No Going Back – Rejection of Promotion Offer Not a Failure to Mitigate

soccer players.jpgGibbs -v- Leeds United Football Club concerned the former Assistant Manager of the Club who took his £330,000 constructive dismissal claim to the High Court so as to sidestep the compensation ceiling in the Employment Tribunal.

Having fairly easily established the fundamental breach of contract necessary to win his claim against Leeds, Mr Gibbs then faced two more difficult questions about his compensation. First, how do you provide for mitigation where you know the dismissed employee is going to get a bonus from his new employer, and when, but don’t know how much it will be?  Second, is it a failure to mitigate that the employee declines to accept an offer of improved employment terms from the old employer?

On the first point, the Judge reviewed the options of (i) estimating the bonus figure (but thereby certainly being wrong in one party’s favour of the other) or (ii) delaying the compensation award until the bonus amount were known, but thereby racking up interest charges for Leeds and denying Mr Gibbs receipt of his money. Note that part of the relevant bonus was due to be paid by Mr Gibbs’ new employer, Tottenham Hotspur FC, little more than four months after the High Court’s decision, at a time of low prevailing interest rates and when Mr Gibbs was safely in receipt of a salary from Spurs and so had no immediate need for the money. Nonetheless, this was still felt to be hardship enough all round to leave that option on the bench.

The Judge chose instead to order that:

  • the full amount of the £330,000 award should be paid to Mr Gibbs’ solicitors to be held in an interest-bearing account;

  • the parties should then agree how much of that could be released to Mr Gibbs (i.e. leaving at least enough in the account to cover any likely bonus award from Spurs); and

  • the rest would be offset against that bonus, with the bonus amount going back to Leeds and the balance to Mr Gibbs, plus interest in each case.

All very sensible and the fact that this was a High Court case in no way prevents a similar Order (or agreement between the parties) being made by the Employment Tribunal where there is a need to reflect an uncertain future receipt in the amount of a settlement or compensation award.

On the second point, was it a failure by Mr Gibbs to take reasonable steps to mitigate his losses when he rejected Leeds’ post-resignation offer to stay at Elland Road as Head Coach/Manager? The Judge gave this allegation a fairly short shrift – having found the Club guilty of a repudiatory breach of Mr Gibbs’ contract, it could not fix things so easily.  Though the new role would have been more senior and presumably better paid, the damage caused to Mr Gibbs’ credibility among players and staff by the Club’s earlier treatment of him made it reasonable for him to refuse.  He could have taken the chance that Leeds would change its behaviour towards him, but he was not obliged to do so.  Bear in mind also the recent Employment Appeal Tribunal decision in Cooper Contracting -v- Lindsey which stressed just how high is the hurdle of showing a failure to mitigate, and also Buckland –v- Bournemouth University in 2010. There the Court of Appeal decided much against its own better judgment that once the employer was guilty of a repudiatory breach of contract, it could not “mend” that breach by profuse apologies and other appropriate steps afterwards, even if those measures would have undone all or most of the harm caused in the first place.

© Copyright 2016 Squire Patton Boggs (US) LLP
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Biomass Research And Development Initiative Provides Seven Projects With Up To $10 Million In Funding

On May 9, 2016, the U.S. Department of Energy (DOE), the U.S. Department of Agriculture (USDA), and the National Institute of Food and Agriculture (NIFA) announced the recipients of up to $10 million in funding through the Biomass Research and Development Initiative (BRDI). BRDI is a joint program through DOE and USDA that helps develop sustainable sources of biomass and increase the availability of biobased fuels and products. DOE selected two of the grant winners to receive between $1 million and $2 million: the Ohio State University (OSU) project is “Biomass Gasification for Chemicals Production Using Chemical Looping Techniques,” and the Massachusetts Institute of Technology (MIT) project is “Improving Tolerance of Yeast to Lignocellulose-derived Feedstocks and Products.”

USDA then selected five grant winners to receive a total of $7.3 million in funding:

  • University of California-Riverside, to convert poplar to ethanol and polyurethane via pretreatment and lignin polymer synthesis;

  • University of Montana, to quantify ecological and economic opportunities of various forest types and to quantify benefits of replacing fossil fuel with forest-based bioenergy;

  • North Carolina Biotechnology Center, to optimize production of educational resources on biomass sorghum production in the Mid-Atlantic region;

  • Dartmouth College, to overcome the lignocellulosic recalcitrance barrier; and

  • State University of New York College of Environmental Science and Forestry, to provide life cycle understanding for the production of willow and forest biomass to mitigate investment risk.

Article By Kathleen M. Roberts of Bergeson & Campbell, P.C.

©2016 Bergeson & Campbell, P.C.

The Federal Defend Trade Secrets Act: Impact on Employers

Trade Secrets Confidential Chain.jpgOn May 11 2016, President Obama signed The Defend Trade Secrets Act (“DTSA” or the “Act”). Effective immediately, the DTSA creates a federal civil cause of action that allows companies to file civil lawsuits for trade secret theft under the federal Economic Espionage Act. Before the passage and signing of the DTSA, the statute only provided for criminal cases brought by prosecutors. Civil trade secret cases had to be brought under state law. While the DTSA provides an added layer of protection for companies’ trade secrets, its impact on employers is more uncertain.

Federal Cause of Action

Prior to the DTSA, victims of trade secret theft could only bring civil causes of action understate trade secret laws. These laws vary widely despite the fact that many states have passed some formulation of the Uniform Trade Secrets Act. The DTSA provides a federal civil cause of action covering any trade secret “related to a product or service used in, or intended for use in, interstate or foreign commerce.” There is a three year statute of limitations which is triggered on the date on which the trade secret misappropriation was discovered or “by the exercise of reasonable due diligence should have been discovered.” The availability of a federal trade secret cause of action could make interstate trade secret disputes more efficient by reducing choice of law disputes that happen when it is uncertain which state’s trade secret law should apply and also provides access to federal courts which are accustomed to addressing sometimes complex issues of formulations and technical information that is often necessary in these cases. However, the DTSA does not preempt state trade secret actions, so forum shopping and choice of law disputes will remain prevalent.

Seizure Clause

Along with providing a federal cause of action, the DTSA affords victims of trade secret theft an ex parte seizure proceeding to prevent the propagation of misappropriated trade secrets. Such an order can be obtained only under “extraordinary circumstances.” For a seizure order to issue, the trade secret owner must show, inter alia, that the accused party has actual possession of the trade secret and that an immediate and irreparable injury will occur without the seizure.

Companies should exercise caution when invoking the DTSA’s seizure provision because the Act also provides that parties who have been accused of trade secret theft will have a claim for damages as a result of any wrongful seizure and demand the return of any material that was wrongfully seized along with the trade secret information.

Restrictions on Employee Mobility

The DTSA contains provisions related to employee mobility. The Act restricts the availability of injunctive relief to “prevent a person from entering an employment relationship” and provides that if an injunction were to place conditions on a person’s employment, such restrictions must “be based on evidence of threatened misappropriation and not merely on the information the person knows.” This provision effectively rejects the inevitable disclosure doctrine applicable in certain jurisdictions, whereby an employer can enjoin a former employee from working in a new job that would inevitably result in the use of the employer’s trade secrets. Under the inevitable disclosure doctrine, an employer does not have to provide evidence of actual or threatened misappropriation of trade secrets, just the former employee’s knowledge of such trade secrets. This claim will not be available under the DTSA. Lastly, the DTSA prohibits the issuance of an injunction which would “conflict with an applicable State law prohibiting restraints on the practice of a lawful profession, trade or business,” so employers in states that are more restrictive vis a vis non competes, will still be governed by those state laws.

Whistleblower Immunity

The Act’s most employee friendly clause, provides immunity to employees who disclose trade secrets either to the government for the purpose of reporting or assisting in an investigation of a suspected violation of law, or in a complaint filed in a lawsuit or related proceeding if such a filing is made under seal. Also, an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may reveal the trade secret to his or her attorney and utilize the trade secret information in the proceeding if the person files any document containing the trade secret under seal and does not disclose the trade secret except under court order.

The whistleblower provision contains a notice requirement that applies to any employer that utilizes employment contracts that concern the use of trade secrets. The Act requires employers to “provide notice of the [whistleblower] immunity . . . in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.” The employer may instead, provide in the contract a cross-reference to a policy document provided to the employee that sets forth the employer’s reporting policy for a suspected violation of law. Employers who neglect to comply with the Act’s notice requirements lose the ability to recover exemplary damages and attorneys’ fees under the DTSA in actions brought against employees or independent contractors who were not given the notice. This requirement applies to any new agreements or revisions to agreements made as of May 11, 2016, the date of enactment of the Act.

Employer Tips

The DTSA offers a mixed bag for employers. While the Act provides a federal trade secret cause of action (and the concomitant promise of more uniformity), it does not preempt state trade secret law, so forum shopping and choice of law issues will remain. The Act provides for a robust ex parte seizure proceeding to prevent the dissemination of trade secrets, but also a wrongful seizure cause of action for the accused party which could lead to costly satellite litigation. The Act limits an employer’s ability to restrict a former employee’s subsequent employment by requiring the employer to provide evidence of threatened misappropriation, rather than merely evidence of what the employee knows. Finally, the Act provides immunity for individuals who disclose trade secrets in whistleblowing situations and in retaliation lawsuits, simultaneously requiring employers to notify all employees or independent contractors subject to employment contracts that touch on trade secrets about the whistleblowing immunity. The whistleblowing notice requirements add costly administrative and legal burdens to employers who utilize such contracts.

Article By David I. Rosen, Galit Kierkut & Charles H. Kaplan of Sills Cummis & Gross P.C.

© Copyright 2016 Sills Cummis & Gross P.C.

FDA Outlines Future Medical Device Coordinating Center

FDALogoThe federal Food and Drug Administration’s planning board (Planning Board) for a medical device evaluation system (NMDES) recently recommended the creation of a centralized Coordinating Center to develop a national system to evaluate medical devices. Convened in 2014 by the U.S. Food and Drug Administration and the Brookings Center for Health Policy, the Planning Board emerged out of an FDA action plan in 2012 seeking to strengthen the medical device post-market surveillance system by building a more coordinated and efficient system that would track medical devices and share evidence regarding safety and efficacy.

In the report, issued on April 5, 2016, NMDES is described as a voluntary, coordinated network of partnerships that include government agencies, device manufacturers, provider organizations, health plans, and patient communities that share the common goal of “generating higher quality data and evidence at lower costs to inform and improve patient care.” The Coordinating Center proposed by the Planning Board would be responsible for governing, coordinating, and standardizing efforts among these participants. The Coordinating Center would not have explicit regulatory authority, but FDA’s authorities could authorize and initiate activities through the Coordinating Center.

NMDES as a Coordinated Network of Partners

ll post

This proposed network would build on the currently-existing limitations in obtaining evidence regarding medical devices, such as the absence of a broad adoption of unique device identifiers (UDIs) for tracking purposes, the expense of manual data entry and delays in data extraction, and limited participation in medical device tracking experts by health care providers and patients.

Although the Coordinating Center should be able to meet its objectives of optimizing data sharing, promoting best practices for device evaluation, and developing a process for disseminating safety and efficacy information, the proposed plan still has several hurdles to overcome. Under the timeline proposed in the report, it is “unlikely that a de novo entity can be organized.” Therefore, the Coordinating Center would have to be incubated at an “established hosting entity” with the plan to spin off the Coordinating Center and Governing Board into a “financially stable and independent entity.” Additionally, there is little concrete discussion of the source of early seed funding. Until such organizational and funding details are determined, NMDES and the Coordinating Center will remain aproposed system; however, as the report is the first in a series of papers to be released by the Planning Board, we expect more information to be forthcoming.

Article By M. Leeann Habte & Lindsey E. Gabrielsen of Foley & Lardner LLP

© 2016 Foley & Lardner LLP

Night Moves: FAA Makes Front Page News With Drone Exemption

On April 18, 2016, the FAA approved, for the first time ever, nighttime operation of a small unmanned aircraft system (UAS or “drone”) when used for commercial activity.  The FAA permitted Industrial Skyworks, Inc. to use drones to inspect buildings at night.

In order to get the exemption, the FAA required the following of Industrial Skyworks:

  • The pilot in command had to possess a commercial or private pilot certification that allowed night operations;

  • The pilot needed a medical certificate per 14 C.F.R. part 67; and

  • The drone had to remain in the pilot’s and visual observer’s line of sight at all times.

Industrial Skyworks bolstered its case by taking these steps to ensure the drone’s safe operation at night.

  • It would be launched from an illuminated landing and take-off area and equipped to continually alert the pilot of its location and altitude.

  • It possessed anti-collision lights visible from 5,000 feet.

  • The site of the preprogrammed flight was limited in size, and the area was restricted to authorized personnel.

  • The pilots completed a training program that included nighttime operating skills and experience.

  • The company created a comprehensive security plan, including a provision that the pilot in command and visual observer would arrive at the work site 30 minutes prior to flight to ensure their eyes adjusted to the darkness.

Article By Jeffrey K. Phillips of Steptoe & Johnson PLLC

© Steptoe & Johnson PLLC. All Rights Reserved.

U.S. Solar Installations Reach 1 Million

Last week the Solar Energy Industries Association (SEIA) and George Washington University (GWU) issued a report estimating that the United States has reached 1 million solar installations and will surpass 2 million installations by 2018.  This is a 1,000-fold increase over 15 years as only 1,000 systems were installed in 2001, and these numbers highlight the tremendous growth experienced by the solar industry.  Of the 1 million PV systems, there are currently over 942,000 residential installations, nearly 57,000 PV installations at businesses, non-profits and government agencies, and over 1,500 utility-scale PV installations.  SEIA and GWU anticipate 4 million installations by 2020 and for the U.S. to be installing one million PV systems annually by 2025. To learn more about this solar milestone and the factors contributing to the solar industry’s growth, read on!

While currently only supplying 1 percent of U.S. electricity generation, solar energy accounted for 30 percent of new capacity last year and is expected to continue developing.  This growth has profoundly affected the job sector, where solar jobs grew 123 percent in the past five years and created 1 in 83 new U.S. jobs in 2015.  Overall, the solar industry now employs over 200,000 Americans, three times more jobs than U.S. coal mining.

Multiple factors were credited for playing a role in the U.S. reaching 1 million solar installations, including lower installation costs and predictable, stable federal and state policies.  In the last ten years, installation costs have dropped more than 70 percent, driven by declining solar module prices.  Enacted in 2008, the solar Investment Tax Credit (ITC), a 30 percent tax credit for solar systems on residential and commercial properties, was extended in December through 2021.  Meanwhile, state policies such as net-metering and renewable portfolio standards (RPS) have allowed solar to enter markets.  Currently, 44 states have net metering policies and 29 have RPS policies.

One challenge for the future of solar is the inability of lower-income households to benefit from solar due to a multitude of barriers, including a high rate of renters, multi-tenant buildings, and a lack of access to financing.

Article By Thomas R. Burton, III of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
©1994-2016 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

June 2016 Visa Bulletin Update

The Department of State (DOS) has released the June 2016 Visa Bulletin that includes the “Application Final Action Dates” and “Dates for Filing Applications.”

For both family-sponsored and employment-based filings, the United States Citizenship and Immigration Service (USCIS) website indicates that the Application Final Action Dates chart must be used for May 2016.

Please see below for the Application Final Action Dates for both family-sponsored and employment-based preference filings:

Application Final Action Dates for Family-Sponsored Visa Applications

June Visa Bulletin

Movement from the May 2016 Visa Bulletin shows gradual but insignificant jumps in processing dates for this category, with the exception of China, F4 dates retrogressing from July 22, 2003 to January 1, 2003.

Application Final Action Dates for Employment-Based Preference Cases

IBI blog june 2016

Of particular note is that China EB-2 and EB-3 preference categories saw a retrogression from September 1, 2012 to January 1, 2010; and August 15, 2013 to January 1, 2010, respectively; and India EB-2 preference category also experienced a four-year retrogression from November 22, 2008 to October 1, 2004.

©2016 Greenberg Traurig, LLP. All rights reserved.
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To Brexit or to Bremain? That is the Question on 23 June 2016

A View from BrusselsUK and Europe flag

As the 23 June date for the British referendum about its future in the European Union (EU) comes closer, the EU political leadership in Brussels remains uncertain how best to support the ‘Bremain’ forces in order to avoid the embarrassing and damaging departure of one of its largest and strongest members.

None of the political leaders in Brussels or in other EU capitals want to see the UK leave, but they have learned to be cautious and show restraint when it comes to engaging in EU related discussions in Britain. Often enough they were told to stay neutral (or silent) in order not to make things worse for the pro-EU forces. But they now ask themselves whether their passive stance is a sufficiently supportive strategy for a decision of this magnitude for all partners involved – also because many traditionally pro-EU industry stakeholders in the UK have remained reserved so far, leaving a lot of momentum to the “Leave” side.

Supporting the (B)Remain Camp while Preparing for the Eventuality

The top EU leadership has clearly spoken out in favour of the UK to remain a part of the European family. Already in 2014 European Commission President Juncker has given the financial services dossier to the British EU Commissioner Jonathan Hill, and has recently asked Jonathan Faull, a top level UK EU official in Brussels, to lead the Commission’s high level Brexit task force.

Influential national political leaders, including German Chancellor Angela Merkel, have clearly spelled out that they want the UK to remain, and have grudgingly accepted UK specific political concessions in an EU summit in February 2016 in order to support David Cameron. They are wary of potential Brexit copycats across Europe.

Behind closed doors, EU institutions such as the European Central Bank and the European Commission are preparing itself for the eventuality of the British voting to “leave” on 23 June. They cannot afford not to, given the enormous impact it would have on Europe – akin to the “Grexit” situation in recent years.

A View from the United States

On 22 April 2016, President Obama visited London and argued that he had a right to respond to the claims of Brexit campaigners that Britain would easily be able to negotiate a fresh trade deal with the US. He said,

“They are voicing an opinion about what the United States is going to do, I figured you might want to hear from the president of the United States what I think the United States is going to do. And on that matter, for example, I think it’s fair to say that maybe some point down the line there might be a UK-US trade agreement, but it’s not going to happen any time soon because our focus is in negotiating with a big bloc, the European Union, to get a trade agreement done. The UK is going to be in the back of the queue.”

The Only Certain Thing is Uncertainty

The overall uncertainty related to a potential Brexit is large and little is known about how the separation process between the UK and the European Union would look like in practice. Many questions remain unanswered, including the political dynamics a Leave decision would trigger within and outside the UK.

What seems certain is that if Britain does leave the EU, a multi-year separation and negotiation process will commence.

When Greenland left the European Economic Community in 1985 it took a full three years to complete – and this even though they only had a few really important political issues to solve. The UK has been part of the European Union since 1973 – thus the social, legal and economic entanglement is much higher.

Article By Wolfgang A. Maschek & Helen Kavanagh of Squire Patton Boggs (US) LLP

© Copyright 2016 Squire Patton Boggs (US) LLP

In Wake of Panama Papers Scandal Obama Calls for Stricter Bank Regulations, Tax Rules

In a news conference today President Obama addressed rules and proposed regulations announced Thursday intended to help the U.S. fight tax evasion and other crimes connected to anonymous offshore companies and accounts.  The announcements come after a month of intense review by the administration following the first release of the so-called Panama Papers, millions of documents stolen or leaked from Panamanian law firm Mossack, Fonseca.  The papers have revealed a who’s who of international politicians, business leaders, sports figures and celebrities involved with financial transactions accomplished through anonymous shell corporations.

The new regulations include a “customer due diligence” rule requiring banks, mutual funds, securities brokers and other financial institutions to determine, verify and keep records about the actual ownership of the companies with whom they do business.  The administration has also proposed regulations requiring owners of foreign-owned “single-member limited liability companies” to obtain employer identification numbers from the IRS.  In an effort to increase transparency and address “the problem of global tax avoidance,” both rules are intended to make more easily discoverable the actual ownership of offshore companies and accounts, allowing for easier investigation of suspected fraud, tax evasion and money laundering.  Currently, companies can do business in the U.S. anonymously by registering in states that do not require full disclosure of actual ownership.

The new rules create regulatory obligations for a broad array of financial institutions, and potential new obligations for off-shore investors.  A further release of Panama Papers is expected on Monday, with the identities of many U.S. companies and individuals involved in such “anonymous” shell corporations likely to be revealed, and greater scrutiny of such transactions and the financial institutions involved with them likely to follow.

Article By Raymond C. Marshall & David S. Cannon of Sheppard, Mullin, Richter & Hampton LLP

Copyright © 2016, Sheppard Mullin Richter & Hampton LLP.

Tokyo District Court Rules that “US-Style” Dismissal is Invalid

badge_button_japan_flag_800_2185Article 16 of the Japanese Labour Contracts Act provides that “If a termination lacks objectively reasonable grounds and is not considered to be appropriate in general social terms, it is treated as an abuse of rights and is invalid”.  Obviously the terms “objectively reasonable grounds” and “appropriate in general social terms” are ambiguous but here is a case which sheds a little light on those two phrases.

On March 29, 2016 the Tokyo District Court ruled that the termination of the five plaintiff employees by Japan IBM was invalid.   Chief Judge Toru Yoshida ordered Japan IBM to reinstate them and to pay their salary retroactive to the date of termination.  The plaintiffs were all dismissed without notice based on what IBM said was their poor performance.  The employees alleged that the real reason was a desired reduction of the workforce and that IBM picked on them because they were members of a labour union which was against any restructuring, and not because their performance actually justified their dismissals.

The Court did indeed find that the plaintiffs’ performance was lower than average. However, it ruled that continuous lower evaluation based on a relative evaluation system is not enough to justify the termination.  Merely because their performance was poorer than their colleagues’ did not mean that they were objectively unable to perform the duties of the role to an adequate standard.  As a result, said the Court, Japan IBM had abused the right to terminate.

The plaintiffs’ lawyer said proudly during media interview at the Court, “This judgement is a landmark case because the judgement proved that the Japanese legal theory of “abuse of right” can serve as a brake on US-style terminations”.  In fact it was already very clear that Japanese law would block dismissals without very good reason (i.e. not including performance unless supported by very strong evidence of very serious shortcomings), but we can probably forgive him in his moment of triumph.  Even if it is not strictly a landmark, the decision does make it clear that relatively (as opposed to absolutely) poor performance will not count as “objectively reasonable grounds” for a dismissal, and that a termination without prior warning (or which is stated to be for an untrue reason) will not be found to be “appropriate in general social terms”.

Therefore, unilateral terminations in Japan are often litigated. Since the sanction of default is usually reinstatement rather than a cash payment, getting it wrong for the sake of expediency is often not a sensible option.  This IBM case is a good lesson for employers in Japan accustomed to US or similar employment systems that poor performance is not always a justifiable reason to dismiss.  Establishing objectively reasonable grounds is a very high hurdle in Japan and may strain the patience of employers not used to that burden.  It is therefore much preferable to try to agree a severance with the employee.  While this may be expensive it will at least be effective to terminate his employment and draw a conclusive line under the matter.  The employee in turn gains a cash cushion and an opportunity to leave his employment with little loss of face and a clear record and reference.

Article By Kenichiro Kawada of Squire Patton Boggs (US) LLP
© Copyright 2016 Squire Patton Boggs (US) LLP