Supreme Court Rules Public Sector Union Agency Fees Still Alive

The U.S. Supreme Court was equally divided 4-to-4 on a case that asked the Justices whether to overturn long-established law that allows a public sector union to charge an agency or service fee to those employees who choose not to join the union. With the Court equally split, the lower court’s decision is automatically affirmed, and public sector unions can continue to charge agency fees to employees who do not join the union.

Overturning Abood Appeared A Real Possibility

In the 1977 Abood v. Detroit Board of Education decision, the Supreme Court ruled that unions could charge an agency fee to public employees who chose not to join the union to cover the union’s costs to negotiate a contract that covers all the public employees. For over thirty years, that has been settled law. In 2014, however, the Court suggested it might be willing to overturn Abood, questioning its analysis on several grounds, including whether a mandatory agency fee violates a non-union member’s First Amendment right to free speech.

That apparent willingness to overturn Abood set up the First Amendment challenge to public union agency fees in this term’s case of Friedrichs v. California Teachers Association. At the oral argument in Friedrichs in January, the Court’s more conservative Justices appeared ready to overrule Abood. Even the four more liberal Justices appeared to concede that the First Amendment argument may be tough to uphold but instead focused on the importance of not overturning prior rulings unless there is a compelling reason to do so. The long-standing Abood precedent appeared in jeopardy.

Justice Scalia’s Death Creates Stalemate 

Justice Antonin Scalia’s unexpected death in February left the Court at a 4-to-4 stalemate in Friedrichs. With the even split, the Ninth Circuit’s ruling applying Abood stands.

Opponents of unions and the Abood decision will have to wait for another case to work its way through the judicial system to raise the issue for consideration by a future Court. Of course, depending on who fills Justice Scalia’s vacancy, the majority of Justices may no longer have an appetite to reconsider Abood. We’ll all have to wait and see. In the meantime, public sector unions may continue to charge agency fees to those employees not paying union dues.

Article By Jason S. Ritchie of  Holland & Hart LLP

Copyright Holland & Hart LLP 1995-2016.

Ohio v. Sierra Club: The Integrity of the Clean Air Act

EPAYesterday, the Supreme Court of the United States announced it will not grant Certiorari in Ohio v. Sierra Club, et al. In this case, the Sixth Circuit found an area must adopt required pollution-control measures before the EPA can designate it as having satisfied the law’s health-based pollution standards.

In 1997, the EPA created the National Ambient Air Quality Standards of fine particulate matter in the air.  When the EPA created these standards, regions were designated as having met, or not met the air quality standards.  In order to meet the standards, states were required to adopt “reasonable measures and technologies” to reduce the pollution in the problematic areas.  In 2011, the EPA deemed Ohio to have met the appropriate standards because the air quality had improved. Ohio, however, had never created a pollution regulatory plan as the Clean Air Act required. In response, the Sierra Club filed suit alleging the EPA acted illegally by designated the areas as having met air quality standards.

Creating a pollution regulatory plan is crucial, according to Sanjay Narayan, the managing attorney for the Sierra Club on the case.  Before 1990, the Clean Air Act had no requirement that states produce an implementation plan.  According to Narayan, the expectation was “we [the EPA] don’t care how you get there, we aren’t going to tell you how to get there, we’re just going to check in at the deadline and expect you to have made it. And what happened was that the vast majority of the states did not meet the deadline.”

Narayan describes the implementation plan as “a show your math” requirement. This has been very useful in helping states create lasting change in their air quality–by creating a regulatory framework that shows how they can reduce air pollution, the states are more likely to meet their deadline.  Narayan points out “It’s also useful for other areas to know what worked and what successful areas did.  Here’s what turned out to be cost effective, that kind of record is tremendously useful as we move forward on what was meant to be a nation-wide campaign for healthy air for the public.”

In  Ohio v. Sierra Club, there are a few details to consider.  Pollution decreased, and that’s the goal.  However, it might not be that simple.  In the years preceding Ohio’s drop in air pollution, the economy crashed.  Narayan draws comparisons to the Beijing Olympics, saying, “When people aren’t running their [industrial] plants for economic reasons, the air cleans up a little bit.  But it turns around quickly once you turn the plants back on.”  However, Ohio did meet the standard, and according to Narayan, to comply with the Clean Air Act they’d simply need to go back and show their work.  He says, “They did meet the standard, and they say they have all the controls they need in place.  There is a procedural step that Ohio hasn’t taken, and it shouldn’t be hard for Ohio to take it.”

The Sixth Circuit decision that currently stands requires Ohio to take those regulatory steps. In the current case, the Sixth Circuit agreed that the entire portion of the Clean Air Act must be followed, and that it wasn’t enough for Ohio to have simply met the standards.  Ohio has appealed to the Supreme Court.

Narayan says, “It’s about the integrity of the clean air act.”  These requirements are crucial in ensuring the air gets cleaned up in a timely manner.  Narayan says, Decades of experience has shown us that without these requirements, states miss deadlines, air pollution lasts for much longer than it should and the public really suffers.  The pollution sends kids to the hospital with asthma, it creates respiratory disease in the elderly-delay is a disaster for public health.”

Article By Eilene Spear & Nicole Cudiamat Minnis of The National Law Review / The National Law Forum LLC
Copyright ©2016 National Law Forum, LLC

California Employers: New Poster to be Posted April 1, 2016

Did you recently update your workplace posters? Time to do it again.

In California, all employers have obligations to satisfy workplace posting, such as posting information related to wages, hours and working conditions. The workplace posters must be placed in an area frequented by employees where these posters may be easily read during the workday.

As a result of new amended regulations pertaining to the California Fair Employment and Housing Act (“FEHA”) going into effect on April 1, 2016, certain covered employers must post a new poster on April 1, 2016. Employers with 5 or more employees (full-time or part-time) are covered by the FEHA and must post a specific notice, which replaces Pregnancy Disability Leave (“PDL”) Notice A. This new poster, titled “Your Rights and Obligations as a Pregnant Employee,” provides clarifications of the PDL, including, but not limited to, the following:

  • Eligible employees are entitled up to four months of leave per pregnancy, and not per year;

  • The four months means the working days the employee would normally work in one-third of a year or 17 1/3 weeks; and

  • PDL does not need to be taken all at once, but can be taken on an as-needed basis as required by the employee’s health care provider.

For a copy of this poster, click here.

Under the California Code of Regulations, “[a]ny FEHA-covered employer whose work force at any facility or establishment is comprised of 10% or more persons whose spoken language is not English shall translate the notice into every language that is spoken by at least 10 percent of the workforce.”  The Spanish version of the foregoing notice should be available soon here.

Any time employers are required to update their posters and/or new (or amended) regulations are issued, employers should take the opportunity to ensure their workplace posters and their employee handbooks and policies are up to date and compliant.

Article By Pascal Benyamini of Drinker Biddle & Reath LLP

©2016 Drinker Biddle & Reath LLP. All Rights Reserved

Superman Breyer v. Batman Lourie Battle in Sequenom Petition for Cert.

This is an amplification of my last post on the Sequenom petition for cert. in Sequenom v. Ariosa. I have been arguing for some years that the patent world will never be at rest where diagnostic claims are concerned until the patent eligibility of a simple “If A, then B” claim is addressed by the Fed. Cir. and/or the Supreme Court.

This is the type of claim criticized by Justices Breyer, Souter and Stevens in the “Metabolite Labs dissent” of 2006, when the Court declined to decide the patent-eligibility of a method of detecting a deficiency of cobalamin or folate by assaying a body fluid for an elevated level of homocysteine and correlating the elevated level with a cobalamin or homocysteine deficiency.” Justice Breyer just called the claim a law of nature with a mental step.

Fast forward to 2012 and the Mayo decision (132 S.Ct. 1289), and the Supreme Court invalidated an awkwardly drafted claim that I will re-write here as a method of medical treatment claim:

A method of treating an immunoregulatory disorder by administering a [known drug] so that the metabolite levels of said drug in the blood are between 1 and 10 um/l. (I made up the concentrations, but they represent, on the low side, minimal acceptable efficacy and, on the high side, unacceptable side effects. This is what the Court viewed as a natural phenomenon or correlation).

The Alice decision led the Court to the “Mayo Rule,” that a claim reciting a natural law, phenomenon or abstract idea had to be inspected to see if, in combination with the additional steps, it contained a further inventive concept that would render the claim patent-eligible under s. 101. Little guidance has been provided by the courts or the PTO as to how this rule should be applied in the case of life science claims, particularly to diagnostic claims. (Dicta in Mayo suggested that the Court did not view the claim as directed to a diagnostic method.)

Enter Arisoa. The Fed. Cir. held that the Mayo Rule rendered all the appealed claims patent-ineligible as directed to a natural phenomenon combined with well-known laboratory techniques. And, in fact, most of the appealed claims are broad. Here is claim 1 of US 6,258,540:

  1. A method for detecting a paternally inherited[cffDNA] …which method comprises amplifying a paternally inherited nucleic acid of fetal origin from a serum or plasma sample [from a pregnant female] and detecting the presence of cffDNA in the sample.

That’s it. In an earlier post, I noted that only claim 21 recites that a diagnostic test is carried out of the amplified cffDNA. The final step of this claim reads: “providing a [prenatal] diagnosis based on the presence and/or quantity and/or sequence of the foetal nucleic acid.”

The Federal Circuit opinion below noted that this claim was on appeal but did not mention it again in its opinion. But, in Sequenom’s petition it is the only claim that is reproduced in full. Sequenom states that “Claim 21 situates [the steps of amplification and detection of cffDNA] within a larger diagnostic method that up-ended conventional practice.”

Sequenon knew both that a claim to cffDNA in maternal blood was unpatentable as a natural phenomenon. The isolated and purified cffDNA obtained after amplification and detection is a patent-ineligible natural product thanks to Myriad. So Sequenom’s decided that its best approach was to argue that the isolation and detection steps where not conventional because they had never previously been used to isolate and detect the target biomarker, cffDNA. So the Question posed to the Supreme Court might have been: “Is a method directed to isolating a biomarker from a patient sample where it had not been known by the art to occur, patent-eligible under s. 101?” But that is not exactly how Sequenom saw it in its petition, when it wrote that the Question Presented is:

“Whether a novel method is patent-eligible where; (1) a researcher is the first to discover a natural phenomenon; (2) that unique knowledge motivates him to apply a new combination of known techniques to that discovery, and (3) he hereby achieves a previously impossible result without preempting other uses of that discovery.”

The “Question” is more difficult to interpret than many claims, and raises more questions than it answers. Why does the method have to be novel to meet the requirements of s. 101? What is the “natural phenomenon”? But these are minor quibbles that Judge Breyer seems to have answered to his own satisfaction. In other words, any diagnostic test will be based on the discovery of a natural phenomenon. In this case it is not the correlation between cffDNA and any pathological state, it is the existence of cffDNA in maternal blood. Remember, only claim 21 recites carrying out a diagnostic assay based on the cffDNA, but the claim does not recite the condition that is detected.

To continue, the “unique knowledge” [of cff DNA in maternal blood] motivates researcher to apply a new combination of known techniques to that discovery. But the only conceivable difference between the known techniques used to amplify and detect cffDNA and the known techniques to measure elevated homocysteine, does not lie in the analytic techniques but in the marker that is being detected or measured. In other words, the known techniques are in “new combination” because of the marker to which they are applied.

The last factor in the Sequenom Question requires the researcher to achieve a previously impossible result without preempting other uses of the discovery. This can be no more than an tautological attempt to save the claims that do not recite carrying out a diagnostic test. But what is the impossibility that has been overcome? The previously impossible result can only be a blood test that can yield information about the state of the fetus. And all practitioners soon learn the danger of labeling the results of an invention as previously impossible.

But doesn’t any new diagnostic test achieve a result that is “impossible” before it was discovered? To come full circle, it was surely “impossible” to predict the likelihood of a man’s developing prostate cancer before the PSA assay was discovered – e.g., before it was discovered that PSA was a fairly reliable biomarker for imminent or present prostate cancer. (And there were other uses for the homocysteine assay as well – at least in 2006, lack of preemption would not have saved that claim from Justice Breyer.)

Until the recognition of the significance of a natural correlation by a researcher is given weight as an “unconventional step” per se, the relentless degradation of patent claims for both diagnostic methods and methods of medical treatment [remember my Mayo claim, above] will continue. That’s why Judges Lourie and Moore are my current superheroes, since, in their Ariosa concurrence, they wrote that “the patent’s claims merely ‘rely on or operate by, but do not recite [claim?] a natural phenomenon…and that barring such inventions under s. 101 would mean that ‘nothing in the physical universe would be patent eligible.’” Sequenom wants the Supreme Court to reverse on the basis that the Fed. Cir. is applying the Mayo Rule too broadly. I don’t think they are wrong. I just don’t like the condition of the horse they rode in on.

Article By Warren Woessner of Schwegman, Lundberg & Woessner, P.A.
© 2016 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

Olympus to Pay $632.2 Million to Resolve Allegations of Kickbacks

Olympus Corporation of the Americas, the United States’ largest distributor of endoscopes and related medical equipment, recently agreed to pay $623.2 million to resolve criminal charges and civil claims, according to a United States Department of Justice (DOJ) press release on March 1, 2016. The settlement is a result of a qui tam action alleging violations of the Federal False Claims Act (FCA), Federal Anti-Kickback Statute (AKS), and analogous state statutes for paying kickbacks to physicians and hospitals to induce the purchase of Olympus medical and surgical equipment. Olympus was required to enter into a Corporate Integrity Agreement and a Deferred Prosecution Agreement that, among other things, includes an executive financial recoupment program that will cause company executives to forfeit certain compensation if they are associated with future misconduct.

The relator and government alleged that, because the Olympus equipment used for treatment was purchased as a result of a kickback, Olympus caused the physicians and hospitals to file false claims for treatment under Medicare, TRICARE, and Medicaid in violation of the FCA and state law. The kickbacks themselves were prohibited under the AKS. Both federal laws have separate penalties that were combined in this settlement, which is a reminder to the health care industry that liability under the FCA and AKS can reach staggering amounts.

What Providers Should Know

  • If an employee raises a compliance concern, investigate and appropriately address the concern. Do not retaliate. While the Olympus relator was a former Chief Compliance Officer with a long employment history at Olympus, individuals at all levels and experiences may have insight into company practices sufficient to identify areas of compliance vulnerability (thereby later arming themselves with information sufficient to file a qui tam action should the company choose to ignore individuals’ concerns or otherwise fail to correct non-compliance).

  • Prohibited remuneration under the AKS may take many forms. For instance, the remuneration that Olympus allegedly provided to physicians and hospitals included free use of medical equipment, unprotected discounts, payments disguised as grants for educational or research programs, payments to physicians in excess of fair market value for speaking engagements, vacations, meals, and entertainment.

  • If referring health care providers receive remuneration, the compensation arrangements should be carefully structured to meet applicable AKS safe harbors. Providing remuneration in the form of medical equipment discounts, leases or payments for speaking engagements may increase a company’s exposure under the AKS. Where such remuneration is provided, it is best to structure the arrangement with relevant AKS safe harbor protection.

  • An effective and robust compliance program is essential. In addition to allegations of kickbacks, the federal government also focused on Olympus’ alleged lack of appropriate training, knowledgeable compliance staff, and compliance programs to prevent and identify violations of the AKS and other federal health care laws.

Background and Alleged Misconduct – Kickbacks and More Kickbacks

The relator in the qui tam action was an 18-year employee of Olympus and was appointed to be Chief Compliance Officer of Olympus in 2009. Prior to 2009, Olympus had no compliance department. As the Chief Compliance Officer, the relator alleged that the he began to try to “eliminate the illegal and systemic practices” described below, but was met with inaction, retaliation, harassment, and severe resistance. In March 2010, Olympus relieved the relator of all his compliance duties and months later terminated his employment. The relator thereafter filed a qui tam action against Olympus.

The relator and government alleged that, from 2006 to 2011, Olympus induced physicians and hospitals to purchase Olympus endoscopes and other medical and surgical equipment by way of the following:

  • Providing free medical equipment and discounts to hospitals and physicians to induce them to purchase surgical consumables produced by Olympus.

  • Paying sales reps stipends of $2,300 that were meant to be used to entertain physicians.

  • Paying physicians tens of thousands and as much as $100,000 per year for consulting services, often without written agreements.

  • Providing physicians and hospitals with millions of dollars worth of free medical equipment, categorized as “permanent loans,” “leases,” “promotions,” “demo units,” “samples,” and “trade-ins.”  In one case, the relator and the government alleged that Olympus provided a physician with approximately $400,000 in endoscopes and other equipment to use without charge in the physician’s private practice, allegedly resulting in one hospital’s decision to purchase millions of dollars of Olympus products.

  • Leasing products to physicians on a debt forgiveness program under which Olympus wrote off debt if the physician entered into a new lease for new products.

  • Paying physicians honorariums for speaking engagements, often without speaker agreements.

  • Paying out grants of hundreds of thousands of dollars from a grant committee made up entirely of sales reps, marketing people, and customer relation personnel.

  • Paying for physicians’ golf trips and vacations, including week-long trips to Japan with sightseeing excursions and lavish entertainment included.

Relator alleged that, because of the aforementioned conduct, Olympus facilitated more than $600 million in sales, earning more than $230 million in gross profits.

Agreements to the Olympus Settlement

The Olympus settlement contains three written agreements: a Civil Settlement Agreement, a Deferred Prosecution Agreement (DPA), and a Corporate Integrity Agreement (CIA). Collectively, these agreements reiterate the monetary and non-monetary consequences to settling allegations of kickbacks and also provide invaluable insight into the government’s view of an effective compliance program.

  • Civil Settlement Agreement. To settle civil claims, Olympus agreed to pay the federal government and affected state governments $306 million total plus interest, with $263.16 million going to the federal government and the remaining $42.84 million to be divided among the states. The realtor was awarded $43.4 million from the federal government’s share. Olympus also agreed to enter into a CIA with the government for five years as part of the civil settlement agreement.

  • Deferred Prosecution Agreement. The DPA indicates that the federal government will file on, or shortly after, the effective date of the DPA a criminal complaint charging Olympus with conspiracy to commit violations of the AKS. Under the DPA, Olympus agreed to pay the federal government $306 million plus interest in exchange for a three-year deferral of criminal prosecution, provided Olympus takes specific remedial actions. Such remedial actions include: (i) the development and implementation of an effective corporate compliance program; (ii) retention of an independent monitor to evaluate and monitor compliance with the DPA and review Olympus’ procedures and practices related to tracking loaned equipment, selecting and paying consultants, considering and awarding grants, and training and education programs; (iii) performance of specific duties by Olympus’ Chief Compliance Officer; and, (iv) enhancement and maintenance of existing training and education programs for all sales, marketing, legal, and compliance employees and senior executives. The DPA also includes an executive financial recoupment program that will cause company executives to forfeit certain compensation if they are associated with future misconduct. If Olympus fulfills its obligations, the government will not thereafter pursue a criminal conviction and will seek dismissal of the criminal complaint the federal government filed in connection with the alleged conduct.

  • Corporate Integrity Agreement. Olympus entered into a five year CIA with the government to review and approve its compliance program, in exchange for the government’s promise not to seek exclusion of Olympus from Medicare, Medicaid, or TRICARE. The CIA sets forth many general obligations for Olympus to meet, including: (i) compliance responsibilities of specific Olympus employees and the board of directors; (ii) development and implementation of a health care compliance code of conduct and policies and procedures regarding the operation of Olympus’ compliance program; (iii) training and education programs; (iv) risk assessment and mitigation; and, (v) establishment of a mechanism, e.g., compliance hotline, to enable individuals to disclose any identified issues or questions with compliance

The CIA further directs Olympus to meet the following specific requirements related to the alleged misconduct:

  1. Consulting arrangements. Olympus must require all consultants who are health care professionals to enter written agreements describing the scope of work to be performed, the fees to be paid, and compliance obligations for the consultant. Olympus will pay consultants according to a centrally managed, pre-set rate structure that is determined based on a fair-market value analysis.

  2. Grants and Charitable Contributions. Olympus must establish a grants management system that will be the exclusive mechanism through which requestors may request or be awarded grants.

  3. Management of Field Assets. Olympus must establish a system to manage medical and surgical equipment and products provided to health care professionals on a temporary basis.

  4. Review of Travel Expenses. Olympus must establish processes for the review and approval of travel and related expenses for health care professionals.

Article By Jennifer L. Evans, Dayna C. LaPlante, Ryan M. McAteer & Stephen M. Angelette
Polsinelli PC
© Polsinelli PC, Polsinelli LLP in California

Solazyme Becomes TerraVia, Shifts Focus To Food And Specialty Ingredients

On March 11, 2016, Solazyme announced a name change to reflect a new focus on food, nutrition, and specialty ingredients instead of biofuels. TerraVia™ (TerraVia), as Solazyme is now known, will create value in plant-based food through a transformational algae innovation platform. TerraVia will focus on developing AlgaVia® Whole Algae ingredients (lipid rich powder and protein) and AlgaWise™ Algae Oils, as well as consumer food products that currently include Thrive® Culinary Algae Oil. The Company will also focus on animal nutrition ingredients and personal care ingredients, including AlgaPur Oils. The fuels, industrial oils, and Encapso™ business previously run by Solazyme have been moved to a unit called Solazyme Industrials, which is likely to be sold off. This shift towards high-value, low volume product areas is not surprising given the current low oil prices that are hurting biofuel profits, and is a key component in the continued success of the biobased industry.

Article By Kathleen M. Roberts of Bergeson & Campbell, P.C.
©2016 Bergeson & Campbell, P.C.

Breaking: CPSC Obtains Record $15.45 Million Civil Penalty in Settlement Agreement with Gree

Consumer Product Safety Commission SealThis morning, the U.S. Consumer Product Safety Commission (CPSC) announced that it has obtained a record-breaking $15.45 million civil penalty in a settlement agreement with Gree Electric Appliances of China, Hong Kong Gree Electric Appliances Sales Co. of Hong Kong, and Gree USA Sales of California (Gree) over dehumidifiers sold under 13 different brand names.  This civil penalty amount shatters the largest previous amount levied by the CPSC against a company, $4.3 million.

The amount of this civil penalty—the maximum permitted under the Consumer Product Safety Act (CPSA)—is consistent with a series of recent remarks made by CPSC Chairman Elliot Kaye.  In 2015, Kaye remarked at the annual ICPHSO product safety conference that he was directing staff to seek significantly higher civil penalties against companies for violations of the CPSA.  Last month, at the 2016 ICPHSO conference in Washington, D.C., Kaye doubled down (literally) by stating that he wanted to see “double digit” civil penalties based on certain fact patterns as that is what Congress intended when it increased the civil penalty ceiling in the Consumer Product Safety Improvement Act of 2008 (CPSIA).

According to the settlement agreement, the CPSC alleged that Gree did the following: (1) knowingly failed to report a defect and unreasonable risk of serious injury to the CPSC immediately with dehumidifiers sold under thirteen brand names; (2) knowingly made misrepresentations to the CPSC; (3) sold dehumidifiers bearing the UL safety certification mark knowing that the dehumidifiers did not meet UL flammability standards.  The CPSC alleged further that Gree’s subject dehumidifiers had a defect that caused them to overheat, and, on occasion, catch fire, causing a purported $4.5 million in property damage.

Gree denied the CPSC’s allegations and also set forth in the settlement agreement that it voluntarily notified the Commission in connection with the dehumidifiers, carried out a voluntary recall in cooperation with the Commission and acted to reduce the potential risk of injury.

In addition to paying the $15.4 million civil penalty to settle the CPSC’s charges, Gree has agreed to implement a stringent compliance program to ensure future compliance with the CPSA.  Such compliance programs have become common elements in civil penalty settlement agreements.

The vote to approve the settlement agreement was 4-1 in favor, with Commissioner Ann Marie Buerkle voting against.   Although voting in favor of the agreement, Commissioner Joe Mohorovic issued a statement expressing reservation that the public facing documents do not reveal enough detail (in Mohorovic’s words the “compelling facts”) for the regulated community to draw lessons.   Mohorovic has expressed these same concerns previously.

Article By Matthew Cohen & Matthew R. Howsare of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
©1994-2016 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

Legislature Tries Again To Put Citizens United On California Ballot

Nearly two years ago, I wrote that the California Supreme Court had blocked an effort to include an advisory vote in the statewide ballot. Proposition 49 asked whether the United States Congress and California Legislature should approve an amendment to the U.S. Constitution overturning the United States Supreme Court decision in Citizens United v. Federal Election Commission, 130 S. Ct. 876 (2010).  Just after New Year’s Day, the California Supreme Court issued an opinion addressing the merits of the argument.  The Court concluded:

  • As a matter of state law, the Legislature has authority to conduct investigations by reasonable means to inform the exercise of its other powers;

  • Among those other powers are the power to petition for national constitutional conventions, ratify federal constitutional amendments, and call on Congress and other states to exercise their own federal article V powers (U.S. Const., art. 5);

  • Although neither constitutional text nor judicial precedent provide definitive answers to the question, long-standing historical practice among the states demonstrates a common understanding that legislatures may formally consult with and  seek nonbinding input from their constituents on matters relevant to the federal constitutional amendment process;

  • Nothing in the state Constitution prohibits the use of advisory questions to inform the Legislature’s exercise of its article V-related powers; and

  •  Applying deferential review, Proposition 49 is reasonably related to the exercise of those powers and thus constitutional.

Howard Jarvis Taxpayers Assn. v. Padilla, 62 Cal. 4th 486, 494 (2016).

Earlier this month, Senators Benjamin Allen and Mark Leno decided to take another run at putting an advisory vote on the ballot. They gutted SB 254, a bill amending the Streets and Highways Code, and inserted legislation calling a special statewide election to be consolidated with the November 8, 2016 general election.  At this special election, the voters will be asked to vote on the following “advisory” question:

Shall the Congress of the United States propose, and the California Legislature ratify, an amendment or amendments to the United States Constitution to overturn Citizens United v. Federal Election Commission (2010) 558 U.S. 310, and other applicable judicial precedents, to allow the full regulation or limitation of campaign contributions and spending, to ensure that all citizens, regardless of wealth, may express their views to one another, and to make clear that the rights protected by the United States Constitution are the rights of natural persons only?

When Governor Brown allowed Proposition 49 (SB 1272) to become law without his signature, he observed “we should not make it a habit to clutter our ballots with nonbinding measures as citizens rightfully assume that their votes are meant to have legal effect.”  (Letter to Members of Cal. State Senate, July 15, 2014.). Perhaps the same could be said of proxy statements.

Article By Keith Paul Bishop of Allen Matkins Leck Gamble Mallory & Natsis LLP
© 2010-2016 Allen Matkins Leck Gamble Mallory & Natsis LLP

U.S. Department of Labor Issues Final Rule Greatly Expanding Scope of Reportable “Persuader” Activities

DOLOn March 23, 2016, the U.S. Department of Labor (DOL) issued a final rule, first proposed in June 2011, requiring employers and their labor relations consultants, including law firms, to report to DOL any agreements pursuant to which the consultant undertakes activities with “an object directly or indirectly to persuade employees concerning their rights to organize and bargain collectively.” Reports are to be filed electronically and are subject to immediate public access. Failure to report is subject to criminal sanctions.

The new rule reverses a decades-old DOL interpretation of the “advice” exception to reporting requirements. Previously, if the agreement between the employer and consultant involved nothing more than the consultant providing the employer with materials or advice that the employer had the right to accept or reject, so long as the consultant had no direct contact with employees, no report was required.

The new rule requires an employer to report on Form LM-10 and consultants to report on Form LM-20 information relating to the scope of the agreement and fees paid for the provision of both direct and indirect persuader materials or activities.

The new rule narrows the “advice” exception to oral or written recommendations from the consultant regarding a decision or course of conduct by the employer including, for example, counseling a business about its plans to undertake a particular course of action, legal vulnerabilities and how they may be minimized, identification of unsettled areas of the law and representation of the employer in disputes or negotiations that may arise.

The greatly expanded definition of reportable persuader activities, provided the object is to directly or indirectly persuade employees concerning their rights to organize and bargain collectively, includes, among many other activities:

  • Planning, directing or coordinating activities undertaken by supervisors or other employer representatives with employees.

  • Providing persuader materials or communications to the employer in oral, electronic or written form for dissemination or distribution to employees, including drafting and revising of such materials. (The sale, rental or other use of “off the shelf” persuader materials not created for the particular employer is excluded, unless the consultant assists the employer in selecting materials).

  • Conducting a seminar for supervisors or other employer representatives if the seminar includes development of anti-union tactics and strategies.

  • Developing or implementing personnel policies or actions which have a direct or indirect object of persuading employees concerning their rights to organize and bargain collectively.

The rule is applicable to agreements and payments made on or after July 1, 2016. Legal challenges and an attempt to block enforcement of the new persuader rules are a certainty—the outcome is not.

Article By Thomas E. Obenberger of Michael Best & Friedrich LLP

© MICHAEL BEST & FRIEDRICH LLP

Choosing the Next Vice President [PODCAST]

Every election, months before an official candidate is nominated, the names of potential vice presidents are floated around. For each presidential candidate there are different factors to consider, and over the years the role of the vice president seems to have changed. This podcast, featuring Vincent C. Immel Professor of Law Joel K. Goldstein, will explore what the future holds for the candidates and for the office itself.

Corie:

I’m Corie Dugas. Thanks for joining us. We have Professor Joel Goldstein, the Vincent C. Immel Professor of Law and highly respected scholar on the Vice Presidency. Today we will explore what the future holds for the candidates and for the office itself. Welcome to the show Joel.

Joel:

Hi, Corie.

Corie:

Well to start things off, can you give the listeners a refresher on the important responsibilities of the vice president once elected?

Joel:

The constitution gives the vice president two responsibilities. He or she is the president of the Senate and is the first successor in case of a death, resignation, removal or disability of the president. But, in fact, that doesn’t really describe very well what the modern Vice President does. The Vice President rarely presides over the senate. Instead, ever since Walter Mondale was Vice President in 1977, the vice presidents become a highly important, engaged, involved member of the Executive Branch, who works closely with the president in the White House, is a close presidential advisor, and takes on assignments from the president.

Corie:

Ok, so now that things have sort of changed since Mondale, what makes a good vice president?

Joel:

It’s a difficult job because for a vice president to be successful, he has to have a good relationship with the president. He has to add something substantive to the administration that it needs, whether it’s the ability of a spokesperson, or as a diplomat or a congressional liaison. But, really a vice president has to be both a leader and a follower. A vice president has to be able to deal with world leaders and congressional leaders as an equal, but also has to be able to operate in a situation where he or she isn’t the decider; rather they’re implementing what somebody else has decided.

Corie:

 So we’re really amping up into the election season. In general, what are the presidential candidates that we have out there looking for in a potential vice president?

Joel:

The basic things that a presidential candidate looks for in a vice president is somebody at the least who hopefully can help them improve their chances of being elected, but who at least won’t hurt them. They don’t want the vice president to become a major drag on their candidacy. So there’s an elaborate vetting process that takes place to see, to examine the potential vice presidential candidates in detail. Find out everything about their lives. Joe Liebermann said that it was like having a colonoscopy without an anesthesia. So they do this to try and eliminate candidates who will have negative baggage that will hurt the ticket. But they usually are looking for somebody who could at least provide or who could hopefully provide some boost. Sometimes it’s a question of picking somebody who could help unify the party. Sometimes it’s helping them with a demographic where they’re weak or where they’re a part of the party or the constituency where the presidential candidate is weak.

Corie:

Are there any particular personality characteristics that you think are important for a vice candidate?

Joel:

Well vice presidential candidates I think needs to be presidential. There’ll be a debate of probably 90 minutes where the vice presidential candidates and if you’re a presidential candidate, you don’t want to be sitting watching that debate as your campaign goes down the tubes because people see that you’ve put somebody potentially a heartbeat away from the presidency who doesn’t belong there. Moreover, you want somebody who is presidential because who you choose as vice president is often sort of the first presidential decision that a presidential candidate makes. So it’s sometimes viewed as sort of a test on how good of a decision maker somebody is. The other thing you need in a vice presidential candidate is somebody who is a good follower. Somebody who will recognize that two greats they’re being given a plan, a script and they need to follow it. They’re not the person who gets to dictate strategy. They help implement a strategy that others have set.

Corie:

So, if the vice presidential candidates are followers, which seems that that is really important and that makes perfect sense, can they really be influential in the policy that’s presented in the campaign?

Joel:

Well they can be in some respects. I mean, they can be influential with the presidential candidate and his or her advisors to the extent that they’re respected by the presidential candidate. I mean for instance when Michael Dukakis chose Lloyd Benson, Dukakis and Dukakis’s top aides really grew to respect Benson a lot and sometimes Dukakis’s aids would even go to Benson and ask Benson to say things to Dukakis as a way to persuading him. But they also can be influential in the campaign, to the extent that they’re an effective sales person for the presidential candidate, to the extent that they are good at articulating themes that the campaign wants to get across. In 1960, when John Kennedy was running for president, he was attacked on the ground that he was Catholic. Lyndon Johnson very effectively went through the south and would talk about JFK’s war record and the war record of John F. Kennedy’s brother who was killed in World War II, and would say that when those young men went out to fight for their country, nobody asked what religion they were. And so a vice presidential candidate who is an effective messenger and an effective articulator of the themes that the campaign wants to get across can also be influential in the campaign.

Corie:

So you’ve listed a number of characteristics and given some great examples of some excellent vice presidential candidates and what they’ve helped the presidential candidates with. What do you think are some of the names that we will be hearing on the democratic ticket in the upcoming election?

Joel:

Well it’s always a bit unpredictable until you get closer, but I think some of the people that might be considered, especially if Secretary Clinton is the nominee, would be Secretary Castro, who is the Secretary of Housing and Urban Development, and Secretary Lopez, who is the Secretary of Labor – have both been widely mentioned. They are two candidates who are young – relatively new to the national scene, but are thought to be helpful in terms of mobilizing support among the Hispanic community. Senator Cory Booker from New Jersey is sort of a up and coming new member of the senate. Senator Ted Cain of Virginia was one of the ten finalists that then Senator Obama considered in 2008. He’s an influential senator from a potential swing state. Senator Sherrod brown from Ohio is another who, I think, Secretary Clinton might consider. Again, somebody who is well thought of by the more liberal wing from the Democratic Party also comes from Ohio. So I think those may be the people who will be considered on the democratic side.

Corie:

Is there any names that come to mind if Bernie Sanders moves forward as the nominee?

Joel:

Well I think that if Senator Sanders was the nominee, I think some of the same names. You would expect that he would try and strengthen himself in some of the areas where he’s been weaker. Let’s say some of the traditional democratic constituencies, African Americans, Hispanics –where he hasn’t run as well. He also would be somebody who, unlike Secretary Clinton, who doesn’t have perceived national security credential. So, he also would be looking for somebody stronger in that area. You know, where as in her case, she doesn’t really need to cover that.

Corie:

That makes a lot of sense. Is there anybody that you see potentially popping up on the Republican ticket?

Joel:

Well the Republican ticket a lot depends on who the nominee is. But one person who has been mentioned widely and who would be considered on the Republican side would be Governor Nikki Haley of South Carolina. She was the person chosen to give the response to President Obama’s State of the Union address in January. She’s supported Senator Rubio, which would mean if somebody other than Senator Rubio is the nominee she would be perceived as a bridge to that part of the party. Also is a woman and somebody who I think is perceived as an effective governor of South Carolina. She would be helpful in a race against Secretary Clinton. I think there could be some people from Donald Trump –said he would take a political insider and said Governor Haley would fit that bill. People like Senator John Thune from South Dakota or Senator John Corn from Texas might be sort of people who might be considered. It could be a long list and this point it is sort of unpredictable to say. There could some different dynamics that play out on the Republican Party that we have encountered in recent times.

Corie:

How will the naming of the Vice Presidential candidate, when we get there, change how the campaigns look?

Joel:

Well once you name one vice presidential candidate and then two vice presidential candidates, instead of the race becoming a competition between two people; it becomes a competition, in a way, between two couples. Particularly, if either of the running mates is a new face, there is almost a feeding frenzy that takes place as America is introduced to somebody new. Paul Ryan in 2012. Governor Palin in 2008. Even somebody like Senator Biden, who had been in the Senate for 36 years, have shared major committees, run for president and so forth; the level of coverage that you receive as a vice presidential nominee is well beyond anything you have ever received in any other type of political life. So there’ll be a focus of the new candidate and what that selection says about the person who selected him or her. I mean ultimately people vote based upon their preferences of the presidential candidates but how they perceive the vice presidential candidates, what messages it sends about the presidential candidates are things that some people take into account. I think those are ways in which selection changes the dynamic of the campaign. It gives us somebody new to talk about, somebody new to write about. And often times, new candidates – in which the presidential candidates have been doing this for long periods of time, I mean it is if they’re in mid-season farm. Vice presidential candidates is somebody who is selected and hasn’t been used to doing this. So, sometimes in the early stages they have committed gaffes and those create their own sort of patterns of coverage and problems for a ticket.

Corie:

And by the time we get to the naming of Vice Presidential candidates, we’ll have been with months and months of hearing of hearing form the presidential candidates, so it might be fresh new voices in there as well. In the recent elections, have you seen any examples of vice presidential candidate that have stood out as good picks that have really helped elevate the presidential candidate?

Joel:

Well, I think there have been a few. I think that, depending on how far back one goes, in 1976, I think that pretty clearly that Jimmy Carter would not have been elected if not have been for Mondale’s role in the campaign. And in the vice presidential debate, Mondale helped Carter in a couple of decisive states. I think that in 1992, Al Gore really helped Bill Clinton reinforce the image of Clinton as a young southern democratic centrist. Gore was the same thing. So when you put the two together, the picture of the two of them, their spouses, really presented a image of change that was more powerful than just seeing Governor Clinton. I think that Dick Cheney in 2000, lent gravitas to President Bush’s candidacy. I think it was reassuring that where you had somebody who could governor, but had someone with no national security experience to be bringing on to his ticket somebody who had experience leading the defense department during the Persian Gulf War. I think the choice of Governor Palin in 2008, initially really energized the Republican base, the conservative part of the republican party who had never been enamored with Senator McCain became enthusiastic about him for the first time. Ultimately, over the course of the campaign, I think Governor Palin had some fairly disastrous interviews and so forth. Her numbers went down and she became something of an albatross for the campaign, but the initial period of selection, she really provided some energy and boost for his campaign. But one of the lessons I think is that sometimes presidential candidates choose somebody who will look good in July and August and while that may be important, ultimately it’s also important as to how they’re going to be perceived in October and November.

Corie:

Professor Goldstein also has a new book on this topic, The White House Vice Presidency: The Path to Significance, Mondale to Biden. This book is out now. So thank you so much for joining us today Joel. I hope you all had a chance to read the book. This has all been very informative and interesting discussion.

Joel:

Thanks Corie, it’s been fun.

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