The National Law Forum

Wal-Mart to Pay $150,000 to Settle EEOC Age and Disability Discrimination Suit

Keller Store Manager Was Harassed and Fired Because of His Age and Denied Accommodation for His Diabetes, Federal Agency Charged

Wal-Mart Stores of Texas, L.L.C. (Wal-Mart) has agreed to pay $150,000 and provide other significant relief to settle an age and disability discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC), the agency announced today. The EEOC charged in its suit that Wal-Mart discriminated against the manager of the Keller, Texas Walmart store by subjecting him to harassment, discriminatory treatment, and discharge because of his age. The EEOC also charged that Wal-Mart refused to provide a reasonable accommodation for the man’s disability as federal law requires.

According to the EEOC’s suit, David Moorman was ridiculed with frequent taunts from his direct supervisor, including “old man” and “old food guy.” The EEOC further alleged that Wal-Mart ultimately fired Moorman because of his age. Such alleged conduct violates the Age Discrimination in Employment Act (ADEA), which prohibits discrimination on the basis of age 40 or older, including age-based harassment.

The EEOC’s suit also alleged that Wal-Mart unlawfully refused Moorman’s request for a reasonable accommodation for his diabetes. Following his diagnosis and on the advice of his doctor, Moorman requested reassignment to a store co-manager or assistant manager position. According to the suit, Wal-Mart refused to engage in the interactive process of discussing Moorman’s requested accommodation, eventually rejecting his request. Under the Americans with Disabilities Act (ADA), Wal-Mart had an obligation to reasonably accommodate Moorman’s disability.

The EEOC filed suit on March 12, 2014, (Case No. 3:14-cv-00908 in U.S. District Court for the Northern District of Texas, Dallas Division) after first attempting to reach a pre-litigation settlement through its conciliation process.

“Mr. Moorman was subjected to taunts and bullying from his supervisor that made his working conditions intolerable,” said EEOC Senior Trial Attorney Joel Clark. “The EEOC remains committed to prosecuting the rights of workers through litigation in federal court.”

Under the terms of the two-year consent decree settling the case, Wal-Mart will pay $150,000 in relief to Moorman. In addition, Wal-Mart agreed to provide training for employees on the ADA and the ADEA. The training will include an instruction on the kind of conduct that may constitute unlawful discrimination or harassment, as well as an instruction on Wal-Mart’s procedures for handling requests for reasonable accommodations under the ADA. Wal-Mart will also report to the EEOC regarding its compliance with the consent decree and post a notice to employees about the settlement.

“The EEOC is pleased that Wal-Mart recognized the value of resolving this case without any further court action,” said EEOC Dallas District Director Janet Elizondo.

ARTICLE BY

U.S. Equal Employment Opportunity Commission

Legalize Poker? Expert Witnesses Will Be Responsible

As poker continues to rise in popularity in mainstream America, it could very well be expert witnesses who ultimately cause the game to become largely legalized.

Over the last decade, poker (specifically Texas Hold’em poker) has emerged from the back rooms of smoky taverns, exited the underground gambling dens of low-level mobsters, and announced itself to conventional society as being a legitimate contest between skilled competitors.

The general public has been receptive. Multimillion-dollar tournaments are now televised on ESPN as more and more Americans are playing online every day, most of the time illegally through websites based offshore or overseas.

As the public watches often-familiar, famous faces continue to make final tables and win, television-viewers are able to witness each player’s strategy, lending to the idea that the game is based more on skill than chance. This fact, according to experts, distinguishes poker from “gambling” and should thus remove poker from the jurisdiction of state gambling laws.

“It is my considered opinion, based on my experience, on research that I have personally conducted, and on a review of the scholarly literature, that Texas Hold’em is a game in which skill predominates over chance in determining the outcome,” wrote expert witness Robert C. Hannum, a professor of risk analysis and gaming at the University of Denver, in an affidavit filed last month in a Wisconsin circuit court. “Thus, in my opinion, it would be incorrect to describe Texas Hold’em as a game of chance.”

The lawsuit, Verrett and Kroon v. Schimel, was filed by a poker advocacy group against the state attorney general and seeks declaratory judgment to have the court rule poker as a bona fide game of skill. A decision of such would thereby allow a poker player to gamble legally on the outcome of oneself, similar to lawfully betting on yourself in darts, pool, golf, tennis, or even pie-eating.

Hannum’s statistically exhaustive 22-page expert witness affidavit goes to great lengths to show how little chance (or how the cards are dealt) affects the overall outcome in poker. He cites statistics and mathematical analysis and extensively examines other scientific studies on poker.

“In contrast with these numerous studies finding that skill predominates over chance in poker, I am aware of no study reaching the conclusion that poker is a game predominately of chance,” Hannum writes. “In my opinion, the studies above establish conclusively that in the long run, skill predominates over chance in poker.”

To the average legal observer, it would seem that a judge will be hard-pressed to disagree with Hannum and the associated statistical science and would thus be forced by sheer mathematics to rule in favor of poker’s categorization as a game of skill rather than an act of gambling.

While the case will directly affect only poker players in Wisconsin, it’s difficult to think that the trend will not follow across the United States.

ARTICLE BY

Ryan Thompson, Esq.

IMS ExpertServices

Life Sciences: Protecting the Crown Jewels

An innovator or owner of patent rights or other technology in the life sciences arena is often unable, because of lack of financial or other resources, to develop or commercialize a pharmaceutical product covered by such intellectual property rights. In these cases, the innovator/owner (the licensor) will frequently out-license the invention to a third party (the licensee) for development and commercialization by such licensee. The resulting license agreement can be a complicated document. In this article, I will address some of the important licensing considerations that a licensor should take into account before executing a license agreement.

Consider the Exclusivity v. Non-exclusivity of the License Grant

An initial consideration in a license agreement is whether the license grant will be exclusive or non-exclusive to the licensee. If the license grant is exclusive, then the licensor typically agrees not to grant a license to any third party. If the license grant is non-exclusive, then the licensor typically is permitted to grant further licenses to third parties. Even in an exclusive license, however, the licensor may want to retain certain rights for itself. For instance, the licensor may want to preserve for itself the right to enter into certain geographical markets or fields of use. The parties should be very clear in the license agreement as to whether or not the licensor is permitted to exercise any R&D, commercialization or other rights during the term of the license agreement.

Whether a license is exclusive or nonexclusive will set the tone for the associated rights and obligations of the parties set forth in the remainder of the license agreement. For example, an exclusive licensee is usually subject to “diligence” obligations, requiring it to exploit the licensed technology in order to maintain the license grant; a non-exclusive licensee is usually subject to limited or no such obligations. Also, an exclusive licensee usually has more rights than a non-exclusive licensee with respect to the prosecution, maintenance, defense and enforcement of patent rights.

Also Consider the Scope of the “Field of Use” and “Territory”

Other important initial considerations in the license agreement are the scope of the licensed field of use and the scope of the licensed territory. A “field of use” defines the field in which the licensee may exercise the licensed rights and may take one of many forms. For example, the field of use may be all encompassing (“any and all fields and applications”), may be limited to only therapeutic or only diagnostic products, may be limited to only biologics or only small molecule products, or may be limited to a specific medical indication (e.g., cardiac indications). Especially in the case of an exclusive license (and based on the nature of the licensee), it is sometimes better for the licensor to limit the field of use. Then the licensor would be permitted to grant subsequent rights to other parties in the non-licensed fields. Alternatively, if the field of use is broad, the licensor should require that the licensee actually exercise its rights in certain specified fields in order to maintain such rights. If the licensee fails to exercise its rights in a specified field of use within a certain period of time, the licensor’s remedies could include the right to terminate the license agreement in its entirety, the right to terminate the license agreement with respect to one or more specific fields and/or the right to convert an exclusive license grant in such field to a non-exclusive grant.

Considerations regarding the “territory” are very similar to the considerations regarding the field of use. Often, in order to maintain an exclusive worldwide territory grant, the licensee is required to exploit the licensed technology in specified countries. For example, the licensee may be required to develop and commercialize a product covered by the licensed technology (licensed products) in the United States and at least one other “major market country” (e.g., Japan, France, Germany, Italy, Spain and the United Kingdom). Again, the licensor’s remedies for the licensee’s failure to satisfy this obligation could be similar to the remedies set forth above for field of use.

Maximize the Royalty Payments

Pursuant to the terms of the license agreement, the licensee will most likely be required to pay to the licensor a royalty based on sales of licensed products. Although the determination of the amount of royalty is in large part a business decision and takes into consideration, among other things, the scope and strength of the licensed patent and other intellectual property rights, the breadth of the field of use and territory, whether the licensed product is a therapeutic product (typically a higher royalty rate) or a diagnostic product, and whether the license grant is exclusive or non-exclusive, there are many important legal nuances that the licensee could and should consider. One such nuance is the calculation of “net sales.”

The amount of royalty owed by the licensee is normally calculated by multiplying the royalty rate by the amount of sales of the licensed products. The royalty rate does not need to be a flat rate and could be graduated, for example, with a rate change as sales increase. In determining the “sales” portion of the royalty calculation, it is more advantageous to the licensor that sales be based on amounts invoiced (as opposed to amounts received) by the licensee, thus keeping the risk of bad debt (i.e., a sales amount is invoiced but not actually received by the licensee) with the licensee. Also, although “net sales” (as opposed to “gross sales”) is the usual royalty base, the licensor should restrict the deductions taken into account to determine such net sales. For example, although the “net sales” calculation frequently includes deductions from gross sales for governmental taxes and charges, customer credits and rebates, and transportation, storage and insurance expenses, the licensor should avoid less typical deductions such as sales commissions owed by the licensee or a catch-all deduction for “other reasonable deductions.”

Ensure That the Inventions Are Fully Exploited

Once a licensor licenses its invention to a third party in an exclusive license arrangement, the licensor will lose much control over the day-to-day use of the technology. It is imperative that the licensor requires the licensee to actually exploit the technology in a timely manner and devote sufficient time, money and resource to such exploitation. Almost all exclusive patent or technology license agreements contain a “diligence” provision requiring the licensee to employ certain efforts with respect to the research, development and commercialization of licensed products. Generally, the diligence requirement provides that the licensee must use “commercially reasonable efforts” to advance the product through the pipeline and sale process. However, the meaning of “commercially reasonable efforts” is not precise and the two parties to the contract could interpret the phrase, and the corresponding diligence requirement, quite differently.

A prudent licensor defines the diligence requirement more exactly. Ideally, the diligence requirement would be accompanied by diligence milestones, contractually obligating the licensee to reach certain developmental, regulatory or sales milestones by certain target dates or to spend a certain dollar amount on the licensed product in a given time period. Additionally, different diligence standards could apply with respect to different jurisdictions. If the licensee fails to meet its target, the licensor would be entitled to one or more remedies such as a financial payment from the licensee or a right of termination.

Maintain Control over Patent Prosecution

In an exclusive patent license arrangement, the licensee usually pays for the costs associated with patent prosecution and maintenance. Even in a non-exclusive arrangement, the licensee could be required to pay for a portion of such amounts. Though the licensor bears some or all of the patent prosecution and maintenance expenses, the licensor should ensure that it ultimately has control. Ideally, the license agreement should provide that the licensor controls the prosecution and maintenance, perhaps with counsel reasonably acceptable to the licensee. The licensor could allow the licensee to provide input into where (which jurisdictions) the licensor will prosecute and maintain the patents. However, the licensor should have the final say as to the scope and jurisdiction of the patent filings. In order to address a licensee’s concern that it would be required to pay for expenses in jurisdictions where the licensee does not deem patent coverage to be necessary or desirable, the license agreement could provide that the licensee may notify the licensor that the licensee will not pay the patent costs in a particular jurisdiction – in which case the licensee would probably lose its license rights (or at least its exclusivity, in the case of an exclusive license grant) with respect to such jurisdiction.

Carefully Consider Termination Provisions

A license agreement includes customary termination provisions. For example, each party usually has the right to terminate the agreement in the case of an uncured material breach by the other party. Additionally, the licensee typically has the right to terminate the license agreement for convenience (without cause) following some notice period (e.g., 90 days). Following termination of the license agreement, the licensor may want to either resume R&D or commercialization efforts on its own or re-license the technology to another suitable third party. In order to avoid the need to duplicate efforts (and expenditures) of the first licensee, the licensor should give careful consideration to the termination provisions in the license agreement. Ideally, if the licensee terminates the license agreement for convenience (i.e., the licensee walks away from the technology) or the licensor terminates the license agreement because of an uncured material breach by the licensee, the licensee would be required to automatically assign to the licensor, for no additional consideration or for some agreed upon payment, all of the results, know-how and intellectual property generated by or on behalf of the licensee under the license agreement and all regulatory files, regulatory approvals and other rights related to the licensed product. Thus, the licensor or its new licensee would be able to capitalize on the past work performed by the licensee, expedite timelines and reduce expense.

All or some of the points described above could be very important to a licensor. Although the interrelation of these and various other provisions in a license agreement are complex, by understanding the unique issues and concerns that arise when analyzing and negotiating a license agreement, the licensor is better able to protect its invention and ultimately increase its profit.

ARTICLE BY

Lori M. Waldron

Sills Cummis & Gross P.C.

This article appeared in the February 2015 issue of The Metropolitan Corporate Counsel. The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect those of Sills Cummis & Gross P.C. Copyright © 2015 Sills Cummis & Gross P.C. All rights reserved.”

Three Things Commercial Drone Operators Need to Know Regarding the FAA’s Proposed Rules

In a long anticipated move, on February 15, 2015, the Federal Aviation Administration (FAA) issued proposed rules that are intended to permit the commercial operation of small unmanned aircraft, commonly referred to as “drones.”

Safety is Key

The proposed rules attempt to balance the risk to public safety while providing a regulatory framework that is reasonably (but not overly) burdensome to the industry to avoid stifling advances in technology and economic competitiveness. The FAA addresses safety in a number of ways, but most obviously by limiting the weight of the drone, limiting the manner of its operation, and by placing restrictions on the people flying the drone. By providing a regulatory path for at least some commercial operations, the proposed rules help those in the industry avoid uncertainty and substantial costs associated with requesting an FAA exemption or special airworthiness certificate.

Only Small Drones Would Have the Green Light

Under the proposed rules, commercial operators of a small drone (weighing less than 55 pounds) must not fly higher than 500 feet above ground level, faster than 100 mph, over people who are not directly involved in the operation, at night, or when weather visibility is less than 3 miles. A small drone must undergo a preflight inspection before use, though FAA airworthiness certification would not be required. With some modifications due to its size, small drones nevertheless would be subject to the same aircraft marking and registration requirements that are applicable to manned aircraft. And although the drone must remain within the visual line-of-sight of the operator at all times, to meet the needs of commercial operators where limited risk to people or property would be incurred, this requirement may be met by also deploying a visual observer, perhaps in radio contact with the operator, to assist the operator to maintain visual contact with the small drone in place of the operator.

Operators (“Pilots”) of Drones Must Meet Minimum Requirements

To establish at least a reasonable degree of uniformity across all potential commercial uses permitted under the rules and to minimize national security risks within the borders of the U.S., commercial operators of small drones must:

Be at least 17 years old;

Pass an initial and recurrent aeronautical knowledge test at an FAA-approved knowledge test center;

Be vetted by the Transportation Security Administration (TSA);

Obtain an unmanned aircraft operator certificate with a small unmanned aircraft systems (UAS) type rating,

Make available to the FAA the small unmanned aircraft for inspection/testing; and

Report an accident within 10 days of any operation that results in injury or property damage.

To be sure, winners and losers will exist on both sides of the proposed rules. While crop monitoring, research uses, educational/academic uses, powerline/antenna/bridge inspections, aerial photography, wildlife tracking, and rescue operations may be more easily accommodated under the proposed rules, other commercial uses will remain in the cold, such as anything requiring use of a drone heavier than 55 pounds at takeoff, flights higher than 500 feet, faster than 100 mph, or at distances or under conditions where the operator or visual observer cannot maintain visual line-of-sight with the drone. Until the FAA obtains data sufficient to warrant expansion of these rules, those who wish to operate a drone outside the proposed rules have the option of pursuing either an FAA exemption or a special airworthiness certificate.

ARTICLE BY

Thomas E. Williams

Neal, Gerber & Eisenberg LLP

Secure Sockets Layer (SSL) 3.0 Encryption Declared “No Longer Acceptable” to Protect Data

On Friday, February 13, 2015, the Payment Cards Industry (PCI) Security Standards Council (Council) posted a bulletin to its website, becoming the first regulatory body to publicly pronounce that Secure Socket Layers (SSL) version 3.0 (and by inference, any earlier version) is “no longer… acceptable for protection of data due to inherent weaknesses within the protocol” and, because of the weaknesses, “no version of SSL meets PCI SSC’s definition of ‘strong cryptography.’” The bulletin does not offer an alternative means that would be acceptable, but rather “urges organizations to work with [their] IT departments and/or partners to understand if [they] are using SSL and determine available options for upgrading to a strong cryptographic protocol as soon as possible.” The Council reports that it intends to publish soon an updated version of PCI-DSS and the related PA-DSS that will address this issue. These developments follow news of the Heartbleed and POODLE attacks from 2014 that exposed SSL vulnerabilities.

Although the PCI standards only apply to merchants and other companies involved in the payment processing ecosystem, the Council’s public pronouncement that SSL is vulnerable and weak is a wakeup call to any organization that still uses an older version of SSL to encrypt its data, regardless of whether these standards apply.

As a result, every company should consider taking the following immediate action:

Work with your IT stakeholders and those responsible for website operation to determine if your organization or a vendor for your organization uses SSL v. 3.0 (or any earlier version);
If it does, evaluate with those stakeholders how to best disable these older versions, while immediately upgrading to an acceptable strong cryptographic protocol as needed;
Review vendor obligations to ensure compliance with a stronger encryption protocol is mandated and audit vendors to ensure the vendor is implementing greater protection;
If needed, consider retaining a reputable security firm to audit or evaluate your and your vendors’ encryption protocols and ensure vulnerabilities are properly remediated; and
Ensure proper testing prior to rollout of any new protocol.

ARTICLE BY

Heather Egan Sussman

Sarah T. Hogan

McDermott Will & Emery

Philadelphia Mandates Paid Sick Leave

Employers should act to ensure compliance before the law takes effect on May 13.

On February 12, the City of Philadelphia joined the nationwide paid sick leave trend when Mayor Michael Nutter signed the Promoting Healthy Families and Workplaces Ordinance (the Ordinance) into law. The Ordinance requires employers with 10 or more employees in the City of Philadelphia to provide paid and unpaid sick leave to eligible employees and is effective May 13.

Under the Ordinance, full- and part-time employees who work at least 40 hours per year within the City of Philadelphia will accrue paid sick leave at the rate of one hour for every 40 hours worked, up to a maximum of 40 hours per year. Employees who work less than 40 hours per year within the City of Philadelphia will accrue unpaid sick leave at the same rate.^[2]Employees may use covered leave (1) for their own illnesses; (2) to address a family member’s mental or physical illness, injury, or health condition; or (3) to obtain medical attention to recover from an injury or disability caused by domestic or sexual violence (including stalking) or for related legal services or remedies.

The Ordinance also includes the following:

Employer Coverage: Employers that employ fewer than 10 full-time, part-time, or temporary employees for at least 40 weeks in a calendar year are not required to comply with the Ordinance. However, certain chain establishments, as defined under the Ordinance, are required to provide paid sick leave regardless of the number of employees at the chain’s Philadelphia location.
Excluded Employees: Independent contractors, seasonal employees, adjunct professors, employees hired for a term of less than six months, interns, pool employees in the healthcare industry, state and federal employees, and employees covered by a bona fide collective bargaining agreement are not covered by the Ordinance.
Accrual of Paid Sick Time: Paid sick time begins to accrue on the effective date of the Ordinance (May 13) for any then-current employee and begins to accrue on the date of hire for any employees hired after the effective date. Recently hired employees can use accrued sick time 90 days after their hire date. Employers must allow employees to carry over accrued sick time to the following calendar year, unless the employer chooses to provide at least 40 hours of sick time at the beginning of the following calendar year. Employers that already provide employees with paid leave (including, for example, vacation days, sick days, floating holidays, parental leave, personal leave, or paid time off) that may be used as sick leave and that meets or exceeds the amount mandated by the Ordinance are not required to provide additional sick leave.
Use of Paid Sick Time: Employees are generally required to provide advanced notice of the need for sick leave and may use accrued sick time in hourly increments (or any smaller increment) that the employer uses to account for absences or use of other time. If an employee takes two or more sick days, the employer may require documentation to verify that the sick time is covered by the Ordinance.
Notice: Covered employers must distribute individual written notices to all eligible employees regarding their rights under the Ordinance or display a poster regarding the Ordinance in a conspicuous and accessible location in the workplace. If an employer has employees who do not speak English as a first language, the employer must post or provide individual notice of the Ordinance and its requirements in any other language that is the first language spoken by at least 5% of its workforce.
Anti-Discrimination and Anti-Retaliation Provisions: The Ordinance prohibits discrimination and retaliation against any employees who exercise their rights under the Ordinance or who inform other employees about the right to paid sick time under the Ordinance. The Ordinance also creates a rebuttable presumption of retaliation against any employer that takes an adverse action against an employee within 90 days of the employee engaging in protected activity under the Ordinance.
Enforcement: Mayor Nutter will designate an agency responsible for implementing, administering, and enforcing the Ordinance, and the agency will have the authority to issue guidelines and regulations to carry out and enforce the Ordinance. Employees may pursue claims against an employer for violations of the Ordinance by filing a complaint with the agency or in court (after first filing a complaint with the agency). The agency or the city solicitor may also pursue claims in court against employers to enforce the Ordinance.
Record Keeping: Employers must keep records that document the hours worked by employees and sick time accrued by and taken by the employees. Employers must retain the required records for a two-year period and allow the agency reasonable access to such records with appropriate notice.

Recommendations

To ensure compliance, employers should take the following actions on or before May 13:

Supply each employee with an individual written notice that contains the information required by the Ordinance or display a poster with the same information where employees can easily read it. The Ordinance mandates that this same information should also be included in any employee handbook distributed to employees. (The city has yet to issue a model poster. Employers should continue to visit the city’s website because the agency responsible for enforcing the Ordinance is required to create and make available a poster that contains the mandated paid sick leave information.)
Review, create, or modify existing vacation, paid time off, and sick leave policies to ensure compliance with the Ordinance. Employers must ensure that they are not only providing sufficient sick leave to employees but also that employees are permitted to take leave under the Ordinance’s terms.
Train human resources and supervisory personnel on the Ordinance’s new sick leave requirements, including, for example, the reasons that employees may use sick time, how much sick time they may use, and the documentation that employers may request when employees use accrued sick time. Employers should also train human resources and supervisory personnel on the anti-discrimination and anti-retaliation provisions under the Ordinance and update related policies accordingly.
Ensure that time and payroll records are sufficiently detailed to reflect the hours that employees worked and the amount of sick leave covered employees accrued and used to comply with the Ordinance’s record-keeping provisions.

ARTICLE BY

Morgan, Lewis & Bockius LLP

The New Competition – Emerging Legal Technologies Out of Silicon Valley

In January, the National Law Review had pleasure of attending theAnnual Marketing Partner Forum in beautiful Rancho Palos Altos, California. Programing was provided by the Legal Executives Institute at Thomson Reuters and featured over 15 hours of dynamic workshops. Hundreds of marketing partners, managing partners, in-house counsel and senior-level marketing and business development professionals were in attendance.

The “New Competition” program featured emerging legal technologies within Silicon Valley. Catherine Hammack of Jurispect, Monica Zent of Foxwordy, and Daniel Lewis of Ravel Law each showcased their innovative technologies and shared their thoughts as to where innovation is taking the legal industry in 2015.

“Jurispect will help fundamentally transform how companies operate by providing organizations with a real-time analytical view of both exposure and opportunities to take proactive steps to manage legal and regulatory risk.” – Catherine Hammack

Catherine was present on two momentous occasions in U.S. financial history: as an intern at Arthur Anderson when Enron was indicted, and as a first-day associate at Bingham McCutchen the day Lehman Brothers filed for bankruptcy, and the start of the financial crisis in 2008. Following her time at Bingham as a financial litigator, she transitioned to join Google’s Policy team, where her perspective on legal services dramatically changed.

As Catherine elaborated in a post-conference interview: “There was a huge gap between the way law firms traditionally provide counsel and the way companies need information to make business decisions.” She was surrounded by engineers and data scientists who were analyzing vasts amounts of data with cutting edge technology. Catherine became interested in adapting these technologies for managing risk in the legal and regulatory industries. Inspired by Google’s data-driven decision making policies, she founded Jurispect.

Jurispect is a tool that companies can use to track legal and regulatory changes relevant to their industry, and possibly to identify risks earlier on to help avoid future Enrons and Lehman Brothers. Currently, Jurispect is geared toward companies in the financial services and technology space, and will be expanding into other regulated industries in the very near future. Key decision makers in the corporate legal, compliance and risk departments of companies are benefitting from Jurispect’s actionable intelligence. The user’s experience is customized: Jurispect’s technology adjusts based on user profile settings and company attributes. As the user continues to utilize Jurispect, its algorithms continuously calibrate to improve the relevancy of information presented to each user.

Jurispect’s team of seasoned experts in engineering, data science, product management, marketing, legal and compliance collaborated to develop the latest machine learning and semantic analysis technologies. These technologies are used to aggregate information across regulatory agencies, including sources such as policy statements and enforcement actions. Jurispect also analyzes information in relevant press releases, and coverage by both industry bodies and mainstream news. The most time-saving aspect of Jurispect are the results that coalesce into user-friendly reports to highlight the importance and relevance of the regulatory information to their company. Users can view this intelligence in the form of notifications, trends, and predictive analytics reports. Jurispect makes data analytics work for legal professionals so they spend less time searching, and more time on higher level competencies. As Catherine elaborated, “We believe that analytics are quickly becoming central to any technology solution, and the regulatory space is no exception.”

“Foxwordy is ushering in the era of the social age for lawyers and for the legal industry.” – Monica Zent

Monica is an experienced entrepreneur and had already been running a successful alternative law firm practice when she founded Foxwordy. Foxwordy is a private social network that is exclusively for lawyers. Monica reminded the audience that we are, remarkably, ten years into the social media experience and all attorneys should consider a well rounded social media toolkit that includes Foxwordy, Twitter, and LinkedIn.

However, as Monica elaborated in a post-conference interview, LinkedIn, for example, “falls short of the needs of professionals like lawyers who are in a space that is regulated; where there’s privacy, [and] professional ethics standards.” As an experienced attorney and social seller, Monica understands that lawyers’ needs are different from other professionals that use the more mainstream and very public social networks, which is why she set out to create Foxwordy.

Foxwordy is currently available to licensed attorneys, those who are licensed but not currently practicing but regularly involved in the business of law, certified paralegals, and will eventually open up to law students. Anyone who fits the above criteria can request membership by going to the homepage, and all potential members go through a vetting process to ensure that they are a member of the legal community. At its inception, the Foxwordy team expected to see more millennials and solo practitioners taking advantage of the opportunity to network on Foxwordy. Those populations have joined as expected, but what was surprising is how the product resonated across all demographics, positions and segments of the legal industry. Foxwordy has seen general counsels, in-house counsels, solo practitioners, major law firm partners, law school deans, judges, politicians and more become members.

Foxwordy is currently available to join and will be emerging out of public beta around summertime this year. As Monica said during her presentation “Time is the new currency”, and what the Foxwordy team has found via two clinical trials is that engaging Foxwordy saves lawyers an average of two hours per day. Membership includes all the core social features such as a profile page, connecting with others, the ability to ask questions and engage anonymously, exchange referrals, and exchange other information and resources. Free members experience all the core functions fully and there is a premium membership that is available with enhanced features and unlimited use of Foxwordy. In the closing thoughts of her post-conference interview, Monica shared that “the ability to engage anonymously and discreetly, yet at the same time collaborate with our legal colleagues and engage with them on a social level has been very powerful.”

“There is an amazing opportunity to use data analytics and technology to create a competitive edge for lawyers amidst all of this information…” – Daniel Lewis

Data analytics and technology has been used in many different fields to predict successful results. In his presentation, Daniel pointed out that fields traditionally considered more art than science have benefitted from the use of data analytics to predict accurate results.

Having conducted metrics-based research and advocacy while at the Bipartisan Policy Center, and observing how data-driven decision making was being used in areas like baseball and politics, Daniel was curious why the legal industry had fallen so far behind. Even though the legal field is often considered to be slow moving, there are currently over 11 million opinions in the U.S. judicial system with more than 350,000 new opinions issued per year. There is also a glut of secondary material that has appeared on the scene in the form of legal news sources, white papers, law blogs and more. Inspired by technology’s ability to harness and utilize vast amounts of information, Daniel founded Ravel Law to accommodate the dramatically growing world of legal information.

Ravel Law is optimized for all lawyers across the country. Currently, thousands of associates, partners, and in-house counsel are using Ravel. Ravel has as also begun working with 30 of the top law schools around the country, with thousands of law students learning how to use it right alongside legal research staples such as Westlaw and LexisNexis. Professors and students around the country have also independently discovered Ravel and are using and teaching it. When asked why he works with law schools, Daniel said “We work with schools because students are always the latest generation and have the highest expectations about how technology should work for them.” Students have given the Ravel team excellent feedback and have grown into a loyal user base over the past few years. Once these students graduate, they introduce Ravel to their firms. Ravel’s user base has been growing very quickly and they have only released a small portion of what their technology is ultimately capable of.

Ravel’s team of PhDs and technical advisors from Google, LinkedIn, and Facebook, has coded advanced search algorithms to determine what is relevant, thereby enhancing legal research’s effectiveness and efficiency. Ravel provides insights, rather than simply lists of related materials, by using big data technologies such as machine learning, data visualization, advanced statistics and natural language processing. In a post-conference follow up Daniel elaborates: “Our visualizations then show how the results connect in context, helping people understand the legal landscape very rapidly as well as find needles in the haystack.” Ravel guides users toward analysis of relevant passages in a particular case, without navigating away from the original case or conducting a new search. Daniel and his colleagues will be launching more new features this year and are looking forward to continuing to “transform how attorneys search and understand all legal information.”

Chase Barfield v. Sho-Me Power Electric Cooperative: Major Verdict in Electric Utility Easement Case

More than five years after starting in state court before later restarting in federal court, a federal court jury in Missouri has issued a major verdict in litigation concerning the use of electric utility easements for commercial telecommunication purposes. On February 6, 2015, the jury in Chase Barfield, et al., v. Sho-Me Power Electric Cooperative, et al., (U.S.D.C. Western District of Missouri, 2:11-cv-4321NKL), found that the compensation owed to the plaintiff-landowners totaled $79,014,140 representing the fair market rental value of the defendants’ use of the utility easements for commercial telecommunication purposes. While there have been other cases around the country alleging similar misuse of utility easements, those cases have all settled and the Sho-Melitigation appears to be the first to proceed through trial to a final jury verdict.

In 2010, a small group of Missouri landowners filed a state court lawsuit, which was subsequently dismissed and refiled in federal court the next year, alleging that certain electric utilities and affiliated entities in Missouri and Oklahoma installed and operated commercial fiber optic lines on the plaintiffs’ properties without the right to do so and without paying compensation to the landowners. The lawsuit alleged that Sho-Me Power Electric Cooperative and its subsidiary Sho-Me Technologies, LLC, KAMO Electric Cooperative and its subsidiary K-PowerNet, LLC, and Cooperatives’ Broadband Network, collectively installed over 2,000 miles of fiber optic lines within easements that were limited to electric transmission and distribution line purposes.

While some of the fiber optic capabilities were utilized for the utilities’ own operations consistent with the underlying easements, the plaintiffs alleged that some of the fiber optic lines were used by the defendants or leased to third-parties for commercial telecommunication purposes in violation of the limited utility easements that had been granted. The landowners asked the court to declare that the defendants had no legal rights to use the easements for commercial telecommunication purposes and also brought claims for trespass, disgorgement of profits, an injunction to prevent future commercial fiber optic uses of the easements, and punitive damages. The defendant utilities and their subsidiaries admitted many of the facts related to their telecommunication activities, however, they denied that such activities were inconsistent with their easement rights.

In 2013, the federal court granted class status thereby allowing the named plaintiffs to represent the interests of more than 3,000 landowners who were crossed by the defendants’ fiber optic lines. After many months of complex litigation addressing multiple issues, in March, 2014 the federal court issued its summary judgment decision on the primary claims. The court adopted the plaintiffs’ categorization of the nearly 6,500 express easements and condemnation orders describing the property rights at issue; then proceeded to conduct a detailed analysis of whether the defendants’ fiber optic lines and the uses thereof were permitted under the terms of the easements and orders. The court concluded that, under Missouri law, the defendants’ actions were inconsistent with the easements and court orders in three of the eight categories, totaling more than 3,000 individual easements and orders.

The jury’s recent decision sets the damages attributable to the defendants’ breach of the easements and court orders and resulting trespass, as found by the court. In determining this amount, the jury considered the parties’ evidence that the value of the landowners’ claims was between $100,000, as argued by the defendants, and in excess of $100 million dollars, as argued by the landowners after considering the revenue the defendants received from the fiber optic lines and the associated expenses. The jury’s award covered only the ten year period prior to the judgment and did not include prejudgment interest, attorney fees and costs, or future compensation.

Lessons Learned

As the national demand for improved and expanded electrical and telecommunication infrastructure continues to grow at an apparently ever-increasing pace, utilities and telecommunication service providers are faced with the challenge of where to locate such new and improved infrastructure. Opportunities to site brand new infrastructure corridors are becoming more limited. To the extent such opportunities exist, many landowners do not welcome such uses on their property and some complain of “easement fatigue” as a result of requests from multiple utility, telecommunication, pipeline, and other infrastructure companies. As a result, local governments frequently require infrastructure companies to consider first the use of existing easements and corridors so as to minimize impacts on private property and to optimize the land uses within their jurisdictions.

Whether motivated by landowner concerns, local government requirements, or other project considerations, utilities and other infrastructure companies are trying to squeeze every permissible use out of their existing land rights. For example, use of technologies such as fiber optic ground wires that combine an electrical ground wire with bundled fiber optic lines allow electric utilities to maximize the use of their existing easements with little or no physical intrusion on the property on which the infrastructure is located. This technology was at issue in theSho-Me litigation. However, the analysis is not limited to the extent of the physical intrusion on the underlying property. At the heart of such disputes is the landowner’s right to control and be compensated for the beneficial use of his or her property.

The Sho-Me court explained that resolution of such issues requires consideration of “how changing technologies should be harmonized with historic real property principles.” Furthermore, “[w]hether an additional use is reasonable and necessary depends on whether the additional use represents only a change in the degree of use, of whether it represents a change in the quality of the use. If the change is in the quality of the use, it is not permissible, because it would create a substantial new burden on the servient estate.” As the court concluded, where the additional use exceeds that which is authorized by the easement, a trespass occurs and a landowner may be entitled to compensation.

As demonstrated by the recent decision in the Sho-Me litigation, such compensation can be substantial. Given that most instances of this type of dispute involve lengthy linear infrastructure projects – electric transmission or distribution lines, pipelines, railroads, etc. – crossing many landowners’ properties, the risk associated with large awards for trespass or unjust enrichment cannot be ignored.

It is important to note that real property law is, for the most part, a matter of state law. While the basic principles of real property law are generally similar among most jurisdictions, the specific law and the analysis of the facts under that law will vary from state to state. Therefore, before proceeding with a new or additional use on an existing easement, utilities and other infrastructure companies must conduct a careful analysis of the land rights supporting a particular project considering the laws of the specific states involved. The decisions and jury verdict in the Sho-Me litigation should provide an instructive, cautionary tale.

ARTICLE BY

Thomas J. Dougherty

Lewis Roca Rothgerber LLP

Another Court Rejects Notion that Restrictive Covenant Agreements Must be Supported by At Least Two Years of At-Will Employment

In a recent decision addressing the enforceability of a restrictive covenant agreement under Illinois law, the court in Bankers Life and Casualty Co. v. Miller, 2015 U.S. Dist. LEXIS 14337 (N.D. Ill. 2/6/15), ruled that Illinois law did not require a minimum of two years of employment to support the employee’s restrictive covenant obligations. The court rejected the employee’s argument that the “bright-line” rule created by the Illinois Appellate Court in Fifield v. Premier Dealer Services, Inc.required at least two years of continued employment to justify enforcement of the non-competition restrictions.

The Bankers court ruled that “the competition restrictions were not invalid for lack of consideration as a matter of law on the basis that the departing employees’ tenure was less than two years[.]” Instead, the court ruled that each non-competition restriction should be assessed on a case-by-case basis. The Bankers ruling is in line with a prior Northern District of Illinois decision, Montel Aetnastak, Inc. v. Miessen, in which the court (by a different judge) ruled that 15 months of continued employment was sufficient consideration to support a non-competition restriction. In Montel, the employee voluntarily resigned his employment.

In Illinois state courts, however, employers have not had such good luck. The Illinois Appellate Court in Prairie Rheumatology Associates, S.C. v. Francis recently reiterated the two-year rule created in Fifield.

For employers, the difference in the treatment of Illinois restrictive covenant agreements emphasizes the importance of beating the employee to the courthouse. In other words, if an employee files a declaratory action in state court, the odds are that the court will follow the Fifield rule. If, on the other hand, the employer files first in federal court, the odds favor the employer.

Yet another case, Instant Technology, LLC v. Defazio, 2014 U.S. Dist. LEXIS 61232 (N.D. Ill. May 2, 2014), is pending in the Seventh Circuit Court of Appeals. We will monitor this case and follow up once a ruling is issued.

ARTICLE BY

Rufino Gaytán

Deborah Rehorst

Godfrey & Kahn S.C.

Gear Up for Increased CMS Scrutiny of Hospice Services for Assisted Living Facility Residents

A recent study issued by the evaluation and policy division of the U.S. DHHS Office of Inspector General (OIG) indicates that hospices can expect increased scrutiny regarding the services they provide to assisted living facility residents. The study, dated January 13, 2015, was based upon an evaluation of all Medicare hospice claims from 2007 through 2012. Key observations made by OIG included the following:

Hospices provided care significantly longer for individuals in the assisted living facility setting as compared with other settings such as private homes and skilled nursing facilities.
For-profit hospices received much higher Medicare reimbursement per beneficiary than did nonprofit hospices.
Residents of assisted living facilities often had medical diagnoses that required less complex care.
Hospices often furnished fewer than five hours of visits for routine home care patients in assisted living facilities.

The OIG study does not speak to the important reality that residents of assisted living facilities typically are healthier than residents of skilled nursing facilities, which would tend to support a higher median number of hospice days in the assisted living setting.

OIG recommends to CMS that, as part of its ongoing hospice payment reform efforts, it should reduce incentives for hospices to target assisted living facility residents with certain diagnoses and those likely to have extended periods of care. Of course, this follows a similar recommendation by MedPac. OIG’s study recommends that CMS “target certain hospices for review.” These include hospices with a high percentage of CMS payments for patients in assisted living facilities, and hospices with a high percentage of patients receiving care over 180 days or patients with certain diagnoses. In the wake of this critical study, hospices, especially for-profit hospices, can expect increased scrutiny of the services they provide to assisted living facility residents.

Hospice providers whose patients include a high number of assisted living facility residents should expect to be subject to increased Medicare review. Hospices should consider taking preemptive defensive steps now, such as:

Evaluating their data on assisted living facility residents in order to identify any outliers or potentially unsupported distinctions from services provided in other settings; and
Conducting internal compliance reviews regarding the services provided to assisted living facility residents.

This is especially true of for-profit hospices that fall in or near the category of high service to assisted living facility residents.

ARTICLE BY

Pamela A. Scott

Poyner Spruill LLP

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