National Security Meets Teenage Dance Battles: Trump Issues Executive Orders Impacting TikTok and WeChat Business in the U.S.

On August 6, 2020, Trump issued two separate executive orders that will severely restrict TikTok and WeChat’s business in the United States.  For weeks, the media has reported on Trump’s desire to “ban” TikTok with speculation about the legal authority to do so.  We break down the impact of the Orders below.

The White House has been threatening for weeks to ban both apps in the interest of protecting “the national security, foreign policy, and economy of the United States.”  According to the Orders issued Thursday, the data collection practices of both entities purportedly “threaten[] to allow the Chinese Communist Party access to Americans’ personal and proprietary information — potentially allowing China to track the locations of Federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage.”

This is not a new threat.  A variety of government actions in recent years have been aimed at mitigating the national security risks associated with foreign adversaries stealing sensitive data of U.S. persons.  For example, in 2018, the Foreign Investment Risk Review Modernization Act (FIRRMA) was implemented to expand the authority of the Committee on Foreign Investment in the United States (CFIUS) to review and address national security concerns arising from foreign investment in U.S. companies, particularly where foreign parties can access the personal data of U.S. citizens.  And CFIUS has not been hesitant about exercising this authority.  Last year, CFIUS required the divestment of a Chinese investor’s stake in Grindr, the popular gay dating app, because of concerns that the Chinese investor would have access to U.S. citizens’ sensitive information which could be used for blackmail or other nefarious purposes.  That action was in the face of Grindr’s impending IPO.

In May 2019, Trump took one step further, issuing Executive Order 13873 to address a “national emergency with respect to the information and communications technology and services supply chain.”  That Order stated that foreign adversaries were taking advantage of vulnerabilities in American IT and communications services supply chain and described broad measures to address that threat.  According to these new Orders, further action is necessary to address these threats.  EO 13873 and the TikTok and WeChat Orders were all issued under the International Emergency Economic Powers Act  (IEEPA), which provides the President broad authority to regulate transactions which threaten national security during a national emergency.

Order Highlights

Both Executive Orders provide the Secretary of Commerce broad authority to prohibit transactions involving the parent companies of TikTok and WeChat, with limitations on which transactions yet to be defined.

  • The TikTok EO prohibits “any transaction by any person, or with respect to any property, subject to the jurisdiction of the United States,” with ByteDance Ltd., TikTok’s parent company, “or its subsidiaries, in which any such company has any interest, as identified by the Secretary of Commerce”
  • The WeChat EO prohibits “any transaction that is related to WeChat by any person, or with respect to any property, subject to the jurisdiction of the United States, with Tencent Holdings Ltd., WeChat’s parent company “or any subsidiary of that entity, as identified by the Secretary of Commerce.”
  • Both Executive Orders will take effect 45 days after issuance of the order (September 20, 2020), by which time the Secretary of Commerce will have identified the transactions subject to the Orders.

Implications

Until the Secretary of Commerce identifies the scope of transactions prohibited by the Executive Orders, the ultimate ramifications of these Orders remain unclear.  However, given what we do know, we have some initial thoughts on how these new prohibitions may play out.  The following are some preliminary answers to the burning questions at the forefront of every American teenager’s (and business person’s) mind.

Q:  Do these Orders ban the use of TikTok or WeChat in the United States?

A:  While the Orders do not necessarily ban the use of TikTok or WeChat itself, the app (or any future software updates) may no longer be available for download in the Google or Apple app stores in the U.S., and U.S. companies may not be able to purchase advertising on the social media platform – effectively (if not explicitly) banning the apps from the United States.

Q:  Will all transactions with ByteDance Ltd. and Tencent Holdings Ltd. (TikTok and WeChat’s parent companies, respectively) be prohibited?

A:  Given the broad language in the Orders, it does appear that U.S. app stores, carriers, or internet service providers (ISPs) will likely not be able to continue carrying the services while TikTok and WeChat are owned by these Chinese entities.  However, it is unlikely that the goal is to prohibit all transactions with these companies as a deterrent or punishment tool – which would essentially amount to designating them as Specially Designated Nationals (SDNs) – the  Orders clearly contemplate some limitations to be imposed on the types of transactions subject to the Order by the Secretary of Commerce.  Furthermore, the national security policy rationale for such restrictions will not be present in all transactions (i.e. if the concern is the ability of Chinese entities to access personal data of U.S. citizens in a manner that could be used against the interests of the United States, then presumably transactions in which ByteDance Ltd. and Tencent Holdings Ltd. do not have access to such data should be permissible.).  So while we do not know exactly what the scope of prohibited transactions will be, it would appear that the goal is to restrict these entities’ access to U.S. data and any transactions that would facilitate or allow such access.

Q:  What does “any property, subject to the jurisdiction of the United States” mean?

A:  Normally, the idea behind such language is to limit the prohibited transactions to those with a clear nexus to the United States: any U.S. person or person within the United States, or involving property within the United States.  It is unlikely that transactions conducted wholly outside the United States by non-U.S. entities would be impacted.  From a policy perspective, it would make sense that the prohibitions be limited to transactions that would facilitate these Chinese entities getting access to U.S.-person data through the use of TikTok and WeChat.

Q:  What about the reported sale of TikTok?

A: There is a chance the restrictions outlined in the TikTok EO will become moot.  Reportedly, Microsoft is in talks with ByteDance to acquire TikTok’s business in the United States and a few other jurisdictions.  If the scope of prohibited transactions are tailored to those involving access to U.S. person data and if a U.S. company can assure that U.S. user-data will be protected, then the national security concerns of continued use of the app would be mitigated.  Unless and until such acquisition takes place, U.S. companies investing in TikTok or utilizing it for advertising such be prepared for the restrictions to take effect.  At this time, there do not appear to be any U.S. buyers in the mix for WeChat.

Q:  The WeChat EO prohibits any transaction that is “related to” WeChat…what does that mean?

A:  The WeChat prohibition is more ambiguous and could have significantly wider impact on U.S. business interests. WeChat is widely used in the United States, particularly by people of Chinese descent, to carry out business transactions, including communicating with, and making mobile payments to, various service providers.  The WeChat EO prohibits “any transaction that is related to WeChat  with Tencent Holdings Ltd., or any of its subsidiaries.  Unlike TikTok, WeChat’s services extend beyond social media.  While the language of the ban is vague and the prohibited transactions are yet to be determined, it appears likely that using WeChat for these communications and transactions may no longer be legal. It is also unclear if the WeChat prohibition will extend to other businesses tied to Tencent, WeChat’s parent company, including major gaming companies Epic Games (publisher of the popular “Fortnite”), Riot Games (“League of Legends”), and Activision Blizzard, all in which Tencent has substantial ownership interests.  There has been some reporting that a White House official confirmed Tencent’s gaming interest are excluded from the Order as being unrelated to WeChat, but until the Secretary of Commerce specifies the prohibited transactions, the scope of the Order remains uncertain

Bottom Line

Until the Secretary of Commerce issues its list of transactions prohibited under these Executive Orders, the scope and effect of these Orders is conjectural.  This Administration’s all-in posture towards China would suggest that the prohibitions could be broad and severe.  U.S. companies utilizing WeChat or TikTok for business purposes or conducting business with the apps’ owners, should think carefully about ongoing and future transactions.  Of course, there is an election right around the corner and a new Administration may bring significant change to related foreign, trade and technology policy.  Thoughtful planning for a variety of scenarios will enable companies’ to respond appropriately as the restrictions on TikTok and WeChat are crystallized.


Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.

Domestic Violence: What is a Dating Relationship?

Several months into the COVID-19 pandemic, the daily lives of most people have changed in many ways. With many people still desiring to find companionship, dating websites and mobile applications have provided somewhat of a substitute for traditional in-person dates, which are no longer feasible during the pandemic.

What happens if the relationship you’ve developed in these virtual settings goes awry, and the continued virtual contact becomes unwanted, threatening, malicious, and/or harassing? Can you obtain a restraining order to prevent further contact?

The answer largely depends on whether your online relationship with this person is considered to be within the definition of a “dating relationship” under the New Jersey Prevention of Domestic Violence Act.

The New Jersey Prevention of Domestic Violence only provides protection for certain classes of relationships, defined as a spouse, former spouse, household member (whether presently or at any prior time), parties with a child in common, or parties with whom the victim has had a dating relationship.

Fortunately, recent case law has shown an evolution of the term “dating relationship” under the statute to account for the evolution of dating itself.

The case of C.C. v. J.A.H., decided by the New Jersey Appellate Division on June 11, 2020, took into consideration two individuals who had never experienced a traditional, in-person “date.” They never visited each other’s homes, or met each other’s friends or family members. They never engaged in sexual relations, kissed, or even held hands. What they did do, however, was exchange nearly 1,300 highly personal and intimate text messages over the course of several months. Eventually, when one of the parties tried to cease the contact and spurn any further relationship, the other party’s communications became threatening and malicious.

In this first case of its kind, the court held that these two individuals, who shared no other meaningful contact aside from these text messages, were in enough of a “dating relationship” to provide protection to the victim.

This case may have broadened the protections available to victims of domestic violence tremendously. If you are being threatened, harassed or otherwise are subjected to domestic violence, you may be able to obtain a Final Restraining Order to protect yourself.


COPYRIGHT © 2020, STARK & STARK

Apple, Inc. Probed by European Commission for Possible Antitrust Violations

In late June, the European Commission (EC) opened several formal cases investigating Apple’s mobile payment technology (Apple Pay) and various third-party and user agreements to determine whether the tech giant’s practices and policies infringe on competition rights and abuse market power. Specifically, the Commission will investigate the company’s terms and conditions integrating the payment feature into merchant applications and websites, and the imposition of its proprietary in-app purchase system and accompanying restrictions. The latter prevents third-party developers from informing their users of cheaper alternative purchases available outside the app. The investigations follow complaints made by Spotify, a music streaming service competitor, and an e-book/audiobook distributor competitor, according to the EC’s press release.

In a statement, EC Executive Vice President Margrethe Vestager said that the Commission needs to allay fears that Apple’s “gatekeeper role” in the distribution of apps and content to users does not distort market competition. The impetus, she said, was to ensure that “Apple’s measures do not deny consumers the benefits of new payment technologies, including better choice, quality, innovation and competitive prices.”

Apple is one of the latest tech targets to experience regulatory scrutiny. Facebook, Amazon, and Google are facing antitrust inquiries by EU member states, the European Commission, and the United States’ Department of Justice and Federal Trade Commission.


© MoginRubin LLP

ARTICLE BY the Competition Policy and Advocacy practice at MoginRubin.
For more on mobile payment portals, see the National Law Review Financial Institutions & Banking law section.

The Naked Truth About Trademark Cancellation: Only Harm, No Proprietary Interest Required

The US Court of Appeals for the Federal Circuit determined that a contracting party that contractually abandoned any proprietary interest in a mark may still bring a cancellation action if it can “demonstrate a real interest in the proceeding and a reasonable belief of damage.” Australian Therapeutic Supplies Pty. Ltd. v. Naked TM, LLC, Case No. 19-1567 (Fed. Cir. July 24, 2020) (Reyna, J.) (Wallach, J., dissenting).

Australian sold condoms with the marks NAKED and NAKED CONDOMS, first in Australia in early 2000, then in the United States in 2003. Two years later, Australian learned that Naked TM’s predecessor had registered a trademark NAKED for condoms in September 2003. Australian and Naked TM communicated by email regarding use of the mark for a few years. Naked TM contended that the parties reached an agreement; Australian disagreed and said no final terms were agreed upon. Australian filed a petition to cancel the NAKED trademark registration. Ultimately, and after trial, the Trademark Trial and Appeal Board (TTAB) concluded that Australian lacked standing because it had reached an informal agreement that Naked TM reasonably believed was an abandonment of any right to contest Naked TM’s registration of NAKED. Thus, the TTAB found that Australian lacked a real interest in the proceeding because it lacked a proprietary interest in the challenged mark. Australian appealed.

The Federal Circuit reversed. First, the Court clarified that the proper inquiry was a matter of proving an element of the cause of action under 15 USC § 1064 rather than standing. The Court explained that, contrary to the TTAB’s conclusion, “[n]either § 1064 nor [its] precedent requires that a petitioner have a proprietary right in its own mark in order to demonstrate a cause of action before the Board.” Assuming without deciding that the TTAB correctly determined that Australian had contracted away its rights, the Court found that fact irrelevant. Ultimately, even though an agreement might be a bar to showing actual damages, a petitioner need only show a belief that it has been harmed to bring a petition under § 1064.

The Federal Circuit found that Australian had a reasonable belief in its own damage and a real interest in the proceedings based on a history of two prior applications to register the mark, both of which the US Patent and Trademark Office rejected on the basis that they would have created confusion with Naked TM’s mark. The Court rejected Naked TM’s argument that Australian’s abandonment of those applications demonstrated there was no harm, instead concluding that Australian’s abandonment of its applications did not create an abandonment of its rights in the unregistered mark. Moreover, as a prophylactic rationale, the Court explained that Australian’s sales of products that might be found to have infringed the challenged registration also create a real interest and reasonable belief in harm.

Judge Wallach dissented. Although he agreed that the TTAB erred by imposing a proprietary-interest requirement to bring suit under § 1064, he disagreed that Australian properly demonstrated an alternative, legitimate interest—i.e., a belief of damage with a reasonable basis in fact. Judge Wallach would have given dispositive weight to the agreement between Australian and Naked TM in which Australian supposedly gave up any right to contest Naked TM’s rights in the mark NAKED.

Practice Note: Ultimately, although the majority and dissent disagreed about how to apply the law to the facts, Australian Therapeutic Supplies stands as a firm reminder that something less than a proprietary interest is required in order to challenge a trademark registration. How much less is a fact-specific inquiry.


© 2020 McDermott Will & Emery

For more on trademark cancellation, see the National Law Review Intellectual Property law section.

Review of McGirt v. Oklahoma – How the Supreme Court and Justice Gorsuch’s Revolutionary Textualism Brought America’s “Trail of Tears” Promise to the Creek Nation Back From the Dead

How does a child sex offender’s appeal of his criminal conviction result in half the State of Oklahoma – 113 years after it was admitted as the 46th State in the Union – being declared “Indian Lands” and given back to the Creek Nation Native Americans? That is the crazy plot not of a Best-Selling novel, but of the United States Supreme Court case McGirt v. Oklahoma, No. 18-9526, decided 5-4 late this term on July 9, 2020 in a ground-breaking majority opinion written by Justice Neil Gorsuch.

To understand McGirt’s impact we must start with its historical context. Roughly 180 years ago, a group of indigenous Native Americans known as the Five Civilized Tribes – the Cherokee, Chickasaw, Choctaw, Creek and Seminole – lived as autonomous nations throughout the American Deep South, as they had for hundreds of years before. As our new United States nation grew, however, European Americans were growing in number and had designs on the land for expansion of the young country. Not surprisingly, these designs didn’t include a place for Native Americans.

The “Indian Problem”

To remedy this so-called “Indian Problem,” the federal government imposed a forced relocation plan to remove the Native Americans from the Deep South. This plan, first championed by George Washington, evolved and was codified in American law and history by President Andrew Jackson, when he successfully pushed the Indian Removal Act of 1830 through Congress (over pioneer Davy Crockett’s fervent, raccoon-capped objection!). It was the Indian Removal Act of 1830 that authorized the federal government to extinguish all Indian title to Deep South lands, and to fully and finally remove the Native Americans by any means necessary.

To peacefully execute this plan, the federal government made a promise to the Five Civilized Tribes that if they agreed to remove themselves voluntarily, they would forever be granted replacement land out in the frontier American West. Had they not agreed, of course, the federal government was more than ready to remove them by force. Realizing they’d been given a Godfather-like “offer you can’t refuse,” the Tribes agreed that they would remove West, in reliance on this promise. One of the Five Civilized Tribes who accepted the government’s offer was the Creek Nation (who, while not a party to McGirt, became the biggest beneficiary of its ultimate holding). That almost 200-year-old promise is where the story of McGirt v. Oklahoma begins.

In what is known in American history as the “Trail of Tears,” beginning in the 1820s and into the 1830s, approximately 60,000 Native American men, women and children were uprooted from their ancestral homes and forced as refugees to pick up and walk hundreds of miles West on faith that the federal government’s promise would be honored. The “Trail of Tears” is a traumatic part of Native American history, as more than 4,000 Native Americans died from exposure, disease and starvation before ever reaching their promised lands. A promise that was made, but never fully fulfilled.

As Justice Gorsuch summarized in his majority opinion:

On the far end of the Trail of Tears was a promise. Forced to leave their ancestral lands in Georgia and Alabama, the Creek Nation received assurances that their new lands in the West would be secure forever. In exchange for ceding “all their land, East of the Mississippi river,” the U.S. government agreed by treaty that ‘[t]he Creek country west of the Mississippi shall be solemnly guarantied to the Creek Indians.” Treaty with the Creeks, Arts. I, XIV, Mar. 24, 1832, 7 Stat. 366, 368 (1832 Treaty).

It was against this great historical backdrop that the otherwise unremarkable criminal appeal of McGirt v. Oklahoma arose.

An Otherwise Unremarkable Appeal

By all accounts, Jimcy McGirt, a Native American, was an unsavory character and is by no means a hero of this story. In 1997, the State of Oklahoma convicted him of molesting, raping and forcibly sodomizing a four-year-old girl, his wife’s granddaughter. His other appellate grounds apparently unconvincing, and the individual circumstances of his case so horrific, his appellate lawyers – as good lawyers do – instead focused elsewhere, on an issue that had been simmering under the surface of Oklahoma state law for years. Perhaps, the lawyers argued, regardless of Mr. McGirt’s heinous conduct, his conviction is null and void for reasons other than the facts of the underlying case all together? Perhaps Oklahoma did not even have jurisdiction – the power – to criminally prosecute and/or to convict him in the first place, because the crime, as heinous as it was – was committed not on state land, but instead on federal “Indian Lands.” Land that Oklahoma has owned and controlled for over 100 years, but that the Creek Nation had been promised, pursuant to treaty, long ago.

Great headwinds worked against McGirt and his appellate counsel, not the least of which was that all of the main parties involved – the United States, the State of Oklahoma – and even the Creek Nation itself – had acquiesced to Oklahoma’s criminal jurisdiction and control over the land for the past 100 years.

As Justice Gorsuch succinctly put it, the question presented in McGirt was “did [McGirt] commit his crimes in Indian Territory?” Or was the crime committed on lands, as everyone seemed to assume for the past century, owned and controlled by State of Oklahoma?

If Eastern Oklahoma (including the large city of Tulsa) was in fact “Indian territory,” i.e. a reservation granted by the United States after the “Trail of Tears” promise, then it would be federal land and pursuant to the Major Crimes Act (MCA), McGirt could not be prosecuted by the State of Oklahoma, but could only be prosecuted by the federal government in federal court. And if that were the case, then McGirt’s conviction would be void, as Oklahoma had no more power to prosecute and convict McGirt of his crimes than you or I do sitting in our comfiest chair.

On its face, the question sounds almost ridiculous. Oklahoma has been a State prosecuting and convicting criminals, including in the areas of Eastern Oklahoma, for over 100 years. Land that McGirt now argues were never under Oklahoma’s power to control, but instead were always part of the Creek Reservation. Oklahoma countered, of course, with what seems like the more logical and pragmatic answer to that question – that through subsequent legislation, Oklahoma’s statehood in 1907, and the passage of generations without recognizing the Creek Nation’s sovereignty over these lands – that even if the land had been the Creek Nation’s at one point, that ended long ago. Oklahoma presented its argument as if it were a “no brainer.”

Justice Gorsuch’s “Textualist” Approach

Justice Gorsuch saw it differently. Siding with the 4 more liberal Supreme Court Justices, Justice Gorsuch wrote for the majority of the Court finding that the land did belong to the Creek Nation, that it was not a part of Oklahoma, and that therefore McGirt’s conviction must be vacated.

Most compelling, however, was how Justice Gorsuch boldly advanced his “textualist” approach in this opinion, regardless of whether it led to a “liberal” or “conservative” outcome.

Justice Gorsuch was President Donald J. Trump’s first Supreme Court appointee. He was championed as a staunch political conservative who would push the Supreme Court to the right. While no one can doubt Justice Gorsuch’s conservative bona fides, what was less understood by the talking heads in the media was that his true convictions are not to political ideology – but to his own brand of “textualist” legal philosophy.

Through this “textualist” lens, Justice Gorsuch ignored all of the numerous arguments over whether the argued outcomes would be best, most reasonable, or most fair and just. Instead, he focused squarely on the words used by Congress when it made and carried out its “Trail of Tears” promise to the Creek Nation. To that end, Justice Gorsuch posited the premise that once a reservation is established by Congress, the only question is whether Congress ever took that reservation away. You can’t look to the States. The law is clear that the States do not have any power to declare or negate a federally granted Indian Reservation. You also can’t look to the Courts. The Courts cannot judicially legislate a reservation into, or out of, existence. Therefore, what must be focused on exclusively is whether Congress ever expressly broke its “Trail of Tears” promise and ended the Creek Nation’s reservation. For that “[t]here is only one place we may look:” Justice Gorsuch said matter-of-factly, “the Acts of Congress.”

In applying this purely “textualist” approach, Justice Gorsuch was unyielding:

History shows that Congress knows how to withdraw a reservation when it can muster the will. Sometimes, legislation has provided an “explicit reference to cessation” or an “unconditional commitment … to compensate the Indian tribe for its opened land.” Ibid. Other times, Congress has directed that tribal lands shall be “restored to the public domain.” Hagen v. Utah, 510 U.S. 399, 412 (1994)(emphasis deleted). Likewise, Congress might speak of a reservation as being “discontinued”, “abolished”, or “vacated.” Mattz v. Arnett, 412 U.S. 481, 504, n. 22 (1973). Disestablishment has “never required any particular form of words,” Hagen, 510 U.S., at 411. But it does require that Congress clearly express its intent to do so, “commonly with an explicit reference to cessation or other language evidencing the present and total surrender of all tribal interests.” Nebraska v. Parker, 577 U.S. 481 (2016).

Oklahoma attempted to argue that either a reservation was never established, or the text of the subsequent Acts of Congress, if not expressly, at least effectively terminated any reservation that may have ever existed. But in Justice Gorsuch’s deft hands, this argument was doomed to fail. As Justice Gorsuch famously and efficiently proclaimed in his now famous Bostock v. Clayton County Title VII opinion earlier this term: “(o)nly the written word is law, and all persons are entitled to its benefit.” This is the textualist (almost religious) creed, and to ignore it as the foundation of any argument before this Court in its current make-up is done at one’s own peril.

To Justice Gorsuch (and most times a majority of this Court), one must set aside all else – what “chaos” may ensue from a ruling, what the conventional wisdom is on an issue (or here, has been for over a hundred years), or – more controversially put – what may be the best or most just outcome of a dispute – and decide disputes based solely on the written words of the law at issue. To a textualist, all citizens should be able to rely on the law as written, regardless of what even a majority may believe was intended by the law, or what an individual jurist may believe in a given case is a more just outcome. It is Judge Gorsuch’s purely textualist approach that dictated the outcome in this case, more than any political ideology or concern.

Once Justice Gorsuch rejected Oklahoma’s argument on the text of the law, he further applied his own textualist principles to dismiss the others. Oklahoma’s argument that the “historical practices and demographics, both around the time of, and long after the enactment of, all the relevant legislation” controlled was soundly rejected. To ignore the plain meaning of the words of a statute based upon matters outside the text, in Justice Gorsuch’s thinking, would risk, as he stated, “substituting stories for statutes.” Stories, to a textualist, are inherently more unreliable than the plain meaning of words on a page. Here, historical stories also typically favor history’s victors and undermine its victims. In this case, Justice Gorsuch found an exemplar case to divorce his “textualist” approach from previous criticism from the left that it is merely a conservative tool, or means to dictate conservative ends. Once you accept stories over the written word of law, to Justice Gorsuch, then the law itself is unmoored and subject only to the prevailing political winds of the time.

Justice Roberts’ Striking Dissent

Almost as striking as Justice Gorsuch’s triumphant planting of his textualist flag this term in Bostock and now McGirt, was Justice Roberts’ continued trend towards a more pragmatic and cautious legal approach. While that trend was highlighted more by pundits in cases where he sided with the more liberal justices, in McGirt, Justice Roberts again (even though he sided with the conservatives) championed the narrower and less ideological approach.

Writing for the four dissenting Justices, Justice Roberts concluded that “a century of practice confirms that the Five Tribes’ prior domains were extinguished.” The dissent ignored what Justice Gorsuch and the other majority justices could not. That to hold as such would be to allow Oklahoma to re-cast its decades of illegal practices, usurpation of authority, and mistreatment of the Creek Nation into “historical custom and practice” that it could then use to justify its dishonoring the “Trail of Tears” promise.

McGirt most assuredly creates sensational headlines due to its massive shift of power and authority from Oklahoma to the Creek Nation. Most articles reviewing this case focus on the uncertainty it will cause in matters between Native Americans and States within whose borders Indian Reservations exist. However, McGirt is also important for another, less sensational, but perhaps more impactful assertion regarding the rule of law in America going forward – the rise of Justice Gorsuch’s brand of “textualism.”

Takeaways

To Justice Gorsuch, the rule of law and the word of the law are paramount to all other interests. As the saying goes – one’s word is their bond. And it is that word – and that word alone – that should always be honored, whether you are a person, or a country. Justice Gorsuch closed his opinion consistently:

Today, we are asked whether the land these treaties promised remains an Indian reservation for purposes of federal criminal law. Because Congress has not said otherwise, we hold the government to its word.

While perhaps over 100 years late, in McGirt, the United States Supreme Court affirmed that what you promise must be honored, and in doing so, belatedly (and surprisingly) fulfilled a “Trail of Tears” promise most thought died long ago.


Copyright 2020 © Burg Simpson Eldredge Hersh & Jardine, P.C.

Renewed Shutdowns/Restrictions Present Interesting Issues Regarding COVID-19 Business Interruption Claims

In recent weeks we have published multiple pieces on issues related to the calculation of damages under business interruption policies for losses associated with COVID-19 shutdowns/restrictions.  Unlike more conventional business interruption claims, such as losses associated with a hurricane, COVID-19 claims are likely to be more complicated regarding the end date for loss calculations, especially in instances where the policyholder was permitted to resume operations in a limited capacity, such as restaurants that initially were ordered closed but then were allowed to transition to a take-out/delivery model, outdoor seating only, or to operate at restricted capacities.

As many jurisdictions now face a resurgence in COVID-19 cases, another complicating issue is likely to arise.  In these jurisdictions that previously imposed restrictions on operations but lifted such restrictions, many policyholders have already submitted COVID-19-related business interruption claims to their insurance carriers.  Having thought that they had weathered the storm and were on the path to recovery, they now face the potential of new shutdowns/restrictions.

If renewed shutdowns/restrictions are imposed, a question is likely to arise as to whether these policyholders have one claim applicable to both sets of shutdowns/restrictions or two separate claims.  Does the policyholder need to provide additional notice related to the second set of shutdowns/restrictions?  Is it more beneficial for the policyholder to have one or multiple coverage triggering events (i.e., occurrences)?  What is the impact on available limits or deductibles/retentions?

These are just a few of the insurance issues potentially presented by the prospect of renewed shutdowns/restrictions.  Policyholders should review the terms of their policies carefully to understand their rights and their best path forward.


© 2020 Gilbert LLP

For more on business interruption, see the National Law Review Insurance, Reinsurance & Surety law section.

Surprise! President Trump Nominates Democrat and Republican to FERC

On July 27, 2020, President Trump nominated two candidates to the Federal Energy Regulatory Commission (FERC), securing a Republican majority on the Commission through June 2021 while also ensuring a continued quorum.

Trump nominated Allison Clements, the Democrats’ top pick, alongside Republican Mark C. Christie. Clements currently serves as founder and president of Goodgrid, LLC, an energy policy and strategy consulting firm. She previously worked for over a decade at the Natural Resources Defense Council, and spent two years as director of the clean energy markets program at the Energy Foundation. Christie currently serves as chairman of the Virginia State Corporation Commission, having served for 16 years on the Virginia board that oversees utilities.

FERC is a five-member agency that should have no more than three members of any one party. For much of the past year it has been operating with three Republicans and one Democrat. FERC’s newest commissioner, James Danly, was confirmed in March despite requests from Democrats to pair his nomination with Clements. Clements would fill the seat left vacant by Commissioner Cheryl LaFleur in August 2019. If confirmed, Christie will take the seat of Republican Commissioner Bernard McNamee, whose tenure expired in June but who plans to stay on until his replacement is seated.

Republican Chairman Chatterjee has announced that he will remain on the Commission until the end of his term, which expires June 2021, although the next President will determine if he continues to serve as chairman. Trump’s appointment of Christie, paired with Chairman Chatterjee’s intention to fulfill his term, could secure a Republican-held Commission for the first months of a Biden presidency in the event the Democratic nominee is successful in November.


©2020 Pierce Atwood LLP. All rights reserved.

COVID-19 Brings Consumer Convenience to Pennsylvania

Effective tomorrow, August 4, 2020, the Pennsylvania Liquor Control Board (PLCB) amended sections 407, 415, and 442 of Act 29 of 2020. These revisions allow Pennsylvania Restaurant (“R”) liquor licensees, Eating Place Malt Beverage (“E”) licensees, and Wine Expanded Permit (“WEP”) holders that possess interior connections to another business they operate, such as a grocery store, convenience store, or similarly situated business that cannot have its entire building or business licensed, to have the consumer use the cash registers at their other business to sell malt or brewed beverages and wine for off-premises consumption.

Consumer Convenience in Pennsylvania

Previously, all alcohol sales in these businesses were confined to the licensed areas where alcohol was stored, served, and sold. This confused many customers who tried to check out at the wrong register line with beer and wine purchases. However, during the COVID-19 pandemic, there has been a push to allow customers to use other registers in the store to create fewer touchpoints for customers by not having to use two different registers and to create less congestion in the licensed areas, which are typically fairly small.

Qualifications for Additional Cash Registers

In order to qualify, ALL the following requirements must be met:

  • The licensee’s building is 11,000 square feet or less;
  • The other business cash registers are in the same building as the licensed premises; and
  • The other business cash registers comply with the following standards as set forth by 47 P.S. 4-415(a)(8) and (9) of the Liquor Code:
    • Cash registers must have signage to designate that alcohol may be purchased at said register
    • Cash registers cannot be registers where customers scan their own purchases, which means that self-checkout is still prohibited for all alcohol purchases
    • Cash registers must always be staffed when patrons are purchasing alcohol
    • Cash register clerks must be at least 18 years of age and have completed Responsible Alcohol Management Program training
    • Cash register clerks must use a transaction scan device to verify the age of any patron purchasing alcohol who appears to be under 35 years of age before a sale can occur
    • The licensee may not sell or share the data from the use of its transaction scan device, except for providing said data to the Pennsylvania State Police Bureau of Liquor Control Enforcement

In order to start using additional cash registers, all the above-mentioned criteria must be met AND an email notification of compliance must be sent to RA-LBLICINV@PA.GOV including the following information:

  • LID, license number, and licensee name and address
  • The building’s total square footage
  • Plans or sketches that show the location of the specific cash registers being used
  • Confirmation that all conditions are met

 


©2020 Norris McLaughlin P.A., All Rights Reserved

ARTICLE BY Matthew B. Andersen and Theodore J. Zeller III at Norris McLaughlin P.A. Summer Associate Benjamin MacLuckie contributed.
For more on state liquor laws, see the National Law Review Biotech, Food & Drug law section.

DOER Finalizes SMART Program Emergency Regulations

The Department of Energy Resources (DOER) has finished the required Solar Massachusetts Renewable Target (SMART) Program 400MW review and emergency rulemaking and published its final regulations. Several revisions and adjustments have been made to the final regulations, including an extension to the COVID-19 extension for new applications received through December 31, 2020.

Revisions have been made to previously published land-use exceptions. Projects that meet the below criteria will now be assessed under the former land-use regulations:

  • Have applied for the Interconnection Service Agreement (ISA) 135 business days prior to April 15, 2020, or have obtained a fully executed ISA by October 15, 2020; and
  • Have obtained a sufficient interest in real estate or other contractual rights to construct the Solar Tariff Generation Unit at the location specified in the ISA as of April 15, 2020.

Additionally, the DOER distinguished eligible land use between projects qualifying for capacity as part of the original 1600MW versus projects qualifying under the new 1600MW. Projects qualifying under the original 1600MW will be eligible for the SMART Program even if located on land designated as Critical Natural Landscape, while projects qualifying under the new 1600MW will be ineligible if the project is sited in a Priority Habitat, Core Habitat, or Critical Natural Landscape.

The final regulations also allow for single-axis trackers to be eligible for the Tracker Adder, and behind-the-meter systems to receive Alternative On-Bill Credits.

The DOER also made modifications to the Statement of Qualification Reservation Period Guideline. In addition to continuing the COVID-19 extension for new applications, the DOER has done the following:

  • Eliminated the requirement that projects obtaining an indefinite extension, pending the authorization to interconnect, must submit a claim within 10 business days of receiving the authorization to interconnect;
  • Granted eligible Public Entity Off-taker Adder Solar Tariff Generation Units an initial Reservation Period of 18 months;
  • Clarified that projects qualified as Community Shared Solar that do not submit a claim with the CSS Adder will have their base compensation rate decreased to the value in the lowest available Capacity Block, but will not be at risk of losing their Statement of Qualification outright: and
  • Established a process by which DOER will queue project applications if there is a rush of applications submitted following the issuance of ISAs by a Distribution Company upon the completion of an ASO study.

Several other Guidelines related to the SMART Program are still being revised, and the DOER is expected to release these updates in the coming weeks. Publication of the regulations is just the beginning phase for resuming the SMART Program. Changes to the regulations that affect the tariff will now need to be implemented into each Electric Distribution Companies’ tariffs and undergo administrative review of the Department of Public Utilities.


© 2020 SHERIN AND LODGEN LLP

For more on solar renewable energy, see the National Law Review Environmental, Energy & Resources law section.

One-Two Punch: Businesses Must Fight the Virus and Possible Liability Claims

After several weeks in lockdown and thousands of business closures in an attempt to control the spread of the novel coronavirus, businesses are finally reopening their doors. Given the high transmission of COVID-19, businesses should consider their risks of legal liability to visitors on their property – customers, employees and others – in the event of COVID-19 exposure at their premises.  But the fear of civil liability remains a hindering problem. These claims will most commonly be pursued under the legal theory of negligence and plaintiffs may seeking financial compensation for their injuries and medical treatment related to COVID-19. Plaintiff’s lawyers in these cases will focus on the operations and procedures in place during the reopening. Some businesses are taking extraordinary measures to protect customers, while others are doing the bare minimum. Businesses need to know how to be in compliance with best safety practices to prevent and defend against claims related to an alleged failure to protect customers from COVID-19 exposures.

Immunity for Businesses for COVID-19 Exposure?

A large number of states, including Massachusetts, have enacted laws to shield health care workers, health care facilities and volunteer organizations treating COVID-19 patients from negligence claims subject to certain exceptions. However, the immunity does not extend to cover damages caused by gross negligence or recklessness. It is important to note that these states have not provided similar immunity to other businesses, nor have they limited liability in cases involving gross negligence for COVID-19 related claims. There have been discussions of additional legislation to protect businesses in these cases, but this has yet to happen.

Tort Claims and Premises Liability Law in Massachusetts

Personal injury claims typically stem from negligent acts, where a party had a duty of care, failed to reasonably care for that individual, and that failure to care caused the individual harm or injury. A ”duty of care” exists when its reasonably foreseeable that some act or omission would cause some type of knowable harm, and thus taking reasonable action to ensure safety. The breach of that duty is the act or omission that causes the harm. The breach of duty must cause some damages. Damages are monetary compensation for the victim’s injuries and losses if liability is found.

Premises liability law, a subset of personal injury law, similarly holds that property owners owe a duty of reasonable care to visitors on their premises in Massachusetts, so as to not create or allow unsafe or hazardous conditions to exist on their premises that could cause injury or harm to patrons and guests. If a hazardous condition exists that could reasonably cause harm, and the property owner fails to remove it or warn of it, this could ultimately result in liability.

The duty of care is stricter for business owners, as they invite persons onto their property to purchase goods or services. The level of care owed depends upon the type of visitor on the property. Massachusetts has two types of lawfully present visitors: 1) licensees- individuals presenting financial gain for the property owner like patrons, diners, shoppers; and 2) invitees- those who are not providing any financial gain to the property owner like guests and friends at a social gathering. The property owner owes its visitors a duty of care, that is to keep the property reasonably safe. In this context, the property owner is well aware of the risks associated with COVID-19, the nature of the disease and how it is transmitted. If it did not take reasonable steps to prevent the transmission of the virus to its licensees and invitees, and the claimant can prove the business’ failure to exercise reasonable care was a “substantial contributing factor” in causing the claimant’s injury, they may be entitled to damages, which can include among other things, medical expenses, economic damages, and even emotional distress.

Breach of Duty

There is an abundance of guidance available to businesses on the virus, transmission, preventative measures. Whether a business “breached” their duty of care will focus on what the business did to determine if taking action (or taking no action) was reasonable or not, given the state of knowledge on the virus. Thus, claimants would need to point to what steps the businesses took to protect its licensees and invitees, and whether there were additional procedures that could have been implemented to prevent the transmission, and whether those additional actions were reasonable in light of what was known about the virus. Intentional ignorance is not a defense – property owners have a duty to investigate known or potential hazards, including COVID-19.

Causation

Claimants in tort claims have the burden of proving causation. This usually means proving that the breach of duty was a “substantial contributing factor” in causing the claimant’s injury. In COVID-19 cases, the claimant will ultimately need to prove that the virus was contracted at that business as opposed to another source, which may be extremely difficult to do. Asymptomatic spread of COVID-19 is one of many challenges to proving the initial source of exposure. While some claimants will rely on contact tracing, that alone does not rule out alternative sources of COVID-19 exposure – any other place the person visited (markets, homes, their workplace), and exposure to family members and friends.

Notably, a large number of states are enacting legislation applicable to workers compensation claims related to COVID-19. This legislation establishes a rebuttable presumption that an employee who tests positive for COVID-19 contracted it in the course of employment, although some are limited to essential workers. A “rebuttable presumption” means that the burden of disproving causation is thrust upon the employer. While there are no similar rebuttable presumptions for personal injury and premise liability claimants at this time, it is an open question as to whether these presumptions can be used affirmatively in tort lawsuits, particularly in a situation where a worker brings COVID-19 into the home and sickens a family member or housemate.

Mitigating Liability

If businesses can show that safety protocols were followed, this evidence can be used to defend these types of claims. The Centers for Disease Control and Prevention (CDC) has set guidelines that should be followed as best practices to avoid COVID-19 liability claims. There is an abundance of state and local guidance on social distancing, use of masks and other measures to prevent the spread of the virus. With the vast amount of information available to the public on the risks of the virus and preventative measures, claimants will argue that businesses have enough information to safely operate Crafty plaintiff’s lawyers will likely seek out and find guidance that specifically supports their clients case. Business owners are advised to do the same for their respective industries, whether it be restaurants, offices or youth sports leagues.

Defenses to Consider in Defending COVID 19 Liability Claims

Statute of Limitations

The statute of limitations for in Massachusetts governing personal injury and premises liability cases places a time limit of three years within the date of the incident for filing the lawsuit. Lawsuits filed after the statute of limitations period may be dismissed as “time-barred.” Other states have similar statutes, although the specific timeframe may vary.

Modified Comparative Negligence Law

Some states, including Massachusetts, use a modified comparative negligence rule in personal injury cases, allowing plaintiffs to recover only if the defendant’s share of the blame was equal to or greater than their own. There are only a few exceptions allowing plaintiffs to recover if they were more than 51% at fault. Another important factor of this rule to consider is that if plaintiffs are found to be at fault, their damages are reduced by their allocated share of the blame. Did the visitor where a mask? Did they stay 6 feet apart from other individuals? Did they wash their hands and sanitize frequently? Were they placing their hands on their mouth and nose? These facts and circumstances are critical factors to consider when shifting the blame to the claimant.

Assumption of Risk Abolished in Massachusetts

Some jurisdictions allow a defendant in a personal injury action to raise an affirmative defense of assumption of risk, but that is abolished in Massachusetts as a defense in personal injury cases. In jurisdictions where this defense is allowed, instead of denying the allegations, defendants can assert that a plaintiff was aware of the risk when engaging in the activity or conduct, fully had knowledge of the consequences and willingly disregarded the risks or assumed the risks. Therefore, the defendant cannot be at fault for negligence and this serves as a complete bar to recovery.

Liability Waivers

Did a plaintiff sign a written liability waiver acknowledging and accepting risks? Enforceability of liability waivers as well as the exceptions to the enforceability of releases vary from state to state. While this only shows licensees and invitees were made aware of the risk, using such waivers in these COVID 19 claims is not a slam dunk defense.

Conclusion

We encourage businesses to consider these liability risks when resuming operations and to follow comprehensive procedures and CDC guidelines to mitigate the risks and protect licensees and invitees from the spread of the virus at these establishments. Our office can help businesses develop a plan specific to their business to mitigate the risks of liability from emerging claims related to COVID 19 and provide guidance and advocacy for defending such claims.


©2020 CMBG3 Law, LLC. All rights reserved.

ARTICLE BY Seta Accaoui at CMBG3 Law.
For more on business COVID-19 liability, see the National Law Review Coronavirus News section.