The National Law Forum

Eastern District of North Carolina (E.D.N.C.) Bankruptcy Court Rules that Borrower Can Raise Unfair and Deceptive Trade Practices Claims Against Lender Based on Refusal to Modify Loan

Does a lender have a duty to act in good faith when negotiating with a borrower during a commercial loan modification? In an order issued recently by the United States Bankruptcy Court for the Eastern District of North Carolina, in In re: Burcam Capital II, LLC, the court denied a lender’s motion to dismiss a borrower’s claims against the lender. The Borrower alleged that the lender’s failure to modify the terms of the loan constituted a breach of the lender’s obligation to deal with the borrower in good faith, as well as an unfair or deceptive trade practice. This was because the borrower alleged that the servicer, as agent of the lender, wanted the loan to go into default as a means of acquiring the real property collateral. While the court acknowledged that the lender had no obligation to modify the terms of the loan, the court still reasoned that the failure to modify the loan under the particular circumstances of this case could constitute a breach of the lender’s obligations to proceed in good faith, and could constitute an unfair and deceptive trade practice under North Carolina law.

Burcam Capital II, LLC (Burcam Capital) is the owner of commercial real property containing retail and office units in Raleigh, NC. The real property serves as collateral for two separate loans, with both loans administered by CWCapital Asset Management, LLC (CWCapital) as special servicer. Burcam Capital defaulted on its note payments in 2011, and CWCapital initiated foreclosure as a result of this default. On June 28, 2012, Burcam Capital filed for relief under Chapter 11 of the United States Bankruptcy Code to stay the foreclosure.

In the course of the bankruptcy proceedings, Burcam Capital filed a complaint against CWCapital alleging that after Burcam Capital’s default, CWCapital acted outside of its narrow role as special servicer of the debt. In particular, Burcam Capital alleged that CWCapital concocted a scheme whereby CWCapital would position itself to either buy the debt from the lender whose loans it was servicing at an artificially low price, or would buy the real property collateral at the foreclosure sale for below market value in order to benefit itself at the expense of both Burcam Capital and the lender whose loans CWCapital was servicing. Burcam Capital alleged that in furtherance of this scheme, CWCapital obtained a severely below market appraisal for the real property collateral and refused to deal with Burcam Capital in any meaningful way regarding any modification or work-out.

CWCapital moved to dismiss the complaint on the basis that neither the lender nor CWCapital breached the loan contract, and that absent a breach of contract or allegations of deceit, there could be no liability for CWCapital under North Carolina Law. CWCapital argued that because under the existing loan contract neither CWCapital nor the lender had any obligation to modify the existing loan, the complaint against CWCapital and the lender should be dismissed.

While the court acknowledged that a lender does not have to reach an agreement with its borrower to modify its loan, and it does not act improperly when enforcing its rights, such as initiating foreclosure when the loan goes into default, the court refused to dismiss the complaint against CWCapital and the lender. The court reasoned that Burcam Capital’s complaint alleged facts that could constitute a breach of the implied covenant of good faith and fair dealing which is applicable to contracts in North Carolina, together with facts that could constitute deceptive trade practices. Unfortunately, the court did not explain its reasoning in great detail. In particular, the court did not specifically address CWCapital’s argument that CWCapital cannot be liable for failing to act in good faith if there was never any breach by CWCapital of the existing loan contract. Nevertheless, the court agreed with Burcam Capital’s allegations that CWCapital’s negotiations were a sham and its appraisal of the property constituted a ruse that could rise to the level of a breach of the lender’s obligations to deal in good faith as well as a false and deceptive trade practice.

One of the primary lessons for lenders in this case is that when the lender agrees to entertain discussions regarding potential loan modifications it should take steps to ensure that it will be seen by any future court or jury as having considered a borrower’s loan modification proposals in good faith. Burcam Capital’s complaint placed great emphasis on CWCapital’s refusal to provide any reasoning behind its rejection of Burcam Capital’s modification proposals, CWCapital’s representative in the negotiations having no actual authority to agree to the terms of any settlement or work-out agreement, and CWCapital never informing Burcam Capital of what types of offers it would agree to regarding any future modification or work-out of the existing loan. Once negotiations with a borrower begin, the lender should take steps to ensure that its negotiations are conducted in good faith. If there are credible allegations that the lender refused to negotiate in good faith, such allegations may be used to prevent an early dismissal of a borrower’s counter-claims against a lender.

One means of preventing such allegations may be for the lender to require that the borrower agree to a pre-negotiation agreement prior to entering into loan modification discussions with the lender. A well drafted pre-negotiation agreement can help reduce misunderstandings and later claims by a borrower against a lender. The pre-negotiation agreement can help establish the ground rules of the discussion, and should include, among other things, agreements that: (a) no oral or written statements made during the negotiation may be used against the other side (to encourage open discussion); (b) any statements made prior to or during the negotiations are not admissible in court for any reason; and (c) confirm the validity of the existing loan documents. While lenders may encounter some resistance from borrowers in using such an agreement, if a borrower does agrees to its terms, a lender may negotiate more freely because the risk of any liability to the lender as a result of such negotiations is minimized.

In this case, the court did not agree that Burcam Capital’s claims against CWCapital should be dismissed, so not all is lost for CWCapital. While Burcam Capital survives in its battle against CWCapital, it must now prove its allegations against CWCapital in court, which is a much higher hurdle than simply arguing that its claims have some legal merit and should not be dismissed. CWCapital recently amended its answer to Burcam Capital’s complaint in light of the court’s refusal to dismiss CWCapital’s claims, and Burcam Capital will now bear the burden of proving that the actions alleged in its complaints are true and that those actions constituted a breach of CWCapital’s obligation to deal in good faith and an unfair and deceptive trade practice.

Article by:

Christopher H. Roede

Jill C. Walters

Of:

Poyner Spruill LLP

California Continues to Shape Privacy Standards: Song-Beverly Act Extended to Email Addresses

Executive Summary: California retailer restricted from requiring a customer email address as part of a credit card transaction. We knew that asking for zip codes is intrusive personal questioning, and now asking for email has been added to the list.

California’s Song-Beverly Credit Card Act (Cal. Civ. Code Sec. 1747 et seq.) (“Song-Beverly Act” or “Act”) restricts businesses from requesting, or requiring, as a condition to accepting credit card payments that the card holder provide “personal identification information” that is written or recorded on the credit card transaction form or otherwise. “Personal identification information” means “information concerning the cardholder,other than information set forth on the credit card, and including, but not limited to, the card holder’s address and telephone number.” The California Supreme Court has previously ruled that zip codes are also “personal identification information” under the Song-Beverly Act. See Pineda (Jessica) v. Williams-Sonoma Stores, Inc., 2011 Cal. LEXIS 1502 (Cal. Feb. 10, 2011).

Recently, a United States federal district court in California expanded “personal identification information” to include email addresses in a decision denying retailer Nordstrom’s motion to dismiss claims it violated the Song-Beverly Act. The plaintiff sued Nordstrom for collecting his email address as part of a credit card transaction at one of its California stores in order to email him a receipt, then subsequently using his email address to send him frequent, unsolicited marketing emails. See Capp v. Nordstrom, Inc., 2013 U.S. Dist. LEXIS 151867, 2013 WL 5739102 (E.D. Cal. Oct. 21, 2013).

Raising a case of first impression under California law, Nordstrom claimed that email addresses are not “personal identification information” under the Song-Beverly Act, so the Act did not apply. The court disagreed with Nordstrom and found the opposite based on the California Supreme Court’s earlier ruling in Pineda. Nordstrom’s argument that email addresses can readily be changed, unlike zip codes, and consumers can have multiple email addresses was not persuasive. The court held that an email address regards a card holder in a more personal and specific way than a zip code. Unlike a zip code that refers to the general area where a card holder works or lives, email permits direct contact with the consumer and implicates their privacy interests. The court concluded that the collection of email addresses is contrary to the Song-Beverly Act’s purpose to guard against misuse of personal information for marketing purposes. In particular, the plaintiff’s allegation that his email address was collected to send him a receipt and then used to send him promotional emails directly implicates the protective purposes of the Act as interpreted in Pineda.

Pineda held that zip codes are personal information for purposes of the Song-Beverly Act, and therefore a brick and mortar retailer violated the Act when it requested and recorded such data. In the Pineda decision, the California Supreme Court found that zip codes, like the card holder’s address expressly called out as “personal identification information” under the Act, were unnecessary to completing the credit card transaction and inconsistent with the protective purpose of the Act. This is especially true when a zip code is collected to be used with the card holder’s name in order to locate the card holder’s address, permitting a retailer to locate indirectly what it is prohibited from obtaining directly under the Act.

Nordstrom also argued that the plaintiff’s claims under the Song-Beverly Act were preempted by the federal “Controlling the Assault of Non-Solicited Pornography and Marketing Act” (better known as the CAN-SPAM Act), but the court disagreed. While the CAN-SPAM Act contains a preemption provision, it only preempts state laws that regulate the manner in which email messages are sent and their content, both of which are not regulated under the Song-Beverly Act.

Retailer tip: The federal court issuing this most recent decision recommends waiting to request an email address (or a zip code) until after the consumer has the receipt from their credit card transaction in hand, and then sending the consumer emails only in conformance with the CAN-SPAM Act.

In the wake of Pineda, retailers faced class action lawsuits for requesting consumer zip codes at check out. This new decision could have a similar effect.

Article by:

Theodore F. Claypoole

Nadia G. Aram

Of:

Womble Carlyle Sandridge & Rice, PLLC

January 2014 New Jersey Regulatory Developments

The following are the most recent health care related regulatory developments as published in the New Jersey Register on January 6, 2014:

On January 6, 2014 at 46 N.J.R. 12, the Department of Banking and Insurance published notice of its proposal of amendments to its rules and the proposal of a new rule governing the Small Employer Health Benefits Program. The amendments were proposed in order to comply with the requirements of the federal Affordable Care Act.

On January 6, 2014 at 46 N.J.R. 76, the Department of Human Services published notice of its readoption of its rules governing outpatient mental health service standards.

On January 6, 2014 at 46 N.J.R. 77, the Department of Human Services published notice of its adoption of amendments to its rules governing managed health care services for Medicaid and New Jersey FamilyCare beneficiaries.

On January 6, 2014 at 46 N.J.R. 77, the Department of Human Services published notice of its readoption of its rules governing independent clinical laboratory services under Medicaid.

On January 6, 2014 at 46 N.J.R. 93, the Department of Human Services published notice of its adoption of amendments to its rules governing the scope of practice of athletic trainers outside of schools and professional teams.

Article by:

Beth Christian

Of:

Giordano, Halleran & Ciesla, P.C.

Build Better Relationships in 2014

While social media, mobile advertising, content creation and blogs are important in your new year’s marketing efforts, building strong relationships with clients and potential clients is still your most important marketing tactic. Don’t neglect this foundation of your marketing efforts. Make relationship building an integral part of your 2014 marketing plan.

build better relationships in 2014

How do you go about building better relationships with clients and potential clients? The key is to communicate and communicate often! But all forms of communication are not equal. Let’s break down the ideal process for building a communication strategy that will lead to stronger relationships with clients and potential clients.

Understand Your Ideal Client:

First and foremost – know who you are targeting. Spend some time looking at your client list. Are there common attributes? What types of cases are you looking for? What types of information are important to potential clients? Or is there a practice area you are looking to expand or start? Now think about what types of information you provide or what types of information would be valuable for each type of client. Today’s consumers are driven by information. Providing highly personalized content directly to the right audience will give your firm the opportunity for direct engagement with potential clients.

How Will You Communicate?

Technological advances mean you have multiple ways to communicate to your audience? Ideally you should leverage more than one to get your message heard. Social media, blogging, and email marketing form a trifecta that attorneys can use to distribute content without having to develop individual messaging for each. This trifecta will allow you to reach not only new prospects (through social media and blogging) but current clients and contacts that are also an important marketing opportunity that shouldn’t be overlooked. Clients may have need or may have contacts within their sphere of influence that have need for legal representation.

If you haven’t already, develop an email marketing list of all your contacts, clients, former clients and referral sources. This will be the basis of the marketing list you will use for email communications. Simultaneously, create a blog (wordpress is fairly easy) and sign up for Twitter and LinkedIn.

Develop An Editorial Calendar:

Now that you understand what your potential clients are looking for and how you will communicate, develop a content list of what you want to write and a schedule (at least 3 months out, but a full 12 months would be even better) for when you will send each article. Once you have your topics laid out you will have a schedule that will be easier for you to maintain moving forward.

Note that more content does not necessarily mean its better! Some attorneys we work with have avoided developing a content strategy primarily because of time constraints – assuming that every article needs to be a treatise on the law. This isn’t the case. You can create compelling content in 1500 words or less that is easily digestible for the average reader. Ideally your content should be informative and conversational, engaging readers and provoking them to want to find out more information or share what they have read with others. Attorneys – this means skip the legalese as much as possible and write content that is easy to understand for the lay person.

Once you have written the article it can be emailed to your contacts, posted to your blog and shared on Twitter and LinkedIn. This allows you to get maximum exposure for every article you write.

Staying in regular contact with your clients and potential clients by providing them with valuable information builds trust, stronger relationships and loyalty.

When settling into 2014 and preparing your marketing strategy, it is important to understand what your potential client’s needs are. Building relationships and providing informative, engaging content is the key to continued success.

Article by:

Anush Alexander

Of:

RW Lynch Company, Inc.

Online Legal Marketing Guidelines for 2014

Lawyers who are exceptionally good at the business of law understand that it is their reputation that is the engine of business development. This is not a novel concept. Provide exceptional representation and client service, people speak highly of you and more people hire you.

In 2014, while this general formula remains largely unchanged, the means by which lawyers can impress clients and the ways in which people communicate the value of a lawyer’s service has evolved significantly. And much of this evolution can be attributed to the internet and related online technologies.

Unfortunately, in adopting online legal marketing strategies and techniques, many lawyers have lost sight of the value of a strong professional reputation built on relationships. Ironically, as social networks and search technologies mature, it will be reputations and relationships that matter most online. Here are some guidelines to help you shape your online legal marketing campaigns.

Set Goals

If you take anything with you from this article, take this: Set specific, tangible and achievable goals for your online legal marketing activities. But not just any goals, goals that have meaning to the business of your law practice. Some examples might be:

Increase the number of clients you can source to organic search traffic.

Increase the percentage of visitors to your website or blog that complete an objective that will help you earn more meaningful attention.

Increase the instances of professional, or where permissible, client endorsements of your services online.

Make these goals specific and realistic. Use real numbers. Create systems to measure and analyze your progress. If you’re working with vendors or consultants, hold them to meeting these goals. Do more of what’s working for you and less of what’s not.

Update Your Online Assets

People expect to be able to find information about you online. And what they find is likely to have more of an impact upon their impression of your than you probably think.

While your website might not get you hired or fired on its own (based on what I’ve seen in the wild, this is becoming more probable), it is sure to contribute to the visitor’s perception of you and your practice.

Web technologies are rapidly evolving. Much of what was state-of-the-art online only a few years ago, is obsolete today. Outdated online assets can be a significant liability to business development. Do you walk into new client meetings with apparel, accessories and technologies from 1950 (perhaps a bad choice of year for some of you)? What message would that send to your potential client? The same is true for your online assets. In 2014, your web assets must:

Be built on technologically sound search engine-friendly architectures.

Load very quickly (in around a second)

Have designs that contribute to the user’s experience and are easy to read, use and interact with on a variety of devices (desktops, tablets and smartphones, responsive design).

Resonate with the problems, challenges and issues of your target audience.

Demonstrate why you are uniquely positioned to help them solve these problems.

Motivate online engagement in the form of comments, subscribers, links, social endorsements and shares.

You probably won’t know when your online assets cost you a new client. It’s unlikely that prospective clients will call or email you to tell you that your site is a joke (although they might if you provide them an avenue for feedback). But if you are getting visitors who don’t engage your pages, bounce off of them, or quickly exit, you might ask yourself whether it has anything to do with the quality of your online assets.

From Self-Promotional to Useful

In case you haven’t noticed, there’s a lot of noise online. Most of it is made by people and businesses talking about how great they are. And the legal profession is no exception. Visit any ten law firm websites, blogs or Facebook pages and you’ll be exhausted by all the “look at me” marketing.

Now put yourself in the position of someone who is looking for information about a legal issue or looking for more information about a specific lawyer. Do you really think they’re persuaded by that pop-up video of a lawyer talking about how much experience they have and how hard they fight? They’re not impressed. And they’re certainly not going to share that cheesy marketing with their friends (unless, of course, it’s in jest).

Instead of building a web presence that feels like a television commercial, focus your efforts on the “stuff” that enhances your professional reputation and helps to create, nurture and solidify relationships. Ask yourself:

Who is my target audience online? What makes these people tick?

What are they looking for online and what do they like to do?

What are they passionate about? What are they afraid of?

How can I supply their demand for information in a way that demonstrates my knowledge, skill and experience in addressing their issues?

The internet doesn’t need another article about what to do after a car accident. What it does need is real leadership from people who know what they’re talking about and can be trusted. And it is this approach to online legal marketing that impresses clients, earns meaningful attention, motivates action and earns new clients. Just like it did before there was an internet.

Article by:

Gyi Tsakalakis

Of:

AttorneySync

The New gTLD Program: Latest Updates on Brand Protection and the Trademark Clearinghouse

The most significant development in the Internet space in recent years is the ongoing generic top-level domain (gTLD) expansion. (As a reminder, a TLD is what appears to the right of the “dot” in a domain name (i.e., .COM, .ORG, .GOV).) The Internet Corporation for Assigned Names and Numbers (ICANN) has embarked on an aggressive plan to expand the Internet from just 23 gTLDs to more than a thousand gTLDs, culminating in an application process in 2012 that allowed any organization with an interest in running a registry to apply for a new gTLD, provided it could meet the designated technical, operational and financial criteria. After this lengthy application and vetting process, ICANN has now delegated the first 44 gTLDs, with additional gTLDs launching each week. Over the next couple of years ICANN expects to delegate nearly 1,400 new gTLDs – including .CLOTHING, .COMPANY, .EDUCATION, .GURU, .HOSPITAL, .INC, .INVESTMENTS, .LAND, .MENU, .MOVIE, .NEWS, .PHOTOS, .SCIENCE, .SPORTS and .WEBSITE.

ICANN’s new gTLD program presents an opportunity for brand owners to utilize the Internet in ways not previously possible, but also raises new enforcement challenges for brand owners. For the first time ever, brand owners can register their trademarks on domain registries tailored to their target industries. On the other hand, brand owners may also be required to monitor 1,400 additional registries to prevent misuse and abuse of their trademarks. With that in mind, in order to ensure that trademark and brand owners’ rights are protected as the Internet expands, ICANN has devised a Trademark Clearinghouse (TMCH), one of the key new gTLD enforcement tools for brand owners, which now serves as a repository for information regarding trademark rights.

A very important step in developing a TMCH strategy is understanding the benefits of participating in the TMCH. The TMCH offers brand owners two separate services for protecting their brands online:

Participation in the Sunrise Period. The Sunrise Period is an initial period of at least 30 days before domain names are offered to the general public. Companies that participate in the TMCH have priority in registering domain names that match their trademarks on any of the new gTLDs to protect them from cybersquatting or to actively use them for strategic business and marketing purposes.
- To take advantage of the Sunrise Period, brand owners can enter registered trademarks for which they can provide proof of use of the mark.
- For example, by entering KATTEN MUCHIN ROSENMAN in the TMCH for .LAW, our firm can later register the domain namewww.kattenmuchinrosenman.law to prevent a third party from obtaining that domain name. Alternatively, the firm may choose to redirect its current website to the new domain name and drop the .COM altogether.
- Opting not to participate in the Sunrise Period does not preclude brand owners from registering domain names matching their trademarks on the new gTLDs. However, once the Sunrise Period expires, brand owners will be competing with the general public on a first-come, first-served basis.
Trademark Claims Service. This is a mandatory service that must be available for at least 90 days during the initial launch of a new gTLD (some registries are opting for longer periods). When attempting to register a domain name, the potential registrant receives a warning notice that the domain name exactly matches a verified trademark record in the TMCH. If a potentially infringing domain name registration proceeds, the trademark owner is notified, and the owner can take appropriate action.
- To take advantage of the Trademark Claims Service, companies can enter registered trademarks in the TMCH (proof of use not required) and be notified of up to 50 domain labels that were found to be abusive by a court under the Anti-Cybersquatting Consumer Protection Act (ACPA) or under the Uniform Domain-Name Dispute-Resolution Policy (UDRP).
- For example, by entering KATTEN MUCHIN ROSENMAN in the TMCH for Claims Service, our firm would receive a notification upon the registration of the domain name www.kattenmuchinrosenman.fail. The firm can take immediate action against the domain name registrant, and transfer or suspend the infringing domain.
- Deloitte, ICANN’s TMCH provider, recently announced plans for a free Extended Claims Service wherein the TMCH will offer notification to trademark owners of marks listed in the TMCH of domain names registered in any of the new gTLDs that match their marks or abused labels for an indefinite time period after each new gTLD registry’s Claims Period. Brand owners must opt-in for the service.
- However, unlike the standard mandatory Claims Service, the Extended Claims Service will not provide a warning notice to prospective domain name registrants that an applied-for domain name matches marks listed in the TMCH or their abused labels prior to their registration, thus providing less deterrent effect than the Trademark Claims Service.

There is no deadline to enter marks into the TMCH. However, as of January 3, 2014, ICANN has already launched 44 new gTLDs, and it is anticipated that ICANN will continue to announce the start-up information for additional TLDs on a weekly basis until all 1,400 new gTLDs are delegated. As such, it is recommended to submit your trademarks as soon as possible to allow sufficient time for processing and to avoid missing out on Sunrise registration opportunities.

Article by:

Merilee J. Arevalo

Christopher D. Casavale

Brian J. Winterfeldt

Of:
Katten Muchin Rosenman LLP

December New Jersey 2013 Health Care Regulatory Developments

Here are the most recent health care related regulatory developments as published in the New Jersey Register in December 2013:

On December 2, 2013 at 45 N.J.R. 2478, the Board of Medical Examiners published notice of its adoption of new rules which create the Genetic Counseling Advisory Committee and will require licensure of genetic counselors in the State of New Jersey.
On December 2, 2013 at 45 N.J.R. 2465, the Department of Health published notice of its cancellation of certificate of need calls for the following services: (1) pediatric long-term care; (2) specialized long-term care; and (3) pediatric intensive care beds and services. In addition, the Department of Health published notice that it was also postponing its certificate of need call for applicants for maternal and child health consortia changes in membership and intermediate and intensive bassinettes.
On December 16, 2013 at 45 N.J.R. 2602, the Department of Human Services published notice of its readoption of its rules governing community mental health services.
On December 16, 2013 at 45 N.J.R. 2602, the Department of Human Services published notice of its readoption of its rules governing payment for dental services under Medicaid.
On December 16, 2013 at 45 N.J.R. 2607, the Board of Physical Therapy Examiners published notice of its readoption of its rules governing the licensure and regulation of physical therapists and physical therapist assistants.
On December 16, 2013 at 45 N.J.R. 2618, the State Board of Dentistry published notice of its action on a petition for rulemaking filed by the New Jersey Dental Association requesting that the Board adopt a rule to establish regulatory guidance with respect to the corporate and/or unlicensed practice of dentistry in New Jersey. This petition was filed following the issuance of a joint staff report on the corporate practice of dentistry by the U.S. Senate Committee on the Judiciary which found that corporations not owned by dentists operated dental clinics under the guise of providing administrative and/or financial management support to licensed dentists. The Board referred the matter to its Rules and Regulations Committee for further deliberation.

Article by:

Beth Christian

Of:

Giordano, Halleran & Ciesla, P.C.

Supreme Court Will Rule on Whether Agency-Approved Beverage Label Can Be Challenged as ‘False Advertising’ in Federal Court

McDermottLogo_2c_rgb

On January 10, 2014, the U.S. Supreme Court agreed to hear an appeal by Pom Wonderful LLC against The Coca-Cola Company. The Court will examine whether Pom can bring a federal Lanham Act false advertising claim against a Minute Maid juice product label that had been approved by the U.S. Food and Drug Administration (FDA). (Pom Wonderful LLC v. The Coca-Cola Co., U.S. Supreme Court case no. 12-761).

At issue in the lawsuit is a Minute Maid label for “Pomegranate Blueberry Flavored Blend of 5 Juices.” The label presents the words “Pomegranate Blueberry” in larger type than the remainder of the phrase. Pom claimed that the label was misleading because the product contains 0.3 percent pomegranate juice and 0.2 percent blueberry juice.

A California federal trial court and the 9^th Circuit federal appeals court in California both ruled that Pom could not bring a Lanham Act false advertising claim against the label, since it had been specifically examined and approved by the FDA. Pom has argued that the decisions were contrary to established law in other U.S. courts, and that federal regulations establish a floor –but not a ceiling — on what an advertiser is required to do to avoid a claim that the advertising is false and misleading. Coca-Cola has argued that product labeling that is specifically authorized by the Food, Drug and Cosmetic Act (FDCA) and approved by the FDA cannot be charged as false or misleading under another federal statute such as the Lanham Act.

Although the question before the Supreme Court is whether a private party can bring a Lanham Act claim challenging a product label regulated under the FDCA, the Supreme Court’s decision could potentially have significant implications for the alcohol beverage industry. For example:

If the Supreme Court rules that a competitor cannot bring a Lanham Act claim against a label that has been approved by the FDA, a natural question is whether the same rule will apply with regard to alcohol beverage labels that have been reviewed and approved by the Alcohol and Tobacco Tax and Trade Bureau (TTB) (by its terms, the Federal Alcohol Administration Act does not preempt the Lanham Act); and

If a Lanham Act claim would be barred against labels approved by TTB, a question may arise about whether a Lanham Act claim would be barred on elements of the label that TTB does not specifically review as a matter of policy – such as contrast, size and placement of label elements.

The Supreme Court is expected to hear argument this spring and decide the case by June 2014. Depending on the decision, alcohol beverage industry members could find they have additional insulation against a federal false advertising claim, but they may likewise be limited in bringing a federal false advertising lawsuit against a competitor’s label that has been approved by TTB.

Article by:

Robert W. Zelnick

Of:

McDermott Will & Emery

Prepare Now for Foreign Talent Acquisition: H-1B Cap Demand Projected to Reach Five-Year High

I. FISCAL YEAR FOR 2015 H-1B CAP

U.S. Citizenship and Immigration Services (“USCIS”) will start accepting new H-1B petitions for Fiscal Year 2015 on Tuesday, April 1, 2014. As such, employers must start identifying current and future employees who will need to be sponsored for new H-1B petitions as soon as possible, as it is likely that this year’s H-1B quota (“H-1B cap”) will be met within one week of it opening and USCIS will then stop accepting new petitions until next year’s H-1B cap opens on April 1, 2015. Once the H-1B cap closes, employers will need to look at alternative visa options for affected employees to assess whether a viable option is available. Please note that only new H-1B petitions are affected; H-1B petitions involving someone who is already in H-1B status or has previously held H-1B status are not affected by the H-1B cap.

By way of background, U.S. businesses use the H-1B program to employ foreign workers in specialty occupations that require theoretical or technical expertise in specialized fields, such as scientists, engineers, or computer programmers. The number of initial H-1B visas available to U.S. employers (the “H-1B cap”) is 65,000, with an additional 20,000 numbers set aside for individuals who have obtained a U.S. master’s degree or higher. This year’s H-1B cap will leave employers unable to secure all of the highly skilled workers needed to remain competitive and will no doubt re-ignite the debate about the need to implement a comprehensive immigration reform.

The rate at which USCIS has received cap-subject H-1B petitions in the past few years has dramatically increased. The usage of the H-1B program is strongly connected to the health of the U.S. economy, and the increase in the H-1B usage rate corresponds with the economic recovery following the 2008 Economic Recession. In keeping with this trend, business immigration practitioners are predicting that the H-1B quota will be reached by the second quarter of 2014, if not much sooner. In fact, it is possible that initial demand for H-1B visas will exceed the 85,000 supply during the first week of the filing season, April 1, 2014 through April 4, 2014.

If USCIS receives more than 85,000 H-1B Cap Petitions during the first week of availability, then a lottery will be conducted to select the petitions that will be processed under this cap. Those petitions not selected in the lottery will be rejected. Should such a rejection occur, an affected foreign national seeking immigration and employment authorization sponsorship with an employer will be unable to obtain an H-1B petition until October 1, 2015 (with the filing season beginning April 1, 2015). Affected foreign nationals may also be required to forego employment with employers and possibly leave the United States.

II. HISTORICAL CONTEXT

As an historical example, in FY 2009 (October 1, 2008 – October 1, 2009), approximately 163,000 H-1B petitions were filed within the five-day filing period at the beginning of April 2008 and a lottery was needed to select the petitions which would enjoy processing under that year’s cap.

Last year, the FY 2014 H-1B cap was reached within the first week of filing. USCIS received a total of 124,000 H-1B petitions and therefore had to conduct a lottery in order to select the petitions needed to meet the regular cap of 65,000 and master’s cap of 20,000.00

The markedly higher demand for H-1B visa petitions in the FY 2014 season is indicative of an improving job market and economy in the United States, and the economy and need for highly skilled workers have picked up over the last year. Accordingly, we project that the demand for H-1B visas this year will be even greater than last year with up to 40% of all H-1B petitions filed by employers rejected by USCIS pursuant to a randomized lottery system.

III. RECOMMENDED ACTION

Based upon the above, we strongly urge employers to file H-1B cap-subject petitions with USCIS on the earliest possible start date in FY 2015: April 1, 2014. This will allow for the mailing of H-1B cap-subject petitions to USCIS on March 31, 2014, for delivery to USCIS on Tuesday, April 1, 2014, the very first day of filing. This will provide the best possible chance for acceptance of the H-1B petition. It can take two to four weeks or more to gather all of the necessary information and documentation and prepare the requisite forms and supporting documentation for filing of an H-1B petition. Therefore, we recommend that H-1B cases should be initiated immediately.

Article by:

Ian R. Macdonald

Scott T. Decker

Of:

Greenberg Traurig, LLP

Illinois Environmental Protection Agency (IEPA) Proposes Emergency Petcoke Rules to the Illinois Pollution Control Board

On Thursday, January 16, 2013, the Illinois Environmental Protection Agency (IEPA)filed a proposal and motion for emergency rulemaking regarding the containment of coke (also referred to as petroleum coke, or petcoke) and coal at bulk terminals with the Illinois Pollution Control Board (Board). In the proposed rule, IEPA asserts that fugitive emissions emanating from several outdoor storage areas at bulk terminals in Cook County are not properly controlled and, therefore, constitute a threat to the public interest, safety, or welfare. The rule requires sources to engage in a number of management activities, take immediate measures to suppress fugitive emissions, and totally enclose all coke and coal piles. ^[1]

The rule applies to coke and coal bulk terminals which are defined as sources, sites, or facilities that store, handle, blend, process, transport, or otherwise manage coke or coal. A number of these bulk terminals are located along shipping channels and waterways such as the Calumet River, Illinois River, and the I&M Canal. Excluded from the rule are sources, sites, or facilities that “produce” or “consume” the coke or coal, such as mines or coal-fired power plant sites. We highlight a few key requirements and deadlines included in the proposal below, but this is not an exhaustive list. To see the entire proposal, please click here.

Within 60 days, all coke and coal that has been at the source for more than a year must be moved to a location that complies with the requirements of the Act and Board regulations.
All other coke and coal must be used or removed within a year from the date it was received.
Within 45 days, sources must submit a plan to IEPA for the total enclosure of all coke and coal within two years.
Within 45 days, sources must submit to IEPA and follow a Coke and Coal Fugitive Dust Plan.
All plans submitted pursuant to the proposed rules will be posted on IEPA’s website and subject to a 30-day public comment period.
Beginning 60 days after the effective date, new setback requirements apply in Cook County, municipalities, and their immediate surroundings requiring coke and coal piles that are not totally enclosed to be located at least 200 feet inside the property line of the source.
Beginning 60 days after the effective date, all coke and coal piles must be on impermeable pads and located at least 200 feet from waters of the U.S., public water supply reservoirs and intakes, and any potable water well.
No loading or unloading or otherwise “disturbing” coke and coal piles when wind speeds exceed 25 miles per hour.
Sources must discontinue the use of non-paved roads within 90 days

Owners or operators of sources subject to the emergency rules will have to implement a number of other operational measures to comply with the rules. In addition, the rule proposes rigorous recordkeeping and reporting requirements that impose, at minimum, monthly certification and reporting requirements.

The Illinois economy relies on shipping canals and water systems on a daily basis as transportation corridors so we are further reviewing this proposal to ensure the end result does not impede commerce. The proposal raises several questions such as whether it is economically reasonable or even technically feasible to totally enclose all of these areas in the manner prescribed in the rules especially given the short timeframes for compliance. This rule could also be reaching unintended entities. Finally, we are reviewing whether IEPA has adequately supported that an emergency exists. The Agency’s proposal as filed does not provide clear answers to these questions and we intend to work closely with the IEPA to help identify areas where the regulatory approach may be improved. The Board will address IEPA’s motion at the January 23, 2014 Board meeting, but the Board can take a number of actions and the outcome is unknown. Nonetheless, the rulemaking docket is now open to accept public comments through noon on Tuesday, January 21. This is the time to begin educating the State and others as to the importance of the coke and coal industry to the State and nation, and to ensure that the difficulties presented by the rule are known. Since emergency rules, once effective, have a limited effective period, the next step for the State will be to develop a more permanent framework for regulation, either through a full rulemaking or legislation. Industry must be mindful of the need to participate fully in order to ensure any framework developed is achievable and sensible.

_{^{[1] Generally, “coke” is derived from the distillation of coal, including metallurgical coke, or “metcoke” or from oil refinery coker units or other cracking processes, including petroleum coke, or “petcoke.” Coke is primarily used as a fuel.}}

Article by:

Amy Antoniolli

Of:

Schiff Hardin LLP

The National Law Forum

Eastern District of North Carolina (E.D.N.C.) Bankruptcy Court Rules that Borrower Can Raise Unfair and Deceptive Trade Practices Claims Against Lender Based on Refusal to Modify Loan

Like this:

California Continues to Shape Privacy Standards: Song-Beverly Act Extended to Email Addresses

Like this:

January 2014 New Jersey Regulatory Developments

Like this: