Amrock Lawsuit Spotlights Consequences of Litigious Gamesmanship

Trade Secret Litigation Commentary

 

On June 3, the Texas Fourth Court of Appeals reversed and remanded the dumbfounding $740 million award in Title Source v. HouseCanary – a welcome development for American innovation and business collaboration. On the back of years-long litigation, a fresh trial of the case can offer important signals for corporations on the risks and rewards of collaboration, as well as deliver much-needed guidance on best practices to navigate already murky trade secret protections.

For the uninitiated, litigation between HouseCanary and Title Source (now Amrock) was borne out of a contract the two companies entered in 2015. The arrangement obligated the delivery of an automated valuation model (AVM) and an app to Title Source at a rate of $5 million per year for HouseCanary’s efforts. Title Source intended to use the software and app as a platform to provide customers the ability to assess property values digitally alongside other services the company offers, like title insurance and closing services. After HouseCanary failed to meet its contractual obligation to deliver a working AVM app, Title Source sued for breach of contract.

HouseCanary then filed a counter claim including allegations that Title Source had misappropriated proprietary information, in this case trade secrets, in an attempt to make an app of its [Title Source’s] own. After a six-week trial that concluded in March 2018, a Texas jury decided in favor of HouseCanary and awarded nearly three-quarters of a billion dollars – one of the largest tort settlements of the year.

Should anyone be keeping score at home, that means the case’s settlement was valued at nearly 150 times the annual payout HouseCanary was to receive from its work with Title Source and dwarfed the firm’s multiple rounds of venture funding by over $600 million. For HouseCanary, litigation proved more profitable than any of its own business ventures, and the settlement certainly outstripped the going market rates on AVMs.

By the conclusion of the original trial, it seemed clear that Title Source had not misappropriated HouseCanary’s trade secrets or proprietary information in building its own app. Further, HouseCanary’s own expert witness testified that there weren’t “any fingerprints, any clues, any reference to any HouseCanary technology” in the app Title Source developed on its own.

Regrettably, the jury’s finding against Title Source was based on inaccurate and incomplete information, unsubstantiated inadmissible character attacks, and back-of-the-napkin math from a questionable damages ‘expert.’ It seemed to be more focused on sticking it to corporate America rather than the actual facts and merits of the case. Not only was the jury gravely mislead, but they also never heard critical information which came to light days after the trial concluded.

Post-trial statements by a former HouseCanary executive turned whistleblower clarified that there was never a “working version” of the app to be delivered to Title Source, and per three more former HouseCanary executives, that the company didn’t have “any IP to steal.” The cogency of HouseCanary’s allegations were further thrown into question when the company, six weeks after the trial’s closure, moved to seal a number of exhibited documents from court record.

As I wrote previously, once the sealing motion was overturned, the documents should “provide another look at the technology in question, which will provide clarity whether there were trade secrets to be stolen.” This is especially important when considered in tandem with the whistleblower testimony.

These and other erroneous inclusions and fatal procedural errors led to a Texas appellate court overturning the verdict and ordering a new trial. The ramifications of the decision in the new trial promise to be immense, especially if HouseCanary invokes Texas’ Uniform Trade Secrets Act for a second time. The Act has been adopted by 47 states total, and significantly broadens the implications of this trial for business operations in all kinds of industries by setting precedent for other lawsuits.

Trade secret litigation has increased tremendously in the past decade, with over 2,700 cases since 2009; add on the massive original settlement and the ruling may very well set the tone for the future of trade secret litigation and the standard of intellectual property protections.

Given the new evidence that has emerged since the jury delivered its decision in 2018, the cards certainly appear stacked against HouseCanary successfully duping the retrial jury. There is little doubt that businesses and innovators everywhere will be awaiting the verdict of the Texas court for clarity on trade secret protections and our court system’s tolerance for overwhelmingly apparent legal gamesmanship.

© George Nethercutt

Authored by George Nethercutt of The George Nethercutt Foundation, a guest contributor to the National Law Review.

For more on trade secrets, see the National Law Review Intellectual Property law section.

Asset Protection for Doctors and Other Healthcare Providers: What Do You Need to Know?

As a doctor or other healthcare professional, you spend your career helping other people and earning an income upon which you rely on a daily basis—and upon which you hope to be able to rely in your retirement. However, working in healthcare is inherently risky, and a study published by Johns Hopkins Medicine which concluded that medical malpractice is the third-leading cause of death in the United States has led to a flood of lawsuits in recent years. As a result, taking appropriate measures to protect your assets is more important now than ever, and physicians and other providers at all stages of their careers would be well-advised to put an asset protection strategy in place.

What is an asset protection strategy? Simply put, it is a means of making sure that you do not lose what you have earned. Medical malpractice lawsuits, federal healthcare fraud investigations, disputes with practice co-owners, and liability risks in your personal life can all put your assets in jeopardy. While insurance provides a measure of protection – and is something that no practicing healthcare professional should go without – it is not sufficient on its own. Doctors and other healthcare providers need to take additional steps to protect their wealth, as their insurance coverage will either be inadequate or inapplicable in many scenarios.

“In today’s world, physicians and other healthcare providers face liability risks on a daily basis. In order to protect their assets, providers must implement risk-mitigation strategies in their medical practices, and they must also take measures to shield their wealth in the event that they get sued.”

What Types of Events Can Put Healthcare Providers’ Assets at Risk?

Why do doctors and other healthcare providers need to be concerned about asset protection? As referenced above, medical professionals face numerous risks in their personal and professional lives. While some of these risks apply to everyone, it is doctors’ and other medical professionals’ additional practice-related risks – and personal wealth – that makes implementing an asset protection strategy particularly important. Some examples of the risks that can be mitigated with an effective asset protection strategy include:

  • Medical Malpractice Lawsuits – All types of practitioners and healthcare facilities face the risk of being targeted in medical malpractice litigation. From allegations of diagnostic errors to allegations of inadequate staffing, plaintiffs’ attorneys pursue a multitude of types of claims against healthcare providers, and they often seek damages well in excess of providers’ malpractice insurance policy limits.
  • Contract Disputes and Commercial Lawsuits – In addition to patient-related litigation, medical practices and healthcare facilities can face liability in other types of civil lawsuits as well. By extension, their owners’ assets can also be at risk, as there are laws that allow litigants to “pierce the corporate veil” and pursue personal liability in various circumstances.
  • Federal Healthcare Fraud Investigations – Multiple federal agencies target healthcare providers in fraud-related investigations. From improperly billing Medicare or Medicaid to accepting illegal “kickbacks” from suppliers, there are numerous forms of healthcare fraud under federal law. Healthcare fraud investigations can either be civil or criminal in nature, and they can lead to enormous fines, recoupments, treble damages, and other penalties.
  • Drug Enforcement Administration (DEA) Audits and Inspections – In addition to healthcare fraud investigations, DEA audits and inspections present risks for healthcare providers as well. If your pharmacy or medical practice is registered with the DEA, any allegations of mishandling, diverting, or otherwise unlawfully distributing controlled substances can lead to substantial liability.
  • Liability for Personal Injury and Wrongful Death in Auto and Premises-Related Accidents – In addition to liability risks related to medical practice, doctors, other practitioners, and healthcare business owners can face liability risks in their personal lives as well. If you are involved in a serious auto accident, for example, you could be at risk for liability above and beyond your auto insurance coverage. Likewise, if someone is seriously injured in a fall or other accident while visiting your home (or office), you could be at risk for liability in a personal injury lawsuit in this scenario as well.

To be clear, an asset protection strategy mitigates the risk of losing your wealth as a result of these types of concerns—it does not mitigate these concerns themselves. The means for addressing medical practice-related concerns is through the adoption and implementation of an effective healthcare compliance program.

Are Asset Protection Strategies Legal?

One of the most-common misconceptions about asset protection is that it is somehow illegal. However, there are various laws and legal structures that are designed specifically to provide ways for individuals and businesses to protect their assets, and it is absolutely legal to use these to your full advantage. Just as you would not expect your patients to ignore treatment options that are available to them, you are not expected to ignore legal tools and strategies that are available to you.

What are Some Examples of Effective Asset Protection Tools for Doctors and Other Healthcare Providers?

Given the very real liability risks that doctors and other healthcare providers face, for those who do not currently have an asset protection strategy in place, implementing a strategy needs to be a priority. With regard to certain issues, asset protection measures need to be in place before a liability-triggering event occurs. Some examples of the types of tools that physicians, healthcare business owners, and other individuals can use to protect their assets include:

1. Maximizing Use of Qualified Retirement Plans

Qualified retirement plans that are subject to the Employee Retirement Income Security Act (ERISA) can offer significant protection. Of course, obvious the limitation here is that these assets placed in a qualified plan will only be available to you in retirement. However, by maximizing your use of a qualified retirement plan to the extent that you are preserving your assets for the future, you can secure protection for plan assets against many types of judgments and other creditor claims.

2. Utilizing Nonqualified Retirement Plans as Necessary

If you operate your medical practice as a sole proprietor, then you are not eligible to establish a qualified retirement plan under ERISA. However, placing assets into a nonqualified retirement plan can also provide these assets with an important layer of protection. This protection exists under state law, so you will need to work with your asset protection attorney to determine whether and to what extent this is a desirable option.

3. Forming a Trust

Trusts are the centerpieces of many high-net-worth individuals’ asset protection strategies. There are many types of irrevocable trusts that can be used to shield assets from judgment and debt creditors. When you place assets into an irrevocable trust, they are no longer “yours.” Instead they become assets of the trust. However, you will still retain control over the trust in accordance with the terms of the trust’s governing documents. Some examples of trusts that are commonly used for asset protection purposes include:

  • Domestic asset protection trusts (DAPT)
  • Foreign asset protection trusts (FAPT)
  • Personal residents trusts
  • Irrevocable spendthrift trusts

4. Offshore Investing

Investing assets offshore can offer several layers of asset protection. Not only do many countries have laws that are particularly favorable for keeping assets safe from domestic liabilities in the United States; but, in many cases, civil plaintiffs will be deterred from pursuing lawsuits once they learn that any attempts to collect would need to be undertaken overseas. Combined with other asset protection strategies (such as the formation of a trust or limited liability company (LLC)), transferring assets to a safe haven offshore can will provide the most-desirable combination of protection and flexibility.

5. Forming a Limited Liability Company (LLC) or Other Entity

If you are operating your medical practice as a sole proprietor, it will almost certainly make sense to form an LLC or another business entity to provide a layer of protection between you and any claims or allegations that may arise. However, even if you have a business entity in place already—and even if you are an employee of a hospital or other large facility—forming an LLC or other entity can still be a highly-effective asset protection strategy.

6. Utilizing Prenuptial Agreements, Postnuptial Agreements, and Other Tools

Depending on your marital or relationship status, using a prenuptial or postnuptial agreement to designate assets as “marital” or “community” property can help protect these assets from your personal creditors (although debts and judgments incurred against you and your spouse jointly could still be enforced against these assets). Additionally, there are various other asset protection tools that will be available based on specific personal, family, and business circumstances.

7. Gifting or Transferring Assets

If you have assets that you plan to give to your spouse, children, or other loved ones in the future, making a gift now can protect these assets from any claims against you. Likewise, in some cases it may make sense to sell, transfer, or mortgage assets in order to open up additional opportunities for protection.

Ultimately, the tools you use to protect your assets will need to reflect your unique situation, and an attorney who is familiar with your personal and professional circumstances can help you develop a strategy that achieves the maximum protection available.

Oberheiden P.C. © 2020  

ARTICLE BY Dr. Nick Oberheiden of Oberheiden P.C.

For more articles on healthcare providers, see the National Law Review Health Law & Managed Care section.

PFAS Water Cleanup…Have You Bought Yourself a Multi-Million Dollar Superfund Issue?

The last two years have seen an incredible uptick in activity with respect to PFAS regulations, and media coverage of PFAS continues to fuel the fires from the public, non-government organizations and environmental groups for additional action to be taken. The EPA continues its process of determining Maximum Contaminant Levels for PFAS. The FDA is examining the ways that it might regulate PFAS levels in both food and food packaging. Meanwhile, states, bombarded with constituent outcries and under pressure to take action to fill the gap until the EPA and FDA finish their regulatory review processes, quickly enact drinking water limits for PFAS and ban PFAS-containing products, such as children’s toys and food packaging.

As states continue setting drinking water limits for PFAS and in preparation for the EPA’s final determination of a Maximum Contaminant Level for PFAS in drinking water, many water utilities are beginning to evaluate the steps needed to come into compliance with existing or anticipated water regulations. Comprehensive compliance programs are being created and costly well testing sites are being built to determine PFAS content at various points along the waterways for drinking water sources. At water treatment facilities, expensive water filtration systems are being installed to remove as many PFAS as possible from drinking water sources. With water utilities coming under fire in the litigation world for PFAS issues, these steps may curtail the short-term issues and costs associated with PFAS litigation.

However, the long-term impact of the remediation steps that water treatment facilities ae taking may only be pushing litigation costs further down the road, not eliminating them. In addition, little considered Superfund laws may be triggered through PFAS water filtration that could end up costing water treatment facilities tens or hundreds of millions of dollars in cleanup costs.

CERCLA and PFAS

Under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), once a substance is designated as “hazardous” by the EPA, the Act gives the EPA considerable power to designate sites containing such substances as Superfund sites and force parties responsible for the pollution to pay for the cleanup of the site. Without a designation of a substance as “hazardous” (and therefore a site as a Superfund site), the EPA may either pay for the cleanup of the site itself or attempt to pursue, through time-consuming and costly litigation, the property owner for the costs of cleanup.

One of the most closely watched developments in the PFAS world is whether the EPA will make the determination that PFAS are “hazardous” under CERCLA. Although the EPA has promised its determination soon and various lawmakers are pressuring the EPA to make a determination in the near future, it is still uncertain as to when the EPA will issue its final regulations.

In the meantime, however, water utilities are under increasing pressure to filter out PFAS from drinking water. These PFAS are typically deposited in landfills. Out of sight, out of mind? Not exactly, when it comes to PFAS. As the quantity of PFAS accumulate in landfills, if the EPA makes a determination that PFAS are “hazardous” substances under CERCLA, the EPA could immediately designate landfills full of PFAS as Superfund sites and take action to pursue parties to pay for the cleanup. Water utilities could therefore be at significant risk of having to pay for Superfund site cleanup.

Further, in some instances, water utilities may have previously been involved with Superfund site cleanup for other reasons and believed the site issues to be fully remediated.  However, since PFAS have not yet been classified as “hazardous”, Superfund sites were never tested for PFAS. Should the EPA determined that PFAS are “hazardous” under CERCLA, the EPA will have the right to reopen previously closed Superfund sites for further testing and remediation specific to PFAS, even if parties deemed responsible for the pollution already paid millions of dollars to clean up the site for other contaminants.

Water utilities in particular must pay special attention to PFAS developments under CERCLA. Proactive planning is needed to determine alternate means of disposing of or eliminating PFAS from water sources. Failure to enact forward-thinking strategies may very well end up costing water utility companies tens of millions in unexpected and unwanted costs if they fail to do so.

©2020 CMBG3 Law, LLC. All rights reserved.

ARTICLE BY John Gardella at CMBG3 Law.

Leveraging Technology to Meet Your Marketing Needs During COVID-19

Technology plays a vital role in our everyday lives and has vastly improved the way we communicate to friends, family, and colleagues alike. During these unprecedented times, technology has played an even greater role, including using it for law firm marketing efforts. While a pandemic has certainly ceased much of our normal lives, below are four ways you can use technology to keep your marketing and public relations efforts alive.

Live Stream on Social

Many social media platforms, such as Twitter, Facebook, and Instagram feature a live stream option, allowing users to broadcast directly from their home in real time. A great way to use this tool is to host Q&A sessions to discuss trending topics related to your practice area. Consider promoting the Q&A 2 to 3 weeks prior and allow people the option to submit questions ahead of time via direct message or email.

Webinars

Since most states have implemented stay-at-home orders, nearly every in-person event has been cancelled for the foreseeable future. However, that doesn’t mean presentations, seminars, or lectures aren’t possible to conduct. One of the main benefits of hosting a webinar is the ability to present from wherever and have your attendees tune-in from anywhere. Use this opportunity to adapt your presentation to be more visually appealing to a broader audience and incorporate a few real-life examples to keep your audience engaged. Be sure to also promote your webinar 2 to 3 weeks prior to maximize attendance. Additionally, for lawyer-attended webinars, consider getting your presentation CLE-certified as an added incentive for lawyers to fulfill their required CLE hours.

Newsletters & Email Blasts

If you have an up-to-date contact list, distribute a newsletter or email blast detailing how your company is helping those affected by COVID-19. This is a great way to communicate with your network and offer valuable information. Additionally, by using distribution platforms such as MailChimp and Constant Contact, you can view your newsletter/email blast’s performance analytics, including how many people viewed your content and which links were clicked the most. If you don’t have an up-to-date contact list, use this time to create or update one.

Google Analytics

 This free feature offered by the search engine giant allows users to collect website traffic information and identify the number of unique monthly visitors, among other data. Since Google Analytics tracks data in real time, you’re consistently informed of how your website is performing against your competitors. You can also generate weekly reports to pinpoint relevant keywords and search terms embedded in your URLs that drive people to your site. With this information, you can better understand the behavior of your customers, and update text or content on the backend of your website to improve your ability to reach your target audience.

© 2020 Berbay Marketing & Public Relations

For more marketing for law firms, see the Law Office Management section on the National Law Review.

Federal Court Strikes Down Portions of Department of Labor’s Final Rule on COVID-19 Leave, Expands Coverage

On August 3, 2020, the United States District Court for the Southern District of New York struck down portions of the DOL’s Final Rule regarding who qualifies for COVID-19 emergency paid sick leave under the Emergency Paid Sick Leave Act (“EPSLA”) and the Emergency Family and Medical Leave Expansion Act (“EFMLEA”), collectively referred to as the Families First Coronavirus Response Act (“FFCRA”).

Of particular importance to retail employers, the Court invalidated two provisions of the DOL’s Final Rule pertaining to: (1) conditioning leave on the availability of work and (2) the need to obtain employer consent prior to taking leave on an intermittent basis.

Neither the EPSLA nor the EFMLEA contains an express “work availability” requirement. The EPSLA grants paid leave to employees who are “unable to work (or telework) due to a need for leave because” of any of six COVID-19-related criteria. FFCRA § 5102(a). The EFMLEA similarly applies to employees “unable to work (or telework) due to a need for leave to care for . . . [a child] due to a public health emergency.” FFCRA § 101(a)(2)(A).  In its Final Rule, the DOL concluded that these provisions do not reach employees whose employers “do not have work” for them, reasoning a work-availability requirement is justified “because the employee would be unable to work even if he or she” did not have a qualifying condition set forth in the statute.

In rejecting the DOL’s interpretation, the Court stated that “the agency’s barebones explanation for the work-availability requirement is patently deficient,” given that the DOL’s interpretation “considerably narrow[s] the statute’s potential scope.”  Under the Court’s interpretation, employees are entitled to protected leave under either the EPSLA or EFMLEA if they satisfy the express statutory conditions, regardless of whether they are scheduled to work during the requested leave period.

The Court also rejected part of the DOL’s interpretation that employees are not permitted to take the protected leave on an intermittent basis unless they obtain their employer’s consent.  As an initial matter, the Court upheld the DOL’s interpretation that employees cannot take intermittent leave in certain situations in which there is a higher risk that the employee will spread COVID-19 to other employees (i.e., when the employees: are subject to government quarantine or isolation order related to COVID-19; have been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19; are experiencing symptoms of COVID-19 and are taking leave to obtain a medical diagnosis; are taking care of an individual who either is subject to a quarantine or isolation order related to COVID-19 or has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19).

In those circumstances, the Court agreed that a restriction on intermittent leave “advances Congress’s public-health objectives by preventing employees who may be infected or contagious from returning intermittently to a worksite where they could transmit the virus.”  Therefore, in those situations, employees are only permitted to take the protected leave in a block of time (i.e., a certain number of days/weeks), not on an intermittent basis.  As a result, the Court upheld the DOL’s restriction on intermittent leave “insofar as it bans intermittent leave based on qualifying conditions that implicate an employee’s risk of viral transmission.”

The Court, however, rejected the requirement that employees obtain their employer’s consent before taking intermittent leave in other circumstances (i.e., when an employee takes leave solely to care for the employee’s son or daughter whose school or place of care is closed).  In doing so, the Court ruled that the DOL failed to provide a coherent justification for requiring the employer’s consent, particularly in situations in which the risk of viral transmission is low.  The Court’s opinion brings the EPSLA and EFMLEA in line with the existing FMLA, which does not require employer consent.

It is unclear if the DOL will challenge the Court’s decision or revise its Final Rule to bring it in compliance with the Court’s opinion.  Regardless, the Court’s decision takes effect immediately and retail employers should be mindful of this ruling and revisit their COVID-19 leave policies.

Copyright © 2020, Hunton Andrews Kurth LLP. All Rights Reserved.

COVID-19: FTC Acts Fast, Lambasts Missing Masks

Section 5 of the Federal Trade Commission Act (15 U.S.C. Section 45(a)) provides worthwhile remedies for the types of unfair competition that intellectual property practitioners find quite familiar, and practitioners should give them due consideration.  Selling COVID-19 masks you don’t have provides a good example.

In a case filed in early July (FTC press release) the FTC took a Staten Island business to task, along with its owner, for claiming that masks, respirators and other “PPE’s” (personal protection equipment) was “in stock” and “would ship the next day” (Complaint).  The website “supergooddeals.com” continues to lead off with its signature slogan, “Pay Today, Ships Tomorrow” (https://supergooddeals.com/; also accessed by the author on July 31, 2020).

Apparently starting in March 2021, supergooddeals.com began selling PPE.  According to the FTC complaint, the website claimed that the desired masks were “IN STOCK” (complaint paragraphs 19 and 20).  The FTC complaint gives no indication as to whether or not the “in stock” claim was accurate, but instead pleads the examples of several consumers who never received masks, and numerous complaints to which supergooddeals.com never responded.

The FTC complaint also implies that to the extent that some orders may have been shipped, they were shipped on terms that were far less favorable than supergooddeals.com advertised, and when shipments never arrived (or perhaps were never sent) supergooddeals.com failed to give buyers the opportunity to change their mind, or offer a refund or any modification in price terms (e.g. Complaint paragraphs 29-31).

Supergooddeals.com also apparently attempted to conceal their failures (worse verbs could be applied) by producing shipment labels carrying the promised shipping date, but for packages that either would never ship, or shipped much later than the labelled date.  Supergooddeals.com apparently didn’t realize that when a business creates its own USPS shipping labels, “An electronic record is generated on the ship date indicating that your package has been mailed and the Postal Service is expecting to see your package that day.” Click-N-Ship Field Information Kit

(For those of us that may merely be tardy, the same USPS webpage suggests mailing the package on the next business day.  Checking for a friend.)

The FTC also asserted MITOR (“Mail, Internet, or Telephone Order Merchandise,” 16 CFR Part 435) which defines the terms in the name, defines unfair and deceptive practices in context, requires certain activities, and lists some exceptions (including, for reasons known only on K Street, “orders of seeds and growing plants”).

So, the alleged infractions include:

  • Advertising a delivery date that you know you cannot meet,
  • Advertising items that you don’t have in stock
  • Producing a false mailing label in an attempt to prove the shipping date, and
  • Failing to cancel orders when requested or provide prompt refunds

The Federal Trade Commission Act has worthwhile remedies for such activities, and as the Complaint indicates (paragraphs 58 and 59) the FTC plans to seek them against supergooddeals.com.

So, the people get their money back from supergooddeals.com and all’s well that ends well. Right?

Not exactly.  The FTC Act offers no private right of action in these circumstances.  The Fair Debt Collection Practices Act (FDCPA) 15 USC Section 1692(d) which is generally under the Federal Trade Commission, provides private remedies in the consumer debt arena, but a private party otherwise has no right to the remedies sought against supergooddeals.com under the FTC Act.

At this point, however, the intellectual property (“IP”) practitioner may have an extra arrow up his or her sleeve:  Section 43(a) of the Lanham Act (15 USC 1125(a)) if—IF—the parties can be defined as competitors in the section 43(a) sense.

FTC § 5(a)

Lanham Act § 43(a)

Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful.

(1)Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which—

Anchor(A)

is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or

Anchor(B)

in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities,

shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

The Lanham Act applies to false representations (etc.) about goods and services in interstate commerce, but plaintiffs attempting to stretch section 43 (a) too far have been turned down e.g., Radiance Found., Inc. v. NAACP, 786 F.3d 316 (4th Cir., 2015) (The Radiance Foundation, an African American influenced pro-life organization, criticized the NAACP over the NAACP position on abortion.  The NAACP issued a cease and desist letter and the Radiance Foundation filed a declaratory judgment complaint arguing that neither trademark infringement nor dilution had occurred.  The NAACP counterclaimed under (inter alia) section 43(a).  The Fourth Circuit held that for a number of reasons, including the lack of competing goods or services in the section 43(a) sense, the NAACP did not have a trademark remedy in these circumstances.)

Supergooddeals.com certainly dealt (and continues to deal) in “goods” in the sense of section 43(a).  Nevertheless, the “hundreds of” consumers listed in (e.g.) paragraph 26 of the FTC complaint don’t have a section 43(a) remedy against supergooddeals.com because such customers are not “competitors” of supergooddeals.com in the sense required by section 43(a).  Stated more formally, for individual defrauded customers, the answer to, “whether a legislatively conferred cause of action encompasses a particular plaintiff’s claim” is “no.” (Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 132 (2014). (“A consumer who is hoodwinked into purchasing a disappointing product may well have an injury-in-fact cognizable under Article III, but he cannot invoke the protection of the Lanham Act—a conclusion reached by every Circuit to consider the question.”)

Does Pat Peoples have any Silver Lining here?  Well, yes. In addition to a possible contractual remedy, most states have some form of general “unfair competition is illegal” statute as well as consumer protection remedies.

For the time being, however, these defrauded consumers have Uncle Sam on their side, and when “Uncle” sues he usually gets the job done.

 

Copyright 2020 Summa PLLC All Rights Reserved

ARTICLE BY Philip Summa and Summa PLLC.
For more FTC PPE Actions see the National Law Review Coronavirus News section.

Legal News: Law Firm Hires, Professional Recognition and Legal Innovation

With plenty of adjustments and creativity, the legal industry churns into August.  The legal industry has shown remarkable ingenuity as law firms adapt to the challenges of COVID-19 and the ancillary impact of the pandemic.  Below we highlight some law firm hires, law firm innovations and accolades, and legal technology news.

Law Firm Hires and Lateral Attorney Moves

Labor and employment lawyer Ryan McCoy rejoined Norton Rose Fulbright as a partner. McCoy split the past seven years between Baute Crochetiere Hartley & Velkei and Alston & Bird, previously spending eight years as part of Norton Rose Fulbright’s dispute resolution and litigation practice from 2005 until 2013.

McCoy represents clients from the healthcare, pharmaceutical, retail, insurance, transport and insurance industries, focusing his practice on wage and hour class actions, discrimination suits, wrongful termination and retaliation, commercial litigation, and complex insurance coverage. He has also defended clients before the American Arbitration Association in wage and hour violations, sexual harassment, pregnancy discrimination, disability discrimination as well as meal and rest period disputes.

“Ryan impressed us as a young lawyer, and we are thrilled to have him return in his prime. The client demand for employment and labor law seems to be at an all-time high during this unusual time for businesses,” said Shauna Clark, Norton Rose Fulbright’s U.S. head of employment and labor.

“I am delighted to return to Norton Rose Fulbright and collaborate once again with these talented lawyers. The firm’s unmatched global reach and wide range of offerings will benefit my clients significantly,” McCoy said.

Patent attorney Pierre R. Yanney joined Bressler, Amery & Ross law firm as a principal in its Corporate and Commercial Transactions Practice Group. Previously, Yanney was a principal at Baker & Hostetler law firm.

Mr. Yanney focuses his practice on all aspects of patent law, ranging from patent litigation, opinions and counseling, to Patent Office prosecution, and has experience in handling a wide range of technologies including RFID, cellular systems, medical electronics and devices, signal processing, communication systems, electronic tolling, and elevator control systems.  Yanney has prosecuted more than 2,000 patent applications and written more than 100 patent opinions, in addition to arguing several cases before the U.S. Court of Appeals for the Federal Circuit and the Patent Trial & Appeal Board.

“I’m excited to welcome Pierre Yanney to our New York office. Pierre is known for the breadth and depth of his IP experience. It’s rare that you come across someone like Pierre who can write a patent application, get it allowed at the Patent Office, and also litigate patents in district court. His talents and business insights will be a positive addition to our active Corporate and Commercial practice,” said Bressler New York Managing Principal, Mark Knoll.

Labor and employment attorney Scott Nelson joined Hunton Andrews Kurth as a partner in the law firm’s Houston office. Nelson previously was a partner at Seyfarth Shaw LLP, and led Baker McKenzie’s domestic U.S. Employment Counseling and Litigation practice.

Nelson’s practice focuses on complex employment litigation, specifically wage and hour class and collective actions, ERISA litigation, and trade secret and restrictive covenant matters. He also counsels clients on employment law compliance, including international employment law issues, restrictive covenants, wage-and-hour matters, internal investigations, executive terminations, mass layoffs, employee policies, employee training and due diligence.

“Scott’s thorough understanding of the many complex issues our clients face and his impressive track record of experience handling ERISA litigation and advising on international employment law matters complement the strengths of our comprehensive labor and employment practice,” said Emily Burkhardt Vicente, co-chair of Hunton Andrews Kurth’s labor and employment group. “We are pleased to welcome him to the firm.”

Bergeson & Campbell attorney Timothy D. Backstrom passed away on July 24. Backstrom joined Bergeson & Campbell in 2007, and was an expert in the Federal Insecticide, Fungicide, and Rodenticide Act, also contributing to the law and regulation of fuel and fuel additives under the Clean Air Act.

“Tim was an incredibly gifted lawyer, respected by his peers, loved by his fellow colleagues here at Bergeson & Campbell, P.C., and a wonderful man, husband, and father.  He is survived by his wife Lydia Cox Backstrom, his (step) son Christopher Blancato, his brother Paul Backstrom (Kathy), and his cousins Dan and Don Backstrom,” Bergeson & Campbell said in a statement following his death.

Backstrom grew up in Illinois and Wisconsin, later moving to the East coast to earn his undergraduate degree at the Massachusetts Institute of Technology. He earned his law degree at Yale Law School, and then went on to work for the U.S. Environmental Protection Agency’s Office of General Counsel on pesticide, toxic substances, and air quality issues for 25 years, developing a deep understanding of FIFRA.

“We will miss Tim’s uncompromising commitment to legal excellence, his passion for the law, his exuberance for any work composed by Gustav Mahler, and his unrelenting belief that the rule of law will ultimately prevail over the societal challenges we are now experiencing,” Bergeson wrote in a statement.

Law Firm Innovation

Winston & Strawn announced the formation of an Environmental, Social and Governance (ESG) Advisory Team, designed to help companies navigate their ESG profiles. The advisory board will be co-chaired by Winston & Strawn partners Mike Blankenship and Eric Johnson, and utilizes the firm’s experience across disciplines to oversee the ESG issues companies are facing during these challenging times.  Blankenship identifies the correlation between successful businesses and their attention to ESG values, saying, “successful businesses are placing ESG principles at the forefront of their core values and leveraging those principles to chart a path for financial success and future growth to the benefit of all their stakeholders, including employees, customers, vendors, local communities, and stockholders.”

The team includes Chicago partners Mike Melbinger, Eleni Kouimelis, Cardelle Spangler, and Rex Sessions, of counsel Stephanie Sebor; New York partner Tara Greenberg, London partners Peter Crowther and Anthony Riley.  The group will focus on ESG disclosure and messaging, Board oversight of ESG risks, shareholder activism, corporate governance and regulatory compliance.  With an eye to these principles, the Winston & Strawn ESG team will “work closely with clients to develop and execute ESG-related initiatives that best fit their specific needs to the benefit of all of their stakeholders,” Eric Johnson says.

Hughes Hubbard & Reed law firm launched a coronavirus and CARES Act tracker that monitors enforcement actions across the country, targeting Paycheck Protection Program loan fraud, fraudulent COVID-19 cures, as well as violations of state and federal laws. Hughes Hubbard & Reed is monitoring coronavirus government agency filings, and will update the tracker frequently.

To date, Hughes Hubbard & Reed has identified 110 coronavirus and CARES act cases brought by the Department of Justice and Securities and Exchange Commission, with 12 state attorneys general bringing cases. Pennsylvania’s attorney general’s office has been the most active with COVID-19 related legal actions. Forty percent of cases involve alleged criminal violations, and 30 percent of coronavirus related cases include a suspension of securities trading by the Securities and Exchange Commission, with the number of cases growing steadily since April.

The tracker can be accessed here with detailed information on each case, including links to court filings and relevant statutes.

DLA Piper law firm received the 2020 Beacon of Justice Award from the National Legal Aid & Defender Association (NLADA), recognizing the growth of the firm’s pro bono practice focusing on the needs of immigrant children facing abuse, neglect and abandonment. The NLADA also recognized the firm’s collaboration with the American Bar Association to develop habeas corpus petition template pleadings and practice advisories for unaccompanied children.

“We are honored to play a role in advocating for the rights of vulnerable individuals and families seeking a better life in the US,” said Lisa Dewey, pro bono partner and director of New Perimeter, DLA Piper’s nonprofit affiliate that provides long-term pro bono legal assistance in under-served regions around the world. “I am proud of the dedication to serving immigrants that our lawyers have demonstrated through their pro bono service, and we look forward to continuing this important work.”

Jay Bender, a partner at the Birmingham, Ala. office of Bradley Arant Boult Cummings law firm, received the Alabama Commendation Medal from the Alabama Army National Guard for his work on the “Honoring American Veterans in Extreme Need Act of 2019” (HAVEN Act; H.R. 2938).

Bender was presented the award by Amy Quick Glenos, an of counsel attorney at Ogletree, Deakins, Nash, Smoak & Stewart, P.C., and a reserve component soldier and captain in the U.S. Army JAG Corps, Alabama Army National Guard, for which she also serves as trial counsel.

The HAVEN Act was signed into law last year, changing bankruptcy laws to protect disabled veterans experiencing financial hardship. Bender worked pro bono alongside other Bradley attorneys on the law, serving as co-chair of the Legislative Committee of the American Bankruptcy Institute Task Force on Veterans and Service Members Affairs – of which Mr. Bender is a founding member.

“We congratulate Jay on this prestigious recognition of his many years of work and unwavering commitment to protecting disabled veterans in financial distress and ushering the HAVEN Act into reality,” said Bradley Birmingham Office Managing Partner Dawn Helms Sharff. “This recognition is reflective of Jay’s outstanding work and the importance of this landmark law in helping disabled veterans and their families achieve financial stability.”

Tycko & Zavareei law firm won a $11 million settlement representing a healthcare whistleblower in a False Claims Act lawsuit.  Jonathan Tycko of Tycko & Zavareei and Felix Gavi Luna of Peterson Wampold Rosato Feldman Luna law firm represented the whistleblower.

The settlement involved allegations that a testing laboratory owned by Cordant Health Solutions paid kickbacks to two major clients of the laboratory to encourage further testing referrals to the laboratory from those clients. The whistleblower, who was a former employee of Cordant, filed the lawsuit under the qui tam provision of the False Claims Act five years ago. Cordant agreed to pay the government $11,942,913 to settle the claims. The government awarded the whistleblower approximately $2.4 million, or 20 percent of the settlement amount.

“This settlement shows that the False Claims Act works,” Tycko said.  “Through the qui tam provisions of that law, our client was able to bring the kickbacks to the attention of the government in a way that led to both criminal and civil remedies.  We are proud and humbled to represent brave whistleblowers, such as the individual who brought this case.”

“We are grateful for how seriously the U.S. Attorney’s Office, and all the government lawyers and investigators who have worked on this matter, took our client’s allegations, and for the work they did to reach this settlement,” said Luna.

Bryan Cave Leighton & Paisner recently announced that Denver associate, Ivan London, was recently elected to serve on the Board of Advisors for Western Energy Alliance.  Comprised of 300 member companies, the Western Energy Alliance focuses on environmentally responsible exploration and production of oil and gas in the region.  The Western Energy Alliance supports policies to encourage investment and job growth in the region.  London’s practice with Bryan Cave focuses on regulation in energy, environmental and with other natural resource matters.

Legal Technology Innovations

At the end of July, Clariviate Plc announced an agreement to combine with CPA Global, a global leader in IP software and tech –enabled services.  The transaction will be all-stock with an enterprise value of approximately $6.8 billion.  The transaction is expected to go through regulatory approvals, is expected to close fourth quarter of 2020. By combining efforts, CPA Global and Clarivate will provide an IP solution that provides market-leading software, data, technology and services throughout the IP lifecycle, from academic research to IP portfolio management.

Jerre Stead, CEO of Clarivate indicates the company’s share similar core values and expects the partnership to lead to more innovation.  He says, “This is a transformative combination with a strong strategic fit between the two companies. It will create a full-service IP organization which will provide customers with a wide range of products and services to help them make faster and smarter critical decisions.”  Simon Webster, the CEO of CPA Global, echoes the sentiment, calling the move “a natural next step.”  He says, “The fit between our respective product offerings across the innovation and IP lifecycle, the commonality of our vision for the future of the industry, and the alignment of both companies’ cultures and values makes for an extremely exciting future for our customers, employees and shareholders alike.”

Leading accounting firm BDO USA, LLP launched Athenagy, a business intelligence platform for legal professionals, designed to provide the legal department with transparency and critical insight throughout the litigation cycle.  Athenagy is designed to integrate with Relativity®One and can provide critical insight into where data lives and what it does through the steps of a legal hold, providing information to legal professionals.

Daniel Gold, managing director of BDO Managed Services practice, says “Athenagy solves persistent problems that legal departments face when it comes to managing their data. By providing transparency and detailed analytics throughout the data lifecycle, Athenagy is empowering legal professionals to make better, more informed decisions at every step of the e-discovery process, and beyond.”

That’s it for now.  We’ll have more soon.

 

Copyright ©2020 National Law Forum, LLC

Debunking Five Business Development Myths to Help You Achieve Success

Business development, marketing and public relations initiatives can be intimidating to even the most-seasoned legal veteran. The idea of creating a successful plan seems daunting, much less the prospect of executing, maintaining and measuring the plan’s performance metrics. The steps to effective business development are rooted in creating visibility and thought leadership that successfully position both you and your firm within the marketplace and that translate into new clients and business referrals.

Here are five business development myths that make creating and executing a successful business development plan seem impossible. It is important to remember that most attorneys did not go to law school or begin their legal practices with the aspiration of becoming a seasoned marketer. However, it is possible to become successful at business development by reevaluating how you measure success and how you focus your efforts  — and debunking these myths.

Myth #1- There Is a “One Size Fits All” Marketing & Business Development Plan

Each individual’s marketing and business development plan should be customized to highlight not only their unique strengths but also to incorporate their priorities, experience, capabilities and commitment level. For example, if you’re more extroverted, your plan could include large networking events or speaking engagements. If the idea of speaking to a group of strangers is intimidating, then perhaps your plan includes writing articles or providing your expertise in small roundtable discussions. Additionally, before creating a business development plan, each individual needs to evaluate factors like where they are in their career, what their short-term and long-term goals are, and what they need to get out of their business development initiatives to be considered effective.

Myth #2- Being Successful at Business Development Means You Are a “Rainmaker”

There is often a stigma that the successful business developer is defined as a rainmaker. Business development success should be measured on an individual level and not compared to the firm as a whole or measured against any other attorney’s business development contribution. There are too many factors for each person and their experiences and circumstances to label only the rainmaker as successful. Just like a law firm requires many layers of expertise to run smoothly, there are different levels of contributors to business development, and each level should be valued and encouraged if individuals are participating to the best of their ability and expanding their business development experience.

Myth #3- New Clients Are the Only Measure of Business Development Success

While the obvious end goal of all business development initiatives is more business which equals more billing and revenue, signing new clients is not the only measure of successful business development. Expanding your network to broaden the exposure of your expertise is a fundamental part of a successful business development plan. Often, attorneys get too focused on cultivating the relationship with a potential client and miss opportunities to connect with valuable referral sources, thus limiting their network.

There are also other business development initiatives that can be measured as successful beyond singing a new client- including getting a bylined article published, being honored with a significant award or ranking, or being quoted in the press. Each of these things help to create an integrated and effective business development plan that sets up the foundation for long-term success.

Myth #4- Executing Your Plan Needs to Be Done Alone

Simply because your business development plan “belongs to you” doesn’t mean you have to execute it on your own. Working with someone to hold you accountable is crucial to the process. This is not to say you need to immediately run out and find a business development coach to be successful, but you do need someone to discuss which initiatives are working in your plan and identify any challenges you’re facing. This should include regular check-in meetings to make sure your plan is progressing the way you’d like and to ensure your goals are being achieved. It also includes evaluating the success, or lack thereof, of initiatives and adjusting or revising goals to be more effective.

Having a mentor or aspirational influence is also a helpful tool for both planning and execution. While you don’t have to model your plan to mirror someone else’s, there is value in knowing where you’d like to be and seeing someone else achieving that level of success. A mentor will serve in a more interactional role, but if that model doesn’t fit with your personality or your business, identifying with a person or people whose success you would like to emulate is helpful when crafting a strategy and long-term goals in your business development plan.

Myth #5- Business Development Is a Fancy Term for Networking

Many people declare they don’t need a business development plan because they are “active” within their industry and regularly attend events. Event attendance is a piece of a larger initiative that creates a successful and measurable business development plan. Often, attorneys put all their marketing eggs in one basket. They become frustrated when those efforts are unsuccessful and give up. An integrated approach is key to being successful in business development. This includes not only networking but also incorporating other things like writing, ranking and honors, digital strategy, and public relations.

It’s easy to focus on client work and push business development initiatives to the side or add them to a to-do list. The idea behind breaking down these common myths is to empower everyone to feel they can create a manageable business development plan, use the tools and resources they need to execute these plans successfully, and to execute these plans with short-term and long-term goals that are easily achieved. Business development does not need to be intimidating, overwhelming or time-consuming if your plan is personalized to highlight your strengths, comfort level and readiness. The goal of business development is not just to meet people and hope they’ll hire you, but to create lasting impressions through initiatives and actions that enhance your visibility and position you as a thought leader.

© Copyright 2008-2020, Jaffe Associates

ARTICLE BY Evyan O’Keefe at Jaffe PR.
For more on law firm business, see the National Law Review Law Office Management section.

COVID-19 Update: NY Governor Cuomo Extends Tenant Protections, Including Eviction and Foreclosure Moratorium

On August 5, 2020, New York State Governor Andrew Cuomo issued Executive Order 202.551 (the “New Order”) to provide additional relief to renters impacted by the COVID-19 pandemic and extended the time periods for certain other protections that had been previously granted to renters and property owners pursuant to Executive Order 202.82, as extended by Executive Order 202.283 and Executive Order 202.484 (the “Prior Orders”).

The Prior Orders provided for (i) a moratorium on evictions of commercial tenants through August 5, 2020, and residential tenants through July 5, 2020, and (ii) a moratorium on eviction and foreclosure of any residential or commercial tenant or owner through August 20, 2020, if the basis of the eviction or foreclosure is the nonpayment of rent or the mortgage, as applicable, and the tenant or owner, as applicable, is eligible for unemployment insurance or benefits under state or federal law or is otherwise facing financial hardship due to the COVID-19 pandemic.

Executive Order 202.48 previously had removed the restrictions on residential foreclosures and residential evictions, as those has been superseded by legislative action.  The Laws of New York 2020, Chapter 112 provides for 180 days of mortgage forbearance for individuals, which period may be extended by the mortgagor for an additional 180 days.5  The Laws of New York 2020, Chapter 127 prohibits evictions of residential tenants that have suffered financial hardship during the COVID-19 pandemic for the non-payment of rent.  In each case, the relief granted extends through the period commencing on March 7, 2020, until the date on which “none of the provisions that closed or otherwise restricted public or private businesses or places of public accommodation, or required postponement or cancellation of all non-essential gatherings of individuals of any size” continue to apply.

The New Order extends a number of existing Executive Orders, including the Prior Orders for an additional 30 days, to September 5, 2020, effectively continuing the moratoria on commercial and residential evictions and foreclosures – whether instituted by executive order or passed into law by the legislature – until such date.

1       Executive Order 202.55, available here.

2       Executive Order 202.8, available here.

3       Executive Order 202.28, available here.

4       Executive Order 202.48, available here.

5       The Laws of New York 2020, Chapters 112 and 127.

© Copyright 2020 Cadwalader, Wickersham & Taft LLP

For more on COVID-19 related rental relief, see the National Law Review Coronavirus News section.

Return to Work COVID-19 Testing Considerations

As employees increasingly transition back into the physical workplace, employers have begun to grapple with whether and how to deploy COVID-19 diagnostic testing as a return-to-work solution.  Many employers want to avoid extended employee quarantine or isolation requirements that prevent their employees from returning to the office for weeks and disrupt their operations.  But is this potential solution legal?  And is it effective?  Below we discuss practical considerations for employers considering a return to work COVID-19 testing strategy.

Is it Legal?

For the most part, yes.  While the Equal Employment Opportunity Commission (“EEOC”) has approved of COVID-19 diagnostic testing in the workplace generally, it has, as explained further below, recently modified its guidance to discourage its use as a return to work strategy.  Further, approaches vary widely across the states and localities that have taken a position on return to work testing.  For example, while Illinois permits its use, an ordinance in Dallas, Texas prohibits return to work testing.

Is it Effective?  

It depends.  Before mandatory vaccination becomes an option (which we wrote about here), requiring employees to test negative for COVID-19 before returning to work may at first glance seem like a reasonable way to ensure employee attendance while keeping the workplace safe.  For some employers, particularly those that are able to test frequently, quickly and accurately, this may be a sound approach.  But for other employers, they will have to weigh their options carefully.  Recent updated guidance from the CDC, employee complaints about the invasiveness of testing, and very real ongoing concerns about testing availability and accuracy may militate against pursuing a testing strategy at this time.

More specifically, recent guidance from the CDC discourages a test-based strategy as a primary solution finding that a symptom-based screening strategy is sufficient to identify when an individual with symptoms may return to work.  However, if an employer nevertheless decides to proceed with diagnostic testing as part of their COVID-19 mitigation strategy, the CDC recommends having employees test negatively twice with the two consecutive tests coming at least 24 hours, before returning to work.

State and local guidance does not necessarily provide additional clarity on how best to proceed.  For example New York State’s guidance only addresses situations where an employee experiences symptoms upon arrival at work or while at the office, advising that in those instances an employee may return to work with a single negative COVID-19 test (in contrast to the CDC’s recommended two consecutive negative tests).  But New York’s guidance does not currently address whether testing is a solution to a host of other scenarios – for instance, where an employee’s remote screening indicates recent symptoms, known exposure, or where an employee traveled to a place with significant community spread.  In those instances, the New York guidance does not incorporate testing as a return to work solution, instead asserting that individuals who have had known close contact with someone who has COVID-19 (i.e. within 6 feet of someone for ten or more minutes) should (1) isolate for 10 days from the onset of symptoms (if the individual has symptoms); or (2) isolate for 14 days from the date of exposure (if the individual does not have symptoms).  New York’s guidance also states that employees who test positive for COVID-19 must complete at least 10 days of isolation from the onset of symptoms or 10 days of isolation after the first positive test if they remain asymptomatic.

Putting all the guidance aside for the moment, testing may prove futile in many cases regardless.  First, COVID-19 reportedly can take 2-14 days after exposure to become identifiable in a diagnostic test, and thus, employees who test negative may return to work and later discover they have indeed been infected.  And in other cases, testing may prove futile if an employee cannot access a test readily, and thereafter receive their results in a timely manner, which effectively sidelines them from returning to the office anyway.  Further, there is also the possibility of a false negative, particularly when an employee takes a rapid test.  Other employer considerations include how COVID-19 testing, and the resulting disciplining of employees if they refuse to be tested, might affect overall employee morale.

Employers should consider these issues and weigh them against the vitality of other preventative measures such as whether an employee can telework or take a paid or unpaid leave in lieu of returning to work.  If the employee must return to work, employers should consider using other safety measures (whether in lieu of or in addition to testing), such as symptom/exposure questionnaires, temperature checks and workplace social distancing requirements.

What if an Employee Refuses to Take a Diagnostic Test? 

In selecting any of these options, employers should consider creating a policy or procedure that, among other things, discloses the circumstances under which an employee must take a test, the specific test or tests that the employer will accept, and the consequences of an employee’s refusal to be tested prior to returning to work.  Employers should also consider whether they will afford an employee the opportunity to take an unpaid leave of absence where they refuse to take a test in lieu of a disciplinary action.

Further, before resorting to disciplinary measures, employers should first consider the nature of the employee’s objection.  If the employee is simply annoyed or frustrated about the testing policy, disciplinary measures may be appropriate as the employees is failing to adhere to a company safety policy.  However, employers should evaluate whether the employee is asking for a disability accommodation, and if so, should consider alternative options to testing.

A Note about Isolation Practices and Employee Abuses.

In jurisdictions that do not require employees to isolate after potential symptoms or exposure, employers that need employees to work in the office may be turning to COVID-19 diagnostic testing as an alternative or supplement to isolation practices they consider impractical or prone to abuse.  Indeed, some employers are facing scenarios in which employees attempt to take advantage of company isolation policies in an effort to take extended time away from the workplace.

Employers facing this situation may consider implementing a diagnostic testing strategy (where permitted and feasible), but should also consider addressing the various employee abuse scenarios that might unfold and provide cautionary warnings to employees.  For example, New York, New Jersey, Massachusetts, and some other jurisdictions are requiring individuals who travel to certain states with troublesome COVID-19 metrics to quarantine for 14 days upon their reentry.  If an employee is planning travel to a “hot spot” on vacation to avoid returning to work, the employer should consider warning the employee that if they are unable to telework upon their return, they may be required to take additional paid time off or even unpaid leave.  Alternatively, employers facing operational difficulties if employers are away for multiple weeks may wish to revisit paid time off approval processes or condition approval of company-provided vacation time on an employee’s ability to return to work promptly after traveling.  In short, employers may have several options to address employees’ abuse of isolation rules that do not necessarily have to involve the implementation of diagnostic testing.

Final Considerations.

If an employer does decide to implement a testing strategy, it should ensure that its COVID-19 testing and screening protocols and policies adhere to relevant state and local guidelines, which vary greatly by jurisdiction.  Employers should further ensure they are tracking other practical aspects of testing.  For example, employers must safeguard employee medical records in accordance with Americans with Disabilities Act (“ADA”) requirements and the privacy requirements of various states and localities, which we discussed here.  When choosing a diagnostic test, employers must also ensure that the test is reliable and accurate – for instance, some rapid testing kits now entering the market may not meet the EEOC’s reliability and accuracy standards.  Similarly, any testing strategies must be uniformly applied so as not to cause disparate treatment amongst employees.  Employers should refer to the EEOC’s ADA guidance, which we discussed here, to ensure non-discriminatory application of testing policies.

©1994-2020 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

For more on COVID-19 Testing see the National Law Review Coronavirs News section.

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