The National Law Forum

Mississippi Enacts Medical Marijuana Law

Mississippi Governor Tate Reeves signed legislation legalizing medical cannabis on February 2, 2022. Known as the “Mississippi Medical Cannabis Act”, the law permits the use of medical cannabis to treat certain debilitating medical conditions including cancer, Parkinson’s disease, Huntington’s disease, muscular dystrophy, HIV/AIDS, hepatitis, ALS, Crohn’s disease, ulcerative colitis, sickle-cell anemia, Alzheimer’s disease, dementia, post-traumatic stress disorder, autism, cachexia or wasting syndrome, chronic pain, severe or intractable nausea, seizures, severe and persistent muscle spasms, among others. The law was effective immediately upon signing by the Governor, although medical cannabis will not become available for months.

Medical cannabis products will include cannabis flower, cannabis extracts, edible cannabis products, beverages, topical products, ointments, oils, tinctures and suppositories.

The medical cannabis law contains many favorable provisions for employers. Specifically:

Employers are not required to permit or accommodate the medical use of medical cannabis, or to modify any job or working conditions or any employee who engages in the medical use of cannabis, or seeks to engage in the medical use of cannabis;
Employers are not prohibited from refusing to hire, discharging, disciplining, or otherwise taking adverse employment action against an individual with respect to hiring, discharging, tenure, terms, conditions or privileges of employment as a result, in whole or in part, of that individual’s medical use of medical cannabis, regardless of the individual’s impairment or lack of impairment resulting from the medical use of medical cannabis;
Employers are not prohibited from establishing or enforcing a drug testing policy;
Employers may discipline employees who use medical cannabis in the workplace or who work while under the influence of medical cannabis.
The law does not interfere with, impair or impede any federal requirements or regulations such as the U.S. Department of Transportation’s drug and alcohol testing regulations;
The law does not permit, authorize or establish an individual’s right to commence or undertake any legal action against an employer for refusing to hire, discharging, disciplining or otherwise taking an adverse employment action against an individual with respect to hiring, discharging, tenure, terms, conditions or privileges or employment due to the individual’s medical use of medical cannabis;
Employers and their workers’ compensation carriers are not required to pay for or to reimburse an individual for the costs associated with the medical use of cannabis;
The law does not affect, alter or otherwise impact the workers’ compensation premium discount available to employers who establish a drug-free workplace program in accordance with Miss. Code Section 71-3-201 et seq.;
The law does not affect, alter or otherwise impact an employer’s right to deny or establish legal defenses to the payment of workers’ compensation benefits to an employee on the basis of a positive drug test or refusal to submit to or cooperate with a drug test, as provided under Miss. Code Sections 71-3-7 and 71-3-121;
The law does not authorize an individual to act with negligence, gross negligence, recklessness, in breach of any applicable professional or occupational standard of care, or to effect an intentional wrong, as a result, in whole or in part, of that individual’s medical use of medical cannabis;
The law prohibits smoking and vaping medical cannabis in a public place or in a motor vehicle;
The law prohibits operating, navigating, or being in actual physical control of any motor vehicle, aircraft, train, motor boat or other conveyance in a manner that would violate state or federal law as a result, in whole or in part, of that individual’s medical use of medical cannabis; and,
The law does not create a private right of action by an employee against an employer.

Mississippi employers should review the law to determine whether any revisions to drug and alcohol testing policies or other workplace policies will be necessary.

Article By Kathryn J. Russo of Jackson Lewis P.C.

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

To Search or To Sink: The Importance of Clearing Your Brand

So many times in my three decades of practice I’ve shaken my head at the perils a trademark owner can so easily avoid by searching and clearing a mark. The litigations! The unnecessary attorneys’ fees! The time and resources lost! All because my client (or adversary) didn’t conduct a proper trademark search.

Adopting a Trademark

So what’s all the fuss about? Well, before adopting a trademark (that is, a brand name for goods or services) you should have an attorney commission a proper clearance search, review it, and provide you with a well-reasoned opinion as to the availability of the brand for “use” and “registration.” (Yes, they are different things, as explained below.) I’m not talking about an Internet search or an online search of U.S. Trademark Office records, though both can be useful to make sure there aren’t any easily found barriers to use or registration of a mark before a full search is commissioned.

I’m talking about a full clearance search done by a reputable vendor the attorney commissions to uncover all uses (registered and not) of the same or similar marks for the same or similar goods/services as you want to use your brand for. The resulting vendor’s report sent to the attorney is typically anywhere from 300 pages up to 1000 pages. Then the (experienced trademark) attorney reviews it and lets you know in a detailed opinion if the mark is free for you to use and register without entangling you in the risk of a dispute/lawsuit. If it’s not available, you pick another brand, and search again.

Using a Brand and Registering It

So what’s the difference between freedom to use a brand and freedom to register it? In the U.S., “common law” trademark rights can exist based solely upon use (that is use of a trademark without registration). That’s because consumers can associate a brand with a single source (the trademark owner/producer of goods/services) even if it’s not registered. (It’s different in other countries, and searches should be done in every country for which you want to use your brand.)

So it’s possible that there’s a barrier to use but not to registration, because a common law (unregistered) trademark is too similar to the brand you want to use, and is being used in connection with identical or related goods/services as your proposed brand. That’s why you want clearance to both use and register a mark. (Registration is important because it provides you with nationwide rights in your brand; common law trademarks cover only the geographic territory where sales under the brand occur.)

So please clear your mark. It’s pennies on the dollar compared to what you will spend in a dispute or (heaven forbid) litigation. Here’s to happy searching!

Article By Jeanne Hamburg of Norris McLaughlin P.A.

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

Bouncing Back with Justice Leah Ward Sears [PODCAST]

Former Georgia Supreme Court Chief Justice Leah Ward Sears had to overcome multiple systemic barriers including racism and misogyny, but a personal setback – divorce – is something that profoundly shaped her. In this episode of Bouncing Back, Justice Sears shares with Rebecca Glatzer how she came to terms with her divorce and to accept that she could not control—or fix—everything in her life.

With decades of experience as an attorney, a jurist and an elected official, Justice Leah Ward Sears, a Partner in the Litigation Section of Smith, Gambrell & Russell, LLP, brings a powerful combination of strategy, analytical thinking and tactical action that gives her clients a compelling edge in complex litigation, appeal, and arbitration and mediation.

Recognized as one of Georgia’s leading legal luminaries and role models, Ms. Sears broke numerous barriers in her swift rise to the highest court in Georgia. When she was elected to the Superior Court of Fulton County, she became the first woman to ever serve on that court. Later she was appointed, and then elected, to serve as a Justice on the Supreme Court of Georgia — again, the first woman as well as the youngest jurist ever on that court.

She rose to Presiding Justice and in 2005 her colleagues elevated her to Chief Justice of the Georgia Supreme Court, where she served until retiring from the bench in 2009. During her tenure at the Georgia Supreme Court, Ms. Sears spearheaded an effort to establish the Georgia Office of Dispute Resolution, which is a policy-making body under the auspices of the Georgia Supreme Court that oversees the development of court-connected alternative dispute resolution (ADR) programs in Georgia. She also chaired the Judicial Council of Georgia and was a member of the Board of Directors of the National Conference of Chief Justices.

Since returning to private practice, Ms. Sears has concentrated on prosecuting appeals in both the state and federal courts in many jurisdictions across the United States. This often means embedding with the trial team to develop and execute pretrial and trial strategy, build credible evidence, and begin positioning for an appeal while the trial is underway by preserving evidence and proactively looking for narrowly focused issues at trial that will help protect a hard-fought victory or overturn an unfavorable outcome.

Ms. Sears earned an advanced degree (LLM) in Appellate Judicial Studies from the University of Virginia Law School, and she completed a Juris Doctorate (JD) at Emory University School of Law. She also holds a Bachelor of Science degree from Cornell University.

Article By Rebecca Glatzer with Major Lindsey & Africa.

For more articles about legal leaders, visit the NLR Civil Rights type of law page.

Filing Tax Returns and Making Tax Payments: Best Practices During the Pandemic and Beyond

With staffing shortages and service center closures, it should come as no surprise that the IRS has faced a number of challenges during the pandemic. A couple of the biggest challenges have been in the opening and processing of taxpayer correspondence and in the processing of tax returns. As National Taxpayer Advocate, Erin Collins, stated in her Annual Report to Congress, “Paper is the IRS’s Kryptonite, and the IRS is buried in it.”

Going into 2022, the IRS has a significant backlog of unprocessed taxpayer correspondence and unprocessed returns. The estimates are staggering.

Five million pieces of unprocessed taxpayer correspondence
Over 11 million unprocessed tax returns, including:
- Six million individual income tax returns
- 2.3 million amended individual tax returns
- 2.8 million business returns (income tax and employment tax returns)

The 2022 tax filing season, which opened on Thursday, January 24 for individual income tax returns, has the potential to create even more challenges for the IRS. Below is a list of best practices taxpayers can follow to ensure timely processing of their payments, tax returns, and claims for refund. These practices apply to individuals and required filing for businesses.

File returns and make payments electronically.
If you must file a paper return or mail in a payment to the IRS, send the return or payment to the proper address via USPS Certified Mail, Return Receipt Requested. Using this method will assist in resolving timely filing and/or timely payment penalties assessed by the IRS.
Properly notate your tax payment and include the form number, tax period and your social security number or employer identification number.
Respond to notices from the IRS in a timely manner.

In addition to the above, the IRS has offered a few filing tips for individuals.

Fastest refunds by e-filing, avoiding paper returns: Filing electronically with direct deposit and avoiding a paper tax return is more important than ever to avoid refund delays. If you need a tax refund quickly, do not file on paper – use software, a trusted tax professional or IRS Free File.
Filing 2021 tax return with 2020 tax return still in process: For those whose tax returns from 2020 have not yet been processed, 2021 tax returns can still be filed. For those in this group filing electronically, here’s a critical point: taxpayers need their Adjusted Gross Income, or AGI, from their most recent tax return at time of filing. For those waiting on their 2020 tax return to be processed, make sure to enter $0 (zero dollars) for last year’s AGI on the 2021 tax return. Visit Validating Your Electronically Filed Tax Return for more details.

More individual filing tips from the IRS can be found here.

If you have unpaid taxes or unfiled returns, you need an experienced tax attorney to represent you in your dealings with the IRS or the Department of Justice. An accountant or enrolled agent is not protected by the attorney-client privilege.

Article By Angelique M. Neal & Eric M. Nemeth with Varnum LLP.

For more articles about tax returns, visit the NLR Tax type of law section.

As the California Attorney General Focuses on Loyalty Programs, What Do Companies Need to Remember?

The California attorney general (AG) celebrated data privacy day by doing an “investigative sweep” of the loyalty programs of retailers, supermarkets, home improvement stores, travel companies, and food service companies, and sending out notices of non-compliance to businesses that the AG’s office believes might not be fully compliant with the CCPA. As the AG focuses its attention on loyalty programs, the following provides a reminder of the requirements under the CCPA.

What is a loyalty program?

Loyalty programs are structured in a variety of different ways. Some programs track dollars spent by consumers; others track products purchased. Some programs are free to participate in; others require consumers to purchase membership. Some programs offer consumers additional products; other programs offer prizes, money, or products from third parties. Although neither the CCPA nor the regulations implementing the CCPA define a “loyalty program,” as a practical matter most, if not all, loyalty programs have two things in common: (1) they collect information about consumers, and (2) they provide some form of reward in recognition of (or in exchange for) repeat purchasing patterns.[1]

What are the general obligations under the CCPA?

Because loyalty programs collect personal information about their members, if a business that sponsors a loyalty program is itself subject to the CCPA, then its loyalty program will also be subject to the CCPA. In situations in which the CCPA applies to a loyalty program, the following table generally describes the rights conferred upon a consumer in relation to the program:

Right	Applicability to Loyalty Program
Notice at collection	A loyalty program that collects personal information from its members should provide a notice at the point where information is being collected regarding the categories of personal information that will be collected and how that information will be used.[2]
Privacy notice	A loyalty program that collects personal information of its members should make a privacy notice available to its members.[3]
Access to information	A member of a loyalty program may request that a business disclose the “specific pieces of personal information” collected about them.[5]
Deletion of information	A member of a loyalty program may request that a business delete the personal information collected about them. That said, a company may be able to deny a request by a loyalty program member to delete information in their account based upon one of the exceptions to the right to be forgotten.
Opt-out of sale	A loyalty program that sells the personal information of its members should include a “do not sell” link on its homepage and permit consumers to opt-out of the sale of their information. To the extent that a consumer has directed the loyalty program to disclose their information to a third party (e.g., a fulfillment partner) it would not be considered a “sale” of information.
Notice of financial incentive	To the extent that a loyalty program qualifies as a “financial incentive” under the regulations implementing the CCPA (discussed below), a business should provide a “notice of financial incentive.”[4]

Are loyalty programs always financial incentive programs?

Whether a loyalty program constitutes a “financial incentive” program as that term is defined by the regulations implementing the CCPA depends on the extent to which the loyalty program’s benefits “relate to” the collection, retention, or sale of personal information.”[6] While the California Attorney General has implied that all loyalty programs “however defined, should receive the same treatment as other financial incentives,” a strong argument may exist that for many loyalty programs the benefits provided are directly related to consumer purchasing patterns (i.e., repeat or volume purchases) and are not “related” to the collection of personal information.[7] If a particular loyalty program qualifies as a financial incentive program, a business should consider the following steps (in addition to the compliance obligations identified above):

Notify the consumer of the financial incentive.[8] The regulations implementing the CCPA specify that the financial incentive notice should contain the following information:

- A summary of the financial incentive offered.[11] In the context of a loyalty program a description of the benefits that the consumer will receive as part of the program would likely provide a sufficient summary of the financial incentive.

- A description of the material terms of the financial incentive. [12] The regulation specifies that the description should include the categories of personal information that are implicated by the financial incentive program and the “value of the consumer’s data.”[13]

- How the consumer can opt-in to the financial incentive.[14] Information about how a consumer can opt-in (or join) a financial incentive program is typically conveyed when a consumer reviews an application to join or sign-up with the program.

- How the consumer can opt-out, or withdraw, from the program. [15] This is an explanation as to how the consumer can invoke their right to withdraw from the program.[16]

- An explanation of how the financial incentive is “reasonably related” to the value of the consumer’s data.[17] While the regulations state that a notice of financial incentive should provide an explanation as to how the financial incentive “reasonably relates” to the value of the consumer’s data, the CCPA requires only that a reasonable relationship exists if a business intends to discriminate against a consumer “because the consumer exercised any of the consumer’s rights” under the Act.[18] Where a business does not intend to use its loyalty program to discriminate against consumers that exercise CCPA-conferred privacy rights, it’s not clear whether this requirement applies. In the event that a reasonable relationship must be shown, however, the regulations require that a company provide a “good-faith estimate of the value of the consumer’s data that forms the basis” for the financial incentive and that the business provide a “description of the method” used to calculate that value.[19]

Obtain the consumer’s “opt in consent” to the “material terms” of the financial incentive,[9] and
Permit the consumer to revoke their consent “at any time.”[10]

FOOTNOTES

[1] FSOR Appendix A at 273 (Response 814) (including recognition from the AG that “loyalty programs” are not defined under the CCPA, and declining invitations to provide a definition through regulation).

[2] Cal. Civ. Code § 1798.100(a) (West 2021); Cal. Code Regs. tit. 11, 999.304(b), 305(a)(1) (2021).

[3] Cal. Code Regs. tit. 11, 999.304(a) (2021).

[5] Cal. Civ. Code § 1798.100(a).

[4] CAL. CODE REGS. tit. 11, 999.301(n); 304(d); 307(a), (b).

[6] CAL. CODE REGS. tit. 11, 999.301(j) (2021).

[7] FSOR Appendix A at 75 (Response 254).

[8] Cal. Civ. Code § 1798.125(b)(2) (West 2021).

[11] CAL. CODE REGS. tit. 11, 999.307(b)(1) (2021).

[12] CAL. CODE REGS. tit. 11, 999.307(b)(2) (2021).

[13] CAL. CODE REGS. tit. 11, 999.307(b)(2) (2021).

[14] CAL. CODE REGS. tit. 11, 999.307(b)(3) (2021).

[15] CAL. CODE REGS. tit. 11, 999.307(b)(4) (2021).

[16] Cal. Civ. Code § 1798.125(b)(3) (West 2021).

[17] CAL. CODE REGS. tit. 11, 999.307(b)(5) (2021).

[18] Cal. Civ. Code § 1798.125(a)(1), (2) (West 2021).

[19] CAL. CODE REGS. tit. 11, 999.307(b)(5)(a), (b) (2021).

[9] Cal. Civ. Code § 1798.125(b)(3) (West 2021).

[10] Cal. Civ. Code § 1798.125(b)(3) (West 2021).

Article By David A. Zetoony & Jena M. Valdetero with Greenberg Traurig LLP.

For more articles about data privacy, visit the NLR Cybersecurity, Media & FCC section.

Oregon Health Authority Adopts COVID-19 Vaccination and Masking Rules in Healthcare and K-12 Education

On January 31, 2022, the Oregon Health Authority (OHA) published permanent rules relating to COVID-19 vaccination and masking requirements in healthcare settings, just a few days after issuing similar rules for K-12 schools. The permanent rules replaced temporary rules that expire after 180 days.

The permanent rules for both healthcare and K-12 settings will “remain in effect unless the State Public Health Director or State Public Health Officer issues an order stating that the requirements . . . are no longer necessary to control COVID-19.” Under both rules, the factors that may lead to a loosening of restrictions or rescission of the permanent rules include the following:

“The degree of COVID-19 transmission”
“COVID-19 related hospitalizations and deaths”
“Disparate COVID-19 related health impacts on communities of color and tribal communities”
“Guidance from the U.S. Centers for Disease Control and Prevention”
“Proportion of the population partially or fully vaccinated”

The statewide temporary indoor mask mandate is set to expire on February 8, 2022. OHA is still reviewing public comments on a proposed permanent indoor mask mandate and expects to publish a permanent rule in the coming weeks. Healthcare and K-12 employers may want to revisit their COVID-19 policies and workplace practices to consider whether they are complying

Article By Paul E. Cirner with Ogletree, Deakins, Nash, Smoak & Stewart P.C.

For similar articles on public health, visit the NLR Health Care Law section.

Electrification of the Fleet is on the Horizon, Preparing Now is Key

While we often hear how EVs will revolutionize the lives of the average consumer, commercial fleet owners are starting to take note of the impact these new powertrain systems will have on their own business and operations. As OEMs find creative ways to increase aerodynamics, extend battery range, and increase charging speeds, the zero emission and lower long-term cost of EVs compared to ICE (internal combustion engine) vehicles makes a compelling argument for adoption, at least on paper. What really matters is how those factors play out as the rubber hits the road, which OEMs are starting to see play out in real time. Over the past few years, there has been an explosion of commercial fleet platforms from existing and new entrants in the commercial vehicle space. From light to heavy trucking to fleet platform automobiles, EV technology is looking to capture every corner of the commercial fleet sector. Coupled with a slow reduction in the number of ICE vehicles produced in future years, the market may start pushing fleet operations towards EVs, whether they like it or not.

According to the Department of Transportation, over eight million vehicles made up commercial fleets in the US in 2020, which includes a mix of trucks and automobiles used in commercial and government operations. Even more make up commercial vehicles on the road that are not considered part of a fleet. As consumer demand drives most traditional OEMs toward EV dominated fleets, commercial fleet owners and operators need to start to prepare now for the same shift in their vehicle suppliers, or risk playing catchup once the market does turn from ICE to EV. This isn’t to say that failure to be an early adopter will be the death-knell to commercial fleet businesses; it likely won’t be. What businesses with commercial fleets should consider is their own business needs and their timeline for their own fleet replacement as EV technology and infrastructure support continues to evolve. Establishing a process and plan for upgrading existing fleets, training personnel, upgrading infrastructure, and understanding available programs for conversion will be key.

The switch from an ICE to EV fleet isn’t as simple as flipping a switch or plugging in a car – EVs bring a new powertrain and new sources of information. EVs in their current state are expensive, new vehicle supply is constantly in question, current operators are unaware of the nuances involved with operating an EV, and the infrastructure necessary to support a commercial fleet of EVs isn’t universally robust. For the average fleet operator, there also is a need to focus on route optimization, installing and maintaining new hardware capable to supporting charging on-site, revamping their maintenance and care procedures, and working with their local energy providers to understand how power demands in their local market may impact their own energy costs and needs. Additionally, although data analytics has improved existing fleet operations over the past few years, expect to see more nuanced data availability to the benefit of fleet operators. As commercial and consumer EVs come out with ever more connectivity to the web and each other, coupled with the ability for “smart cities” to increase data available to drivers and vehicles, expect future fleet operators to get even more granular and predictive understanding of traffic patterns to optimize commercial routes. Managing these dynamics and capitalizing on new sources of information will better enable operators to adapt to the changing landscape. The ability to adapt to this new frontier will be a key trait for successful fleet operations in the Auto-2.0 operated environment.

Article By Christopher R. Boll of Foley & Lardner LLP

For more infrastructure and transportation legal news, click here to visit the National Law Review.

Cannabis and District Courts: Are Those Courthouse Doors Closed Too?

We have written many times over the past few years about how the bankruptcy courts are off-limits to state-legalized cannabis businesses. This past year brought no new relief to the cannabis industry, and the doors to the bankruptcy courts remain shut. Are the other federal courts off-limits as well? A recent district court decision from the Southern District of California sheds some light on this issue, and indicates that the district courts are at least partially open to participants in legal cannabis businesses.

Factual Background

The facts of Indian Hills Holdings, LLC v. Frye are relatively straightforward. Plaintiff Indian Hills Holdings (“IHH”), Construction & Design Professional Corp. (“CDP”) and its principal Christopher Frye (“Frye” and, together with CDP, the “Defendants”) entered into a contract whereby IHH paid Defendants to purchase Cultivation “Adult” Extreme Cubes (the “Cubes”). Defendants in turn contracted with ICT Centurion Investments, LLC (“ICT”) to purchase the Cubes. The Cubes were marketed as a “fully integrated growing container system” used in indoor cannabis cultivation. When ICT sold the Cubes to another party, Defendants were unable to deliver the Cubes to IHH. Defendants refused to return the money, and IHH sued, asserting breach of contract, unjust enrichment and fraud claims.

A default judgment was entered against CDP for failing to respond to IHH’s complaint. Frye, however, filed a motion to dismiss the complaint, arguing in part that IHH did not have standing to bring its claims. Noting that Frye only “cursorily” raised the standing issue and that the “issue is a complex one”, the court reframed Frye’s argument as follows:

The contract is illegal under the Controlled Substances Act, 21 U.S.C. §§ 801, et seq.(the “CSA”);
Federal district courts will not enforce contracts that violate federal law;
Because federal district courts will not enforce contracts that violate federal law, IHH lacks an “actionable injury”; and
Because IHH lacks an actionable injury, the district court does not have subject matter jurisdiction.

Legal Analysis

The court began its analysis by considering whether the parties’ contract violated the CSA. Section 863(a) of the CSA makes it unlawful to sell or offer for sale “drug paraphernalia,” which is defined to include “any equipment, product, or material of any kind which is primarily intended or designed for use in manufacturing … a controlled substance.” Because the Cubes are used to grow cannabis, and because cannabis is a controlled substance, the sale of the Cubes would seemingly violate section 863(a) of the CSA. However, the CSA contains an exemption, whereby section 863 does not apply to any person authorized by state law to manufacture, possess or distribute drug paraphernalia. California allows the manufacturing of drug paraphernalia, which would include the Cubes. As a result, the court wrote that the contract “may fall within the CSA exemption.” Additionally, the court noted that the U.S. Department of Justice has declined to enforce the CSA’s prohibition on the sale of marijuana when the marijuana is bought or sold in accordance with state law. For these reasons, the court concluded that enforcing the parties’ contract would likely neither violate the CSA nor public policy.

While the contract may be legal, the court still had to consider whether assuming jurisdiction over the dispute would result in a violation of federal law. After all, federal courts will not assume jurisdiction over a dispute where the court will be required to order a legal violation. The question therefore became whether a plausible remedy existed for IHH that would not require the court to order such a legal violation. The court held that it could fashion a remedy without violating the law by simply awarding IHH monetary damages. A judgment for money damages, unlike an award of specific performance, would not result in IHH obtaining the Cubes and growing cannabis. Instead, the result would be a return of the monies paid by IHH to Defendants for the Cubes. The court’s ruling was consistent with prior cases involving state-legalized cannabis business, where the courts found ways to provide relief without violating the CSA. E.g., Polk v. Gontmakher, 2021 U.S. Dist. LEXIS 53569 (W.D. Wash. Mar. 22, 2021) (noting that “recent case law involving cannabis-related business contracts does not espouse an absolute bar to the enforcement of such contracts”); Mann v. Gullickson, 2016 U.S. Dist. LEXIS 152125 (N.D. Cal. Nov. 2, 2016) (court may consider breach of contract claim arising from sale of cannabis business when “it is possible for the court to enforce [the] contract in a way that does not require illegal conduct”).

Takeaways

As the legalized cannabis industry continues to grow and develop, market participants will undoubtedly need access to courts. The bankruptcy courts remain off-limit, thus requiring distressed cannabis businesses and their creditors to turn to state-law insolvency proceedings (e.g., assignments for the benefit of creditors; receiverships). To those in the industry, it may be a welcome relief to know that at least some federal district courts have made themselves available to these parties and that these courts thus far have shown a willingness to adjudicate disputes arising from the cannabis industry. However, any party seeking their day in federal court needs to ensure that they are not asking the court to grant relief that would violate federal law, including the CSA. This means that while money damages should be available, specific performance of the contract is likely off the table.

Article By Mark A. Salzberg of Squire Patton Boggs (US) LLP

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

USCIS Announces H-1B Cap Registration Period for March 2022

On Friday, January 28, 2022, US Citizenship and Immigration Services (USCIS) announced that the online registration period for H-1B quota selection for the upcoming fiscal year will begin on March 1 at 12:00 pm (noon) Eastern Standard Time and run through 12:00 pm (noon) Eastern Standard Time on March 18. The FY2023 H-1B quota is for H-1B registrations and petitions filed to USCIS in the spring of 2022, with a start date of October 1, 2022 or later.

The registration system for this year is similar to last year’s H-1B registration. Registrations will be submitted electronically and will require a non-refundable $10 registration fee. Assuming that USCIS receives more registrations than the allotted number of 85,000 available H-1B petitions, USCIS will conduct a computer-generated lottery among all registrations. Employers with selected cases will then be eligible to file an H-1B petition within a designated 90-day period following registration selection. As mentioned above, approved H-1B petitions will be effective on October 1, 2022 or later — the start of the government’s 2023 fiscal year.

Article By Angel Feng and William L. Coffman with Mintz.

For more about USCIS updates, visit the NLR Immigration section.

District Court Declines to Dismiss 401(k) Fee Litigation Case in First Decision Post-Hughes

In the first decision since the Supreme Court’s ruling in Hughes v. Northwestern Univ., No. 19-1401, 595 U.S. ___ (U.S. Jan. 24, 2022) (discussed further here), a Georgia federal district court held in favor of plaintiffs and declined to dismiss allegations that defendant’s 401(k) plan included costly and underperforming funds and charged excessive recordkeeping fees. Specifically, plaintiffs alleged that defendants breached ERISA’s fiduciary duty of prudence by: (1) offering retail share class mutual funds despite the availability of identical lower-cost institutional share classes of these same funds; (2) including actively managed mutual funds which were more expensive than available passively managed funds; (3) selecting and maintaining underperforming funds; and (4) overpaying for recordkeeping services.

In declining to dismiss plaintiffs’ investment management fee claims, the district court relied heavily on Hughes. The court expressed its view that Hughes “suggested” that a defined contribution plan participant may state a prudence claim by merely alleging that the plan offered higher priced retail class mutual funds instead of available identical lower-cost institutional class funds. The district court also rejected defendant’s argument that plaintiffs’ claims should be dismissed in part because the plan offered a variety of investment options that participants could select, including lower-cost passive investment options. The district court explained that Hughes rejected this exact argument in holding that a fiduciary’s decisions are not insulated merely by giving participants choice over their investments and that fiduciaries have a continuing duty to monitor plan investments.

The court declined to dismiss plaintiffs’ recordkeeping claims because plaintiffs plausibly alleged that the plan paid nearly double the fees charged by similarly sized plans and that defendant failed to monitor those costs. In regards to plaintiffs’ underperformance claims, the court held that the existence and extent of the alleged underperformance was better left for summary judgment given the parties’ differing views on the issue.

Proskauer’s Perspective

While plaintiffs seemingly scored a victory in the first decision since Hughes, the decision does not indicate that this will (or should be) the trend. First, the district court issued its decision one day after Hughes was decided without the benefit of additional briefing, which would have likely included briefing on the Supreme Court’s direction that district courts give “due regard” to the reasons why a fiduciary made the challenged decisions. Second, the district court appears to have, at a minimum, over-emphasized the Supreme Court’s holding as to the plausibility of mutual fund retail share class claims; the Supreme Court did not hold directly or in dicta that a plaintiff may survive dismissal merely by alleging the availability of identical lower-cost mutual fund share classes.

The case is Goodman v. Columbus Reg’l Healthcare Sys., 2022 U.S. Dist. LEXIS 13489 (M.D. Ga. Jan. 25, 2022).

Article By Kyle C. Hansen and Tulio D. Chirinos with Proskauer Rose LLP.

For more articles about 401(k) plans, visit the NLR Labor & Employment section.

The National Law Forum

Mississippi Enacts Medical Marijuana Law

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