The National Law Forum

Grocery Manufacturers of America (GMA) and Vermont Agree to Drop GMO Lawsuit

The food industry, led by the Grocery Manufacturers of America (GMA), and Vermont have agreed to dismiss a federal lawsuit that challenged a state law requiring the labeling of certain foods made with genetically modified organisms.

Vermont’s labeling requirements for genetically modified (GM) foods have been preempted by the recent enactment of federal GM labeling legislation which establishes a “National Bioengineered Food Disclosure Standard” and calls for the U.S. Department of Agriculture (USDA) to “establish a national mandatory bioengineered food disclosure standard”. On August 11, 2016, Vermont’s Attorney General (AG) issued a formal memo stating that the AG’s office will no longer enforce the state’s requirements. Still pending on appeal to the 2nd U.S. Circuit Court of Appeals in New York, however, was a federal court case filed by food industry groups against the state of Vermont challenging the state GMO labeling law.

Earlier this week, the parties to the lawsuit agreed the suit was no longer warranted because a new federal law preempted the Vermont law that took effect July 1, 2016.

The dismissal of the legal challenge to Vermont’s GMO labeling law represents the formal conclusion of a particularly controversial chapter in the GM labeling debate that involved sparring over the potential development of a patchwork of conflicting labeling requirements across the 50 states. With the conclusion of the Vermont GMO labeling law saga, industry can now work with USDA to develop uniform federal regulation for labeling GMO foods.

ARTICLE BY Food and Drug Law at Keller and Heckman of Keller and Heckman LLP

Considerations for Travel to Iran to Explore Relaxed Trade Opportunities

Before booking your airfare, be mindful of these potential issues.

In light of liberalized trade with Iran made possible by the Office of Foreign Assets Control’s (OFAC’s) General License H and the relaxation of US secondary sanctions, personnel of a non-US company, whether or not owned or controlled by a US parent, may be considering travelling to Iran to explore potential business opportunities. Here are some key points to consider as you make your plans.

Travel to Iran by US Persons Is Permitted

An OFAC General License provided in 31 CFR § 560.210(d) authorizes travel to Iran from the United States or by US Persons (US citizens and US permanent resident aliens]) from outside the United States to do market research or gather business opportunity information. This authorization includes

importation or exportation of accompanied baggage for personal use;

maintenance within Iran, including payment of living expenses;

acquisition of goods or services for personal use in Iran; and

arrangement or facilitation of such travel, including air, sea, or land voyages.

US State Department Warning for Travel to Iran

On August 22, the US Department of State (State Department) reissued a travel warning for Iran that reiterates and highlights US citizens’ risk of arrest and detention, particularly dual national Iranian Americans. Iranian officials continue to detain or prevent foreigners (in particular, dual nationals of Iran and western countries, including the United States) from leaving Iran. The State Department says US citizens traveling to Iran should very carefully weigh the risks of doing so and consider postponing their travel. The State Department additionally instructs US citizens who reside in Iran to closely follow media reports, monitor local conditions, and evaluate the risks of remaining in the country.

The State Department advises that Iranian authorities continue to unjustly detain and imprison US citizens, including students, journalists, business travelers, and academics, on charges that include espionage and posing a threat to national security. Iranian authorities have also prevented a number of Iranian American citizens who traveled to Iran for personal or professional reasons from departing, in some cases for months.

The US government does not have diplomatic or consular relations with Iran, and therefore cannot provide protection or routine consular services to US citizens in Iran. The Swiss government, acting through its embassy in Tehran, serves as a protecting power for US interests in Iran. The Foreign Interests Section at the Swiss Embassy provides a limited range of consular services that may require significantly more processing time than at US embassies or consulates.

The Iranian government does not recognize dual citizenship and will not allow the Swiss to provide protective services for US citizens who are also Iranian nationals. The Iranian authorities determine a dual national’s Iranian citizenship without regard to the dual national’s personal wishes. Consular access to detained US citizens without dual nationality is often denied as well.

Loss of Visa Waiver Privileges for Entry into the United States by Non-US Citizens

The US Visa Waiver Program (VWP) Improvement and Terrorist Travel Prevention Act of 2015 (the Act), which took effect in January 2016, has adversely affected some travelers to Iran who wish to enter the United States. Under the Act, travelers in the following categories are no longer eligible to travel or be admitted to the United States under the VWP:

Nationals of VWP countries who have traveled to or been present in Iran, Iraq, Sudan, or Syria on or after March 1, 2011 (with limited exceptions for travel for diplomatic or military purposes in the service of a VWP country)

Nationals of VWP countries who are also nationals of Iran, Iraq, Sudan, or Syria

These individuals will still be able to apply for a visa using the regular immigration process at US embassies or consulates.

As of January 21, 2016, travelers who currently have valid Electronic System for Travel Authorizations (ESTAs) and who have previously indicated that they hold dual nationality with one of the four countries listed above on their ESTA applications will have their current ESTAs revoked.

The US Department of Homeland Security’s secretary may waive these restrictions if he determines that such a waiver is in the law enforcement or national security interests of the United States. Such waivers will be granted only on a case-by-case basis. As a general matter, categories of travelers who may be eligible for a waiver include

individuals who traveled to Iran, Iraq, Sudan, or Syria on behalf of international organizations, regional organizations, and subnational governments on official duty;

individuals who traveled to Iran, Iraq, Sudan, or Syria on behalf of a humanitarian nongovernmental organization on official duty;

individuals who traveled to Iran, Iraq, Sudan, or Syria as a journalist for reporting purposes;

individuals who traveled to Iran for legitimate business-related purposes following the conclusion of the Joint Comprehensive Plan of Action (July 14, 2015); and

individuals who traveled to Iraq for legitimate business-related purposes.

The Department of Homeland Security does not specifically define what travel to Iran for “legitimate business-related purposes” means, how the department applies the definition, or what evidence is necessary to sustain such a claim and successfully receive relief. Anecdotal evidence suggests that administrative avenues for relief from the Act’s provisions to enter the United States after travel to Iran for “legitimate business-related purposes” are obscure. Travelers to Iran who want to enter the United States and require a visa to do so should apply through the routine visa application process at their appropriate US embassy or consulate and not expect rapid administrative agency relief for the effects of the Act.

ARTICLE BY Louis Rothberg, Margaret M. Gatti & Marynell DeVaughn of Morgan, Lewis & Bockius LLP

Join LMA at their Legal Marketing Technology Conference, October 5-6 in San Francisco

The Legal Marketing Technology Conferences are the largest conferences dedicated to technologies that law firm professionals use to identify, attract and support clients. They provide the premier forum to learn from and network with thought leaders and colleagues.

Join your colleagues for the Legal Marketing Technology Conference West, October 5-6 in San Francisco. Register today!

PRE-CONFERENCE (afternoon October 5, 2016)

Attendees may choose between:

Technology Workshops View the Agenda
Lead Marketers’ Summit (law firm members only) View the Agenda

CONFERENCE (all day October 6, 2016) View the Agenda

11 sessions
More than 30 industry-leading speakers

Nasdaq Makes Preparations to Shorten Settlement Cycle for Securities Transactions from T+3 to T+2

In connection with the industry-led initiative to shorten the settlement cycle for transactions in U.S. equities and other securities from trade date plus three business days (T+3) to trade date plus two business days (T+2), the Nasdaq Stock Market LLC (“Nasdaq”) has preliminarily identified certain rules that establish or reference a T+3 settlement cycle, including rules that establish the ex-dividend date for distributions by Nasdaq-listed companies.

In order to implement a T+2 settlement cycle, Nasdaq would modifyRule 11140(b)(1) to provide that the “ex-dividend date” will generally be the first business day before the record date. The ex-dividend date is the date on which a security is traded without the right to receive a dividend or distribution that has been declared by a listed issuer.

The following Nasdaq rules would also be impacted by this amendment:

Rule 2830 (Investment Company Securities, incorporated by reference from NASD Rule 2830)
Rule 11150(a) (Transactions “ex-interest” in bonds which are dealt in “flat”)
Rules 11210(c) and (d) (Confirmations)
Rule 11320(b) and 11320(c) (Dates of delivery)
Rule 11620 (Computation of interest)

Nasdaq anticipates filing rule amendments to accommodate the new T+2 settlement cycle later in 2016, and fully implementing T+2 settlement in the third quarter of 2017. Interested parties can submit comments prior to September 30, 2016.

ARTICLE BY Peter Rivas of Jones Walker LLP

Fair Pay and Safe Workplaces Final Rule Presents Challenges to Government Contractors

Last week, the FAR Council released its Final Rule implementing President Obama’s 2014 Fair Pay and Safe Workplaces Executive Order. At the same time, the U.S. Department of Labor released its Final Guidance on the rule. Contractors need to take action immediately—the Final Rule goes into effect on October 25, 2016.

The proposed rule was issued back in May of 2015 and there has been lots written about it (and more than 10,000 comments and responses submitted). In today’s post, we highlight some of the requirements that may present challenges to contractors. Remember, once the rule takes effect, contractors will be required to report certain details about their labor law violations.

Public Disclosure of Labor Law Violations

Actually, contractors will be required to disclose violations of 14 federal labor laws and executive orders and state equivalents. Those laws range from the Fair Labor Standards Act and the Occupational Safety and Health Act to the Service Contract Act, the Davis Bacon Act and the Family and Medical Leave Act. The E.O.s include E.O. 13658 (Establishing a Minimum Wage for Contractors) and E.O. 1124 (Equal Employment Opportunity). The Final Rule also requires contractors to update their reports every six months. And, all disclosures under the new rule will be public.

Phase-In Periods

That’s probably one of the main takeaways here—the rule will be “phased in” over time. Starting on October 25, 2016, the disclosure requirements will become effective as to prime contracts valued at $50 million or more. By April 25, 2017, those requirements will apply to prime contracts valued at $500,000 or more. Subcontracts are not covered by the rule until October 25, 2017. Initially, the disclosure rules only will look back one year, but that “look back” period will stretch to three years by October 25, 2018.

Paycheck Transparency and Arbitration Restrictions

Starting on January 1, 2017, the “paycheck transparency” provisions take effect. Among other things, starting in 2017, contractors will be required to provide notices to workers about their status as independent contractors and whether they are exempt from overtime pay. Those notices will be particularly problematic for contractors who have not previously focused on proper classification and for all contractors in light of new overtime regulations and DOL’s increased attention to alleged worker misclassifications.

Subcontractor Reporting Directly to DOL

The Final Rule includes one significant change from the proposed rule and requires subcontractors to report directly to the Department of Labor rather than to the prime contractor. The rule also includes a contorted pathway for consideration of subcontractors’ disclosed violations, bouncing from DOL back to the sub and then up to the prime and then to the contracting officer. It remains to be seen how that process will work and if it will work efficiently.

Reporting Does Not Extend to Affiliates

The text of the Final Rule makes it clear that the reporting requirements do not extend to corporate parents, subsidiaries or affiliated companies. Instead, it is limited to the contracting party only.

Perhaps it is a silver lining for prime contractors that they will not be required to report on their subcontractors’ and their own affiliates’ labor law violations. But the new rules contain many new requirements and contractors should get ready now for the implementation to begin on October 25, 2016.

Proposed Rule to Benefit Certain Immigrant Startup Entrepreneurs

Qualified applicants would be granted parole in United States for up to five years.

On August 26, 2016, US Citizenship and Immigration Services (USCIS) published an advance copy of a proposed rule that would extend discretionary parole (temporary permission to be in the United States) to certain international entrepreneurs to allow them to establish new businesses in the United States.

“America’s economy has long benefitted from the contributions of immigrant entrepreneurs, from Main Street to Silicon Valley,” said USCIS Director León Rodríguez. “This proposed rule, when finalized, will help our economy grow by expanding immigration options for foreign entrepreneurs who meet certain criteria for creating jobs, attracting investment, and generating revenue in the US.”

The rule is expected to be published in the Federal Register on August 31, 2016, after which the public will be invited to comment.

Under the proposed rule, qualified applicants would be granted parole in the United States on a discretionary basis if they can demonstrate that

the startup entity was recently formed (within the three years preceding the date of the filing of the initial parole application;
the entrepreneur applicant is “well-positioned to advance the entity’s business” (as demonstrated by at least 15% ownership and an active and central role in the operations and future growth of the entity); and
the entrepreneur applicant can further validate the entity’s substantial potential for rapid growth and job creation through investments by established US investors such as venture capital firms, angel investors or startup accelerators, government grants, or certain alternative criteria.

Much like the E-1 and E-2 visa classification, passive investors will not qualify under the proposed rule.

No more than three entrepreneurs may receive parole with respect to any one qualifying entity. Qualified applicants, their spouses, and minor unmarried children can be given a discretionary grant of parole initially lasting up to two years. The spouse would also be eligible for employment authorization. Finally, eligible entrepreneurs (and family members) may be considered for “re-parole” for an additional period of up to three years if they can demonstrate that their entities have shown potential for rapid grown and job creation through additional investment, revenue generation, and creation of at least 10 full-time jobs for US workers.

ARTICLE BY Eleanor Pelta & Eric S. Bord of Morgan, Lewis & Bockius LLP

China’s Quantum Cryptography: Tales from (Quantum) Crypt

The dream of hack-proof communication just got a little closer to reality. On August 16, 2016, China launched the world’s first “quantum satellite,” a project the Chinese government hopes will enable it to build a communication system incapable of being hacked. Such a system, if perfected, would allow for encrypted communications between any two devices with absolute certainty that the encryption could not be broken, and with a built-in mechanism for alerting the sender/receiver if someone tried.If you are interested in truly understanding the mechanics of quantum cryptography, I would highly recommend the article “How Quantum Cryptography Works.” For the purpose of this post, a very basic explanation is as follows:

In order to encrypt a two way communication, the sending party (who we will call “Alice”) typically encodes a message using a key and sends the message to the receiving party (who we will call “Bob”), who then decrypts the message using the same key. Since modern technology makes it possible to engineer almost unbreakable keys, the best way for an eavesdropper (who we will call “Eve”) to access the message is to find the key itself, which is vulnerable because it also needs to be communicated between Alice and Bob, but can’t itself be encrypted, or else Bob won’t be able to use it.

Quantum cryptography would allow Bob and Alice to use a new key for every message AND guarantee that if Eve tries to intercept the key, they will know. Quantum entanglement is a physical phenomenon that can cause certain particles to become “entangled” such that a change in one will elicit a predictable change in the other, no matter how far apart the entangled particles are, and without any measurable (by current scientific standards) communication between them. If Alice and Bob share entangled particles, Alice can transmit the information for a new key to Bob for every communication by altering the directional spin of her particles, which in turn will alter the spin of Bob’s particles. A complicated process of measuring particle spin and cross-checking information between Alice and Bob (more fully explained in the article linked to above) is then used to generate the key.

Since so far as science is currently aware there is nothing “communicated” between the entangled particles, there is nothing for Eve to intercept unless she can actually access Bob’s particles. Meanwhile, Heisenberg’s uncertainty principle states that anytime the spin of one of these particles is measured, the very act of measuring it changes the spin of that particle. This means that if Eve does manage to physically access Bob’s entangled particles and measures them to try and get Alice’s key before passing the particles back to Bob, Bob will know the particles were intercepted because the key he thinks he got from Alice won’t work to unlock Alice’s message after he and Alice cross-check their information, since Eve’s measuring of Bob’s particles caused the spin of those particles to change. Furthermore, since Eve is not able to cross-check her information with Alice, even if she is able to listen to Bob and Alice cross-checking their information, Eve will not be able to use her information to formulate the correct key to decode Alice’s message.

The ability to send completely secure messages between any two points has myriad applications for data security. From a commercial standpoint, it could mean the ability for enterprises to remote access data without fear of interception. It could also mean an increase in the security of customer information (especially information that is legally required to be protected, such as personally identifiable information) and a corresponding decrease in the risk of a security breach that might result in damage to a company’s brand, increased compliance costs, or potential litigation awards and expenses. For consumers, it could mean the ability to communicate private information securely in an age where so many online transactions require the sending of sensitive information over the internet.

More troubling (or liberating, depending on your point of view) are the challenges quantum cryptography poses for law enforcement and national security. Agencies such as the CIA, FBI, and NSA currently depend on access to third party data networks, such as e-mail clients and telecommunication companies, for a large part of their data collection and monitoring activities. Under the “third-party doctrine” when Alice sends a message to Bob, if a copy of that message is kept by the medium they use to communicate (e.g. by Alice’s e-mail client), a government agency can request a copy of that information directly from Alice’s e-mail client without needing to get a warrant, and without telling Alice or Bob about the request. Quantum cryptography could allow Alice to send an encrypted message to Bob such that, even if a government agency gets a copy of the message itself from Alice’s e-mail client, they will not be able to decrypt it without help from either Alice or Bob.

Quantum cryptography still has a long way to go before it lives up to its promise, and there will almost certainly be bumps along the way. Yet, if the Chinese satellite launch does kick start the quantum cryptography revolution, commercial enterprises, consumers, governments, hackers, and lawyers alike will need to find ways to respond to the new challenges it creates.

ARTICLE BY Adam Waks of Proskauer Rose LLP

Made in the USA (For the Most Part)

Newspaper headlines report a new economic trend—manufacturing is returning to the United States. The country’s industrial production grew by 0.7 percent in July, its biggest jump since November 2014. This number represents everything made by factories, mines, and utilities. Before companies start slapping “Made in the USA” labels on their wares, they need to make sure they are familiar with the legal requirements to do so.

The Federal Trade Commission (the FTC) monitors the marketplace and aims to keep businesses from misleading consumers. Within the FTC’s jurisdiction is regulating “Made in the USA” claims.

If a product is labeled as “Made in the USA,” without any qualification, it must be “all or virtually all” made in the United States. “[A]ll significant parts and processing that go into the product must be of U.S. origin. That is, the product should contain no – or negligible – foreign content.” The FTC contemplates the site of final assembly or processing, the proportion of manufacturing costs paid to the U.S., and how detached the foreign material is from the finished product. For many businesses, this standard can be hard, if not impossible, to meet.

Since January 2015, the FTC has issued 46 letters to companies asserting misleading U.S. origin claims on a wide range of products, such as cookware, snow blowers, auto parts and pet products.

For example, the FTC recently determined that Shinola—a Detroit-based manufacturer of high-end watches, bicycles, and leather goods—did not meet it. Shinola advertises its products with the slogans “Built in the USA” and “Built in Detroit.” But in June of this year, the FTC called this labeling misleading because “100 percent of the cost of materials used to make certain watches . . . [and] more than 70 percent of the cost of the materials used to make certain belts” goes to imported materials. For example, Shinola’s watches incorporate Swiss-made timekeeping components.

Shinola’s founder had a good reason for why his company incorporated foreign parts: many of the components are unavailable in the U.S. The components are imported to Detroit where Shinola’s 400 employees assemble watches in the company’s factory. The FTC, however, applied its “net impression” analysis and determined that Shinola’s slogans contradict reality. Shinola’s advertisements will now read “Built in Detroit using Swiss and Imported Parts.”

In light of the FTC’s stance on U.S. origin claims, companies should follow FTC decisions and exercise caution when saying “Made in the USA.” There is no bright line rule for whether a product is “all or virtually all” made in the USA. Companies should consider how their products fit within the FTC’s framework and only then decide whether their merchandise has, according to the FTC, been “Made in the USA.”

ARTICLE BY Brittany Robbins of Schiff Hardin LLP

Self-Driving Ride Sharing Cars on Road in 2016 (!)

You know how flying cars, jet packs and things like that always seem way off into the future? Many feel the same about self-driving cars being on the road in the United States. However, Volvo and Uber are out to prove them wrong. As the Automotive News reported, the existing vehicles plus some Uber modifications “will enable the seven-seat SUV to drive itself…” Wow!

Pittsburgh gets to be the guinea pig for this project. Who had Pittsburgh high on its list of locations for self-driving cars to premiere? Volvo developed its self-driving hardware and software at its Pittsburgh tech center, so the location makes some sense. As reported all over, Uber will put two employees in the front seats when the vehicles debut. Volvo will provide tech support. These vehicles reportedly could be on the road in a matter of weeks – by the time you read this they could be rolling out.

Of course, “self-driving” with two employees in the front seat is not quite autonomous. Volvo is working toward a new version of its XC90 to enable level 4 autonomy, which still requires a driver in the driver’s seat. Consequently, while we are not quite at the moment of having the “Johnny Cab” found in Total Recall, before the end of the year, the automotive industry looks to be one large step closer.

ARTICLE BY Jeffrey A. Soble of Foley & Lardner LLP

EEOC Transgender Case, New York City Labor Peace Agreements, Parental Leave: Employment Law This Week – August 29, 2016 [VIDEO]

EEOC Loses Transgender Case in Michigan

Our top story: An employer wins a landmark case after firing a transgender employee. A funeral home in Michigan decided to terminate its director after he notified the business that he would be transitioning from male to female. The U.S. Equal Employment Opportunity Commission (EEOC) filed suit. On a motion to dismiss, a U.S. district court held that Title VII does not prohibit discrimination on the basis of transgender status or gender identity but allowed the EEOC to pursue a claim for sex stereotyping. The funeral home argued that it was protected under the Religious Freedom Restoration Act (RFRA), and the district court agreed, granting the employer’s motion for summary judgment.

“Once the employer is able to prove that they are entitled to a defense under the RFRA, the EEOC has a burden of not just establishing that the purpose of Title VII is a compelling government interest, but it also has to show that the means and application of Title VII was done in the least burdensome way possible. The EEOC failed to address this point in their briefing, and also failed to examine whether this was the least restrictive, or whether there was an alternative, way to enforce Title VII against this employer. . . . In order to be eligible to invoke the RFRA, an employer has to be a private, closely held corporation and cannot be a publicly traded corporation. Secondly, the RFRA can only be invoked if the party suing the employer is the government or a government agency. And third, if the employer is a government itself, they can’t invoke that they have a religion, and therefore the RFRA is not applicable.”

New York City Mandates “Labor Peace” Agreements

New York City is trying to force certain employers to sign “labor peace” agreements with unions. Mayor Bill de Blasio has signed an executive order mandating that a property developer receiving at least $1 million in “Financial Assistance” require its large retail and food service tenants to accept “Labor Peace Agreements.” These agreements would prohibit the companies from opposing union organization and provide what some consider to be affirmative support and assistance to unions. City Development Projects that were authorized or received “Financial Assistance” before July 14, 2016, are exempt from this order.

Lawmakers Urge Rejection of EEOC’s Pay Data Proposal

Senators ask for a halt to the EEOC’s pay data proposal. Three Republican senators have sent a letter to the Office of Management and Budget asking them to shut down a recent proposal from the EEOC. The proposal would expand pay data collection and require employers to categorize hours worked by sex, ethnicity, and race. The lawmakers argue that this kind of data collection would waste time and put significant new burdens on employers.

Parental Leave Requests Increase as School Year Starts

Parental leave requests are on the rise as kids head back to school. An increasing number of states now require that businesses grant unpaid leave to employees for school-related events and activities that happen during the workday. These laws apply to private employers in Washington, D.C., and in such states as California and Massachusetts. As the school year begins, employers will likely see more requests for parental leave and should consider checking the laws in their states to make sure they’re in compliance.

Tip of the Week

Finally, it’s time for our Tip of the Week. Ann Morris, Partner at Finn Partners, is here with some advice on developing a communications plan before a crisis.

ARTICLE BY George Carroll Whipple, III of Epstein Becker & Green, P.C.

The National Law Forum

Grocery Manufacturers of America (GMA) and Vermont Agree to Drop GMO Lawsuit

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Considerations for Travel to Iran to Explore Relaxed Trade Opportunities

Travel to Iran by US Persons Is Permitted

US State Department Warning for Travel to Iran

Loss of Visa Waiver Privileges for Entry into the United States by Non-US Citizens

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Join LMA at their Legal Marketing Technology Conference, October 5-6 in San Francisco

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Nasdaq Makes Preparations to Shorten Settlement Cycle for Securities Transactions from T+3 to T+2

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Fair Pay and Safe Workplaces Final Rule Presents Challenges to Government Contractors