Ransom Demands: To Pay or Not to Pay?

As the threat of ransomware attacks against companies has skyrocketed, so has the burden on companies forced to decide whether to pay cybercriminals a ransom demand. Corporate management increasingly is faced with balancing myriad legal and business factors in making real-time, high-stakes “bet the company” decisions with little or no precedent to follow. In a recent advisory, the U.S. Department of the Treasury (Treasury) has once again discouraged companies from making ransom payments or risk potential sanctions.

OFAC Ransom Advisory

On September 21, 2021, the Treasury’s Office of Foreign Assets Control (OFAC) issued an Advisory that updates and supersedes OFAC’s Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments, issued on October 1, 2020. This updated OFAC Advisory follows on the heels of the Biden Administration’s heightened interest in combating the growing risk and reality of cyber threats that may adversely impact national security and the economy.

According to Federal Bureau of Investigation (FBI) statistics from 2019 to 2020 on ransomware attacks, there was a 21 percent increase in reported ransomware attacks and a 225 percent increase in associated losses. All organizations across all industry sectors in the private and public arenas are potential targets of such attacks. As noted by OFAC, cybercriminals often target particularly vulnerable entities, such as schools and hospitals, among others.

While some cybercriminals are linked to foreign state actors primarily motivated by political interests, many threat actors are simply in it “for the money.” Every day cybercriminals launch ransomware attacks to wreak havoc on vulnerable organizations, disrupting their business operations by encrypting and potentially stealing their data. These cybercriminals often demand ransom payments in the millions of dollars in exchange for a “decryptor” key to unlock encrypted files and/or a “promise” not to use or publish stolen data on the Dark Web.

The recent OFAC Advisory states in no uncertain terms that the “U.S. government strongly discourages all private companies and citizens from paying ransom or extortion demands.” OFAC notes that such ransomware payments could be “used to fund activities adverse to the national security and foreign policy objectives of the United States.” The Advisory further states that ransom payments may perpetuate future cyber-attacks by incentivizing cybercriminals. In addition, OFAC cautions that in exchange for payments to cybercriminals “there is no guarantee that companies will regain access to their data or be free from further attacks.”

The OFAC Advisory also underscores the potential risk of violating sanctions associated with ransom payments by organizations. As a reminder, various U.S. federal laws, including the International Emergency Economic Powers Act and the Trading with the Enemy Act, prohibit U.S. persons or entities from engaging in financial or other transactions with certain blacklisted individuals, organizations or countries – including those listed on OFAC’s Specially Designated Nationals and Blacked Persons List or countries subject to embargoes (such as Cuba, the Crimea region of the Ukraine, North Korea and Syria).

Penalties & Mitigating Factors

If a ransom payment is deemed to have been made to a cybercriminal with a nexus to a blacklisted organization or country, OFAC may impose civil monetary penalties for violations of sanctions based on strict liability, even if a person or organization did not know it was engaging in a prohibited transaction.

However, OFAC will consider various mitigating factors in deciding whether to impose penalties against organizations for sanctioned transactions, including if the organizations adopted enhanced cybersecurity practices to reduce the risk of cyber-attacks, or promptly reported ransomware attacks to law enforcement and regulatory authorities (including the FBI, U.S. Secret Service and/or Treasury’s Office of Cybersecurity and Critical Infrastructure Protection).

“OFAC also will consider a company’s full and ongoing cooperation with law enforcement both during and after a ransomware attack” as a “significant” mitigating factor. In encouraging organizations to self-report ransomware attacks to federal authorities, OFAC notes that information shared with law enforcement may aid in tracking cybercriminals and disrupting or preventing future attacks.

Conclusion

In short, payment of a ransom is not illegal per se, so long as the transaction does not involve a sanctioned party on OFAC’s blacklist. Moreover, the recent ransomware Advisory “is explanatory only and does not have the force of law.” Nonetheless, organizations should consider carefully OFAC’s advice and guidance in deciding whether to pay a ransom demand.

In addition to the OFAC Advisory, management should consider the following:

  • Ability to restore systems from viable (unencrypted) backups

  • Marginal time savings in restoring systems with a decryptor versus backups

  • Preservation of infected systems in order to conduct a forensics investigation

  • Ability to determine whether data was accessed or exfiltrated (stolen)

  • Reputational harm if data is published by the threat actor

  • Likelihood that the organization will be legally required to notify individuals of the attack regardless of whether their data is published on the Dark Web.

Should an organization decide it has no choice other than to make a ransom payment, it should facilitate the transaction through a reputable company that first performs and documents an OFAC sanctions check.

© 2021 Wilson Elser
For more articles about ransomware attacks, visit the NLR Cybersecurity, Media & FCC section.

COBRA Premium Assistance Period Ends September 30, 2021

On September 30, 2021, the COBRA premium assistance period established by the American Rescue Plan Act (“ARPA”) will come to an end. ARPA requires, among other things, that employers provide 100 percent COBRA premium subsidies to assistance eligible individuals (“AEIs”) and their qualified beneficiaries, if they are eligible for COBRA during the six-month period beginning April 1, 2021 through September 30, 2021. Employers must notify all AEIs that their subsidy period is going to end by sending the Notice of Expiration of Premium Assistance at least 15 days, but no more than 45 days, before the expiration of the premium assistance. With the COBRA premium assistance period less than two weeks away, employers should have already sent their final Notices of Expiration. Employers that have not done so, however, should send the notices now.

©2021 Epstein Becker & Green, P.C. All rights reserved.

Article By Gretchen Harders and Jenna D. Russell of Epstein Becker & Green, P.C.

For more articles on COBRA assistance, visit the NLR Administrative & Regulatory section.

What Does Equal Pay Really Mean?

By now you’ve certainly heard of the U.S. women’s soccer team’s challenge to their pay arrangement. Back in the spring of 2019, the players sued the United States Soccer Federation (“USSF”) alleging they were unfairly compensated in comparison to the men’s soccer team–a dispute that has been going on since at least 2017. The federal court dismissed the pay claims on summary judgment, ruling that the women were not, in fact, paid less than the men per game played.

Recently the players appealed the federal court’s ruling to the 9th Circuit. In their opposition brief, the USSF argued that the women cannot challenge a payment schedule they expressly negotiated and agreed to via a collective bargaining agreement.

The case presents two very interesting and important issues on the fair pay landscape. The first question is whether an individual can challenge their pay as unequal when they expressly bargained for and negotiated that pay, especially where–as here–they had full knowledge of what employees of the opposite sex were paid.

The second issue is how much “market realities” (as the USSF has called them) are allowed to play a role in the Equal Pay Act analysis as a legitimate job-related factor other than gender (one of the statutory exceptions). For example, in 2018 and 2019, FIFA paid out $38 million to the winner of the men’s world cup, but only $4 million to the winner of the women’s world cup. That is, in the international market, the men’s soccer competitions (generally speaking, not just the U.S. men’s team specifically) sell more tickets and at higher prices, have more expensive sponsorship deals, and generate more revenue.

The USSF argues that because of the potential to generate more revenue from their competitions (even if they end up losing and failing to generate that revenue), the men stand to earn more in their contracts via win bonuses. In response, the women argue that they have, in fact, generated more revenue than the men’s team over the past few years, yet do not have the same bonus opportunities.

It will be interesting to watch how the 9th Circuit wrestles with these two issues, particularly as the result may have lasting impacts for individual employees making equal pay claims. For example, would pay transparency and negotiated salaries be a strong defense to later equal pay claims? Moreover, would revenue generation or even potential revenue generation be a strong defense even when actual performance suggests the lower-paid female employee is generating more revenue than the male employee?

The 9th Circuit will likely hear oral argument on the appeal in early 2022.

{ U.S. women’s soccer team players sought a collective-bargaining agreement that prioritized guaranteed salaries and benefits over potentially higher bonuses, and can’t now pursue “equal pay” claims based on a pay structure they rejected, the U.S. Soccer Federation argued . . . .

 https://www.wsj.com/articles/u-s-soccer-women-equal-pay-11632341799

©1994-2021 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

Get Poked or Get Canned – Can You Terminate an Employee for Refusing the Vaccine?

The answer is it depends.

Why is the employee refusing the vaccine?

For employers mandating the vaccine, an employee’s refusal to receive it because he or she simply does not want to be vaccinated is likely fair game for termination. Typically, however, an employee will seek a reasonable accommodation that enables him or her not to get the vaccine, raising an objection pursuant to the Americans with Disabilities Act (a medical issue) or Title VII (a sincerely held religious belief). Those scenarios require an employer to entertain the request by engaging in an interactive process to determine, primarily, whether there exists a way to provide the accommodation without creating an undue burden (or hardship) on the employer. The threshold for the hardship analysis is much higher for a medical reason than a religious reason. Keep in mind that you do not have to remove essential functions of a job or create a separate position as a reasonable accommodation.

What if you have a union or a federal contract?

The issue becomes even more complicated if a union is involved or the employer is a federal contractor. With a union, you must make sure you bargain appropriately before imposing a change in working conditions.

On the federal contract side, those employees will fall under a vaccine mandate starting October 15, just like federal employees. In the past months, vaccine requirements have differed from site to site depending on the particular government contracting agent. For example, if the site lets visitors (including contractor/subcontractor employees who perform their duties onsite) enter with masks or a negative test as an alternative to vaccination, the employer will in most cases need to provide the same accommodation. If the site takes a more stringent approach and does not allow masks and negative tests as an alternative, the employer may be able to deny such a request and terminate the employee instead. Before you terminate an employee, make sure to check for any vacancies in which you can provide the accommodation. If no such vacancies exist, the employer should allow the employee to exhaust available sick or PTO time, as well as FMLA leave, if his or her vaccine refusal is based on a medical issue. For a religious issue, the employee would not qualify for sick time, but the employer should allow that employee to exhaust available PTO prior to termination.

What about the OSHA Emergency Temporary Standard?

We expect OSHA to issue its Emergency Temporary Standard (ETS) soon, which will shed light on the analysis, but we do not yet know exactly what that guidance will be. We expect, however, that exceptions based on disability or religious requests for accommodation will be a part of the rules, and the ADA and Title VII analysis will be necessary.

As always, stay tuned for additional guidance after OSHA issues its ETS.

© 2021 Bradley Arant Boult Cummings LLP

Article By Anne Knox Averitt, Chuck Mataya and Anne R. Yuengert of Bradley Arant Boult Cummings LLP

For more articles on mandatory vaccines, visit the NLR Labor & Employment section.

SDNY: Use of Photojournalists’ 9/11 Footage May Be Fair Use

A firefighter digging through rubble. An ambulance being lifted out of the wreckage. Photographs of these and other somber scenes from downtown Manhattan on September 11, 2001 formed the basis of photojournalist Anthony Fioranelli’s copyright infringement case against several media organizations that allegedly used these photos without permission. Recently, the S.D.N.Y. issued a mixed ruling on whether use of these harrowing-yet-iconic photos was fair.

Background

Plaintiff Fioranelli was one of four reporters allowed access to Ground Zero immediately after the September 11, 2001 terrorist attack on the World Trade Center (“9/11”). Fioranelli compiled his raw footage of Ground Zero and registered it with the Copyright Office (the “Content”). CBS licensed Fioranelli’s Content and agreed to pay Fioranelli for each use of any portion of the Content, but later created multiple newsreels and licensed them to other media organizations without Fioranelli’s permission and without compensating Fioranelli for those further uses. Fioranelli sued CBS and its purported sublicensees, including BBC, A&E Television Networks, and Paramount Pictures (among others), alleging that sixteen works—including the CBS newsreels, ten documentaries/docuseries, a docudrama, a “making of” featurette, a religious TV program, and two programs exploring/debunking conspiracy theories—infringed his copyright in the Content. The parties moved for summary judgment, with the defendants seeking a judgment from the court that their use was de minimis and fair.

De Minimis Use

While there was no dispute that the defendants actually copied Fioranelli’s Content, the parties disputed whether the amount copied was legally actionable. The defendants relied on a quantitative analysis, arguing that because they used only a small portion of Fioranelli’s total footage, their use was de minimis.

The court disagreed, holding that a defendant’s quantitatively brief display of a copyrighted work, “when conspicuously displayed, can be actionable.” Applying this standard, the court found that defendants prominently displayed the Content in fourteen of the sixteen challenged works, which contained a full-screen depiction of Fioranelli’s Content. The court noted that the Content was “not mere background footage” but was “clearly observable” and “the focus of the film when shown.” The court further found that the remaining two works—a docudrama and its “making of” featurette—used the Content as the focal point of an entire scene and were also not de minimis. Accordingly, the court denied defendants’ motion for summary judgment on de minimis use, finding that the qualitative prominence of defendants’ uses (i.e., to occupy an entire screen or as the focal point for the viewer) outweighed the quantitative brevity of such uses.

Fair Use

Regarding defendants’ motion for summary judgment on fair use, the court analyzed the four familiar fair-use factors.

Regarding the second factor (the nature of the copyrighted work), the court found that photojournalism (like Fioranelli’s Content) consists primarily of non-fictional renderings of historical events, and often precludes substantial demonstrations of creativity. As such, the nature of the Content—which was non-fictional and historical—weighed in favor of the defendants.

As for the fourth factor (the effect on the potential market for the copyrighted work), the court found that defendants’ uses were paradigmatic of the market for the Content, i.e., licensing to media organizations and “a clear substitute” for Fioranelli’s Content. The court also found that allowing CBS to sublicense the Content to other media organizations without compensating Fioranelli for those sublicensed uses would gravely impact freelance photojournalists, who seek out footage expecting to collect licensing fees for their work. Accordingly, the court found that the fourth factor weighed against the defendants.

As for the first and third factors, the court separately analyzed the alleged infringements. Regarding the first factor (the purpose and character of the use), the court found that some alleged infringements were transformative, whereas others were not, and further found that, for some alleged infringements, fair use issue could not be decided at summary judgment. While the court agreed with Fioranelli that each of the defendants’ uses were commercial in nature, which tends to weigh against fair use, it found that this was not dispositive of the various fair use determinations.

The court found that seven of the challenged works were not transformative because none incorporated Fioranelli’s Content to comment on or critique it, and because those works shared the original purpose of Fioranelli’s Content—to inform the viewer of what happened on 9/11 and its aftermath. In particular, the court held that “[t]he expressive purpose of the original use and the secondary use are the same,” and that defendants’ use of unaltered copies of Fioranelli’s Content to achieve the same purpose that Fioranelli sought to achieve, led the court to conclude that such uses were not transformative.

As for another seven of the challenged works (which included the religious TV program and programs exploring/debunking conspiracy theories), the court declined to make a fair use determination on summary judgment, based in part on defendants’ arguments that their use was transformative because it served a different purpose than Fioranelli’s purpose in creating the Content. For example, the court noted that the programs exploring/debunking conspiracy theories were intended “to educate viewers about conspiracy theories surrounding 9/11” which was not Fioranelli’s original purpose. Similarly, the court held that a reasonable juror could find that use of Fioranelli’s Content to build a political argument was a sufficiently different purpose so as to potentially render the use transformative. Accordingly, the court held that this was an issue to be determined at trial.

The court also found that a docudrama and its “making of” featurette were transformative. The docudrama was a fictionalized retelling of a story of two police officers trapped in the rubble at Ground Zero, wherein Fioranelli’s Content is superimposed on the television that a fictionalized police officer’s family is watching. The court found that the docudrama used Fioranelli’s Content creatively to construct a unique fictionalized setting, not to record or share history. As such, the docudrama’s use of Fioranelli’s Content was found transformative. As for the “making of” featurette, the court found that its purpose was to provide insight into the rationale behind the cinematic choices made in the film, rendering that transformative as well.

As for CBS’ alleged unauthorized use of the Content, the court held the first fair use factor favored Fioranelli for the additional reason that the infringement was in bad faith because CBS removed a watermark reading “NOT FOR BROADCAST” from Fioranelli’s footage before CBS used the footage in its newsreels. The court found that this decision, together with the fact that CBS’ use duplicated Fioranelli’s original purpose and was commercial in nature, led the first factor to weigh slightly in Fioranelli’s favor.

In analyzing the third factor (the amount and substantiality of use), the court referred back to its de minimis use analysis and declined to adopt the defendants’ mathematical, quantitative approach, instead considering whether “the extent of Defendants’ copying is consistent with or more than necessary to further the purpose and character of the use.” For seven works found not transformative, the court found this factor neutral, and for seven additional works the court left this determination for trial, as reasonable jurors could disagree regarding whether the defendants used more of the copyrighted material than necessary for each work’s purpose. For the two uses that the court found transformative (the docudrama film and featurette), the court found that the few seconds of copyrighted material shown on the in-scene television were “no more than necessary to ensure the viewer understood that the family was watching the events of 9/11 unfold on television.”

In sum, the court found that the seven non-transformative uses (the two newsreels and six historical, non-political documentaries) were not fair use; that the two uses that were transformative (the docudrama film and featurette) were fair use; and that for the seven remaining works, fair use could not be decided on summary judgment.

The case is Fioranelli v. CBS Broad. Inc., No. 15-CV-0952 (VSB), 2021 WL 3372695 (S.D.N.Y. July 28, 2021).

This article was written by Brooke M. Wilner and Samuel V. Eichner of Finnegan Law Firm.

For more articles relating to Intellectual Property, please click here.

Illinois Appellate Panel Splits the Difference for BIPA Statute of Limitations in Closely Watched Decision

Currently pending before the Seventh Circuit Court of Appeals is the important question of when a claim under the Illinois Biometric Information Privacy Act (“BIPA”) accrues.  Cothron v. White Castle, No. 20-3202 (7th Cir.)  In another litigation CPW previously identified, a panel for the Illinois Court of Appeals recently addressed whether BIPA claims are potentially subject to a one-, two-, or five-year statute of limitations.  Tims v. Black Horse Carriers, Inc., 2021 IL App (1st) 200563 (Sep. 17, 2021).  The answer is apparently “it depends,” based on the particular claims a plaintiff asserts under the statute.

The underlying facts of the case, as with many BIPA litigations, arose in the employer-employee context.  Plaintiff filed a putative class action Complaint in March 2019.  Plaintiff alleged that he worked for Defendant from June 2017 until January 2018. Plaintiff alleged that Defendant “scanned and was still scanning the fingerprints of all employees, including Plaintiff, and was using and had used fingerprint scanning in its employee timekeeping,” in violation of BIPA.

Count I of the Complaint alleged that Defendant violated Section 15(a) of BIPA by failing to institute, maintain, and adhere to a retention schedule for biometric data.  Count II of the alleged that Defendant violated BIPA Section 15(b) by failing to obtain an informed written consent and release before obtaining biometric data. Finally, Count III of the Complaint alleged that Defendant violated BIPA Section 15(d) by disclosing or disseminating biometric data without first obtaining consent.

Defendant subsequently moved to dismiss the Complaint in its entirety, asserting that Plaintiff’s Complaint was filed outside BIPA’s limitation period.  The motion noted that BIPA itself has no limitation provision and argued that the one-year limitation period for privacy actions under Illinois Code Section 13-201 applies to causes of action under the BIPA.

Plaintiff opposed, arguing that: (1) BIPA’s purpose is (in part) to prevent or deter security breaches regarding biometric data and therefore (2) in the absence of a limitation period expressly contained in BIPA itself, the five-year period in Illinois Code Section 13-205 for all civil actions not otherwise provided for should apply.  Plaintiff also argued that the one-year limitations period applied to actions only involving publication of information—which was not implicated for all claims under BIPA

The statute of limitations issue was eventually certified to a panel of the Illinois Court of Appeals.  The Court noted at the onset that Section 15 of BIPA “imposes various duties upon which an aggrieved person may bring an action” and “[t]hough all relate to protecting biometric data, each duty is separate and distinct.”

The Court ultimately found the publication-based distinction raised in the parties’ briefing a useful construct for categorizing claims under BIPA: “[a] plaintiff could therefore bring an action under the Act alleging violations of section 15(a), (b), and/or (e) without having to allege or prove that the defendant private entity published or disclosed any biometric data to any person or entity beyond or outside itself.  Stated another way, an action under section 15(a), (b), or (e) of the Act is not an action ‘for publication of matter violating the right of privacy.’” (quotation omitted).

The end result reached was that the Court held Section 13-201 (the one-year limitations period) governs BIPA actions under Section 15(c) and (d) while Section 13-205 (the five-year limitations period) governs BIPA actions under Sections 15(a), (b), and (e).

Although the shorter limitations period adopted for BIPA claims under Section 15(c) and 15(d) is a welcome ruling for defendants named in BIPA class actions, this ruling will have a limited impact on pending and future-filed BIPA cases.  This is because with the statute’s generous liquidated damages, class actions (even if defined depending on the claim asserted to include only a 1-year period) will still potentially bring a significant payoff for determined class counsel.  The bigger question—pending before the Seventh Circuit—is when BIPA claims accrue in the first place.  For more on this, stay tuned.  CPW will be there to keep you in the loop.

© Copyright 2021 Squire Patton Boggs (US) LLP

Article By Kristin L. Bryan of Squire Patton Boggs (US) LLP

For more on BIPA, visit the NLR Communications, Media & Internet section.

Apple iPhone Users: Update Your iPhone iOS ASAP

We have noted before how important it is to update the operating system (OS) on your mobile phone as soon as you receive notice from the manufacturer. This week, Apple issued an update to the iOS that is considered urgent.

Apple released two patches this week to address two security vulnerabilities in iPhones, including to protect against Pegasus spyware and WebKit, which is related to how Safari is displayed on screens.

The first patch aims to prohibit a zero-click exploit that launches code in iMessage that allows spyware to be deployed and used against users. This vulnerability is concerning because it does not require the user to open a link for the malicious code to be deployed and have access to the mobile device.

The second patch is designed to fix a vulnerability discovered by a security researcher, which allows threat actors to use malicious web content to exploit iPhones and iPads.

Message today: UPDATE YOUR iPHONE OPERATING SYSTEM ASAP. To do so, plug in your phone, go to Settings, click on General, then click on Software Settings and download iOS 14.8.

Copyright © 2021 Robinson & Cole LLP. All rights reserved.

Article By Linn F. Freedman of Robinson & Cole LLP

For more articles on cybersecurity, visit the NLR Communications, Media & Internet section.

For Cannabis Dispensaries, Ounce of Prevention Worth More than Pound of Cure

Imagine facing the prospect of a crippling class action lawsuit and having to engage in costly discovery to disprove the claims, even where clear evidence of innocence is presented at the pleading stage.  For one cannabis dispensary, this wasn’t merely a thought exercise, it was reality.  In Montanez v. Future Vision Brain Bank, LLC, 2021 WL 1697928 (D.Colo. 2021) plaintiff filed a putative class action against Future Vision Brain Bank (“Future Vision”) alleging that the company had violated the Telephone Consumer Protection Act (TCPA) by sending numerous telemarketing text messages to plaintiff’s cellphone using an Automatic Telephone Dialing System (ATDS).

Future Vision moved to dismiss, contending that plaintiff lacked standing to bring the suit and that the complaint failed to state a claim, in any event.  As to its first defense, Future Vision asserted that plaintiff failed to allege an injury-in-fact because she had provided prior consent to receive text messages and she had not adequately plead the existence of an ATDS.  Second, defendant argued that even if plaintiff had standing, the failure to plausibly allege the use of an ATDS warranted dismissal of the claims.

To establish its first defense, Future Vision submitted an affidavit from its digital systems engineer, which included screenshots showing that plaintiff had enrolled in defendant’s customer loyalty program and that when she did so, she provided her phone number and authorized communication through text message.  The parties marshaled competing authorities from the Third, Eighth, and Ninth circuits on the question whether consent is properly an issue of the merits or jurisdiction.  Citing Tenth Circuit precedent, however, the court reasoned that because resolution of the jurisdictional question (standing) requires resolution of an aspect of the substantive claim (consent), the issue should be resolved under Rule 12(b)(6).  And because defendant moved only to dismiss the issue under Rule 12(b)(1), the court denied the motion to dismiss on the issue of standing as to consent.

The court reached a similar conclusion with respect to defendant’s ATDS defense, even though it was asserted under both Rule 12(b)(1) and Rule 12(b)(6).  An ATDS is defined by the TCPA as “equipment which has the capacity (a) to store or produce telephone numbers to be called, using a random or sequential number generator; and (b) to dial such numbers.” 47 U.S.C. § 227(a)(1).  As we have previously discussed, the Supreme Court’s recent decision in Facebook v. Duguid clarified that unless the dialing equipment uses a random or sequential number generator, businesses will not be required to obtain prior written consent from the consumer before contacting them. 141 S.Ct. 1163 (2021).  Under the Supreme Court’s recent interpretation, equipment that merely dials from a list, and does not incorporate the use of a random or sequential telephone number generator is not bound by the TCPA’s requirements to obtain prior express consent before making calls or sending text messages using an ATDS.

Under the Supreme Court’s recent interpretation, equipment that merely dials from a list, and does not incorporate the use of a random or sequential telephone number generator is not bound by the TCPA’s requirements to obtain prior express consent before making calls or sending text messages using an ATDS.

Despite the clarity of this precedent, the court determined that it was not dispositive at the pleading stage.  “While the Supreme Court’s decision elucidates the definition of an ATDS,” the court stated, “that holding will prove far more relevant on a future motion for summary judgment than it does now.  At this stage, the Court must take all well-pleaded facts as true and cannot consider outside evidence without converting the Motion into a motion for summary judgment.”  The court then went on to find that plaintiff had plausibly alleged the use of an ATDS.  Specifically, plaintiff alleged that defendant utilized a messaging platform that allowed the transmission of thousands of text messages without human involvement.  And defendant relied on the platform’s ability to store telephone numbers, generate sequential numbers, dial numbers in a sequential order, and dial numbers without human intervention.

This case demonstrates that although many may have viewed Facebook as a decisive victory for cannabis companies that use automated equipment to make calls or send text messages, the district court’s decision here indicates that Facebook may not always be sufficient to protect defendants at the pleading stage.  This is because where a TCPA class action is filed is as important as what is alleged.  Had this case been brought within the Third or Eighth Circuits, where courts have found consent relevant to the standing inquiry, the outcome likely would have been different.  Unless and until the Supreme Court resolves the growing circuit split on this issue, cannabis companies that use any type of automated dialing system should consult with competent legal counsel to design and implement mitigation strategies, including (i) help identifying known litigators and serial plaintiffs, (ii) scrubbing numbers against the Do Not Call registry, (iii) checking for reassigned numbers, (iv) drafting arbitration provisions and class action waivers; (v) crafting strategic forum selection and choice of law clauses; and (vi) developing compliance programs to minimize risk to the company.

Copyright © 2021 Womble Bond Dickinson (US) LLP All Rights Reserved.

Article By Dwayne D. Sam of Womble Bond Dickinson (US) LLP

For more articles on cannabis, visit the NLR Biotech, Food, & Drug section.

Top Legal Industry News for September 2021: Law Firm Pro Bono, Hiring & Innovation

Welcome back to another edition of the National Law Review’s legal industry news column. Read on for the latest news on law firm pro bono, innovation and hiring as selected by the National Law Review editorial team!

Law Firm Hiring & Moves

Jones Walker LLP expanded its State & Local Tax (SALT) Team with the addition of Alysse McLoughlin as partner. Ms. McLoughlin has experience in tax planning, state tax litigation, and other financial services, and she has previously served as the head of state tax for Barclays Capital and state tax counsel for Lehman Brothers. She has also been ranked in Chambers USA since 2017 for her tax law expertise.

“We have known Alysse and have respected her professionalism and talent for years,” said Bill Backstrom, leader of Jones Walker’s Tax Practice Group. “We are thrilled to welcome her to our team. Her background at a multinational investment bank, a global financial services firm, and the IRS is a huge asset to our SALT team. We look forward to working with her and seeing her immediate impact in support of our clients’ interests.”

David M. Hill joined Burg Simpson Eldredge Hersh & Jardine as an associate attorney. Previously, he  served as a judicial extern and a law clerk in the United States Court of Appeals for the Fifth Circuit and Wyoming’s Fifth Judicial District Court respectively, and obtained a Master’s degree in Business Management and Supply Chain Management.

Mr. Hill will be working in Burg Simpson’s Cody, Wyoming office where he will represent clients in matters ranging from real estate, lease agreements, estate planning, contracts, and personal injury.

Stradley Ronon Stevens & Young, LLP added corporate attorney Lisa R. Jacobs to the firm’s Philadelphia office as a partner. She worked with a diverse array of clients, including health care service provider groups, food and beverage conglomerates, and professional sports teams, and practiced in fields such as private equity transactions, mergers and acquisitions, and corporate finance.

“I’ve known, respected and worked with Lisa Jacobs for many years,” said Stradley Ronon Co-Chairman and Managing Partner Jeffrey A. Lutsky. “I couldn’t be more excited to have her join Stradley.”

Pierce Atwood welcomed Nicholas Gladd as a partner in their Energy Law practice in the Washington D.C. and Portland offices. Mr. Gladd brings a wealth of knowledge on energy regulation and has held positions with FERC’s Solicitor’s Office and the Energy Bar Association.

“Nic’s deep and broad energy law and litigation expertise will help us serve our growing roster of utilities, energy project developers, energy marketers, investors, and more. We are fortunate that Nic chose to bring his talent and expertise to Pierce Atwood, and we look forward to having him join our team of highly-skilled energy lawyers,” said Pierce Atwood Energy Practice Group Chair Jared S. des Rosiers.

Pro Bono & Recognition

Good2BSocial is one of the fastest growing private companies, according to Inc. Magazine’s annual Inc. 5000 list, which looks at small business growth in America. The 2021  companies are ranked based on their growth from 2017-2020.

“We’re very excited to make our first appearance on the Inc. 5000. It’s particularly significant that we made the list now given the challenges so many companies endured and overcome due to the Covid-19 pandemic. We thank all our employees, clients and partners who have supported us along the way,” said Guy Alvarez, Good2bSocial’s founder and CEO.

“The 2021 Inc. 5000 list feels like one of the most important rosters of companies ever compiled. Building one of the fastest-growing companies in America in any year is a remarkable achievement. Building one in the crisis we’ve lived through is just plain amazing. This kind of accomplishment comes with hard work, smart pivots, great leadership, and the help of a whole lot of people,” said Scott Omelianuk, editor-in-chief of Inc. Magazine.

Boston Bar Association’s (BBA) Labor and Employment Section Steering Committee selected Sherin and Lodgen’s David I. Brody  to serve as the co-chair for the 2021-2022 term. The committee plans the association’s Labor and Employment section activities and develops policy initiatives.

Mr. Brody represents individuals in a wide range of labor and employment matters before federal and state courts in Massachusetts and has been a member of the BBA’s Labor and Employment Steering Committee since 2018.

Matthew Sarna of DLA Piper received the 20/20 Partners Young Leader Award from the Business Bankruptcy Section of the American Bar Association (ABA) Business Law section. The award is reserved for attorneys who demonstrate commitment to business bankruptcy, involvement in the community, professionalism and leadership. Mr. Sarna was one of 19 recipients.

Mr. Sarna focuses on corporate bankruptcy and restructuring matters, andhelps debtors pick up the pieces left from the COVID-19 pandemic. Mr. Sarna is also involved in pro bono matters and helps veterans obtain discharge upgrades through the National Veterans Legal Service Program.

Legal Industry Awards & Innovation

The International Association of Defense Counsel (IADC) elected new board leaders and members for 2021-22. The IADC focuses on legal reform and attorney professional development.

IADC members represent some of the largest companies in the world, including members of the FORTUNE 500, and are leaders in corporate and insurance law.

The new board leaders are:

• President

Spencer H. Silverglate

Clarke Silverglate, P.A.

Miami, Florida

• President-Elect

Mark R. Beebe

Adams and Reese LLP

New Orleans, Louisiana

• Immediate Past President

Andrew S. Chamberlin

Ellis & Winters LLP

Greensboro, North Carolina

• Vice President of Insurance

Thomas F. Lysaught

QBE North America

Chicago, Illinois

The new IADC board members (three-year terms) are:

• J. Dominic Campodonico

Gordon Rees Scully Mansukhani, LLP

San Francisco, California

• Daniela Karollus-Bruner

CMS Reich-Rohrwig Hainz

Vienna, Austria

• Christopher A. Kenney

Kenney & Sams, P.C.

Boston, Massachusetts

Americas Lodging Investment Summit selected Vedder Price’s deal to sell the L’Ermitage Beverly Hills Hotel property led by Michael M. Eidelman, Shareholder and Chair of the firm’s Insolvency, Bankruptcy and Corporate Reorganization group, as its Single Asset Transaction of the Year.

The United States District Court for the Central District of California appointed Mr. Eidelman as Special Master overseeing the sale of the L’Ermitage Beverly Hills Hotel,  which the United States Government sold  to recover illegally laundered funds from a major international money laundering scandal known as 1MDB. The scandal allegedly involved the embezzlement of billions of dollars from the Malaysian development firm 1MDB. The hotel property sold for $100 million to EOS Investors after a competitive auction involving 50 competing bids.

“The Vedder Price team is honored to be recognized by The Americas Lodging Investment Summit,” Mr. Eidelman said. “We couldn’t be happier with the outcome of the sale. The transaction highlights both our industry knowledge and hard work.”

Ward and Smith created a new service covering mandatory workplace vaccines and potential exemptions to mandatory vaccination policies. The new service allows North Carolinians to speak to an attorney on the issue of mandatory vaccines through a phone call or virtual meeting for a flat fee of $300.

“A real concern, from the numerous calls we’ve fielded about this issue, are from individuals who are stressed over the possibility of losing their jobs and livelihoods should they choose not to get vaccinated,” said Labor and Employment attorney Ken Gray. “That’s why we developed this service. We regularly help employers craft workplace policies and help them understand their rights, as well as the rights of their workers. With this service, individual employees can also understand their rights and move forward with correct information under the law here in North Carolina.”

Employees may be exempt from the requirement if they have a disability or religious beliefs, but those exemptions have their limits.

“Not all employers are covered by the ADA or Title VII. Plus, the accommodation process is different for every workplace, depends on an employee’s circumstances, or can change based on the needs of the business. For example, accommodations may be different if a company decides to have that employee work remotely.”

Those interested in contacting Ward and Smith for more information can call 800-998-1102.

Jackson Lewis launched a video training series covering Title IX team training obligations and addressing sexual misconduct allegations for higher education institutions. The training includes May 2020 Title IX regulations and the July 2021 Title IX guidance from the U.S. Department of Education.

“Providing truly effective annual Title IX team training can be challenging, but it is essential to ensuring fairness, compliance and campus safety,” said Josh Whitlock, principal in Jackson Lewis’s Charlotte, N.C. office and creator of the new video training series. “Individuals who serve as coordinators, investigators, hearing officers, appellate officers and advisors in matters involving sexual misconduct allegations have an often daunting and always impactful role.  Their training must address complex and shifting legal requirements and prepare them to navigate sensitive situations with skill and care. This series offers a comprehensive, efficient, cost-effective and versatile solution. Our team poured deep thoughtfulness and literally hundreds of hours into creating the training content and platform, we are proud of the value that the series offers, and we have received great feedback from the dozens of schools already using it.”

The course includes seven modules for training, 15 hours of practical breakdowns, real-world examples, quizzes and other interactive elements and on-demand access on any device with unlimited sharing within the institution.

Copyright ©2021 National Law Forum, LLC

Article By Hanna Taylor, Chandler Ford and Rachel Popa  of The National Law Review / The National Law Forum LLC

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

EAGLE Act Aims to Reform Employment-Based Green Cards, H-1B Visa Program, and Family-Sponsored Visas

Rep. Zoe Lofgren (D-Calif.), chair of the House Subcommittee on Immigration and Citizenship, and Rep. John Curtis (R-Utah) have introduced the Equal Access to Green Cards for Legal Employment (“EAGLE”) Act. Its reforms focus on employment-based green cards, the H-1B visa program, and family-sponsored visas.

The EAGLE Act

The proposed bill makes it harder for fraud to occur. The bill requires all H-1B job postings to be listed on the U.S. Department of Labor (“DOL”)‘s website for 30 days. Employers are prohibited from employing more than 50% of their workforce through H-1B jobs. The Act also requires employers to adjust wage requirements for H-1B jobs in a way that reflects changes in the cost of living throughout the United States.

The bill’s sponsors strongly feel that the proposed changes will reduce H-1B visa fraud, which will, in turn, allow American employers truly in need of foreign workforce to meet their demands better, even without increasing the H-1B visa cap.

The bill also proposes a remedy to the current green card backlogs. By phasing out per-country caps by 2032, the bill would prevent U.S. Citizenship and Immigration Services (“USCIS”) from being overwhelmed with an enormous number of backlogged applications.

Present Immigration System Requires Reforms

It is widely known that the immigration system has had many setbacks, and reform is long-awaited. The last major reform was in 1990. At least five presidents have channeled their efforts in proposing drastic immigration reforms, but some have seen little success.

The present immigration system has placed caps on many visa programs, restricting the number of visas issued. This restricts employers with an immediate need for workforce, as they cannot find enough workers to employ within the United States. Since the pandemic, the U.S. has seen acute labor shortages, causing employers to lobby for an increase in the employment-based visa cap.

Employment-based permanent resident visas are subject to a 7 percent per-country cap. India and China have the maximum number of skilled workers on employment-based visas, resulting in skilled workers from these countries waiting for decades for permanent residency. As a result, these skilled workers are often unable to immigrate to the United States.

“We are now seeing recruiters from outside America luring those with highest skills away from the U.S.,” Lofgren stated in a press release. Unlike the United States, many countries, like Canada and Australia, use merit-based immigration programs. In the merit-based immigration system, potential immigrants are scored based on language skills, educational degrees, and salary offers. Visas are offered to those who meet the minimum requirements.

Reforms to H-1B Visa Program

One of the most coveted visa programs employers use is the H-1B, an employment-based visa for immigrants in a specialty occupation. Each year, only 85,000 H-1B visas are issued, including 20,000 set aside for applicants with master’s degrees and PhDs from American universities. There are far more applicants each year than the numeric limit allows, so a lottery is held. The H-1B program is also criticized for fraud by employers, some of whom employ foreign workers and pay them less than they would pay equivalent American workers.

©2021 Norris McLaughlin P.A., All Rights Reserved

Article By Raymond G. Lahoud of Norris McLaughlin P.A.

For more articles on green cards, visit the NLR Labor & Employment section.

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