North America

U.S. Supreme Court – Willfulness Is Not a Prerequisite for a Profit Award for Trademark Infringement

In its unanimous April 23, 2020 opinion in Romag Fasteners v. Fossil, Inc., the Supreme Court made clear once and for all that a successful trademark plaintiff is not required to establish that the defendant’s infringement was willful to be entitled to an award of the infringer’s profits. In other words, profits may be disgorged for less than willful infringement of a trademark.

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Supreme Court: The ACA & Risk Corridor Obligations

The U.S. Supreme Court decision today in Maine Community Health Options v. United States, is a major decision affecting healthcare and resolving a significant Obamacare dispute. The Affordable Care Act famously established online exchanges where insurers could sell their healthcare plans. It included the now-expired “Risk Corridors” program aimed to limit the plans’ profits and losses during the exchanges’ first three years (2014-16). The Act contained a formula for computing a plan’s gains or losses at the end of each year, providing that eligible profitable plans “shall pay” the Secretary of the Department of Health and Human Services (HHS), while the Secretary “shall pay” eligible unprofitable plans. But the Act did not appropriate funds that the Secretary could dispense or cap the amounts that the Secretary would pay to unprofitable plans. Nor was there any budget neutrality stated in the Act. The program was something less than a great success and, after three years, in which unprofitable plans outnumbered those that were profitable, the net deficit was more than $12 billion. But the Centers for Medicare and Medicaid Services (CMS) couldn’t make any payments to unprofitable plans because, each year, its budget appropriation included a rider preventing CMS from using the funds for Risk Corridors payments. Four unprofitable plans brought suit against the government under the Tucker Act, alleging that the ACA obligated the government to pay the full amount of their negative deficit. With Justice Sotomayor writing for seven other Justices (Alito, J. dissented, and Thomas, J. and Gorsuch, J. did not join one section of the majority opinion), the Court agreed with the plans and reversed the Federal Circuit’s holding that while the ACA initially created an initial obligation, the subsequent riders vitiated it.

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Chambers USA 2020 Ranks Connolly Gallagher Three Delaware Practices

Connolly Gallagher LLP appears in three Delaware practice categories in the 2020 edition of Chambers USA: America’s Leading Lawyers for Business released today. The prestigious Chambers guide has consistently ranked Connolly Gallagher for Delaware Chancery, Intellectual Property and Labor & Employment services.  Chambers sources including firm clients and market commentators praise Connolly Gallagher  as:

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Law Firm ILN-telligence Podcast: Episode 2: Michael Slan | Fogler Rubinoff LLP

Michael Slan is the managing partner of Fogler Rubinoff LLP in Toronto, Canada, and a member of the International Lawyers Network. In this episode, Lindsay has a candid conversation with Michael about the importance of communication in this time of pandemic, why deep cuts may not be the best cuts, and what leadership looks like in the face of market downturns and global lockdowns.  Listen here.

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New York State Again Revises Paid Election Leave Law

As we previously reported, last year, New York State expanded its election leave law to allow employees more paid time off if needed in order to vote on Election Day (increasing the paid time off from two to three hours). However, in the State’s 2020-21 budget, signed by Governor Andrew M. Cuomo on April 3, 2020, new amendments to New York’s Election Leave Law (Election Law § 3-110) (the “Law”) undo the changes implemented by last year’s legislation and essentially reinstates the prior time-off rules, which provide that if an employee is a registered voter without “sufficient time” outside of scheduled working hours to vote in an election, the employee may take up to two hours of paid time off from work. The Law went into effect immediately.

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SEC and FINRA Provide Guidance on Regulation Best Interest

Recently, the U.S. Securities and Exchange Commission’s (“SEC”) Office of Compliance Inspections and Examinations (“OCIE”) issued a Risk Alert to provide broker-dealers with guidance on examinations regarding regulation Best Interest (“Reg BI”).  Reg BI requires that when broker-dealers make a recommendation regarding securities to a retail customer it must act in the best interest of the customer, without placing its own financial or other interest ahead of the retail customer’s interest.  The Financial Industry Regulatory Authority (“FINRA”) also stated that it would take the same approach in its examinations of broker-dealers and their associated persons for compliance with Reg BI.

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Global Lockdown: International Jurisdictions Extend COVID-19 Stay-Home Orders

As we previously reported, the COVID-19 pandemic has altered the global workplace and international employer-employee relations in profound ways. As COVID-19 continues to spread, countries have enacted nationwide orders, requiring billions of people to stay at home. Recently, in an effort to continue to slow the spread of COVID-19, several countries have extended national stay-home orders. The ordered restrictions vary according to jurisdiction specific reasons.

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Time Is Money: A Quick Wage-Hour Tip on … the De Minimis Principle

Generally, the Fair Labor Standards Act (“FLSA”) requires employers to compensate their non-exempt employees for all time that they are required or allowed to perform work, regardless of where and when the work is done.  However, an exception exists for small amounts of time that are otherwise compensable work time but challenging to record, otherwise known as the de minimis doctrine.  Of course, the million-dollar question is how much time is considered de minimis.  Unfortunately, there is no bright-line rule and the answer may differ under federal law and California law, or other states.

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Another California Federal Judge Denies Postmates’ Attempts to Escape Thousands of Individual Arbitrations Continue Reading…

We have written here about the efforts of several gig economy companies like DoorDash to avoid having to conduct – and pay for – thousands of individual arbitrations alleging that their workers had been misclassified.

As we have said before, companies that implement arbitration agreements with class action waivers must be careful what they ask for.  By using such agreements, they run the risk of dozens, hundreds or even thousands of individual arbitrations, the cost of which could threaten the companies’ very existence.  (In California, we estimate that the arbitration costs alone for a single-plaintiff case are approximately $60,000 – which does not include the attorney’s fees in defending that case or the potential exposure.)  It is for that very reason that some companies have elected not to implement such agreements.

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First Circuit: Massachusetts Employee Must Abide by a Restrictive Covenant Governed by a Delaware Choice of Law Clause – the More Things Change, the More They Stay the Same, Part II

When Massachusetts enacted the Massachusetts Noncompetition Agreement Act (“MNCA”) in mid-2018, some commentators suggested that the statute reflected an anti-employer tilt in public policy. But, we advised  that sophisticated employers advised by knowledgeable counsel could navigate the restrictions set forth in the MNCA.  As reported here, the May 2019 decision from the District of Massachusetts in Nuvasive Inc. v. Day and Richard, 19-cv-10800 (D. Mass. May 29, 2019) (Nuvasive I) supported our initial reading of the MNCA.   The First Circuit’s April 8, 2020 decision in Nuvasive, Inc. v. Day, No. 19-1611 (1st Cir. April 8, 2020) (Nuvasive II),which upheld the District Court’s decision, provides further evidence that Massachusetts courts will still enforce contractual choice of law provisions when considering requests to enforce certain restrictive covenants in employment contracts.  Indeed, in Nuvasive II, the First Circuit concluded that the MNCA, by its terms, does not apply to non-solicitation agreements, and that the Massachusetts employee, Day, had not demonstrated a legal basis for the District Court to ignore the Delaware choice of law clause in his employment agreement.

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