in-person attendance as an RN was an essential function of King’s position, and that the hospital was not required to eliminate that essential function as a reasonable accommodation under the ADA.

The trial court ruled that the hospital was right – regular, in-person attendance was an essential function of the RN position – and therefore King’s request for an exception from that requirement was per se unreasonable. The Sixth Circuit disagreed, however, and held that leave can be a reasonable accommodation even when in-person attendance is required to perform the job’s essential functions because the leave “enables the employee to return to work following the period of leave requested as an accommodation – i.e., it enables the employee to perform the essential function of attendance.”

So, What Makes a Leave of Absence Request Reasonable?

Given that a medical leave of absence can be a reasonable accommodation, the question then becomes what makes an accommodation request reasonable? In other words, how much leave is reasonable?

As the Sixth Circuit stated in King, there are few bright-line rules regarding how much leave an employer may have to give as a reasonable accommodation. One general rule that applies in most cases is that an employee’s request for indefinite leave is not a reasonable accommodation. So, if an employee is truly requesting an indefinite leave of absence, then an employer could likely deny that request for accommodation because it is unreasonable.

In contrast to indefinite leave, a request for a defined period of leave can be a request for a reasonable accommodation. For instance, in the King case, King requested five weeks of medical leave, which the Sixth Circuit found to be reasonable. While the reasonableness of a leave of absence oftentimes depends on the circumstances, generally speaking a leave request of 30 days or less is likely to be reasonable. It would likely take an employer about that long to fill the position anyway – so up to 30 days may be OK.

When determining whether the length of a leave request is reasonable, courts can refer to the amount of leave that the employer grants under its medical leave policy. For instance, in the King case, the hospital had a policy allowing for up to one year of non-FMLA leave. In comparison to seeking a year of non-FMLA leave, King was seeking five weeks. Since the hospital allowed up to one year of non-FMLA leave, and King was requesting five weeks, that helped make King’s request reasonable in the Sixth Circuit’s eyes.

Another factor to consider when deciding whether to grant leave as a reasonable accommodation is whether the leave could be effective in allowing the employee to return back to work. If the employee’s prognosis indicates a likelihood of recovery, then that weighs in favor of granting a leave of absence as a reasonable accommodation. On the other hand, a leave of absence for a situation in which the employee likely can never return to work is probably not a reasonable accommodation.

Tips and Takeaways

As the King case illustrates, leaves of absence as a reasonable accommodation continues to trouble employers and causes mistakes that can lead to costly litigation. There are some tips and takeaways that can help tame the leave-as-a-reasonable-accommodation beast:

If an employee requests leave as an accommodation (and is not FMLA eligible), then the employer should request medical information from the employee’s physician (through the employee because of privacy concerns) that supports the need for leave and specifies an expected return-to-work date.

If the information from the employee’s physician states that the employee’s leave should be indefinite, then indefinite leave is likely not a request for a reasonable accommodation and the employer could deny the request (with appropriate documentation).

If the employee’s physician does state an expected return-to-work date, then the employer should determine whether the amount of leave requested is reasonable. In doing so, the employer should consider its own policies concerning how much leave it grants for non-FMLA situations.

Also, the employer should consider how much time it would take to replace the employee if he or she was terminated. If it would take a comparable amount of time to replace the employee as it would to allow the employee to take leave, then the employer should likely just grant the leave.

The employer should also consider whether a leave of absence would be an effective accommodation. If an employee shows little to no ability to ever return to work because of ta medical condition, then granting leave for leave’s sake is likely not a reasonable accommodation under the ADA.

If the employee’s physician requests a reasonable amount of leave for the employee, and the employer decides to grant the accommodation, the employer should send a letter or email to the employee acknowledging the granting of the leave of absence, specifying how long the leave of absence has been granted for, and discussing return-to-work issues. In that letter, the employer should allow for the employee to request an extension of the leave of absence if medical conditions warrant. If the employee returns to work at the conclusion of that leave of absence, the employer may want to consider getting a letter from the employee’s physician releasing him or her to return to work and stating what, if any, restrictions the employee has. If the employee cannot return to work at the conclusion of the leave and does not request an extension, then the employer would likely be on solid footing to terminate the employee at that point in time.

An employer should treat each reasonable accommodation request as unique, not pre-judge it, and decide whether under the circumstances a reasonable accommodation should be granted.

Although dealing with leave-of-absence issues under the ADA will continue to cause employers issues because of the lack of bright lines, an employer who follows the steps outlined above may help tame the leave-as-a-reasonable-accommodation beast.

Article By John P. Rodgers of Bradley Arant Boult Cummings LLP

For more articles on labor law, visit the NLR Labor & Employment section.

The Biden Administration Proposes Mark-to-Market Minimum Tax on Individuals With More than $100 Million in Assets

Summary and Background. On March 28, 2022, the Biden Administration proposed a 20% minimum tax on individuals who have more than $100 million in assets. The minimum tax would be based on all economic income (which the proposal refers to as “total income”), including unrealized gain. The tax would be effective for taxable years beginning after December 31, 2022. The minimum tax would be fully phased in for taxpayers with assets of $200 million or more.

Under the proposal, an individual’s 2023 minimum tax liability would be payable in nine equal annual installments (e.g., in 2024-2032). For 2024 and thereafter, the minimum tax liability would be payable in five annual installments. The tax may be avoided by giving away assets to section 501(c)(3) organizations (including private foundations or donor-advised funds) or 501(c)(4) organizations before the effective date of the legislation so as to avoid the $100 million threshold.

The Biden proposal is an attempt to appeal to Senator Joe Manchin (D-W.Va.) and address some criticisms of Senator Ron Wyden’s (D-Or.) mark-to-market proposal. Senator Manchin has expressed support for a minimum 15% tax on individuals, and this support was apparently an impetus for the proposal. Senator Manchin has not, however, expressed support for a mark-to-market minimum tax, and the Biden Administration does not appear to have received any support from Senator Manchin before releasing its proposal.

The five-year payment period is an attempt to address concerns that Wyden’s proposal might overtax volatile assets, and to “smooth” taxpayers’ cash flows without the need for the IRS to issue refunds. Under the Biden Administration’s proposal, installment payments of the minimum tax may be reduced to the extent of unrealized losses.

The minimum tax is being described as a “prepayment” that may be credited against subsequent taxes on realized income. This description provides a backup argument on constitutionality: the minimum tax isn’t a tax on unrealized income but is merely a prepayment of tax on realized income.

Operation of the Minimum Tax. The minimum tax would apply to taxpayers with wealth (assets less liabilities) in excess of $100 million. The proposal does not define liabilities, and does not indicate whether a taxpayer would be deemed to own the assets of his or her children, or trusts. Therefore it is unclear as to whether a taxpayer who is close to the $100 million threshold may avoid the tax by giving away assets to children. As mentioned above, a taxpayer can give assets to section 501(c)(3) or 501(c)(4) organizations to avoid the threshold, and so, if the minimum tax is enacted, donations to charity would be expected to dramatically increase.

The proposal phases in for taxpayers with wealth between $100 million and $200 million. The phase in is achieved mechanically by reducing the tax liability to the extent that the sum of (w) the minimum tax liability, and (x) the uncredited prepayments exceeds two times (y) the minimum tax rate, times (z) the amount by which the taxpayer’s wealth exceeds $100 million. Thus, for a taxpayer with $150 million of wealth and a zero basis and no prior prepayments, the $30 million of minimum tax liability would be reduced by $10 million to equal $20 million. ($10 million is amount by which (x) $30 million exceeds (y) $20 million, which is 40% [two times the minimum tax rate] times $50 million [the amount by which the taxpayer’s wealth exceeds $100 million].)

A taxpayer subject to the minimum tax would make two calculations: Their “normal” tax liability under our current realization system, and the “minimum” tax under the proposal. Tax would be paid on the greater of the two.

For purposes of the 20% minimum tax, the taxpayer would include all unrealized gain on “tradeable assets.” The proposal does not define tradeable assets. Tradeable assets would be valued using end-of-year market prices. The taxpayer would also include all unrealized gain on “non-tradeable assets.” Non-tradeable assets would be valued using the greater of (i) the original or adjusted cost basis, (ii) the last valuation event from investment (i.e., a round of equity financing), (iii) borrowing (i.e., a lender’s appraisal), (iv) financial statements, or (v) other methods approved by the IRS. Original or adjusted cost basis would be deemed to increase at a rate equal to the five-year Treasury rate plus two percentage points. The five-year Treasury rate is currently 2.76% and so, at today’s rates, non-traded assets without a valuation event would deemed to increase in value at a 4.76% annual rate. The proposal would not require valuations of non-tradeable assets.

While a taxpayer would be subject to the minimum tax if it exceeds the normal tax, as mentioned above, payment of the minimum tax would be made in equal annual installments (nine for the first year of minimum tax liability and five thereafter).

So, assume that a taxpayer purchases an equity interest in a non-traded C corporation on January 1, 2023 for $200 million. The taxpayer has no realized income and no other assets. The taxpayer would have zero “normal” tax. Assume that the five-year Treasury rate is 2.76%. The investment would be deemed to increase in value by 4.76% (to $209.5 million). The minimum tax would be 20% of $9.5 million, or $1.9 million. If this was the taxpayer’s first year subject to the minimum tax, the minimum tax liability would be $211,111 in each of years 2024-32, subject to the “illiquid exception” described below. If the taxpayer subsequently sells the C corporation, it would credit the minimum tax prepayments against his or her income tax liability.

Payments of the minimum tax would be treated as a prepayment available to be credited against subsequent taxes on realized gains.

The Biden Administration has separately proposed that death would give rise to a realization event. If a taxpayer’s prepayments in excess of tax liability exceed gains at death, the taxpayer would be entitled to a refund. The refund would be included in a single decedent’s gross estate for estate tax purposes. Net uncredited used prepayments of a married decedent would be transferred to the surviving spouse (or as otherwise provided in regulations).

In contrast to Senator Wyden’s proposal, which does not require that tax be paid on unrealized gain for non-traded assets, and instead imposes a deferral charge upon realization, the Biden Administration’s proposal generally requires that minimum tax be calculated with respect to all unrealized gain, including deemed appreciation on non-traded assets, subject to an “illiquid exception.” If tradeable assets held directly or indirectly make up less than 20% of a taxpayer’s wealth, the taxpayer may elect to include only unrealized gain in tradeable assets in the calculation of their minimum tax liability. A taxpayer that makes this election would be subject to a deferral charge upon realization to the extent of gain, but the deferral charge would not exceed 10% of unrealized gain. The proposal does not indicate the rate of the deferral charge.

This aspect of the Biden Administration’s proposal provides a meaningful benefit to “illiquid” taxpayers and encourages taxpayers to become “illiquid” to qualify for the exception. The proposal provides that tradeable assets held “indirectly” are treated as owned by the taxpayer for this purpose and therefore it is unclear whether and to what extent taxpayers can contribute tradeable assets into nontradeable vehicles to qualify for the illiquid exception. The proposal would provide the IRS with specific authority to issue rules to prevent taxpayers from inappropriately converting tradeable assets to non-tradeable assets.

Estimated tax payments would not be required for minimum tax liability, and the minimum tax payments would be excluded from the prior year’s tax liability for purposes of computing estimated tax required to avoid the penalty for underpayment of estimated taxes.

The tax is expected to affect 20,000 taxpayers (in contrast to roughly 700 under Wyden’s plan) but to generate approximately the same amount of revenue as Wyden’s proposal: $360 billion over ten years as estimated by the Treasury Department (which is expected to be around $550 billion over 10 years under the Joint Committee on Taxation’s “scoring” methodology).

Article By Robert Gaut, Martin T Hamilton, and Colleen Hart at Proskauer Rose LLP

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

A Lawyer’s Guide to Integrated Marketing

Like many lawyers, I did not learn about marketing in law school. I knew nothing about communications or media relations before law school, either. When I graduated and began practicing at a boutique matrimonial law firm, there was no internal or external marketing resource, and no direct conversations or plans about public relations or branding. One founding partner talked about the importance of reputation for connecting with potential clients and how his connections in the legal community resulted in many referrals, but he never mentioned marketing.

Yet, as I tagged along to bar association meetings, drafted articles that the partner published in a legal journal, and received encouragement to network at Inns of Court sessions, I saw this side of legal practice come to light. We didn’t call it marketing, or PR, and it was well before social media, but I understood that the partner was intentionally marketing the practice and generating awareness of the firm’s experience — an effort that resulted in new client engagements.

When I decided to leave law after a few years, I enrolled in a New York University course about marketing for professional services. As luck would have it, the instructor was Deborah Brightman Farone, an extraordinary legal marketer then and now — she was inducted into the Legal Marketing Association’s Hall of Fame at the organization’s 2022 annual conference. Deborah introduced me to the field of law firm marketing, and since then, I have worked with hundreds of lawyers and professional marketers on business development and integrated marketing plans, and have helped them make marketing part of their daily practice.

Most lawyers need to understand what this marketing thing is all about. I see firsthand their appreciation for the importance of building client relationships, cross-selling expertise within the firm, and networking. However, I don’t see an understanding of the terms and tactics of legal marketing as often. I think that with so much to learn in law school, there just isn’t time to learn the business side of law. Once a lawyer is practicing law, there may be little direction about how to reach prospects and referral sources, stand apart from other lawyers doing similar work, and find time to “market oneself.”

I frequently read articles where lawyers describe their routes to becoming partner or managing a practice or office. The words “PR” or “marketing” may not appear in their answers, but as someone who has advised lawyers about practice growth for more than 20 years, I know that positioning themselves as knowledge leaders played a role in the success of their relationship-building and practice development. And that, of course, is marketing.

This article will take you through five steps I always examine with lawyers who are just getting started with marketing, or participating in a firmwide marketing program.

Acknowledge the Need for Education

Earning a JD and passing the bar exam prepare a lawyer for the practice of law, but not the business of law. My colleague Vivian Hood recently wrote, “Law schools focus on teaching the art of law, and not so much on the art of connections.” Courses about marketing, public relations, or social media are not part of the law school curriculum. Rather, law school teaches students to read cases and apply precedent, analyze facts and frame arguments, and spot the real issues and see the red herrings. Likewise, legal writing courses, moot court competitions, internships, and other hands-on work prepare them for practicing law. Their understanding of marketing may extend to billboards they see on their way to work, law firm ads in legal journals, or networking events with bar associations.

Lawyers know how to practice law, but do not know what marketing is or how it supports business development and revenue. Education is the first step to heightening awareness. On many occasions, I have explained how PR works so lawyers understand the events that result in being quoted in a trade publication, or the behind-the-scenes steps that go into earning a speaking engagement at an industry event.

Discuss Perceptions of Marketing

The only way to know how an attorney perceives marketing is to ask, and then provide guidance about worthwhile and suitable marketing efforts.

Lawyers often shy away from marketing because they associate it with sales. My colleague Glennie Green explains, “Most attorneys envision some sort of sales when the idea of marketing and business development comes up. They see car salespeople, or aggressive pitches for timeshares. But that is the wrong mindset. Business development is not sales. Business development is cultivating and nurturing relationships.”

Relationships can be built in many ways. A common misconception is that marketing success is based on the ability to be a natural rainmaker who can walk into any room and instantly make connections for the firm. That belief can create unrealistic expectations and undue stress, because rainmakers are few and far between. Relationships can be built and nurtured without that unique rainmaker quality. Everyone adapts to situations differently — some of us are introverts, others extroverts, or a combination of traits.

Assess the Impact of Previous Experiences

Lawyers may base their perceptions of marketing on prior experiences. Lawyers have told me, “I wrote many articles in the past, and they never amounted to any new business.”

“I traveled to speak at a conference, and not a single attendee turned out to be a new client.”

“I did an interview with a reporter who misquoted me.”

“I have a LinkedIn profile, but I’m not interested in doing anything with it; it’s just like Facebook.”

Many people fear failure, and many transactional lawyers and litigators are driven by winning. It is no surprise, then, that lawyers question the value of something that has not been a winner in the past. Understanding and acknowledging these hesitations can lead to productive discussions about marketing and, more specifically, about techniques that may be better suited for the lawyer.

Discuss the Time Commitment

The billable-hour model of legal practice can affect a lawyer’s availability to market their practice. Too many business-driving commitments will inevitably frustrate a lawyer and diminish the success of marketing. It’s better to work with a distinct set of action items that can take only a few minutes a day rather than many hours each week.

Glennie Green has helped lawyers identify their advocates — assistants, paralegals, the firm’s librarians; people they can partner with to achieve their action items. One managing partner with a busy practice serves as an example of this effort. “He has made a commitment to conduct a certain number of meetings a month with current and potential referral sources,” she says. “He enlists a paralegal in the office to help schedule those meetings, as well as maintain his ‘marketing’ calendar. This allows him to keep his focus on his practice and manage the firm. He regularly checks his calendar for new appointments, and he says he looks forward to seeing whom he will meet with next. Once he realized that he didn’t have to do it all and enlisted some help, his plan and marketing goals became not only manageable but systematic.”

Find the Comfort Zone

Marketing efforts must be tailored to a lawyer’s personality and interests. Everyone has a different comfort level. Some lawyers love to speak at conferences, and others would rather research a case and write an analysis for a journal. One lawyer may already enjoy engaging on social media, and another may feel crushed for time but would be amenable to doing a 30-minute interview with a reporter. Perhaps a lawyer may enjoy participating in an association’s events or committees. Green explains, “Knowing a lawyer’s areas of confidence, and recognizing what causes any discomfort, is crucial to establish the right marketing plan with the flexibility to change direction as needed.”

The avenues for marketing include website content and branding, social media posts and engagement, media relations, published quotes and articles, rankings submissions and awards, conferences and speaking opportunities, networking, events, and more. The questions and conversations I’ve provided lead to more precise choices of marketing tactics, as well as more informed expectations of results. An integrated marketing and business development program offers lawyers a selection of tactics, with deliberate matching to their preferences and the flexibility to change as needed.

Article By Liz Bard Lindley of Jaffe

For more business of law legal news, click here to visit the National Law Review.

Cryptocurrency As Compensation: Beware Of The Risks

A small but growing number of employees are asking for cryptocurrency as a form of compensation. Whether a substitute for wages or as part of an incentive package, offering cryptocurrency as compensation has become a way for some companies to differentiate themselves from others. In a competitive labor market, this desire to provide innovative forms of compensation is understandable. But any company thinking about cryptocurrency needs to be aware of the risks involved, including regulatory uncertainties and market volatility.

Form of Payment – Cash or Negotiable Instrument

The federal Fair Labor Standards Act requires employers to pay minimum and overtime wages in “cash or negotiable instrument payable at par.” This has long been interpreted to include only fiat currencies—monies backed by a governmental authority. As non-fiat currencies, cryptocurrencies therefore fall outside the FLSA’s definition of “cash or negotiable instrument.” As a result, an employer who chooses to pay minimum and/or overtime wages in cryptocurrency may violate the FLSA by failing to pay workers with an accepted form of compensation.

In addition, various state laws make the form of wage payment question even more difficult. For example, Maryland requires payment in United States currency or by check that “on demand is convertible at face value into United States currency.” Pennsylvania requires that wages shall be made in “lawful money of the United States or check.” And California prohibits compensation that is made through “coupon, cards or other thing[s] redeemable…otherwise than in money.” It is largely unclear whether payment in cryptocurrency runs afoul of these state requirements.

Of note, the U.S. Department of Labor (“DOL”) allows employers to satisfy FLSA minimum wage and overtime regulations with foreign currencies as long as the conversion to U.S. dollars meets the required wage thresholds. But neither the DOL nor courts have weighed in on whether certain cryptocurrencies (e.g., Bitcoin) are the equivalent, for FLSA purposes, of a foreign currency.

Volatility Concerns

When compared to the rather stable value of the U.S. dollar, the value of cryptocurrencies is subject to large fluctuations. Bitcoin, for example, lost nearly 83% of its value in May 2013, approximately 50% of its value in March 2020, and recently lost and then gained 16% of its value in the span of approximately 15 minutes one day in February 2021.

Such volatility can give payroll vendors a nightmare and can, in some instances, lead to the under-payment of wages or violation of minimum wage or overtime requirements under the FLSA.

Tax and Benefits Considerations

Aside from wage and hour issues, the payment of cryptocurrency implicates a host of tax and benefits-related issues. The IRS considers virtual currencies to be “property,” subject to capital gains tax rates. It has also confirmed in guidance materials that any payment to employees in a virtual currency must be reported on a W-2 based upon the value of the currency in U.S. dollars at the time it was delivered to the employee. This means that cryptocurrency wage payments are subject to Federal income tax withholding, Federal Insurance Contributions Act (FICA) tax, and Federal Unemployment Tax Act (FUTA) tax.

For 401k plan fiduciaries, the Department of Labor recently issued guidance that should serve as a stern warning to any fiduciary looking to invest 401k funds into cryptocurrencies. Specifically, the DOL wrote: “[a]t this early stage in the history of cryptocurrencies, the Department has serious concerns about the prudence of a fiduciary’s decision to expose a 401(k) plan’s participants to direct investments in cryptocurrencies, or other products whose value is tied to cryptocurrencies.” Given the risks inherent in cryptocurrency speculation, the DOL stated that any fiduciary allowing such investment options “should expect to be questioned [by the DOL] about how they can square their actions with their duties of prudence and loyalty in light of the risks.”

Considerations for Employers

Given the combination of uncertain and untested legal risks, employers should consider limiting cryptocurrency compensation models to payments that do not implicate the FLSA or applicable state wage and hour laws. For example, an employer might provide an exempt employee’s base salary in U.S. dollars and any annual discretionary bonus in cryptocurrency.

Whether investing in cryptocurrencies themselves to pay employees or utilizing a third-party to convert US dollars into cryptocurrency, employers should also stay abreast of the evolving tax and benefits guidance in this area.

Ultimately, the only thing that is clear about cryptocurrency compensation is that any decision to provide such compensation to employees should be made with a careful eye towards the unique wage, tax, and benefits-related issues implicated by these transactions.

Article By Daniel J. Butler and Kevin J. White of Hunton Andrews Kurth

For more cryptocurrency and finance legal news, click here to visit the National Law Review.

Apple Smartwatch Antitrust Case Survives, Showing ‘Freedom of Design’ is Not Absolute

Judge Cites ‘Associated’ Anticompetitive Conduct Claims

It’s a case that challenges the limits of the “freedom of design” usually enjoyed by companies accused of product design changes alleged to harm competition. Ordinarily, a design change is not the kind of conduct that runs afoul of the antitrust laws, but on March 21, U.S. Judge Jeffrey S. White from the Northern District of California denied Apple Inc.’s motion to dismiss an antitrust case brought against it by AliveCor Inc. The suit alleges that Apple unlawfully maintained its monopoly in the market for heart rate analysis apps by updating WatchOS, the Apple Watch operating system on which AliveCor’s heart rate analysis app runs. (AliveCor, Inc. v. Apple Inc., No. 21-cv-03958-JSW, N.D. Calif.).

Heart rate analysis apps analyze the user’s heart rate in real time using a sensor close to the user’s wrist and determine whether the user’s heart rate is normal or irregular. The app runs constantly while the device is worn and alerts the user when a situation arises requiring an ECG recording and medical analysis. AliveCor also sells an electrocardiogram-capable wrist band for the Apple Watch and related WatchOS software that analyzes reading from the band. AliveCor claims that its products—the ECG-wristband hardware and software and its heart rate analysis app—“helped change the perception of the Apple Watch from an accessory to a personal health monitoring tool.”

AliveCor calls its heart rate monitoring app “SmartRhythm.” According to AliveCor, when sales of SmartRhythm took off Apple was inspired to announce an update to WatchOS with its own heart monitoring app designed to exclude AliveCor from the U.S. market for WatchOS heart rate analysis apps.

SmartRhythm works by using data from the Apple Watch’s heart rate algorithm. According to the complaint, Apple’s update to WatchOS altered the heart rate algorithm in a way that prevents third-party developers from being able to detect heart rate fluctuations and irregularities. As a result of these changes, SmartRhythm could not provide accurate heart rate analysis, and AliveCor removed it from the market.

Consequently, Apple is a monopolist in the WatchOS heart rate analysis app market, which AliveCor claims Apple is maintaining with exclusionary design changes to WatchOS, in violation of Section 2 of the Sherman Act, California’s Unfair Competition Law, and Section 17200 of California Business and Professions Code.

The court denied Apple’s motion to dismiss AliveCor’s monopolization claim in what it characterized as the “[single brand] aftermarket for WatchOS apps.” Applying the factors enumerated by the court in Newcal Indus., Inc. v. Ikon Office Sol., 513 F.3d 1038, 1044 (9th Cir. 2008), the court found that the WatchOS app aftermarket was wholly derivative from the primary smartwatch market, the alleged restraint applied only to the aftermarket, Apple’s aftermarket power was not obtained through contract terms reached in the primary market, and that competition in the smartwatch market does not discipline anticompetitive practices in the WatchOS app aftermarket. Accordingly, the court ruled that AliveCor’s market definition met the Newcal standards for a “single product” relevant market.

Apple argued that a company that improves a product to the benefit of consumers does not violate antitrust laws “absent some associated anticompetitive conduct,” citing the leading “freedom of design” case of Allied Orthopedic Appliances Inc. v. Tyco Health Care Group LP, 592 F.3d 991, 998-99 (9th Cir. 2010). The court quoted the holding of Allied: “If a monopolist’s design change is an improvement, it is necessarily tolerated by the antitrust laws, unless the monopolist abuses or leverages its monopoly power in some other way when introducing the product.”

Apple argued that its update to WatchOS was purely a design change that benefitted users, with no associated anticompetitive conduct. It observed that AliveCor hadn’t established that consumers use Apple’s app instead of some third-party app, or that Apple rejected any third-party apps, or that no other third-party heart apps are available to Apple Watch users. But the court rejected those arguments, noting that Apple failed to provide any legal authority that would require such allegations.

Apple ignored AliveCor’s allegations that Apple abused or leveraged its monopoly power “in some other way” by changing its heart rate algorithm to make it effectively impossible for third parties to inform a user when to take an ECG. AliveCor contended that Apple’s updated heart rate algorithm, which was pushed out to all earlier Apple Watch models, did not improve user experience. Its purpose was to prevent third parties from identifying irregular heart rates and offering competing apps based on that data. “These allegations present the type of ‘associated conduct’ that makes product design changes cognizable under antitrust law. Plaintiff’s allegations plausibly establish that Apple’s conduct was anticompetitive,” Judge White held. A case management conference set for May 20.

Commentary

It is truly difficult to see how some separate, “associated” conduct by Apple other than its design change to WatchOS violates Section 2. It seems more straightforward to consider the design change itself to be a cognizable anticompetitive act. It may be time to drop the fiction maintained in Allied v. Tyco that design changes are “never” antitrust violations unless accompanied by some “other” conduct. Here, Apple has created the market itself in the form of an OS platform used by millions of consumers who depend on it to access all manner of competing complementary products. Under those circumstances, it should be uncontroversial to hold a platform operator liable under the antitrust laws for design changes that exclude competitors or foreclose participants from the market, without indulging in the fiction of “associated” conduct.

Article By Jonathan Rubin of MoginRubin

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

FTC Imposes Record-Setting $10M Fine Against Multistate Auto Dealer, Settling Charges of Racial Discrimination and Unauthorized Charges

On March 31, the FTC and Illinois State Attorney General announced a settlement of charges against a large, multistate auto dealer that allegedly discriminated against black consumers and included illegal junk fees for unwanted “add-ons” in customers’ bills.

Citing violations under the FTC Act, TILA, ECOA, and comparable Illinois laws, the complaint alleged that eight of the dealerships and two general managers of Illinois dealerships tacked on illegal fees for unwanted products to customers’ bills, often at the end of hours-long negotiations. These add-ons were allegedly buried in the consumers’ purchase contracts, which were sometimes upwards of 60-pages long, and sometimes added despite consumers specifically declining the products.

In addition, employees of the auto dealership also allegedly discriminated against black consumers during the process of financing vehicle purchases. On average, black customers at the dealerships were charged $190 more in interest and paid $99 more for similar add-ons than comparable non-Latino white customers.

The multistate dealer will have to pay $10 million to settle the lawsuit per the stipulated order, the largest monetary judgment ever required in an FTC auto lending case.

Putting it into Practice: From FTC Chair Lina Khan and Commissioner Rebecca Slaughter, the FTC appears poised to allege violations of the FTC Act’s prohibition on unfair acts or practices in light of discrimination found to be based on disparate treatment or having a disparate impact. Their statement discusses how discriminatory practices can be evaluated under the FTC’s three-part unfairness test and concludes that such conduct fits squarely into the kind of conduct that can be addressed by the FTC’s unfairness prong. This joint statement echoes similar announcements by CFPB Director Chopra about the use of unfairness to combat discrimination more broadly (we discussed Director Chopra’s statement and updates to the CFPB’s exam procedures in a recent Consumer Finance and FinTech blog post here).

The size of the financial judgment in this case underscores the seriousness with which the FTC takes discriminatory practices in consumer credit transactions entered into by entities over which they have authority, which includes auto dealerships. As the FTC becomes increasingly focused on enforcement of key laws to protect consumers against discriminatory conduct, companies should use these latest agency pronouncements as a reason to be on high alert for potential discriminatory outcomes in their business activities, even if unintentional.

Article By Moorari Shah, A.J. S. Dhaliwal, and Katie Daw of Sheppard, Mullin, Richter & Hampton LLP

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

The National Law Forum

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