25th Annual Issues for

Corporate House Counsel

CLE Seminar

Louisville, Kentucky

Sponsored by the

Kentucky Bar Association

Corporate House Counsel Section

Kentucky Bar Association

514 West Main Street

Frankfort, Kentucky 40601

502.564.3795

www.kybar.org

The Kentucky Bar Association Corporate House Counsel Section

presents:

25th Annual Issues for Corporate

House Counsel CLE Seminar

This program has been approved in Kentucky for 7.00 CLE credits including

2.00 Ethics credits.

Compiled and Edited by: The Kentucky Bar Association

Office of Continuing Legal Education for

Kentucky Bar Association Corporate House Counsel Section

© 2015 All Rights Reserved Published and Printed by:

The Kentucky Bar Association, April 2015. Editor’s Note: The materials included in this 25th Annual Issues for Corporate House Counsel seminar book are intended to provide current and accurate information about the subject matter covered. The program materials were compiled for you by volunteer authors. No representation or warranty is made concerning the application of the legal or other principles discussed by the instructors to any specific fact situation, nor is any prediction made concerning how any particular judge or jury will interpret or apply such principles. The proper interpretation or application of the principles discussed is a matter for the considered judgment of the individual legal practitioner. The faculty and staff of the Kentucky Bar Association disclaim liability therefor. Attorneys using these materials or information otherwise conveyed during the program, in dealing with a specific legal matter, have a duty to research original and current sources of authority.

25th Annual Issues for Corporate House Counsel CLE Seminar

Table of Contents

Agenda............................................................................................................................. i Speakers ........................................................................................................................ iii KBA Corporate House Counsel Trademark Toolkit ......................................................... 1 Hot Topics in Employment Law ....................................................................................... 9 18 U.S.C. §1519 and Anticipatory Obstruction of Justice .............................................. 35 International Issues Facing Corporate House Counsel .................................................. 45 Legal Issues for Traditional "Vice" Industries: Trademark Issues in the Surging Bourbon Industry .............................................................................................. 57 Legal Issues for Traditional "Vice" Industries: Vice Industries Are Heavily Regulated – Tips on Working with the Rulemakers ....................................................... 61 Legal Issues for Traditional "Vice" Industries: Pre-empting the Angel's Share ............... 63 What to Expect When You're a Respondent .................................................................. 69 Individual Liability under the Fair Labor Standards Act .................................................. 79 The CAN-SPAM Act ...................................................................................................... 81 The EEOC and Severance Agreements: Now What? .................................................... 89 Kentucky Noncompetition Law ...................................................................................... 93 Cloud Security in the Age of Data Breach ..................................................................... 97

FCRA Actions against Employers: Millions of Reasons to Comply with FCRA Requirements for Background Investigations .................................................... 103 Preserving Privilege in Internal Investigations ............................................................. 111 eDiscovery Pitfalls ....................................................................................................... 117 Social Media Policies for Employers ............................................................................ 121 Crafting a "Bring Your Own Device" Policy that Meets Your Organization's Needs .................................................................................................. 123 President Obama's Executive Action on Immigration Reform ...................................... 127 Premises Liability in Kentucky ..................................................................................... 133

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25th Annual Issues for Corporate House Counsel CLE Seminar April 16, 2015

Louisville, Kentucky

8:00-8:30 a.m. Registration & Continental Breakfast 8:30-9:30 a.m. Trademark & IP Practice (1.00 CLE credit) William C. Ferrell, Jr. 9:30-10:30 a.m. Employment Law Hot Topics (1.00 CLE credit) Kathleen B. Wright Kyle D. Johnson 10:30-10:45 a.m. Break 10:45-11:45 a.m. Ethical Issues Associated with 18 U.S.C. §1519 and

Anticipatory Obstruction of Justice (1.00 Ethics credit) Professor Eric Finseth Alden 11:45 a.m.-12:30 p.m. Luncheon & Annual Section Meeting 12:45-1:45 p.m. Issues Faced by Global Employers in the Commonwealth (1.00 CLE credit) Dawn Franklin Croft Carson T. Stewart 1:45-2:45 p.m. Legal Issues for Traditional "Vice" Industries (1.00 CLE credit) Lisa C. DeJaco Lisa E. Underwood Donald J. Kelly 2:45-3:00 p.m. Break

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3:00-4:00 p.m. Procedural Basics in Disciplinary Proceedings (1.00 Ethics credit) Robbie Owen Clements 4:00-5:05 p.m. Five Minute Drill Hot Topics for In-House Counsel (1.00 CLE credit) FLSA Liability Jeffrey A. Calabrese CANSpam/PII Kathie M. McDonald-McClure EEOC Separation Agreements Judith B. Hoge Non-Complete & Non-Solicitation Agreements Thomas M. Williams Cloud Security Douglas F. Brent FCRA Compliance Leila G. O'Carra Preserving Privilege in Internal Investigations Jeremy S. Rogers & Alina Klimkina eDiscovery Pitfalls Patrick W. Michael Social Media Matthew W. Barszcz BYOD Policy Catherine Salmen Wright President Obama's Executive Action on Immigration Reform Nicholas M. Haering Premises Liability W. Craig Robertson III

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SPEAKERS

William C. Ferrell, Jr. Trust Tree Legal, P.C. 1321 Adams Street Nashville, TN 37208 615.852.8408 Bill@trust-tree.com Bill Ferrell is an attorney in Nashville and co-founder of Trust Tree Legal, P.C., which helps people and businesses select and protect their brand names and logos by registering trademarks with the U.S. Patent and Trademark Office. He received his B.S., with honors, from the University of Louisville Speed Scientific School in 1999 and his J.D., magna cum laude, from the University of Louisville Brandeis School of Law in 2005. Mr. Ferrell is also the co-founder of the Trademarkology blog, which is a fun take on trademark law designed to educate the general public on the importance of branding and trademarks. He was previously a member of Stites & Harbison, PLLC from 2003-2014, where he practiced intellectual property & technology law, patent prosecution & protection and intellectual property litigation. Mr. Ferrell is admitted to practice by the U.S. Patent and Trademark Office, the U.S. Court of Appeals for the Federal Circuit, and the U.S. District Courts for the Eastern, Middle and Western District of Tennessee, the Eastern District of Texas, the Western District of Wisconsin, the Western District of Kentucky, the Southern District of Indiana, and the Northern District of Illinois. He is a member of the American, Tennessee, Louisville and Nashville Bar Associations.

Kathleen Biggs Wright Frost Brown Todd LLC

400 West Market Street, Suite 3200 Louisville, KY 40202-3363

502.568.0282 kwright@fbtlaw.com

Katie Wright is a member of the labor department at Frost Brown Todd, LLC in Louisville, where she concentrates her practice on labor and employment law issues, including litigation, arbitrations, conducting investigations, and advising employers on compliance with various federal, state and local employment laws. Ms. Wright rejoined the firm in 2009 after serving as in-house employment counsel for Kindred Healthcare for over four years. There, she advised executives and managers in the Health Services Division, which included approximately 230 nursing homes in twenty-seven states, on compliance with various state and federal laws relating to employment. She also managed Kindred Healthcare's EEOC Charges nationally, conducting numerous workplace investigations, and developed various training programs. Ms. Wright received her B.A. from Indiana University in 1991 and her J.D., magna cum laude, from the University of Louisville Brandeis School of Law in 1997. She is a member of the Kentucky Bar Association and its Labor & Employment Law Section.

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Kyle D. Johnson Frost Brown Todd LLC 400 West Market Street, Suite 3200 Louisville, KY 40202 502.589.5400 kjohnson@fbtlaw.com Kyle Johnson is a senior associate in the Labor and Employment Practice Group in Frost Brown Todd's Louisville office. His practice focuses on a wide variety of labor and employment law issues, including discrimination, harassment, and wrongful discharge. Prior to joining the firm, Mr. Johnson served as a federal law clerk for Hon. Joseph H. McKinley, Jr. in the Western District of Kentucky and the Hon. Hanly A. Ingram in the Eastern District of Kentucky. He received his B.A. from the University of Wisconsin in 2003, and graduated summa cum laude and first in his class from the University of Louisville Brandeis School of Law, where he was a member of the University of Louisville Law Review. Prior to beginning law school, Mr. Johnson served for two years as the Communications Specialist for the South Central Wisconsin Bioterrorism Preparedness Consortium. He is a member of the American, Kentucky and Louisville Bar Associations.

Professor Eric Finseth Alden Northern Kentucky University Chase College of Law

Highland Heights, KY 41099 859.572.5520

Finsethe1@nku.edu Professor Eric Finseth Alden is an Associate Professor of Law who came to Chase Law School from Palo Alto, California, where he had previously been an equity partner in corporate and securities law with the leading Silicon Valley law firm and later an equity partner in the Silicon Valley office of a global law firm. He has broad securities regulatory and transactional experience, including public company disclosure, corporate governance and securities law compliance counseling, public and private offerings of equity, debt and hybrid securities, mergers and acquisitions, the formation and venture capital financing of high tech startups, the formation and subsequent representation of venture capital and other private investment funds, and the representation of banks and hedge funds. From 2005-2006, Professor Alden served as an Attorney Fellow at the Securities and Exchange Commission in Washington, D.C., in the Division of Corporation Finance, Office of Chief Counsel. Prior to joining Chase, he also taught Corporate Governance as a lecturer at the University of California Berkeley School of Law, and Securities Regulation as an Adjunct Professor at the University of California Hastings College of Law. From 2010-2011, Professor Alden was Research Fellow in Securities Regulation and Corporate Governance at the Berkeley Center for Law, Business and the Economy. He received his B.A. from Harvard College, Certificat d'Etudes Politiques from I'Institut d'Etudes Politiques de Paris, M.A. from Freie Universität Berlin, and his J.D. from Columbia Law School. Professor Alden teaches courses in Securities Regulation, Securities (Business Organizations), Corporate Governance, Mergers & Acquisitions, Startups and Venture Capital Law, and Contracts. He is a member of the State Bar of California.

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Dawn Franklin Croft YUM! Brands, Inc. 1441 Gardiner Lane Louisville, KY 40213 502.874.2856 dawn.croft@yum.com

Dawn Croft is a senior attorney at Yum! Brands, Inc., in Louisville, where she focuses on employment practices, IT security and data privacy, compensation, securities and governance. She previously worked as an associate attorney with Frost Brown Todd, LLC from 2007-2010, where she focused on general corporate law, banking, mergers and acquisitions, municipal bonds and securities. Ms. Croft received her B.A. from Yale University in 2001 and her J.D. from the University of Kentucky College of Law in 2007. She is a member of the Kentucky Bar Association and its Business Law Section.

Carson T. Stewart YUM! Brands, Inc.

1441 Gardiner Lane Louisville, KY 40213

502.874.6469 carson.stewart@yum.com

Carson Stewart is Corporate Counsel at Yum! Brands, Inc. in Louisville, where he advises on a variety of corporate matters including corporate governance, securities and financings, as well as technology and treasury-related agreements. Prior to joining Yum, Mr. Stewart spent four years as a corporate associate in the New York office of Davis Polk & Wardwell, LLP, where his practice focused on mergers & acquisitions. He also worked at Citibank as Assistant General Counsel advising a team within the Citi Enterprise Payments division developing innovative digital payment solutions. He joined Yum! in August 2013. Mr. Stewart earned his B.A. from Indiana University-Bloomington in 2003, and his J.D. from Harvard Law School in 2006. He clerked for the Hon. John G. Heyburn II of the U.S. District Court for the Western District of Kentucky and is admitted to practice in New York and Kentucky. He is a member of the KBA Corporate House Counsel Section.

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Lisa C. DeJaco Wyatt Tarrant & Combs, LLP 500 West Jefferson Street, Suite 2800 Louisville, KY 40202 502.562.7375 ldejaco@wyattfirm.com

Lisa DeJaco is a partner at Wyatt Tarrant & Combs, LLP, where she is a member of the firm's Intellectual Property Protection and Litigation Service Team. She practices extensively in the area of intellectual property litigation, where she has prosecuted and defended unfair competition claims, trade secret disputes, and infringement actions over copyrights, trademarks and patents. Since 2010, she has been listed in Woodward/White's The Best Lawyers in America® for intellectual property. She has also defended clients in potential class actions varying from toxic exposures to employment disputes. Ms. DeJaco is AV Preeminent Peer Review Rated by Martindale-Hubbell, and is listed as an up-and-coming lawyer in Chamber's USA: America's Leading Lawyers for intellectual property. She received her B.A., summa cum laude, from Furman University in 1997, where she was a Presidential Scholar and Phi Beta Kappa, and her J.D. from the University of Virginia School of Law in 2000. Ms. DeJaco was a member of the Bingham Fellows Class of 2013, an associate member of the Louis D. Brandeis Inn of Court from 2001-2003, and served as Chair of the Louisville Bar Association's Appellate Section from 2009-2010. She is a member of the American, Kentucky, Louisville and Jefferson County Women Lawyers Associations.

Donald J. Kelly Wyatt Tarrant & Combs, LLP

500 West Market Street, Suite 2600 Louisville, KY 40202

502.562.7387 dkelly@wyattfirm.com

Don Kelly is Partner in Charge of Wyatt Tarrant & Combs LLP's Louisville office, where he is a member of the firm's Litigation & Dispute Resolution Service Team and Executive Committee. He practices in the areas of toxic tort and related environmental litigation, products liability, and commercial disputes. Mr. Kelly is included in Woodward/White's The Best Lawyers in America® in the areas of commercial litigation, litigation-environmental, and product liability litigation (2010-2014) and mass tort litigation/class actions-defendants (2013-2014). He has achieved the highest professional rating by Martindale-Hubbell, and was recognized by his peers in Kentucky Super Lawyers® in the practice area of business litigation. Prior to beginning his legal career, Mr. Kelly worked as a mechanical engineer with the Louisville Gas & Electric Company. He received his B.S.M.E. from Purdue University in 1983, and his J.D., cum laude, from the University of Louisville in 1988. He is a member of the Defense Research Institute, the Kentucky Defense Research Institute, Leadership Louisville 2001, Leadership Kentucky 2007, and the Louisville, Kentucky, and Federal Bar Associations.

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Lisa E. Underwood Wyatt Tarrant & Combs, LLP 250 West Main Street, Suite 1600 Lexington, KY 40507 859.288.7665 lunderwood@wyattfirm.com

Lisa Underwood is a partner with Wyatt Tarrant & Combs, LLP in Lexington, where she leads the firm's Data Privacy & Security Team, bringing together the firm's experience in privacy and security in banking, healthcare and other industries in order to provide legal assistance on data security and breaches for clients across a multitude of industries. She also leads the firm's Equine and Gaming Team and is a member of the firm's Corporate and Securities Service Team. Ms. Underwood represents businesses in pari-mutuel and data privacy and security matters, as well as legislative, administrative law and regulatory initiatives. She previously served as Executive Director for the Kentucky Horse Racing Commission, as Deputy Commissioner for the Department of Public Protection and Acting General Counsel, Kentucky Horse Racing Commission, and as senior corporate counsel for Mason & Hanger. Ms. Underwood received her B.A. from Sewanee-The University of the South in 1981, and her J.D. from the University of Kentucky College of Law in 1984. She is a member of the International Association of Privacy Professionals (IAPP) and the Kentucky and Fayette County Bar Associations.

Robbie Owen Clements Kentucky Bar Association Office of Bar Counsel

514 West Main Street Frankfort, KY 40601

502.564.3795 rclements@kybar.org

Robbie Owen Clements joined the Kentucky Bar Association as Deputy Bar Counsel in April 2006, and became the Office of Bar Counsel's Consumer Assistance Manager in January 2015. She earned her B.A., summa cum laude, from Kentucky Wesleyan College in 1990, and her J.D. from the University of Louisville School of Law in 1993. Ms. Clements was employed by the Madisonville law firm of Frymire, Evans, Peyton, Teague & Cartwright for five years, maintaining a general practice with some emphasis on domestic relations, real estate and civil litigation. She moved to Houston, Texas, in 1999, and after admission to the State Bar of Texas, practiced with the Harris County Attorney's Office until December 2005. In that office, she handled civil litigation in a variety of enforcement areas, including animal cruelty, deceptive trade practices, and termination of parental rights in child abuse cases. Since joining the KBA in 2006, Ms. Clements has handled hundreds of attorney discipline cases involving many areas of law. She served as a speaker at the 2012 and 2013 Kentucky Law Updates, and has also spoken to the State Government Bar Association and the Kentucky Association of Administrative Adjudicators. Ms. Clements is a member of the American Bar Association and the National Organization of Bar Counsel.

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Jeffrey A. Calabrese Stoll Keenon Ogden, PLLC 2000 PNC Plaza 500 West Jefferson Street Louisville, KY 40202 502.568.5448 jeff.calabrese@skofirm.com

Jeff Calabrese is a member of Stoll Keenon Ogden, PLLC's Louisville office, where he serves as chair of the Labor, Employment & Employee Benefits practice group and is also a member of the firm's Privacy & Information Security and Sports Law practice groups. He is AV Preeminent Peer Review Rated by Martindale-Hubbell, is listed in The Best Lawyers in America®, and recognized as a "Top Lawyer" by Louisville Magazine. Prior to joining the firm, Mr. Calabrese clerked for the Hon. Karon O. Bowdre, U.S. District Judge for the Northern District of Alabama, and practiced law in Birmingham, Alabama. He received his B.A. from Emory University in 2000, and his J.D., magna cum laude, from the University of Georgia in 2003. Mr. Calabrese serves on the board of directors for Louisville Central Community Centers, Inc. and Loaves and Fishes, Inc., two local non-profit agencies, and is a member of the vestry of St. Francis in the Fields Episcopal Church. He is member of the American Bar Association and its Employee Rights & Responsibilities Committee (2004-present), the Kentucky Bar Association, and the Louisville Bar Association, serving on the Board of Directors from 2010-2011, the Communications Committee from 2007-present, and as the Labor and Employment Section Chair in 2009.

Kathie M. McDonald-McClure Wyatt Tarrant & Combs, LLP

500 West Jefferson Street, Suite 2800 Louisville, KY 40202

502.562.7526 kmcclure@wyattfirm.com

Kathie McDonald-McClure is a partner with Wyatt Tarrant & Combs, LLP, where she is a member of the firm's Health Care Practice Group. She focuses her practice on the regulation of provider arrangements and beneficiary inducements, pharmacy board licensure, Medicare and Medicaid enrollment, Medicare reimbursement, secondary payer rules and related payment reform, clinical trial contracting and regulatory compliance, health care information privacy and security, and the adoption, implementation, and meaningful use of certified electronic health records. She is the editor of the Wyatt HITECH Law Blog, which focuses on legal developments related to health information technology, privacy, and security. Ms. McDonald-McClure received her B.S.B.A., with highest honors, from the University of Louisville in 1982, and her J.D. from the University of Louisville School of Law in 1985. She is included in Woodward/White's The Best Lawyers in America® 2009-2014, and was selected as a "Partner in Healthcare" by Business First, 2008-2014. She is a member of the American Health Lawyers Association, Health Care Compliance Association, Healthcare Financial Management Association, the Kentucky and American Societies of Healthcare Risk Management, Association for Conflict Resolution, International Association of Privacy Professionals, and the American, Kentucky and Louisville Bar Associations.

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Judith B. Hoge Lloyd & McDaniel, PLC 11405 Park Road, Suite 200 Post Office Box 23200 Louisville, KY 40223-0200 502.625.9296 jhoge@lloydmc.com Judy Hoge is an attorney with Lloyd & McDaniel, PLC, where she practices employment law. From her experience as employment counsel for a Fortune 500 company for ten years, Ms. Hoge's main focus is on risk prevention. She also represents management in administrative proceedings, such as unemployment hearings, EEOC charges of discrimination, wage and hour disputes or investigations, and in all areas of employment litigation, including wrongful termination and claims of discrimination and harassment. Ms. Hoge also has experience representing creditors in bankruptcy, having previously served as Chair of the Local Rules Committee for the Western District of Kentucky. She received her B.A. from the Hollins College, and her J.D. from the University of Louisville Brandeis School of Law. Ms. Hoge is a member of the Louisville and Kentucky Bar Associations, and currently serves as Officer-at-Large for the KBA Corporate House Counsel Section.

Thomas M. Williams

Stoll Keenon Ogden, PLLC 2000 PNC Plaza

500 West Jefferson Street Louisville, KY 40202

502.560.4279 tom.williams@skofirm.com

Tom Williams is a member of Stoll Keenon Ogden, PLLC, where his legal practice focuses in management-side labor and employment law. Since 2004, he has been recognized by Chambers USA as a "Leader in Kentucky" in the field of labor and employment law. He is also AV Preeminent Peer Review Rated by Martindale-Hubbell and is listed in The Best Lawyers in America®. Since 2008, Mr. Williams has been recognized by Kentucky Super Lawyers as one of the top fifty attorneys in the state. In addition to his litigation practice, he is an employment law mediator and a frequent lecturer, trainer and writer on employment law topics. He received his B.A. from the College of William & Mary in 1986, and his J.D. from the University of Cincinnati College of Law in 1990. Mr. Williams is past President of the Louisville Bar Association (2007), and served as Board Chair for the Leadership Louisville Center in 2010. He is also a member of the American, Kentucky and Indiana Bar Associations.

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Douglas F. Brent Stoll Keenon Ogden, PLLC 2000 PNC Plaza 500 West Jefferson Street Louisville, KY 40202 502.568.5734 douglas.brent@skofirm.com Doug Brent is Of Counsel with Stoll Keenon Ogden, PLLC, where his practice focuses on telecommunications and information privacy. His telecommunications law experience includes practice before the FCC and numerous state commissions before and after the passage of the 1996 Telecommunications Act. He was in-house counsel to a global telecommunications carrier before joining the firm in 2003. Mr. Brent began his career as an attorney for the Kentucky Public Service Commission where he developed experience in the regulation of energy and water utilities. He is AV Preeminent Peer Review Rated by Martindale-Hubbell and is listed in The Best Lawyers in America®. Mr. Brent received his B.B.A. from the University of Kentucky in 1982, and his J.D. from the University of Kentucky College of Law in 1986. He has obtained CIPP/US certification from the International Association of Privacy Professionals, and is a member of the Kentucky Bar Association and the Federal Communications Bar Association.

Leila G. O'Carra Wyatt Tarrant & Combs, LLP

250 West Main Street, Suite 1600 Lexington, KY 40507

859.233.2012 locarra@wyattfirm.com

Leila O'Carra is a partner with Wyatt Tarrant and Combs, LLP, where she is a member of the firm's Labor & Employment Service Team. She practices in the areas of labor and employment, higher education, and commercial litigation. Ms. O'Carra received her B.S. from Vanderbilt University in 1998, and her J.D. from the University of Kentucky College of Law in 2003. Prior to joining the firm, she clerked for Hon. Jennifer B. Coffman, U.S. District Court Judge for the Eastern and Western Districts of Kentucky from 2003-2005. Ms. O'Carra is the Legislative Director for the Bluegrass Society for Human Resource Management, and is a member of the Central Kentucky American Inn of Court, the National Association of College and University Attorneys, and the Federal, American, Kentucky and Fayette County Bar Associations.

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Jeremy S. Rogers Dinsmore & Shohl, LLP 101 South Fifth Street, 25th Floor Louisville, KY 40202 502.540.2384 jeremy.rogers@dinsmore.com Jeremy Rogers is a partner in the Litigation Department of Dinsmore & Shohl, LLP. His trial and litigation experience is in a wide range of matters including business disputes, constitutional law, personal injury, employment, insurance, and criminal defense. He also has experience representing news media outlets in defamation, privacy, and other First Amendment-related cases and representing clients in insurances cases including those covered under ERISA. Mr. Rogers received his B.A., magna cum laude, from the University of Kentucky in 1999, and his J.D., cum laude, from Boston College Law School in 2002. He was selected for the Kentucky Rising Stars® list in 2014 and 2015. Mr. Rogers is a member of the Kentucky State Archives and Records Commission; American Inns of Court, Louisville chapter, Barrister (2009-present); Actors Theatre Generation One Board (2003-present), Kentucky Archives and Records Management Advisory Committee (2010-present); and the Kentucky, Indiana, and Louisville Bar Associations.

Alina Klimkina

Dinsmore & Shohl, LLP 101 South Fifth Street, 25th Floor

Louisville, KY 40202 502.540.2337

alina.klimkina@dinsmore.com

Alina Klimkina is an associate with Dinsmore & Shohl, LLP, where she is a member of the firm's Labor & Employment Department. She represents a variety of clients in all areas of employment law, including pre-litigation investigations, litigation, and appeals. She also routinely handles agency investigations, including proceedings before the Equal Employment Opportunity Commission, the Kentucky Commission on Human Rights, and the Kentucky Division of Unemployment Insurance. Prior to joining the firm, Ms. Klimkina clerked for Hon. Edward B. Atkins, U.S. Magistrate Judge for the Eastern District of Kentucky. She received her B.A. from Centre College in 2007, and her J.D. in 2010 from the University of Kentucky College of Law, where she was Articles Editor for the Kentucky Law Journal. Ms. Klimkina serves as a volunteer attorney with the Legal Aid Society of Louisville in the Domestic Advocacy Program, and is a member of the Board of Directors for Exploited Children's Help Organization. She is also a member of the American, Kentucky, and Louisville Bar Associations.

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Patrick W. Michael Dinsmore & Shohl, LLP 101 South Fifth Street, 25th Floor Louisville, KY 40202 502.581.8022 patrick.michael@dinsmore.com Patrick Michael is a partner with Dinsmore & Shohl, LLP, which he joined in 2009 when his former firm, Woodward Hobson & Fulton, LLP, merged with Dinsmore. He focuses his practice primarily in business litigation, commercial transactions and work-outs, non-competition disputes, and professional malpractice defense. He received his B.F.A. from the University of Illinois in 1977, his M.F.A. from the University of Illinois in 1979, his M.B.A. from Bellarmine College in 1984, and his J.D. from the University of Louisville Brandeis School of Law in 1987. Mr. Michael began his legal career as a trial attorney in 1987, and served as Chair of the ALFA International Business Litigation Practice Group for more than six years. During that time, he was responsible for the development and management of three international client seminars which were attended by more than 400 participants. Prior to law school, Mr. Michael began his professional life by preparing for a career in the theatre, and worked at Actors Theatre of Louisville for eight years serving as the theatre's general manager and periodically directing showcase productions. He continues to maintain his contacts in the professional theatre and works as a free-lance director. Mr. Michael is AV Preeminent Peer Review Rated by Martindale-Hubbell, and was selected for the Kentucky Super Lawyers® list. He is a member of the Kentucky and Louisville Bar Associations, and received the LBA's Distinguished Service Award in 2012.

Matthew W. Barszcz Dinsmore & Shohl, LLP

101 South Fifth Street, 25th Floor Louisville, KY 40202

502.540.2373 matthew.barszcz@dinsmore.com

Matt Barszcz is an associate in Dinsmore & Shohl, LLP's Labor and Employment Department, and focuses his practice in the areas of labor, employment, and general litigation. He also has experience in the areas of premises liability and litigation of insurance coverage. Prior to joining Dinsmore, Mr. Barszcz practiced with Golden & Walters, PLLC in Lexington. He received his B.A. from the University of Kentucky in 2002, and his J.D. from the University of Kentucky College of Law in 2010. Mr. Barszcz is a member of the Kentucky Bar Association and its Labor & Employment Law Section and Young Lawyers Division.

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Catherine Salmen Wright Dinsmore & Shohl, LLP 250 West Main Street, Suite 1400 Lexington, KY 40507 859.425.1068 catherine.wright@dinsmore.com Catherine Wright is a partner in the Labor & Employment Law Department at Dinsmore & Shohl, LLP in Lexington. She provides employment advice to clients, conducts training and provides investigation assistance. She has defended against state and federal administrative complaints and handles employment litigation stemming from civil rights claims, the Family Medical Leave Act, and wage-and-hour issues. Ms. Wright has experience representing public employers, including public schools and the Commonwealth of Kentucky, defending First Amendment-based and §1983 actions. She received her B.A. from the University of Kentucky in 1991, and her J.D., Order of the Coif, from the University of San Diego School of Law in 1996. Ms. Wright is a member of Leadership Lexington Class of 2012-2013, and serves as Board Chair for Big Brothers Big Sisters of the Bluegrass. She is a member of the Fayette County Bar Association, and served as Chair of the Kentucky Bar Association's Labor & Employment Law Section from 2012-2013.

Nicholas M. Haering Dinsmore & Shohl, LLP

101 South Fifth Street, 25th Floor Louisville, KY 40202

502.540.2355 nicholas.haering@dinsmore.com

Nick Haering is an associate with Dinsmore & Shohl, LLP, and is a member of the firm's Litigation Department, where he focuses his practice on commercial and business litigation. He draws on his unique experience to advise clients, bringing insight from his studies at Bucerius Law School in Germany, as well as serving as a Milt Stewart Global Fellow in India, where he researched uniform alternative dispute resolution methods. Mr. Haering also previously served as an intern with the Fayette County Commonwealth Attorney's Office. He received his B.A. from the University of Kentucky in 2009, and his J.D., cum laude, from the Indiana Maurer School of Law-Bloomington in 2013. He is a member of the Kentucky Bar Association and its Immigration & Nationality Law Section.

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W. Craig Robertson III Wyatt Tarrant & Combs, LLP 250 West Main Street, Suite 1600 Lexington, KY 40507 859.233.2012 wrobertson@wyattfirm.com Craig Robertson is a partner with Wyatt Tarrant & Combs, LLP, where he is a member of the firm's Litigation & Dispute Resolution Service Team. He practices in the areas of commercial litigation, construction, equine, banking, intellectual property, professional malpractice, insurance and appellate law. Mr. Robertson is included in Woodward/White's The Best Lawyers in America®, has been recognized by his peers in Kentucky's Super Lawyers® 2013, and as one of Lexington, Kentucky's "Rising Stars" in 2002. He received his B.A., with high distinction, from the University of Kentucky in 1990, and his J.D., Order of the Coif, from the University of Kentucky College of Law in 1993. Prior to joining the firm, Mr. Robertson clerked for Hon. Charles R. Simpson III and Hon. John G. Heyburn II in the U.S. District Court for the Western District of Kentucky. He is a member of the Lexington Chamber of Commerce, and the American, Kentucky, and Fayette County Bar Associations.

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KBA CORPORATE HOUSE COUNSEL TRADEMARK TOOLKIT William C. Ferrell, Jr.

I. INTRODUCTION

The goal of this paper (and the accompanying presentation) is to provide in-house counsel with a comprehensive overview of the trademark process. The hope is that the materials will not only allow in-house attorneys to develop a customized trademark strategy that will address the company's interests, but provide the tools to easily explain the trademark process and strategy to non-lawyers.

II. TRADEMARK BASICS

A. What is a Trademark?

A "trademark" is a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods or services of one party from those of others.

B. Why Get a Trademark?

Businesses, products, and services must have names. Every business spends a lot of money advertising and promoting its services to build goodwill and name recognition. That goodwill and name recognition has value, and a trademark is an embodiment of that goodwill. Distinctive trademarks provide a competitive advantage by distinguishing you from competition and communicating your brand to others. Selecting a strong trademark and protecting it with a federal trademark registration maximizes its value. A federally registered trademark can account for a large percentage of a company's total worth and can be valued in the tens of billions of dollars.

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C. How Are Trademarks Protected?

When most people think of trademarks, they think of federal trademark registrations ("Company A trademarked that name"). Trademarks, however, receive limited protection under the common law as soon as they are used in commerce. A federal trademark registration acts like a deed to this intangible asset. Benefits of a federal trademark registration include: 1. Public notice of the claim of ownership of the mark; 2. A legal presumption of ownership of the mark; 3. Exclusive right to use the mark nationwide on or in connection

with the goods/services listed in the registration; 4. Public notice of the claim of ownership of the mark; 5. A legal presumption of ownership of the mark; 6. Exclusive right to use the mark nationwide on or in connection

with the goods/services listed in the registration; 7. The ability to bring an action concerning the mark in federal court; 8. The use of the U.S. registration as a basis to obtain registration in

foreign countries; 9. The ability to prevent importation of infringing foreign goods; 10. The right to use the federal registration symbol ®; 11. Listing in the USPTO's online databases; 12. Protects trademarks used in social media user names; 13. Prevents trademarks appearing in competitor search engine ads; 14. Secure new domain names in sunrise periods and deter

cybersquatters; and 15. Registrations can carry the day in UDRP and URS actions against

cybersquatters. III. BRANDING BASICS

The process of developing a strong and valuable trademark begins with branding. Although lawyers are rarely included in the process of brand positioning and trademark development, involving a lawyer is critical at this early stage. As discussed below, the strength of a trademark is rather counter-intuitive – the less it has to do with the product or service, the stronger it is. Having a

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lawyer monitor the branding and trademark selection process and evaluate the availability of proposed trademarks as the process goes along can reduce costs by preventing the selection of weak or unavailable trademarks. Just as marketing decision-makers should have an understanding of the legal issues surrounding the selection of trademarks, lawyers counseling clients on trademarks should have a basic understanding of branding.

A. What is a Brand?

A brand is what a company, product, or service is in the minds of consumers. A brand is not what a business does, but who it is and why it exists. Branding, therefore, is the process of articulating the characteristics, values, and attributes of a company, product, or service.

B. Steps for Branding

The branding process generally follows these steps:

1. First, an industry/market analysis is performed to identify the market and potential areas for growth in the market.

2. Next, the competitors in the market are analyzed to determine

how the new brand should be positioned. This analysis should include an evaluation of the competitor's branding strategy and trademarks.

3. Then, a target customer base should be identified and analyzed.

This analysis should identify the tastes, habits, geography, and interest of the target market.

4. This information is used to develop a brand's position statement.

While there are several formulas for these statements, typically they follow a format like:

[Trademark] is the only [category of product or service] that provides [brand promise] to [target audience] by [how the brand promise is achieved].

It is through the lens of this position statement that trademarks are developed.

IV. DEVELOPING TRADEMARKS

The goal of the trademark development process is to create distinctive trademarks that communicate the spirit of the brand to the target audience.

A. Types of Trademarks

There are three general categories of trademarks. "Word marks" consist solely of letters or numbers and do not contain any other information. "Stylized marks" consist of a design of some sort including logos, words in

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specific fonts, or combinations of each. There is also a wide range of "non-traditional marks" including trade dress (product packaging), sounds, colors, scents, motion, and feel.

B. Distinctiveness and Availability

The two most important issues that need to be addressed by counsel regarding the trademark selection process relate to the uniqueness of the mark in question. The first is "distinctiveness," or how much the trademark relates to the goods and services being sold. The second is "availability," that is, how much the trademark relates to prior trademarks used on similar goods and services.

C. Distinctiveness

The distinctiveness question essentially rests on how descriptive the trademark is of the goods or services. The more descriptive the trademark is, the weaker and less valuable it is. This is counter-intuitive for many marketing decision-makers aiming to communicate the purpose of the goods or services to the target audience.

Distinctiveness is best described on a spectrum as follows:

1. "Generic" marks are merely the common name for the goods or

services and cannot receive trademark protection. 2. "Descriptive" marks describe an ingredient, quality, characteristic,

function, feature, purpose or use of the specified goods or services. These marks are difficult to register.

3. "Suggestive" marks require imagination, thought or perception to

reach a conclusion as to the nature of those goods or services. These marks can be registered, but are considered weaker and less valuable.

4. "Arbitrary" are real words that do not suggest or describe a

significant ingredient, quality or characteristic of the specific goods or services.

5. "Fanciful" marks are marks that have been invented for the sole

purpose of functioning as a trademark. Arbitrary and fanciful marks are the strongest and most valuable trademarks.

The figure below shows these as they relate to gasoline:

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D. Availability

Clearly, a good trademark is one that is not already used by another company. The basic test used by the USPTO when determining whether a mark can be registered and by the courts when determining infringement is whether there is a likelihood of confusion between the two marks. The USPTO will find a likelihood of confusion "when the marks are so similar and the goods and/or services for which they are used are so related that consumers would mistakenly believe they come from the same source." This is evaluated using the sight, sound, and meaning of the two trademarks. Before dedicating resources to marketing a specific trademark or attempting to register it, it is prudent to make sure that there is no likelihood of confusion with existing trademarks. Potential trademarks should almost always be searched on the Internet and the USPTO database. In many cases it is appropriate to hire a search firm (such as (Thompson or Corsearch) and to hire outside counsel to render an opinion on the availability of the mark.

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E. Other Considerations

1. Regulations.

Make sure the trademarks comport with the regulations in your industry. Some industries (pharmaceuticals, alcohol) are heavily regulated and have specific guidelines regarding naming conventions and may require separate approval.

2. Alternate meanings.

A seemingly innocuous trademark may be highly offensive in a foreign language or may have an inappropriate slang meaning. The context in which a trademark is used may also play a role:

V. REGISTRATION

Applying for a federal trademark registration can be daunting. The USPTO requires electronic filing and the forms are confusing and difficult to navigate. Apart from that difficulty, the registration process is complex. The following diagram sets forth the process and the various times for each stage of the process.

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VI. POST REGISTRATION

A. Things to Do with a Federally Registered Trademark

As previously mentioned, strong trademarks for major companies are valued in the tens of billions of dollars. Even less valuable trademarks can be very useful to a company. Federally registered trademarks can be licensed, sold, used as collateral, and can be used to stop competitors from entering a market.

B. Proper Use of a Trademark

Unlike other forms of intellectual property, trademarks, if used properly, can last forever. If used improperly, trademark rights can become generic. The International Trademark Association ("INTA") developed a handy test for helping non-lawyers remember how to use a trademark properly. It's called the A.C.I.D. Test:

1. Adjective: Trademarks should always be used as an adjective,

not a noun. 2. Consistent: Trademarks should be used the same way each

time. 3. Identification: Always indicate that the word is being used as a

trademark by using the ® symbol for federally registered trademarks and ™ for unregistered marks.

4. Distinctive: Always display the trademark in a way that separates

it from the surrounding text.

Making sure that everyone at your institution knows and applies the A.C.I.D. test will help preserve a trademark's value.

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HOT TOPICS IN EMPLOYMENT LAW Katie Biggs Wright and Kyle D. Johnson

I. EEOC ENFORCEMENT & LITIGATION

A. EEOC Strategic Enforcement Plan ("SEP")

In December 2012, the EEOC approved a Strategic Enforcement Plan ("SEP") covering its Fiscal Years from 2013 through 2016. We are now about halfway through this SEP, and it's no coincidence that the "hot topics" we will discuss today are in large part driven by this SEP and the EEOC's enforcement activities. The EEOC's current SEP focuses on "broad impact" issues in developing areas of the law and identifies six enforcement/litigation priorities for the Commission. Those six areas include:

1. Eliminating barriers in recruitment and hiring – According to the

SEP, the EEOC will target class-based intentional recruitment and hiring discrimination and facially neutral recruitment and hiring practices that adversely impact particular groups. Racial, ethnic, and religious groups, older workers, women, and people with disabilities continue to confront discriminatory policies and practices at the recruitment and hiring stages. These include exclusionary policies and practices, the channeling/steering of individuals into specific jobs due to their status in a particular group, restrictive application processes, and the use of screening tools (e.g., pre-employment tests, background checks, date-of-birth inquiries).

2. Protecting immigrant, migrant and other vulnerable workers –

Here, the EEOC will target disparate pay, job segregation, harassment, trafficking and other discriminatory practices and policies affecting immigrant, migrant and other vulnerable workers, who are often unaware of their rights under the equal employment laws, or reluctant or unable to exercise them.

3. Addressing emerging and developing issues – As a government

agency, the EEOC states it is responsible for monitoring trends and developments in the law, workplace practices, and labor force demographics. Under this SEP, the EEOC will continue to prioritize issues that may be emerging or developing. Given the EEOC's research, data collection, and receipt of charges in the private and public sectors, and adjudication of complaints and oversight in the federal sector, it views the agency is well-situated

The contributions of Jennifer Asbrock, Esq., Member, to this CLE paper are gratefully acknowledged.

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to address these issues. Specific areas that have been identified within this category, include: (a) ADA issues, including reasonable accommodations and qualification standards; (b) accommodating pregnancy-related limitations under the PDA and ADA; (c) coverage of gay, lesbian, bi-sexual and transgender individuals; and (d) employee wellness programs.

4. Enforcing equal pay laws – The EEOC will target compensation

systems and practices that discriminate based on gender. Among the many strategies to address these issues, the Commission particularly encourages the use of directed investigations and Commissioner Charges to facilitate enforcement.

5. Preserving access to the legal system – The EEOC will also target

policies and practices that discourage or prohibit individuals from exercising their rights under employment discrimination statutes, or which impede the EEOC's investigative or enforcement efforts. These policies or practices include retaliatory actions, overly broad waivers, settlement provisions that prohibit filing charges with the EEOC or providing information to assist in the investigation or prosecution of claims of unlawful discrimination, and failure to retain records required by EEOC regulations.

6. Preventing harassment through systemic enforcement and

targeted outreach – Harassment is one of the most frequent complaints raised in the workplace. Harassment claims based on race, ethnicity, religion, age and disability combined significantly outnumber even sexual harassment claims in the private and public sectors. The same is true in the federal sector. While investigation and litigation of harassment claims has been successful, the Commission believes a more targeted approach that focuses on systemic enforcement and an outreach campaign aimed at educating employers and employees will greatly deter future violations.

Source: http://www.eeoc.gov/eeoc/plan/sep.cfm

B. EEOC Data for 2014 Fiscal Year

On February 4, 2015, the EEOC released detailed information and statistics regarding their 2014 fiscal year enforcement and litigation efforts. While these statistics revealed a decrease in the total number of charges filed with the EEOC, the percentage of charges alleging retaliation reached a record high 42.8 percent. The percentage of charges alleging race discrimination, the second most common allegation, remained steady at approximately 35 percent, followed by sex (29.3 percent) and disability (28.6 percent).1

1 These percentages add up to more than 100 percent, because some charges allege multiple

bases.

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During its 2014 fiscal year (September 1, 2013 through August 30, 2014), the EEOC obtained $296.1 million in monetary relief through enforcement efforts prior to the filing of any litigation. The EEOC also filed 133 lawsuits "on the merits" nationwide, which is slightly higher than the past two fiscal years. A lawsuit "on the merits" involves allegations of discrimination or retaliation as opposed to procedural lawsuits, which primarily involve efforts to enforce subpoenas or obtain preliminary relief. The EEOC obtained $22.5 million in 2014 from its litigation efforts (including settlements after the filing of litigation). Thirty percent of the charges filed with the EEOC during its 2014 fiscal year alleged harassment on various bases, including race, sex, and disability. Preventing harassment through systemic enforcement and targeted outreach is a priority of the EEOC and part of its Strategic Enforcement Plan. In fact, the January 14, 2015, Commission Meeting focused on Workplace Harassment. Source: http://www.eeoc.gov//eeoc//newsroom/release/2-4-15.cfm

II. PREGNANCY DISCRIMINATION/LIGHT DUTY

There is no other area in employment law right now that is changing more rapidly. There is a recent EEOC Enforcement Guidance that drastically departs from existing case law and previous EEOC positions on the issue; a pending U.S. Supreme Court involving UPS' Light Duty Policy that was argued in December 2014 and will be decided any day now; and new legislation passed in states like Illinois and Delaware and introduced in the Kentucky legislature that requires employers to provide reasonable accommodations to pregnant employees, including light duty assignments that are normally only provided to employees with work-related injuries. All of these developments, as well as a recent Sixth Circuit decision on the issue, are discussed below. A. EEOC Enforcement Guidance: Pregnancy Discrimination and Related

Issues (July 14, 2014)

Last summer, the EEOC issued a controversial Enforcement Guidance regarding pregnancy discrimination and related issues. One of the most controversial aspects of the new Guidance provides: "An employer may not refuse to treat a pregnant worker the same as other employees who are similar in their ability or inability to work by relying on a policy that makes distinctions based on the source of an employee's limitations (e.g., a policy providing light duty only to workers injured on the job)." Only three of the Commission's five members voted to adopt the new Enforcement Guidance. The two dissenting members of the Commission felt that the Guidance represented a dramatic departure from existing law, binding precedent, and the EEOC's previous guidance on these issues.

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The new Enforcement Guidance is divided into four parts. Part I provides guidance on Title VII's prohibition against pregnancy discrimination, including who is protected and the ways in which violations can be shown. Most importantly, Part I of the Guidance discusses the require-ment that pregnant employees be treated the same as employees who are not pregnant but who are similar in their ability or inability to work, with a particular emphasis on light duty and leave policies. Part II of the Guidance addresses the impact of the ADA's expanded definition of disability on employees with pregnancy-related impairments and describes some particular accommodations that may help pregnant women, including modified work schedules and additional leave (above and beyond what company policies already provide). Part III of the Guidance briefly describes other requirements unrelated to the PDA or ADA that affect pregnant workers, like the FMLA. Finally, Part IV of the Guidance contains some "best practices" for employers. The "best practices" go far beyond what is legally required but, in the opinion of the EEOC, will reduce the chance of a pregnancy-related discrimination claim under the PDA and/or the ADA and "remove barriers to equal employment opportunity." Source: http://www.eeoc.gov//laws/guidance/pregnancy_guidance.cfm

B. Young v. United Parcel Service, Inc., 2015 WL 1310745 (Mar. 25, 2015)

(slip opinion), overruling the Fourth Circuit's decision found at 707 F.3d 437 (4th Cir. 2013)

This case was just decided by the U.S. Supreme Court on March 25, 2015. It is extremely critical of the EEOC's July 14, 2014 Enforcement Guidance on Pregnancy Discrimination with all the Justices agreeing that the Guidance is not entitled to any special, much less controlling, weight. And the most telling quote from the majority opinion has to be: "Why, when the employer accommodated so many, could it not accommodate pregnant women as well?" Id. at 23. The issue before the U.S. Supreme Court was whether, and in what circumstances, the Pregnancy Discrimination Act ("PDA") requires an employer who provides work accommodations, such as light duty, to non-pregnant employees must provide those same accommodations to pregnant employees who are similar in their ability or inability to work. The facts of this case are pretty simple. Young was an "air driver" for UPS. Her job required her to meet the plane at the airport, collect the letters/packages sent by air delivery, load them onto her truck, and deliver them to their destination. While many of the packages she delivered were small and light-weight, she was also required to deliver larger packages weighing seventy to 150 pounds with assistance. Young took leave for in vitro fertilization and became pregnant. As a result of her pregnancy, she was given a twenty pound lifting restriction for the first twenty weeks of her pregnancy and a ten pound lifting

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restriction for the duration of her pregnancy thereafter. Young gave these work restrictions to UPS, and UPS informed her that it could not allow her return to work. Young requested that she be given a light duty job or allowed to return to her air driver job because she "rarely" lifted anything heavier than twenty pounds. UPS denied her request explaining that she was required to lift more than twenty pounds and that light duty was offered only to employees who: (1) had work-related injuries; (2) were entitled to a reasonable accommodation under the ADA for a disability; or (3) had lost their DOT certification. Because Young did not fall within one of these three categories, her request for light duty was denied. Both the trial court and the Fourth Circuit Court of Appeals ruled in favor of UPS finding that UPS' policy was "pregnancy-blind." The Fourth Circuit noted that its decision was at odds with the law in other circuits. The U.S. Supreme Court granted certiorari on July 1, 2014, to eliminate the split in the circuits on this issue. This was just two weeks before the EEOC issued its new Guidance on the issue. The U.S. Supreme reversed the Fourth Circuit's decision in favor of UPS and remanded to the Fourth Circuit for an analysis of whether there was a genuine issue of fact concerning "pretext." It is not an outright "win" for Young, because the U.S. Supreme Court not only rejected the position and/or interpretation of the PDA urged by UPS, it also rejected the position and interpretations urged by Young and the EEOC. In fact, the Supreme Court said it doubted that Congress intended the PDA to grant "most-favored nation status" to pregnant employees, referencing as practically absurd the EEOC's interpretation in its recent Guidance that the PDA requires employers who offer light duty to employees with work-related injuries must also offer light duty to pregnant employees needing light duty. According to the U.S. Supreme Court, a pregnant employee who seeks to show disparate treatment may make out a prima facie case by showing that she belongs to the protected class, that she sought accommodation, that the employer did not accommodate her, and that the employer did accommodate others "similar in their ability or inability to work." The employer may then seek to justify its refusal to accommodate the plaintiff by relying on "legitimate, nondiscriminatory" reasons for denying accommodation. That reason normally cannot consist simply of a claim that it is more expensive or less convenient to add pregnant women to the category of those whom the employer accommodates. If the employer offers a "legitimate, nondiscriminatory" reason, the plaintiff may show that it is in fact pretextual. The plaintiff may reach a jury on this issue by providing sufficient evidence that the employer's policies impose a significant burden on pregnant workers, and that the employer's "le-gitimate, nondiscriminatory" reasons are not sufficiently strong to justify the burden, but rather – when considered along with the bur-den imposed – give rise to an inference of intentional discrimination. The plaintiff can create a genuine issue of material fact as to whether a significant burden exists by providing evidence that the employer accommodates a large percentage of non-pregnant

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workers while failing to accommodate a large percentage of pregnant workers. This approach is consistent with the longstanding rule that a plaintiff can use circumstantial proof to rebut an employer's apparently legitimate, nondiscriminatory reasons. Id. at 20-23. Under this interpretation of the PDA, the Supreme Court said that the Fourth Circuit's judgment must be vacated. The Supreme Court noted that there was evidence in the record of a genuine dispute as to whether UPS provided more favorable treatment to at least some employees whose situation cannot reasonably be distinguished from that of Young. It left to the Fourth Circuit to determine on remand whether Young had also created a genuine issue of material fact as to whether UPS' reasons for having treated Young less favorably than other non-pregnant employees were pretextual.

C. Latowski v. Northwoods Nursing Center, 549 Fed. Appx. 478 (6th Cir.

2013)

This is a recent Sixth Circuit case involving a similar issue. Jennifer Latowski was a certified nursing assistant (CNA) with Northwoods Nursing Center ("North Woods") in Michigan. As a CNA, she assisted nursing home residents with daily activities such as showering, dressing, eating, and ambulating. In 2008, North Woods became aware that Latowski was pregnant. The Center requested that she obtain a doctor's note stating she had no employment restrictions, pursuant to one of its policies that required employees to present a note for "anything medical." Latowski's doctor provided a note that restricted Latowski from lifting over fifty pounds. North Woods then informed Latowski that she could no longer work because, pursuant to the Center's policy, North Woods only accommodated restrictions due to work-related incidents. Following her discharge, Latowski filed suit alleging pregnancy discrimination, violations of the Americans with Disabilities Act and the Family and Medical Leave Act, and related state law claims. The United States District Court for the Eastern District of Michigan granted summary judgment to North Woods on all of Latowski's claims, primarily because it believed that North Woods' policy was "pregnancy blind," meaning that it did not discriminate against any employees due to pregnancy. It also ruled that Latowski was not qualified for the job in light of North Woods' pregnancy-blind policy, which prohibited all employees with non-work related restrictions from continuing to work. As to her retaliation claim, the district court ruled that Latowski could not show a causal connection. The district court also reasoned that Latowski's "regarded as" disability claim failed because North Woods' actions were motivated by a neutral policy, not a perception that she was disabled. Lastly, the district court concluded that Latowski's FMLA interference claim failed because Latowski had never sought to use her FMLA leave; thus, her claim was unripe.

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The Sixth Circuit affirmed summary judgment on everything but Latowski's pregnancy discrimination claim. It held that, although the accommodation policy was facially nondiscriminatory, North Wood's application of the policy could show evidence of pretext. It reasoned that "a plaintiff's qualifications are to be assessed in terms of whether he or she was meeting the employer's expectations prior to and independent of the events that led to the adverse action." Based on the evidence in the record, the court concluded that Latowski's performance had been satisfactory. The court went on to conclude that Latowski could establish a nexus between her pregnancy and the adverse employment decision – the fourth element of the pregnancy discrimination prima facie case. It believed North Wood's decision to accommodate employees with similar restrictions for work-related injuries, but not for non-work-related injuries, was sufficient to establish the fourth element of Latowski's prima facie case. It further believed that Latowski could show evidence of pretext, considering alleged comments by management that Latowski's "belly would be in the way" of her work and that North Woods did not want to be "liable if something happened to [Latowski's] baby."

D. Kentucky Pregnant Workers Fairness Act (HB 218)

Many states, including Illinois, Delaware, and Maryland, have recently passed legislation requiring employers to provide reasonable accommo-dations, including light duty, to pregnant employees who have work restrictions. Kentucky is not far behind. In February 2015, the Kentucky House unanimously passed House Bill 218, which would require employers who are subject to the Kentucky Civil Rights Act to provide reasonable accommodations, including light duty, longer and more frequent breaks, as well as modified and part-time work schedules, for "pregnancy, childbirth, and related medical conditions." The proposed law actually goes much further than the Supreme Court's decision in Young v. UPS in that in addition to the normal factors to be considered in a reasonable accommodation/undue hardship analysis, HB 218 adds as a factor, "Whether similar accommodations are required by policy to be made, have been made, or are being made for other employees due to any reason." HB 218 went to the Kentucky Senate but was not voted on before the end of this session. If HB 218 eventually becomes the law in Kentucky, employers are likely to receive many more requests for workplace accommodations and should review and revise Employee Handbooks, especially policies dealing with light duty, leave requests, attendance, and accommodation requests, for compliance with the new law.

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III. SEVERANCE AGREEMENTS

If you have ever used severance agreements, you are probably aware of the EEOC's aggressive campaign targeting employers who use these agreements and the language contained therein. It has always been the law that an employee cannot waive certain claims, including his/her right to file a charge with the EEOC (or state Fair Employment Practices Agency, like the Kentucky Commission on Human Rights) or his/her right to talk freely with and cooperate with the EEOC (or FEPA) during an investigation into allegations of discrimination or retaliation. Some severance agreements, however, are less than clear about what claims are not released by the "full waiver of any and all claims." The following case illustrates the aggressive position taken by the EEOC in recent "pattern and practice" lawsuits filed by the Commission based solely on the language of the severance agreements used by the employer.

Equal Employment Opportunity Commission v. CVS Pharmacy, Inc., 2014 WL 5034657 (N.D. Ill. Oct. 7, 2014) (appeal pending before the Seventh Circuit). On February 7, 2014, the EEOC filed a lawsuit against CVS Pharmacy alleging that CVS' standard severance agreement, which approximately 650 CVS employees had signed since August 2011, was "overly broad, misleading, and unenforceable." The EEOC argued that the lawsuit was necessary to "correct a pattern or practice of resistance to the full enjoyment of the rights secured by Title VII." More specifically, the EEOC claimed CVS' agreement unlawfully deterred employees from filing discrimination charges and interfered with employees' ability to communicate voluntarily with the EEOC – despite the fact it contained an express disclaimer advising employees they retained the right to file a charge and cooperate in any investigation by the EEOC. The EEOC found the length of CVS' "five-page single-spaced" agreement problematic, as well as the wording of several provisions commonly found in most severance agreements. Those provisions included not only the "General Release of Claims," but also CVS' provisions relating to Cooperation (including notifying the General Counsel verbally and in writing upon receipt of a subpoena or inquiry from an administrative agency); Non-Disparagement; Non-Disclosure of Confidential Information; and No Pending Actions/Covenants Not to Sue. Significantly, the "Covenant Not to Sue" provision contained "a single qualifying sentence that is not repeated anywhere else in the Agreement, noting that 'nothing in this paragraph is intended to or shall interfere with Employee's right to participate in a proceeding with any appropriate federal, state or local government agency enforcing discrimination laws, nor shall this Agreement prohibit Employee from cooperating with any such agency in its investigation.'" The EEOC sought the following relief: (1) a permanent injunction enjoining CVS from using the current version of its Separation Agreement or from prohibiting employees from filing charges with or cooperating with the EEOC; (2) order CVS to revise its current Separation Agreement as to employees who have already signed the agreement and any future agreements; (3) order CVS to issue a corrective communication to its workforce informing all employees that they retain the right to file a charge and to initiate and respond to communication with

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the EEOC and are not required to keep certain information confidential or to notify CVS' HR department or General Counsel about such communications and add similar language to CVS' anti-discrimination policy; (4) order training for CVS' HR department and management personnel who write, negotiate, or execute employment agreements about employees' right to file charges and communicate with the EEOC; (5) provide 300 days to file a charge with the EEOC for any former employee who signed the Separation Agreement at issue or any substantially equivalent release; and (6) award the EEOC its costs. The District Court, however, dismissed the EEOC's lawsuit on October 7, 2014. The Court dismissed the lawsuit based on the EEOC's failure to "conciliate" prior to the filing of the lawsuit. Although the Court did not reach the underlying merits in its decision, the decision contained important clues (buried in footnotes 2 and 3) as to the Court's skepticism of the EEOC's position. For example, the Court noted the EEOC's attempt to "expand the meaning of the term 'resistance' . . . beyond acts of discrimination and retaliation" and rejected that interpretation, stating "Simply put, the term 'resistance' is encompassed by the anti-retaliation and discrimination provisions and requires some retaliatory or discriminatory act." The District Court also said, "even if the Separation Agreement explicitly banned filing charges [which it did not], those provisions would be unenforceable and could not constitute resistance to the Act." The EEOC has appealed the District Court's decision in the CVS case to the Seventh Circuit Court of Appeals, and that appeal is currently pending. The CVS litigation is an aggressive move on the part of the Chicago office of the EEOC, but it is not without precedent. It is also not limited to the Chicago EEOC office. "Cause" findings are also being issued by the Louisville and Indianapolis offices of the EEOC with more regularity since the CVS case was filed and since it was dismissed. Other cases involving similar issues include E.E.O.C. v. SunDance Rehabilitation Corp., 466 F.3d 490 (6th Cir. 2006) and E.E.O.C. v. Nucletron Corp., 563 F.Supp.2d 592 (D. Md. 2008). See also E.E.O.C. v. Board of Governors of State Colleges and Universities, 957 F.2d 424 (7th Cir. 1992). This issue is one to monitor closely and will almost certainly arise more frequently, because it falls within the EEOC's six strategic initiatives – preserving access to the legal system. For this reason, here are just a few practice tips to keep in mind:

Do not use the term "charges" in any release;

Affirmatively state that "nothing in this entire Agreement is intended to prevent Employee from filing a discrimination charge with the EEOC or its state or local agency counterpart or from communicating with those agencies about allegations or investigations of discrimination";

The above "exception" or "disclaimer" should not be buried in the fine print and should apply not only to the paragraphs containing the "release"

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but to other paragraphs concerning confidentiality, cooperation, and non-disparagement;

Continue to state that the Employee waives his/her right to recover damages or other relief to the extent the EEOC or another FEP agency pursues a claim on his/her behalf.

IV. WAGE & HOUR

A. Integrity Staffing Solutions, Inc. v. Busk, 135 S.Ct. 513 (2014)

Integrity Staffing Solutions, Inc. employs warehouse workers who retrieve products from shelves and package them for delivery to Amazon customers. Apparently to cut down on theft, Integrity required the warehouse employees to pass through a security checkpoint after they clocked out at the end of their shifts. The employees weren't paid for the post-clock-out screening time, and they filed a lawsuit seeking compensation. The case eventually made its way to the Supreme Court where the focus of the parties was on whether the time it took to pass through the security checkpoint was compensable under the Portal-to-Portal Act. The Portal-to-Portal Act is a 1947 law enacted by Congress to amend the Fair Labor Standards Act. The law excludes from compensable time "preliminary" and "postliminary" activities – those pre- and post-shift activities, including walking, waiting, and traveling, that are not "integral and indispensable" to the principal activities that an employee is employed to perform. The Court held that an activity is integral and indispensable to an employee's principal activities only "if it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities." In a unanimous decision concluding that the disputed time was not compensable, the Supreme Court made two significant observations. First, the Court pointed out that the screenings were not activities which the employees were employed to perform. That is, the warehouse employer did not employ its workers to undergo security screening, but rather, to retrieve products from the warehouse and prepare those products for shipment to customers. Second, the Court concluded that post-shift security screenings were not "integral and indispensable" to these principal duties because the screenings were not an intrinsic element of retrieving products from the warehouse and preparing them for shipment. Notably, the employer could have eliminated the screenings altogether without impairing the employees' ability to complete their work. Another important aspect of the decision is the arguments that were rejected by the Court. The employees argued that the time should be compensable because the security checkpoints were required by the employer. They also argued that the employer could have taken steps to significantly reduce the wait time. The Supreme Court was not convinced. What matters is not the wait time or the reasons for the checkpoint, but

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rather the relationship between the activity and the employee's principal duties.

B. Killion v. KeHE Distribs., LLC, 761 F.3d 574 (6th Cir. 2014)

KeHE is a distributor of food product. It classifies its sales representatives as "outside salesmen" exempt from the overtime provisions of the FLSA. During a reduction in force, numerous KeHE salesmen signed a separation agreement in which each employee promised not to consent or become a member of a class or collective action. When a collective action against KeHE was filed by various salesmen claiming that they were misclassified, some of the salesmen who had signed the separation agreement joined the action. The issue before the Sixth Circuit was whether the collective action waiver barred the salesmen's right to join the action. The Sixth Circuit concluded that a waiver of an employee's right to join a collective action is – categorically – invalid and unenforceable. Noting the longstanding rule that an employee's rights under the FLSA cannot be waived, the court held that the FLSA collective action procedure is one such non-waiveable right. Although the court was adamant that it would not enforce such a waiver, it nevertheless left open the possibility that such a waiver might be enforceable by an arbitrator if the parties had agreed to arbitrate their dispute. After Killion, don't expect an FLSA collective action waiver to be enforced by courts in the Sixth Circuit. If you are within a Sixth Circuit jurisdiction and want an enforceable class and/or collective action waiver, your best bet is to make the waiver part of an arbitration agreement. As noted below, however, the NLRB will likely take the position that these types of waivers infringe on an employee's Section 7 rights and could give rise to an unfair labor practice charge.

C. McCann v. Sullivan University System, Inc., 2015 WL 832280 (Ky. App.

Feb. 27, 2015)

McCann was employed by Sullivan University as an admissions officer. Sullivan classified its admissions officers as exempt employees. After McCann was terminated by the university, she brought a claim pursuant to KRS 337.385 (the Kentucky wages and hours statute) claiming that she was misclassified and had not been paid for all overtime hours she worked. In the trial court, McCann moved to certify a class of all Sullivan University admissions officers. The question before the Kentucky Court of Appeals was whether a KRS 337.385 action can be maintained as a class or collective action. The court's analysis focused on the statute's plain language. The statute provides that actions for violations of Kentucky's wage and hour laws may only be maintained by one or more employees "for and in behalf of himself, herself, or themselves." This is a significant departure from the language utilized by the statute's federal counterpart, which allows

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actions by employees not only for and on behalf of "himself or themselves," but also on behalf of "other employees similarly situated." When the Kentucky Legislature enacted KRS 337.385, it did not include any language allowing representative or collective actions. Instead, it plainly expressed that an action may be only brought by one or more employees on behalf of himself, herself, or themselves. It did not permit actions to be brought on behalf of employees who are similarly situated. Therefore, the court held that KRS 337.385 does not allow class actions or representative claims. If this published decision withstands further appeal, it will represent a significant victory for employers in Kentucky. It would mean that wage and hour actions under KRS Chapter 337 cannot be maintained as a class action in Kentucky. Recent federal court decisions have similarly concluded that KRS Chapter 337 actions cannot be maintained as class actions in federal court. Of course, federal law would still permit many of the same claims to be asserted as collective actions under the FLSA.

D. Perez v. Mortgage Bankers Ass'n, 135 S.Ct. 1199 (2015)

In 2006, the Department of Labor issued an opinion letter concluding that mortgage loan officers fell within the "administrative exception" to the FLSA's overtime requirements. When the Department of Labor issued a new "Interpretation" in 2010 reversing its 2006 opinion letter and opining that mortgage loan officers are not exempt employees, a bank filed a lawsuit challenging the DOL's Interpretation under the Administrative Procedures Act. The Administrative Procedures Act requires that most agency rules that have the force and effect of law to be promulgated through a time consuming "notice-and-comment" rulemaking procedure. Exempted from the notice-and-comment procedure, however, are "interpretative rules." Although these so-called "interpretive rules" do not have the force and effect of law, they are generally entitled to deference by the courts. The issue before the Supreme Court was whether a change to an interpretation or opinion letter issued by an administrative agency can only be accomplished through the notice-and-comment procedure, or whether a change to a stated agency interpretation falls within the "interpretive rules" exception to the Administrative Procedures Act. Not surprisingly, the Supreme Court concluded that agency interpretations are "interpretive rules," even if they change a prior agency interpretation. Significantly, three of the Justices, although agreeing that the revised Interpretation was validly issued, opined that the amount of deference courts had previously given to an agency's interpretation of its own ambiguous regulations should be reevaluated and possibly overruled. Even the Court's majority recognized that courts need not necessarily defer to the most recent agency interpretation of its own regulations.

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The Perez decision makes clear that before relying upon an agency's interpretive rule in making employment decisions, employers should consider the possibility that a subsequent change in administrations could result in the issuance of a different interpretation without any notice to the employer.

V. WORK RULES UNDER THE NLRA

Section 7 of the NLRA protects, among other things, an employee's right to engage in concerted activities for the purpose of mutual aid or protection. It is unlawful for an employer to interfere with these rights. A work rule that does not explicitly restrict activity protected by Section 7 may nevertheless violate the NLRA if employees would reasonably construe the language to prohibit Section 7 activity. More recently, the NLRB General Counsel has defined the term "reasonably construe" very loosely and not very reasonably, as detailed in a Memorandum he issued earlier this year.

A. Purple Comms., Inc., 361 NLRB No. 126 (2014)

Purple Communications had an Electronic Communications Policy which restricted the use of an employer-provided email account to "business purposes only." Since 2007, the NLRB has taken the position that this type of work rule is permissible. The Register Guard, 351 NLRB No. 70 (2007). The Board previously held that there is no statutory right to use an employer's equipment or media so long as the restrictions are nondiscriminatory. The Board's prior precedent even went so far as to conclude that electronic communications policies could permit email for things like "charitable solicitations," which would permit solicitations for the Red Cross, but prohibit non-charitable solicitations, which would prohibit solicitations for Avon and a union. That all changed in the Board's Purple Communications decision. In its decision, the Board held that it "will presume that employees who have rightful access to their employer's email system in the course of their work have a right to use the email system to engage in Section 7-protected communications on nonworking time." According to the Board, it will be a rare case where special circumstances can justify a total ban on non-work email use by employees. However, employers are permitted, under the Board's decision, to rebut the presumption by showing that special circumstances make the presumption inappropriate in its workplace. Employers are also permitted to apply uniform and consistently enforced controls over their email systems to the extent that such controls are necessary to maintain production and discipline, or if the controls are necessary to ensure the email system's efficient functioning. In response to employers that raised concerns that their ability to monitor email communications would be thwarted if employees are permitted to engage in Section 7-protected activities (i.e., concerns over allegations of surveillance), the Board concluded that employers can still monitor their computers and email systems for legitimate management reasons, such

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as ensuring productivity and preventing email use for purposes of harassment or other activities that could give rise to employer liability.

B. Murphy Oil USA, Inc., 361 NLRB No. 72 (2014).

Upon being hired by Murphy Oil, an employee signed a binding arbitration agreement in which she waived her right to bring a class or collective action against the employer. Ignoring the terms of the agreement, the employee subsequently filed an FLSA collective action against her employer in federal court. Not surprisingly, the employer moved to dismiss based upon the arbitration agreement and collective action waiver. In response, the employee filed an unfair labor practices charge with the NLRB. The Board previously concluded that these types of agreements are unlawful. Specifically, the Board has held that "[m]andatory arbitration agreements that bar employees from bringing joint, class, or collective workplace claims in any forum restrict the exercise of the substantive right to act concertedly for mutual aid or protection that is central to the National Labor Relations Act." D.R. Horton, Inc., 357 NLRB No. 184 (2012). Although the Fifth Circuit refused to enforce the Board's D.R. Horton decision, and at least two other Circuits have similarly rejected D.R. Horton, the Board stuck to its guns and "reaffirmed" D.R. Horton.

C. General Counsel Memorandum on Employer Work Rules

On March 18, 2015, the General Counsel issued a Memorandum which addressed (1) a summary of various work rules found lawful/unlawful by the General Counsel and (2) a copy of Wendy's Handbook Rules that were determined by the NLRB to be lawful pursuant to the terms of a settlement agreement. The report discusses rules related to the following categories: confidentiality; employee misconduct; employee communications with third parties; employee use of company logos and intellectual property; employee use of recording devices; leaving company property; and conflicts of interest. In short, if a rule could be construed as doing one of the following, the Memorandum suggests that it may give rise to a charge of an unfair labor practice:

prohibiting employees from discussing the terms and conditions of their employment and/or the terms and conditions of employment of their coworkers either with themselves or with certain third parties (such as the news media and government agencies), or requiring employer approval before doing so;

prohibiting criticisms or protests regarding an employer's labor policies or treatment of employees;

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prohibiting argument or debate amongst employees about unions, management, and their terms and conditions of employment;

prohibiting the use of the company's name, logos, or other trademarks on protest materials;

prohibiting recording devices on company property during non-work time; and

prohibiting employees from engaging in strike activity (such as by prohibiting employees from "walking off the job").

Furthermore, the report makes clear that context matters. A work rule that might be impermissible standing on its own may be found permissible if it is contained within a category of conduct that can clearly be prohibited. The opposite is also true. A work rule that has been found valid by the General Counsel could be found invalid standing on its own. Source: http://apps.nlrb.gov/link/document.aspx/09031d4581b37135

VI. FMLA UPDATE

A. FMLA Leave Coverage Extends to All Same-Sex Spouses

Beginning March 27, 2015, all legally married same-sex couples will be eligible for leave under the Family and Medical Leave Act ("FMLA"). Departing from the "state of residence" rule it adopted in August 2013, in the wake of the Supreme Court's decision in U.S. v. Windsor (which struck down the definition of "spouse" in the Defense of Marriage Act as a person of the opposite sex) the Department of Labor issued a Final Rule on February 25, 2015, adopting a "state of celebration" rule. The new "state of celebration" rule defines a spouse to include individuals in lawfully recognized same-sex, common law marriages, and marriages that were validly entered into outside of the U.S. if they could have been entered into in at least one state. Once the new rule takes effect on March 27, 2015, all legally married couples – whether opposite-sex, same-sex, or married under common law – will have consistent FMLA rights regardless of their state of residence. Additionally, the new definition permits an eligible employee in a legal same-sex or common law marriage to take FMLA leave to care for his or her step-child or step-parent, regardless of whether the employee has any legal parental relationship to the step-child or the step-parent has any legal parental relationship to the employee. Employers should note that civil unions are not considered marriages under the FMLA. Consequently, employees in civil unions are not guaranteed FMLA leave to care for a spouse; however an employer may offer employment benefits that provides greater family or medical leave

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rights to employees than the FMLA, including offering leave to employees in civil unions. As before, employers are permitted to require proof of a valid marriage when an employee is requesting FMLA leave. If an employer requests such documentation, it is advised that they do so in a non-discriminatory manner, requiring all employees requesting spousal leave to provide the same documentation.

B. Saulter v. Detroit Area Agency on Aging, 562 Fed. Appx. 346 (6th Cir.

2014)

During a corporate restructuring, a review of the employee's position found she was overburdened with administrative tasks. As a result, many of the employee's administrative tasks were shifted to a newly hired employee, as well as several other departments. Shortly thereafter, the employee started an FMLA medical leave. During the employee's leave, her job was eliminated in the restructuring. After her leave, the employee was invited to apply for a part-time contractor position that would be responsible for a portion of the employee's former duties. The employee also was invited to consider applying for a newly-created position, which was later determined to be unnecessary. The employee filed an FMLA interference claim, and the Sixth Circuit upheld summary judgment for the employer. The employer testified there was no consideration of eliminating the employee's position until after the employee was on leave, that the department's smooth operation in the employee's absence prompted consideration of eliminating the employee's position, and there was no contemplation of eliminating the employee's position before such prompting. Reassessing business needs in the midst of an ongoing restructuring was a legitimate reason for termination. There was an absence of a retaliatory motive.

C. Travers v. Cellco Partnership, 2014 WL 4397633 (6th Cir. Sep. 8, 2014)

The employee suffered from a heart condition as well as migraines severe enough that she left work in an ambulance and lost consciousness in her car in the company parking lot. Eventually, she had a cardiac defibrillator implanted to stabilize her condition. The employer, prior to any requested FMLA leave, repeatedly subjected the employee to disciplinary action for waiving mail-in rebates without supervisor approval, even when customers did not request such a waiver. Further similar incidents resulted in terminating the employee on the day she returned from FMLA leave. The employee filed suit, and the Sixth Circuit upheld summary judgment in favor of the employer. First, the employee could not claim interference because she received all the FMLA leave she requested. Second, the employee's retaliation claim was without merit. Because the employer documented the waiving of mail-in rebates, there was "a reasonably informed and considered decision" before terminating the employee. How the termination decision was reached also was important; the evidence showed that the employee's supervisor compiled a list of the employee's many performance issues, presented the list to

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HR, and requested termination. The HR Manager made the actual decision to terminate based solely on the list of performance issues. She had no knowledge that the employee had ever taken FMLA leave. Therefore, the termination could not have been retaliatory.

D. Wallace v. FedEx Corp., 764 F.3d 571 (6th Cir. 2014)

The employee had a medical condition that caused sleep issues and stomach problems. The employee began a pattern of arriving late to work. The employer repeatedly reminded the employee of the importance of arriving to work on time, even suggesting that the employee consider taking medical leave if the issues continued. After a written counseling, the employee's tardiness continued, and the employer escalated the disciplinary process. The employee then sought and received letters from her physician recommending two weeks of leave and providing for a reassessment of her condition after the two weeks. The employee provided these letters to the employer. After receiving the letters, the employer provided the employee several FMLA forms and indicated the paperwork was to be returned within fifteen days. The employee's physician subsequently filled out the necessary certification and recommended an additional three weeks of leave. The employee never returned this new documentation and recommendation to the employer. After the original two weeks of leave elapsed and the employee failed to report for work the two following days, the employer terminated the employee. The trial court decided (and the Sixth Circuit agreed) that the case could proceed to trial. Although FMLA allows employers to delay continuation of FMLA leave if employees fail to return a medical certification within fifteen days, such request for certification must be in writing. Sanctions only are permitted where the employer "advise[s] an employee of the anticipated consequences of an employee's failure to provide adequate certification." Here, the employer only orally requested return of the certification. Further, the FMLA forms the employer provided stated that "Family and Medical Leave is not automatic" and that "qualification under FMLA will be determined upon timely receipt of the medical certification form (within fifteen calendar days) if requested." This language was insufficient to apprise the employee of the consequences of failing to return the form. The employee's failure to report for work was a direct result of her failure to perfect leave, which was a direct consequence of her employer's communication failure.

VII. ADA UDPATE

A. Kroll v. White Lake Ambulance Authority, 763 F.3d 619 (6th Cir. 2014)

An emergency medical technician (EMT) became embroiled in an affair with her married coworker. The affair went badly, and they were observed arguing on several occasions by other employees. Coworkers saw the EMT crying after her shifts on at least two occasions. The EMT's supervisor received a report that the EMT had been using her cell phone while driving an ambulance. He also was told by another coworker that the EMT had been asked to help with a patient but refused because she

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was angry with the coworker. The supervisor decided the EMT should submit to psychological counseling because "he wanted to help her." He told the EMT that if she did not submit to counseling she would be fired. The EMT refused counseling, was terminated, and filed suit. In this case, the Sixth Circuit denied the employer's motion for summary judgment and let the case proceed to trial. An employer can order an employee to undergo a physical or mental medical exam only if "there is significant evidence that could cause a reasonable person to inquire as to whether the employee is still capable of performing her job," or if the employee poses a significant health or safety risk to herself or others. Because the supervisor decided to require counseling, the only relevant evidence is what the supervisor knew at the time he made the decision. At that time, he was aware of only two incidents: (1) that the EMT used her cell phone while driving an ambulance once; and (2) the EMT refused to assist a co-worker with a patient once. While these incidents might merit internal discipline, they cannot, alone, justify requiring Employee to undergo a medical exam. They also do not call into question the EMT's ability to perform her job duties. The other evidence that the EMT was observed arguing with her paramour or crying after shifts had nothing to do with the EMT performing her job duties. Therefore, these incidents could not have been the basis for requiring a medical exam.

B. E.E.O.C. v. Ford Motor Co., 752 F.3d 634 (6th Cir. 2014), rehearing en

banc granted, opinion vacated (Aug. 29, 2014) (currently awaiting decision on rehearing en banc).

The plaintiff was a buyer for Ford Motor Company, along with several other buyers who were on her team. The plaintiff essentially acted as a liaison between Ford's suppliers and parts manufacturers, ensuring the parts supply ran smoothly and resolved disputes. Like most individuals in this type of position, this job was highly interactive and required a lot of in-person contact. Throughout her employment, the plaintiff had chronic attendance problems. She suffered from IBS (Irritable Bowel Syndrome), which made it very difficult for her to leave her desk, or even drive to work or to and from her client contacts without soiling herself. To remedy her absenteeism, the plaintiff requested an accommodation of working from home, which would allow her to still perform her job duties but better manage her IBS symptoms. Ford denied her accommodation request, asserting that her job required too much face-to-face interaction. The plaintiff then sued, and the trial court granted summary judgment in Ford's favor. A three-judge panel from the Sixth Circuit reversed the trial court's decision, holding that physical presence at the employer's workplace might not be an essential job function and that telecommuting could be a reasonable accommodation, despite Ford's stance that the employee's position was not suitable for telecommuting. It is important to note that the Court did not definitively establish that Ford failed to make reasonable accommodations; rather, the Court's ruling made it clear that the determination should be left up to the jury. Following the ruling, several

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state Chambers of Commerce and other groups with strong interest in the matter asked the full Sixth Circuit to reconsider the panel ruling. They argued that the panel's decision essentially gave employees considerable leverage to decide when and where they were able to work. On Friday, August 29, 2014, the Sixth Circuit entered a summary order vacating the panel's opinion and redocketing the case for consideration by the full court en banc. It is possible that the full court could affirm the panel's ruling, but the decision to vacate may hint that other members of the Sixth Circuit would like to weigh in on the issue and harbor a different view. The case was reargued before the en banc panel on December 3, 2014, and the parties are currently awaiting a decision.

C. Hwang v. Kansas State University, 753 F.3d 1159 (10th Cir. 2014)

The EEOC has recently taken an aggressive stance against inflexible leave policies, which the agency contends violate the ADA by precluding additional leave as a reasonable accommodation. There has already been much litigation concerning inflexible leave policies and there will likely be much more. An EEOC press release about recent settlements notes that employers have already paid more than $34 million to resolve lawsuits the EEOC has brought concerning leave and attendance policies. But a recent Tenth Circuit decision challenges the idea that inflexible leave policies are per se unlawful. In this case, the Tenth Circuit held that a state university lawfully terminated a professor after she had exhausted her leave under a six-month maximum leave policy. Although the Court readily acknowledged that the professor was a capable teacher, it noted that the professor, by her own admission, had been unable to perform any duties of her position for six months. Given the length of the absence, the Court found it difficult to conceive how an absence so long "could be consistent with discharging the essential functions of most any job in the national economy today." Even if it were, the Court concluded that it was still "difficult to conceive when requiring so much latitude from an employer might qualify as a reasonable accommodation." In reaching its conclusion, the Court briefly addressed the EEOC's guidance that employers must modify a "no-fault" leave policy if an employee with a disability needs additional unpaid leave as a reasonable accommo-dation. According to the Court, the EEOC's guidance did not address the preliminary question it was trying to tackle, which was: when is a modification to an inflexible leave policy a reasonable accommo-dation? Without giving a definitive answer to that question, the Court found that, in this particular case, granting an additional period of unpaid leave beyond six months was simply not reasonable. This case is an interesting foreshadowing of the ADA litigation to come and may give a hint as to how other courts may deal with the issue.

D. Cash v. Siegel-Robert, Inc., 2013 WL 6231791 (6th Cir. 2013)

The employee worked as a machine mold setter, a job requiring frequent standing, crawling, climbing and lifting. He sought treatment from his doctor for severe back pain. The doctor immediately scheduled the employee for back surgery and advised him the recovery period likely

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would be about one year. The employer's "Maximum Medical Leave of Absence Termination Policy" called for termination if an employee was unable to perform the essential functions of his job for more than six months. The policy also allowed an extension of leave beyond six months, without termination, but only if the employee applied for the extension before the initial six months of leave had expired. The employee also had to provide medical documentation showing he would be able to return to work within a reasonable time. The employee was absent for more than six months and neglected to apply for a renewal of his medical leave, so he was terminated. The employee sued under the ADA for discrimination and failure to accommodate. The Sixth Circuit granted summary judgment for the employer, holding that the company did not discriminate against the employee because he was fired under a neutral leave policy. Moreover, at that time he was not qualified to get his job back because his doctor had not cleared him to return to work. The employer also won on the failure to accommodate claim because the employee never asked for an accommodation and never tried to extend his medical leave under the employer's policy. Had the employee requested a reasonable accommodation, the employer would have had to engage in the interactive process, notwithstanding the medical leave policy, and determine if a reasonable accommodation was available.

E. Santandreu v. Miami Dade County, 513 Fed. Appx. 902 (11th Cir. 2013)

In 2008, the EEOC issued a Fact Sheet stating that employers "have no obligation to provide leave of indefinite duration" because "granting indefinite leave, like frequent and unpredictable requests for leave, can impose an undue hardship on an employer's operations." The following Eleventh Circuit case is illustrative of how most courts have come down on the issue of indefinite leave and may provide ammunition for employers who are called upon to respond to allegations of failure to accommodate. A county employee was diagnosed with high blood pressure, sleep apnea, depressive disorder, and general anxiety disorder. He took several leaves of absence for a total of fifteen months, and he resigned in lieu of termination for failure to return to work after he had exhausted his leave. He filed suit for (among other things) disability discrimination under the ADA, claiming that the employer failed to accommodate him by granting him additional leave. The Eleventh Circuit held that "while a leave of absence may be a reasonable accommodation, the ADA does not require an employer to provide leave for an indefinite period of time because an employee is uncertain about the duration of his condition." The employee was not entitled to an accommodation of additional leave because he was "unable to show that he would be able to perform the essential functions of the job anytime in the reasonable immediate future."

F. Pennington v. Wagner's Pharmacy, Inc., 2013 WL 3480307 (Ky. App.,

Jul. 12, 2013).

The Kentucky Court of Appeals held that morbid obesity is a protected disability under the Kentucky Civil Rights Act ("KCRA"). The appellant,

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Melissa Pennington, worked for Wagner's Pharmacy as a food truck operator in the backside area of Churchill Downs. At the time of her employment, Pennington was 5'4" tall and weighed 425 pounds. She was considered "morbidly obese" (i.e. a person weighing double his/her "normal" weight, or at least 100 pounds more than his/her "normal" weight). In April 2007, Brenda Smyth, a Manager for Wagner's, allegedly directed Pennington's supervisor, Martha Parrish, to discharge Pennington due to her "personal appearance," although Smyth did not specifically reference Pennington's weight. In her suit, Pennington claimed that she was discharged because of her "disability" of "morbid obesity" in violation of the KCRA. Wagner's denied Pennington's claim and alleged that her employment was terminated due to her poor performance. The Company further argued that morbid obesity is not a disability under the KCRA. Wagner's obtained summary judgment in Jefferson Circuit Court. The trial court found that Pennington had "not presented proof of an underlying physiological [condition];" thus, it held that Pennington failed to demonstrate that she was disabled. The Court of Appeals, in an opinion drafted by Judge Sara Walter Combs, disagreed. It held that, based on the evidence presented, Pennington's morbid obesity is a disability under the KCRA. The court based its decision largely on a physician's testimony that morbid obesity is an "abnormal physical condition" and a "metabolic disease." There was also testimony that Pennington suffered from diabetes and sleep apnea and that she faced a shortened life expectancy as a result of her obesity. In light of the physician's report and testimony regarding Pennington's other medical conditions, the court believed that Pennington presented enough evidence to establish that she was disabled under the KCRA. Notably, both the trial court and the appellate court considered the Equal Employment Opportunity's Americans with Disabilities Act (ADA) regulations as they appeared in 2007, prior to the ADA Amendments Act of 2008 (ADAAA), in determining whether Pennington met the legal definition of disability.

VIII. MISCELLANEOUS

A. Criminal Background Checks

E.E.O.C. v. Peoplemark, Inc., 732 F.3d 584 (6th Cir. 2013) In 2005, Sherri Scott, an African-American woman with a felony conviction, submitted an application for employment to Peoplemark, a temporary employment agency. On it, Scott revealed her criminal conviction. Peoplemark ultimately did not refer Scott for employment. Scott subsequently filed a charge of race discrimination with the EEOC. During the EEOC's investigation, Peoplemark's Vice President and General Counsel incorrectly informed the agency that Peoplemark had a

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companywide policy of rejecting all applicants with felony convictions. Based largely on those incorrect admissions, the EEOC formally concluded in September 2007 that Peoplemark's companywide practice of rejecting felons violated Title VII of the Civil Rights Act. According to the EEOC, that "blanket" practice produced an illegal "disparate impact" on African Americans. The EEOC sued Peoplemark on behalf of Scott and approximately 285 similarly situated job applicants. In April 2009, Peoplemark informed the EEOC for the first time that it did not have a companywide policy of rejecting applicants with felony records. By the end of August 2009, Peoplemark had produced more than 176,000 documents, including records showing it had actually hired convicted felons. Despite that evidence, the EEOC continued to request extensions of time to allow its expert witness to produce a report supporting its disparate impact discrimination theory. Peoplemark eventually filed an expert's report opposing the EEOC's theory. After Peoplemark moved for summary judgment, the EEOC agreed to voluntarily dismiss the case. Peoplemark then asked the district court to award it attorneys' fees, expert witness fees, and court costs. The district court granted the Company's request, awarding it more than $219,000 in attorneys' fees, more than $525,000 in expert witness fees and more than $6,000 in other expenses. The district court reasoned that the EEOC should have known by October 2009 that its case was groundless, considering that Peoplemark had produced nearly 200,000 documents roughly two months prior to that time to demonstrate that it did not have a companywide policy against hiring felons. The Sixth Circuit affirmed the awarded costs in full. The court reasoned that the EEOC should have stopped pursuing the case after it received documents showing that Peoplemark did not have a companywide felony conviction policy.

B. Harassment/Hostile Work Environment

Harris v. Burger King, Corp., 993 F.Supp.2d 677 (W.D. Ky. 2014) (appeal pending). An African-American fast food employee's allegations that a manager engaged in a host of unprofessional behavior and was rude and obnoxious were insufficient to support her hostile work environment based on race claim. The plaintiff, Marilyn Harris, started working for Burger King in 2005. She alleged that Gina Priest, the manager assigned to her store in 2006, subjected her to alleged mistreatment which included, but was not limited to, the following:

Intentionally stepping on her foot;

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Aggressively walking up to her on more than occasion;

Yelling at her in front of customers but rarely, if ever, yelling at white employees;

Never speaking to her, but speaking to white employees;

Ignoring her concerns about heat, which led her to faint from heat exhaustion;

Giving her and other black employees lower scores on their evaluations; and

Cutting her hours in favor of white employees. Burger King investigated Harris' complaints, but did not find any evidence of discrimination. It did, however, permit Harris to transfer to a different store due to her conflicts with Priest. Harris was later discharged due to attendance issues. She then filed suit alleging, amongst other things, hostile work environment based on race. The district court, in an Opinion drafted by Judge John Heyburn, ruled that, while Harris demonstrated that her manager engaged in unprofessional behavior, she had not proven it was race based. Further, neither her subjective belief nor her co-worker's subjective beliefs about why the alleged acts occurred were sufficient to establish that the alleged incidents were racially motivated. The court ultimately granted summary judgment to Burger King on Harris' hostile work environment claim.

C. Waiver of Statute of Limitations

Shupe v. Asplundh Tree Expert Co., 566 Fed. Appx. 476 (6th Cir. 2014). In Shupe, the Sixth Circuit upheld dismissal of a plaintiff's claims of sex and age discrimination on the grounds that they were time barred based upon a document she signed at the beginning of her employment. The plaintiff, Sue Shupe, was hired by Asplundh Tree Expert Co. in 2008 as a "Permission Taker/Pre-Planner." Upon hire, she signed a document titled "LIMITATION ON TIME TO FILE CLAIMS OR LAWSUITS." The waiver stated, in part, "IMPORTANT NOTICE" and "READ CAREFULLY BEFORE SIGNING," and "PLEASE READ," all of which were in bold and large print. The waiver required Shupe to file any lawsuit, claim, or administrative claim "no more than six (6) months after the date of the employment action that is the subject of the claim or lawsuit." Shupe filed a lawsuit against Asplundh alleging violations of the Kentucky Civil Rights Act (KCRA) based upon her sex and age. Although Shupe complained that she was subjected to daily sexual harassment, she did not sue Asplundh until nearly a year after her employment ended.

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Seeking to enforce the six-month limitations period Shupe contractually agreed to when she was hired, Asplundh moved to dismiss Shupe's claims. Applying Kentucky law, both the district court and the Sixth Circuit noted that parties may contractually alter a statutory limitations period as long as the agreed upon period is reasonable. The waiver must also be "knowing" and "voluntary." Shupe alleged that she did not knowingly and voluntarily execute the waiver. In support, Shupe alleged she lacked memory of the document, she was required to sign it immediately, she did not have an opportunity to review it with an attorney, and she was never provided with a copy of the waiver or reminded of it at the time of her termination. The Sixth Circuit was not convinced. It stated that the document was clear in content and form. It also stated that an employee's failure to read an agreement generally does not provide him/her with an opportunity to avoid its terms. Further, it believed that providing an employee with only a few minutes to sign an agreement is sufficient, absent evidence that the employee asked for and was denied more time to review, or indicated in some other way that s/he did not understand its terms. The court also held that waivers supported by consideration are more likely to be upheld than those that are not. Nonetheless, providing an employee with wages and employment in exchange for signing a waiver is adequate consideration. The court thus found the agreement valid and dismissed Shupe's claims on the grounds that they were time-barred.

D. Weapons Policy

Mullins v. Marathon Petroleum Co. LP, 2014 WL 467240 (E.D. Ky. Feb. 5, 2014) The plaintiff, Jason Mullins, and his wife Tabatha sued Marathon Petroleum after the Company disciplined Mullins for violating its Weapons Policy. Mullins worked as a Barge Cleaner for the Company. A security guard spotted a rifle on the backseat of Mullin's vehicle, which was parked on Marathon's lot. The guard reported this to Marathon, who subsequently suspended Mullins for one day without pay and placed him on probation for twenty-four months for violating the Company's Weapons Policy. The policy stated, in part "employees or contractors who lawfully possess a weapon may store such a weapon in his or her privately owned vehicle," provided certain administrative requirements are met, including the requirement that the employee complete and have on file a current "Weapons Approval Form" disclosing the weapon. Mullins suit alleged a violation of KRS Chapter 237.106, which states, in pertinent part, no person shall prohibit any person who is "legally entitled to possess a firearm from possessing a firearm in a vehicle on the property." It also states that an employer that disciplines an employee who carries such a weapon in compliance with the statute may be liable

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for civil damages. Mullins also alleged a violation of KRS 527.020(8), which permits storage of a weapon in an "enclosed container, compartment or storage space" within an automobile, such as a "glove compartment, center console or seat pocket." He further alleged several tort claims, including, but not limited, to wrongful discharge in violation of public policy. The district court ruled in Marathon's favor on all of his claims. As to his statutory claim under KRS 237.106, the court emphasized that a claim will only lie if KRS 237.106 "prohibits" employees from keeping weapons in their vehicle. It emphasized that "prohibit" is not synonymous with "regulate." It noted that Marathon's policy merely required compliance with an administrative procedure. It similarly granted summary judgment to Marathon on Mullins' KRS 527.020 claim. It noted that the statute set forth the law as to concealed deadly weapons – and, hence, was inapplicable, considering that Mullins' weapons were not concealed. As to Mullins' public policy claim, the court dismissed it on the grounds that Mullins could not establish that his discharge violated the express terms of the statutes concerning the right to carry firearms.

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18 U.S.C. §1519 AND ANTICIPATORY OBSTRUCTION OF JUSTICE Professor Eric Alden

I. THE STATUTORY PROVISION

A. 18 U.S.C. §1519 is a new obstruction of justice provision of the federal criminal code which reads in full as follows:

"Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both."

B. The operative text of the provision can perhaps best be remembered if we

select out its most commonly applicable and important elements, and include one or two illustrations thereof, as follows:

"Whoever … destroys … or makes a false entry in any record … [or] document [including any legal documents, and including any emails] … with the intent to … influence … the … proper administration of any matter … [under federal] jurisdiction …, or in relation to or contemplation of any such matter …, shall be … imprisoned not more than 20 years…."

C. As is readily apparent, this is a criminal provision of tremendous breadth

and ferocious penalty. Where did it come from, and why? II. COMPARISON TO CERTAIN OTHER CRIMINAL PROVISIONS Comparison to Certain Preexisting Statutes:

A. The federal code now contains a staggering number of criminal provisions, and is growing ever upward. As of an estimated tally some years back, there were already more than 4,400 federal crimes on the statutory books. See generally William J. Stuntz, "The Pathological Politics of Criminal Law," 100 Mich. L. Rev. 505, 514-15 (2001); Kathleen F. Brickey, "Criminal Mischief: The Federalization of American Criminal Law," 46 Hastings L.J. 1135 (1995); Reigning in Overcriminalization: Assessing the Problem, Proposing Solutions: Hearing before the Subcomm. on Crime, Terrorism, and Homeland Security of the H. Comm. on the Judiciary, 111th Cong. 6 (2010); Ronald L. Gainer, "Report to the Attorney General on Federal Criminal Code Reform," 1 Crim. L.F. 99, 110 (1989); John S. Baker, Jr., "Jurisdictional and Separation of Powers Strategies to Limit the Expansion of Federal Crimes," 54 Am. U. L. Rev. 545 (2005).

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B. Quite a few of those criminal provisions will be predicated upon mendacity. But there are two which I'd like to call out for purposes of comparison: (i) perjury; and (ii) 18 U.S.C. §1001 (often referred to as the "Federal False Statements Act," or simply as "1001").

C. Perjury has a been a crime since early times. Generally it provides for:

1. Two-year felony. 2. Only applies to statements made under oath (e.g. in open court). 3. High mens rea is required for conviction.

D. 18 U.S.C. §1001 was created in 1934, during the Great Depression, for

the purpose of incentivizing farmers and businesspeople to report wage, price and quantity statistics accurately to the federal government in connection with the various New Deal programs which were then being enacted. See generally Andrea D. Halverson & Eric D. Olson, "False Statements and False Claims," 46 Am. Crim. L. Rev. 555 (2009); Steven R. Morrison, "When Is Lying Illegal? When Should It Be? A Critical Analysis of the Federal False Statements Act," 43 J. Marshall L. Rev. 111 (2009); Geraldine Szott Moohr, "What the Martha Stewart Case Tells Us About White Collar Criminal Law," 43 Hous. L. Rev. 591 (2006). Section 1001 represented a significant expansion of criminal liability for mendacity, generally providing for:

1. Five-year felony. 2. The false statement giving rise to liability need not have been

made in open court or otherwise under oath. The statute criminalizes false statements made to any officer of the federal government, at any time, in any venue, orally or in written documents.

3. The false statement giving rise to liability need not even have

been made directly to a federal officer. For example, a private individual who lies to a private banking institution in a loan application for a residential loan will be deemed to have lied indirectly to a government sponsored organization (Fannie Mae or Freddy Mac) which guaranteed the loan in order that the bank be able to resell the mortgage in the secondary market, and thus indirectly to have lied to the federal government.

4. "Federal officers" is a broadly construed term that covers a wide

spectrum from U.S. Senators down to federal park rangers. Section 1001 will thus cover any statements made to federal agencies, e.g. to the SEC, to the IRS, to the EPA, etc.

5. Liability attaches at the recklessness level. This is operationally

quite significant, as recklessness can generally be established by the government convincing a jury that the defendant "turned a

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blind eye" or "disregarded red flags" as to whether the defendant's statement might or might not be accurate.

E. 18 U.S.C. §1519 (also referred to simply as "1519") is both radically more

punitive and radically broader in reach than §1001:

1. Twenty-year felony. 2. Not only does a false statement not need to be made under oath,

it does not even need to be made, either directly or indirectly, to the government. It is sufficient for the imposition of liability that the statement have been made with the intent to influence the proper administration of any matter under federal jurisdiction. Thus, all manner of communications between or among private individuals and business entities may trigger the statute, if the requisite intent is present. Examples to be discussed in real-time.

3. Nor is §1519 limited to affirmative statements – it also applies to

acts of destruction. For example, an employee deleting a "bad email," in order that the bad email not someday be discovered and used to demonstrate the state of employee's knowledge of some sensitive matter, would presumably trigger the statute.

4. The statute is triggered even if a potential investigation or

proceeding is nowhere on the horizon, and might only be expected to arise years later. The making of the false statement in a tangible record, or the deletion of a record (such as an email), with the requisite intent, immediately triggers application of the statute.

F. Areas where it may not yet be clear how the statute will be interpreted

include:

1. As to acts of destruction, does the statute only apply with respect to a governmental investigation or proceeding which might someday occur, or does it also apply to private civil litigation which might someday occur? Although many litigators' initial reaction is the former, the legislative history is suggestive that the latter might be the case – the Senate Report makes very clear that the impetus for adoption of §1519 was the document shredding by Arthur Andersen related to the Enron matter, and that private litigants as a general matter would be frustrated by their inability to discover and enter into evidence documents demonstrating the defendants' culpability. See S. Rep. No. 107-146 (May 6, 2002). The Senate Report indeed describes §1519 as "a general anti-shredding statute."

2. Are "document retention policies" still permissible and, if so, under

what set of circumstances? The minority report appended to the majority Senate Report makes clear that the minority was concerned that companies still be permitted to maintain

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reasonable document retention policies. The majority report makes no such caveat. What, for example, would the Department of Justice think of a corporation which adopts a "document retention policy" under which all emails are automatically deleted after ninety days? Is the objective of such a policy to destroy any "bad emails" which might exist, such that they not someday be dredged up in connection with an investigation? Real-time discussion of such.

3. What level of mens rea will be required for the imposition of

liability? The statute uses the words "with the intent to impede, obstruct, or influence." Will this be interpreted to require knowing or purposeful conduct? Or will recklessness as to the falsity of an entry in a document be sufficient to trigger a finding of "scienter" and the imposition of liability?

III. THE HISTORY

A. Section 1519 was enacted into law as §802 of the Sarbanes-Oxley Act of 2002 ("SOX"). Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, 116 Stat. 745 (codified in scattered sections of U.S.C.).

B. The objective of §1519 is broadly to criminalize what one might refer to as

"anticipatory obstruction." See generally Dana E. Hill, "Anticipatory Obstruction of Justice: Preemptive Document Destruction under the Sarbanes-Oxley Anti-Shredding Statute, 18 U.S.C. §1519," 89 Cornell L. Rev. 1519 (2004).

C. In this regard, it was one of a host of statutory sections designed to

radically alter the white collar criminal landscape in the United States. Other SOX criminal provisions include:

1. The penalty for mail and wire fraud was quadrupled overnight,

from five to twenty years. SOX §903, 18 U.S.C. §§1341, 1343. Mail and wire fraud are, of course, workhorses of the federal prosecutorial bar, and thus this quadrupling of the penalty sharply alters the potential penalties across the white collar arena. On mail and wire fraud generally, see William M. Sloan, "Mail and Wire Fraud," 48 Am. Crim. L. Rev. 905 (2011); Jack E. Robinson, "The Federal Mail and Wire Fraud Statutes: Correct Standards for Determining Jurisdiction and Venue," 44 Willamette L. Rev. 479, 479 (2008); Jed S. Rakoff, "The Federal Mail Fraud Statute (Part I)," 18 Duq. L. Rev. 771, 771 (1980).

2. A new twenty-five-year securities fraud felony was created. SOX

§807, 18 U.S.C. §1348. The wording of the provision was deliberately left vague in order to maximize prosecutors' flexibility and reach.

3. A ten-year felony for retaliation against federal informers was

created. SOX §1107, 18 U.S.C. §1513.

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4. A ten-year felony for willful ERISA violations was created. SOX

§904, 29 U.S.C. §1131.

D. The impetus for this legislative action was the wave of corporate accounting and other corporate governance scandals which erupted into public view during the tech crash and market downturn of 2001-2002. Enron and Worldcom were the two most prominent of these, with the latter generating a political riptide in Congress.

E. Since SOX, related white collar criminal provisions were even further

sharpened by Dodd-Frank in 2010. See Dodd-Frank Wall Street Reform and Consumer Protection Act §§929M, 929N, 929O, Pub. L. No. 111-203, 124 Stat. 1376 (2010) (codified in scattered sections of U.S.C.). Specifically, Dodd-Frank generally provides that for all purposes under the various securities law:

1. Aiding and abetting a primary violation is punishable to the same

extent as the primary violation. 2. Recklessness is sufficient to establish aiding and abetting. In other

words, the government does not need to demonstrate a conscious purpose to aid and abet, but merely that the defendant was reckless, e.g. ignored red flags, with respect to whether a primary violation might be occurring.

IV. LAW OF GENERAL APPLICATION

A. Although SOX is frequently thought of as a securities law, and one particularly limited to public companies, no such limitations apply to many of SOX's criminal provisions. This is true both of §1519 and of the new mail and wire fraud penalties. Section 1519 is a law of general application.

B. For example, §1519 has already been applied in the following contexts,

and its metastasis across the legal landscape continues apace:

1. In an example of what one might imagine is the classic, intended application of §1519, an auditor was found to have destroyed his audit work papers in order that they not come to light following a corporate accounting scandal. Convicted under §1519.

2. Destruction of CD containing child pornography in order that it not

be discovered in investigation. Conviction under §1519. U.S. v. Wortman, 488 F.3d 752 (7th Cir. 2007).

3. Due to significant U.S. governmental involvement in the

healthcare arena, many forms of healthcare fraud and related governmental investigations may implicate §1519. See, e.g., U.S. v. Hoffman-Vaile, 568 F.3d 1335 (11th Cir. 2009) (altering patient records in connection with investigation into Medicare fraud).

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4. After a street altercation and arrest, one of the involved police

officers was concerned that the arrestee might try to bring a §1983 civil rights complaint. The officer was concerned the fact that officers had first spoken to the arrestee, rather than the arrestee first speaking to the officers, might appear as a bad fact in litigation. The police officer therefore misstated in the police after-action report that the arrestee had first spoken to the officers. The police officer was convicted under §1519. The conviction was upheld by the 11th Circuit. U.S. v. Hunt, 526 F.3d 739 (11th Cir. 2008).

Similarly, again for false statement in police report, see U.S. v. Moyer, 674 F.3d 192 (3d Cir. 2012).

5. Corrections officers who in their contact reports misstate the facts

as to their interactions with prison inmates have been convicted under §1519. See, e.g., U.S. v. Fontenot, 611 F.3d 734 (11th Cir. 2010).

See also U.S. v. Jensen, 248 Fed. Appx. 849 (10th Cir. 2007) (false entry in report regarding inmate's urinalysis results).

6. In a case currently on appeal to the U.S. Supreme Court, the 11th

Circuit upheld the §1519 conviction of a fisherman who, following an inspection by a fish and game officer in federal waters, threw overboard certain fish which had been measured by the officer as undersized, and replaced those fish with others which were larger. The 11th Circuit held that the fish constituted a "tangible record" within the meaning of §1519. U.S. v. Yates, 733 F.3d 1059 (11th Cir. 2013).

V. AS APPLIED TO IN-HOUSE COUNSEL

A. Factual Situations which May Be Faced in Practice

In-house counsel may be confronted with various factual situations in which they are pressured by others to take actions that either clearly would or might implicate §1519. Examples include: (i) backdating documents (for example, backdating option grant dates, backdating sales contracts); (ii) the making of any other false entries in corporate documents (e.g., employment start date); (iii) the creation of misleading documents which fail to reflect the true nature of a transaction or which contain counterfactual statements (for example, fraudulent tax shelter transactions); (iv) implementing document "retention" policies which are deliberately designed to destroy documents, such as emails, without a defensible business rationale for doing so distinct from the simple desire that no unfavorable documents later be discovered; (v) targeted deletion or destruction of specific damaging emails or documents, even though no investigation or proceeding has yet arisen in connection therewith.

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B. As Analyzed under the ABA Model Rules of Professional Conduct

1. To the extent an in-house attorney is being urged to engage in conduct which the lawyer knows to be illegal, or to render substantial assistance to others in illegal conduct, this would constitute a direct violation of ABA Model Rule 1.2(d), which reads:

a. "A lawyer shall not counsel a client to engage, or assist a

client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law." Model Rules of Prof'l Conduct R. 1.2(d) (1983) (emphasis added).

b. Thus, for example, if the lawyer is urged to backdate option

grant paperwork (e.g. a unanimous written consent of the board of directors in which an option grant is made, and the related option agreement issued under the corporation's stock option plan), in order to achieve tax and financial reporting results which would not be permissible if the option grant paperwork bore true dates of effectiveness), and engages in such conduct, the lawyer would presumably have violated 18 U.S.C. §1519 and, by virtue thereof, also have violated ABA Model Rule 1.2(d).

c. The situation may be less clear cut, however, if the

application of §1519 is less obvious. For example, many corporations have document retention policies. It is to be expected that corporate management will discuss with in-house counsel whether the document retention policy complies with applicable law. In this regard, the attorney would presumably be called upon to discuss the prohibition set forth in §1519, including particularly the requirement that the conduct have been engaged in "with the intent" to impede or influence the proper administration of any matter under the jurisdiction of any federal agency in order for criminal liability to attach. Depending on the nature of the discussion and counsel, discussion of such matters would presumably be permissible under Rule 1.2(d), which allows the attorney to "counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law."

2. If an in-house lawyer has consciously engaged or assisted in a

course of conduct known to the attorney to be illegal, there is a strong case to be made that this would also constitute a violation of the attorney's duty to provide competent representation under ABA Model Rule 1.1, which reads:

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"A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation." Model Rules of Prof'l Conduct R. 1.1 (1983).

3. A lawyer is also obligated under Rule 1.4(a)(5) to:

a. "[C]onsult with the client about any relevant limitation on

the lawyer's conduct when the lawyer knows that the client expects assistance not permitted by the Rules of Professional Conduct or other law." Model Rules of Prof'l Conduct R. 1.4(a)(5) (1983).

b. Thus, if the lawyer is being pressured by corporate

management to engage in conduct violative of §1519, the lawyer would have an obligation to explain to the client the reasons why the lawyer is prohibited from engaging in such conduct.

4. The implications for the lawyer's duty of confidentiality are

complex and will be heavily fact specific. As a general matter, a lawyer is under a duty to maintain the confidentiality of "information relating to the representation of a client." Model Rules of Prof'l Conduct R. 1.6(a) (1983). However, this duty does not apply, and the lawyer may disclose such information, if and to the extent the lawyer reasonably believes necessary, for example:

a. "[T]o prevent the client from committing a crime or fraud

that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer's services," Model Rules of Prof'l Conduct R. 1.6(b)(2) (1983); or

b. "[T]o prevent, mitigate or rectify substantial injury to the

financial interests or property of another that is reasonably certain to result or that has resulted from the client's commission of a crime or fraud in furtherance of which the client has used the lawyer's services," Model Rules of Prof'l Conduct R. 1.6(b)(3) (1983).

c. Although such injury to financial interests might not be

evident at first blush in many §1519 situations, if the corporate entity engages in criminal conduct, such conduct may ultimately lead to governmental investigation and enforcement action, to fines or other penalties, to changes in management, and may thus potentially have an adverse impact on the corporation's stock price. Declines in corporate stock prices are not at all uncommon in the wake of criminal enforcement action against an enterprise and its

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management. Such declines in stock price would presumably constitute injury to financial interests of the corporation's stockholders.

d. Furthermore, under Rule 1.13 (Organization as Client),

there can exist situations in which disclosure of confidential information by the attorney is permitted, "whether or not Rule 1.6 permits such disclosure." Model Rules of Prof'l Conduct R. 1.13(c) (1983).

i. To begin with, an attorney employed by an

organization represents the organization, Model Rules of Prof'l Conduct R. 1.13(a) (1983), and generally not any individual officer or employee of the corporation.

ii. "If a lawyer for an organization knows that an

officer, employee or other person associated with the organization is engaged in action, intends to act or refuses to act in a matter related to the representation that is a violation of a legal obligation to the organization, or a violation of law that reasonably might be imputed to the organization, and that is likely to result in substantial injury to the organization, then the lawyer shall proceed as is reasonably necessary in the best interest of the organization. Unless the lawyer reasonably believes that it is not necessary in the best interest of the organization to do so, the lawyer shall refer the matter to higher authority in the organization, including, if warranted by the circumstances to the highest authority that can act on behalf of the organization as determined by applicable law." Model Rules of Prof'l Conduct R. 1.13(b) (1983).

iii. Rule 1.13 then provides that, "Except as provided

in paragraph (d) [an exception for attorneys conducting investigations or rendering defense representation], if (1) despite the lawyer's efforts in accordance with paragraph (b) the highest authority that can act on behalf of the organization insists upon or fails to address in a timely and appropriate manner an action, or a refusal to act, that is clearly a violation of law, and (2) the lawyer reasonably believes that the violation is reasonably certain to result in substantial injury to the organization, then the lawyer may reveal information relating to the representation whether or not Rule 1.6 permits such disclosure, but only if and to the extent the lawyer reasonably believes necessary to prevent

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substantial injury to the organization." Model Rules of Prof'l Conduct R. 1.13(c) (1983) (emphasis added).

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INTERNATIONAL ISSUES FACING CORPORATE HOUSE COUNSEL Dawn F. Croft and Carson Stewart

I. PRELIMINARY ISSUES: FORMATION & OPERATIONAL CONSIDERATIONS

A. Entity Formation

Is a new legal entity needed? B. Capital Requirements

1. Are there bank account minimums, and must accounts be held at an internationally recognized bank?

2. Will letters of guaranty or credit be needed?

C. Local Licensing Requirements

What local registrations are needed to do business or other licensing requirements in the new jurisdiction?

D. Tax and Currency Considerations

1. Work with tax professionals to ensure that investment in the new jurisdiction is efficient.

2. Currency exchange risk: Are cash pooling agreements, hedges or

other arrangements to protect against currency risk needed? II. EMPLOYEE CONSIDERATIONS: GLOBAL MOBILITY

A. Employment Considerations

1. Common structures.

a. Secondment: employee remains under employ of home country entity and is loaned (seconded) to host country entity.

b. Transfer: employee terminates employment from home

country entity and is re-hired by host country entity (two-step process).

c. Global employment company (GEC): employee is

transferred to intermediary entity (GEC) that seconds employee to host country entity.

d. Dual employment: employment relationship with both

home and host country entity.

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2. Documenting employment/termination.

a. Confirmation of employment status (at will; contractual, etc.).

b. Employment letter – Details of employment (term;

role/duties; reporting relationship; compensation; benefits; allowances; tax equalization; tax preparation and reporting assistance; confidentiality; governing law).

c. Termination letter – Details of termination (statutory

severance; required notice; governing law). 3. Immigration: laws differ from country to country.

a. Visa/authorization requirements differ. b. Treaties/bi-lateral agreements. c. Physical or medical examinations.

4. Returning to home country.

a. Termination of assignment. b. Termination from company. c. Retirement.

B. Compensation Considerations

1. Payroll – salary and bonus.

a. Home country payroll (expatriate) vs. localization – No Majority Practice!

b. Consider whether employee should remain on home

country benefits. 2. Equity.

a. Holding stock in foreign entity. b. Vesting/holding periods. c. Statutory severance obligation.

i. Equity should not be considered normal or routine

compensation or could be considered in statutory severance calculation.

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ii. Equity-issuing entity should inform employee of equity plans and benefits.

d. Compliance with privacy laws when awarding/tracking

grants. 3. Tax compliance.

a. Income taxes. b. Social taxes. c. Inadvertent dual taxation.

4. Exchange control rules. 5. Tax qualified and non-qualified plans.

a. U.S. retirement benefits overseas. b. Internal Revenue Code Section 409(A) and 457(A) for

deferred compensation – (Because you can run but you can't hide from 409(A)).

C. Other Concerns

1. Labor unions. 2. Securities laws in foreign jurisdictions. 3. Inadvertent "permanent establishment." 4. Accompanying family members. 5. Cultural training. 6. Employee privacy. 7. Anti-corruption laws.

D. Key Takeaways

1. Partner with your Human Resources and Tax teams to develop appropriate benefit design.

2. Develop a written employee mobility policy. 3. Document employment arrangement. 4. Ensure plenty of time to plan and execute on employee's transfer.

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5. Communicate early and often with your mobile employees. III. PRIVACY CONSIDERATIONS

A. More Technology, More Data Collection, More Third Parties, More Risk

Failure to comply with privacy and data protection laws means:

1. Lawsuits. 2. Government investigations and sanctions. 3. Loss of brand reputation and sales.

B. Generally, What Are Your Responsibilities?

1. Depends on the jurisdiction. 2. Definitions are key. 3. Don't forget your own policies. 4. Do you want to "do the right thing" regardless of law.

C. Employee Privacy

1. Compliance with international employee privacy laws.

a. EU Data Protection Directive: http://ec.europa.eu/justice/data-protection/

b. US-EU and Swiss Safe Harbor Framework:

http://www.export.gov/safeharbor/index.asp 2. Bring your own device policies. 3. Social media use.

Yum Team Member Social Media Guidelines Excerpt:

DO think about the possible effects of your post – on your employer, on your fellow Team Members, on your own reputation – before you create or publish it.

DO make clear that you are expressing your individual opinions.

DO include the following statement if you mention that you are a company, franchisee, or licensee employee:

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o "The postings on this site are my own and do not represent the views of [Yum! Brands, KFC, Pizza Hut and/or Taco Bell].

o Inclusion of the required statement will not

excuse any violation of this Standard.

DO remember that each of the Brands monitor online postings and will report ANY crimes to the proper authorities, including health code violations, food tampering/safety issues, theft, and vandalism.

DO remember that all workplace policies (e.g., your employer's anti-harassment policy) apply to your conduct in Social Media.

DO NOT speak or write on behalf of Yum! Brands, KFC, Pizza Hut and/or Taco Bell unless you have been specifically authorized to do so. Unless you are authorized, if you are contacted by anyone (media, reporters, bloggers, etc.) concerning the business of the Yum! Brands, KFC, Pizza Hut or Taco Bell, refer the person to the appropriate Public Relations media line below:

DO NOT claim or leave the impression that you are speaking on behalf of any of the Brands (Yum! Brands, KFC, Pizza Hut, and/or Taco Bell) without authorization to do so.

DO NOT misrepresent yourself or your role with Yum! Brands, KFC, Pizza Hut and/or Taco Bell.

DO NOT use any logos, trademarks, graphics, or advertising materials of Yum! Brands, KFC, Pizza Hut and/or Taco Bell.

DO NOT use others' property (e.g., copyrighted music, photos, videos) or images of other people without their express prior permission.

DO NOT publish, post, generate content, or otherwise communicate ANYWHERE any of the following information: o Material non-public financial or

operational information. o Product information.

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o Other protected information. o Photos, videos, or other material created

in violation of the Restaurant Recording Policy.

Team Members who fail to follow these Standards may be subject to discipline, up to and including termination of employment and, in certain circumstances, civil or criminal liability. Franchisees and licensees who fail to implement and enforce this Standard are subject to further action by the Yum! Brands, KFC, Pizza Hut and/or Taco Bell. [This Standard is not intended to preclude or dissuade Team Members from engaging in activities protected by state or federal law, including the National Labor Relations Act, such as discussing wages, benefits or terms and conditions of employment.] Franchisees or licensees are responsible for regularly reviewing and enforcing the terms of this Standard with their employees and will determine, within their sole discretion, the consequences to their employees of failure to follow these Standards. Yum! Brands and its subsidiaries reserves the right to modify, suspend, or withdraw this Standard at any time.

D. Customer Privacy

1. Breach notification laws. 2. Privacy policies. 3. Spam/advertising regulations.

Canada Anti-Spam Regulations, effective July 1, 2014 http://fightspam.gc.ca/eic/site/030.nsf/eng/home

E. Data Breach Plan – Implement It; Practice It

1. Cost goes down $42/record. 2. Identify a team. 3. Identify responsibilities. 4. Define incidents and suspected incidents. 5. Who makes decisions.

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6. Who gets informed.

a. Internally. b. Externally.

IV. ANTI-CORRUPTION LAWS AND THE FOREIGN CORRUPT PRACTICES ACT (FCPA)

Stronger DOJ and SEC enforcement has increased attention on the FCPA in recent years. The SEC website shows a complete list of enforcement cases since 1978: http://www.sec.gov/spotlight/fcpa/fcpa-cases.shtml There are currently approximately 100 open FCPA investigations involving at least dozens of countries. The U.S. is not alone in enforcing anti-bribery laws; many more countries are enforcing their anti-bribery laws, including Russia, U.K., China, India, Germany and Italy. A. Financial Impact

1. Costs of investigation & legal fees. 2. Fines and penalties. 3. Management disruption and distraction. 4. Impact on stock price. 5. Securities and shareholder derivative litigation.

Notable FCPA recent cases and their respective fines / settlement amounts:

a. Siemens AG (2008): $450 million. b. Marubeni Corporation (2012): $54.6 million. c. Smith & Nephew (2012): $22.2 million. d. Bizjet International Sales and Support Inc. (2012): $11.8

million. e. Biomet Inc. (2012): $17.3 million. f. Marubeni Corporation (2014): $88 million.

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g. Goodyear Tire and Rubber Company (2014): $16 million.

h. Avon (2014): $135 million.

Wal-Mart has predicted that it will spend between $200-240 million for fiscal year 2015 on expenses related to compliance enhancements and the investigation.

B. FCPA Components

The FCPA has two components: 1. The "anti-bribery provision" prohibits bribery of foreign

government officials. 2. The "accounting provisions" requires accurate books and

records and a system of internal accounting controls. C. Third Party Risk

1. Indirect payments to foreign government officials are prohibited by the FCPA.

a. "Knowledge" is a required element of a violation. b. Knowledge includes awareness of a high probability of a

bribe. 2. Disregarding or ignoring situations where a bribe is made by a

third party may constitute knowledge and a violation.

a. Be alert for "red flags" suggesting a corruption risk. b. "I don't want to know" is a red flag.

D. Red Flags

1. Reputation of the particular country/agent. 2. Agent's family or business ties with government officials. 3. Agent requests checks be made out to "cash" or "bearer." 4. Invoices with vague or no description of services performed. 5. Checks/payments to vendor are irregular in time or amount. 6. Agent cannot/does not produce receipts for claimed expenses. 7. Refusal to sign contract/statement of FCPA compliance.

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8. Government official requests use of specific agent. 9. Agent requests large up-front payments or unusually high fee. 10. Excessive/lavish entertainment.

E. Aspects of an Effective Anti-Corruption Compliance Program

1. Comprehensive zero tolerance anti-corruption policy.

a. Should contain hotline and/or reporting structure. b. Clear consequences for violating the policy.

2. Regular training (online and in person).

a. Occurs more often in high risk markets. b. Provide relevant examples. c. Don't underestimate the value of in-person training.

3. Third party due diligence.

a. Use a risk based approach to determining level of diligence necessary for each third party.

b. Extend training and require compliance certifications as

necessary. 4. Maintain tone.

Regular communications on topic between headquarters and foreign offices.

5. Proactively review compliance.

Conduct in market reviews of anti-corruption to identify local market issues and any gaps in adherence/understanding of policy.

6. Have a process in place to address allegations.

a. Ensure investigations are credible. b. While having local markets own their compliance in most

circumstances, in the event of an investigation, oversight of the process should be removed from the local market.

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V. MITIGATING COUNTERPARTY RISKS

Key Considerations when Contracting with Third Parties:

A. Pre-Contract Diligence

Consider entering into an NDA and/or letter of intent to give the parties time to conduct due diligence. Use a risk-based approach to vendor selection.

B. Defined Responsibilities

Contractual responsibilities should be significant, demonstrable and measurable:

1. Define scope parameters. 2. Include performance dates and milestones where possible.

C. Risk Allocation and Mitigation

1. Governance and dispute resolution provisions; 2. Termination rights; 3. An entire agreement provision; and 4. Indemnification provisions.

D. Compliance with Law and Company Policies

1. Consider requiring regular compliance certifications (e.g., FCPA). 2. Consider direct and/or third party audit rights.

E. Intellectual Property

1. Define who owns/will own IP as part of the engagement. 2. Require employees to protect each party's IP, for example by:

a. Segregating the counterparty's IP from company and third-party IP; and

b. Prohibiting employees working on the engagement from

working on transactions involving the counterparty's competitor or similar engagements.

F. Staggering Payments

Avoid fixed or up-front payments. Consider alternatives:

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1. Payments by phase. 2. Escrow a portion of the funds to be released on project

completion.

G. Capitalization/Creditworthiness

Consider seeking credit enhancement from the counterparty's parent company or bank, for example:

1. A standby letter of credit; 2. A guaranty; 3. A comfort letter; or 4. A surety bond.

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LEGAL ISSUES FOR TRADITIONAL "VICE" INDUSTRIES: TRADEMARK ISSUES IN THE SURGING BOURBON INDUSTRY

Lisa C. DeJaco

I. THE PROBLEMS OF POPULARITY

A. How Far Does Trademark Protection Go? B. Nicknames C. Belated Protection D. Trade Dress E. Labeling and False Advertising

II. EVERYBODY WANTS TO GET INTO THE BOURBON GAME

A. John Wayne Enterprises, LLC v. Duke University, et al., 8:14-CV-01020, (C.D. Cal. 2014)

1. Declaratory judgment action filed by the John Wayne estate over

use of the term "Duke." 2. In 2013, the estate sought a federal trademark registration to be

used on alcoholic beverages … "Kentucky Straight Bourbon Whiskey Small Batch."

3. The University has filed opposition and cancellation proceedings,

and argues that there will be dilution of its famous mark. 4. Legal questions:

a. Does Duke have the right to prevent use of the word

"Duke" in a market that it doesn't want to enter? Does it own the word "duke" in all contexts?

b. What rights inhere to the John Wayne estate on the basis

of a long-established nickname? B. Who's the Bird?

1. 2011: Wild Turkey was launching a multi-million dollar GIVE 'EM THE BIRD advertising campaign.

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2. Nothing else comes close?

Rare Breed Distilling, LLC v. Jim Beam Brands Co., 3:11-CV-00292, (W.D. Ky. 2011).

a. References to Wild Turkey as "the Dirty Bird" or "the Bird"

in advertising and pop culture dated back at least into the 1970s.

b. In recent years, Wild Turkey had done print ads with GIVE

THEM THE BIRD, THE ONLY TIME TO GIVE A BIKER THE BIRD, SHOOT THE BIRD, and GIVE 'EM THE BIRD.

c. Old Crow had trademarked "Give 'em the bird" in 2010,

was using it on a website and some point-of-sale advertising.

d. Legal questions:

i. Who has the rights in a nickname, and what must

one be able to prove to establish those rights? ii. How much weight should be given to a first-filed

registration?

III. PREDICTING POPULARITY

Kentucky Distillers' Association v. Sazerac Co., Inc., et al., 3:10-CV-000307, (W.D. Ky. 2010) A. The KDA came up with the Bourbon Trail concept in 1999. At that time,

Buffalo Trace was a KDA member. B. Sazerac bought Buffalo Trace, withdrew from KDA. In 2009, Sazerac filed

for "Buffalo Trace on the Bourbon Trail" trademarks (and others). C. KDA brought suit against Sazerac, and Sazerac countersued to cancel

the KDA's Bourbon Trail trademarks. D. Legal questions

1. What can be protected by a mark? 2. What does it take to protect a mark?

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IV. BRANDING > NAMING

Maker's Mark Distillery, Inc. v. Diageo North America, Inc., 679 F.3d 410 (6th Cir. 2012)

A. Jose Cuervo argued that no one would associate their super premium

tequila with a mid-market bottle of Maker's Mark, and argued that other people had made use of dripping wax seals in the past.

B. Maker's successfully established that the red dripping wax seal is well-

known as its distinctive brand element. C. Maker's Mark won an injunction and its attorney fees, but did not recover

any damages because the court said there was no evidence anyone was actually confused.

V. THE NEXT FRONTIER: FALSE ADVERTISING/CONSUMER PROTECTION

A. Plaintiffs are Attacking Brands that Market as "Handmade"

1. 2014 Supreme Court case changed the parameters of claims for false advertising: POM Wonderful LLC v. Coca-Cola Co., 134 S.Ct. 2228 (2014), said that compliance with FDA requirements for labeling did not prohibit a claim for false advertising under the Lanham Act.

2. Advocacy group Consumer Class Actions is offering legal advice

to consumers who question the authenticity of U.S. whiskey marketed as "craft" or "small-batch."

B. Nowrouzi et al. v. Maker's Mark Distillery, Inc., 3:14-CV-02885 (S.D. Cal.

2014)

1. Individuals have filed a putative class action against Maker's Mark, asserting that they were deceived by its label.

2. Maker's Mark label says "handmade" but much of its production is

mechanized. 3. Similar claims are asserted in several suits pending against Tito's

Handmade Vodka. 4. Legal questions:

a. Would a reasonable person believe that the entire process

of manufacture is done by hand? b. Can Plaintiffs sue producers over labeling when its label is

approved by the TTB, which prohibits false and misleading statements?

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VI. … AND IT DOESN'T STOP THERE

A. McNair v. Templeton Rye Spirits, LLC, 1:14-CV-07440 (N.D. Ill. 2014)

1. Templeton Rye's label described a craft rye whiskey distilled using a prohibition era recipe made in Iowa.

2. The whiskey is distilled in Indiana and purchased from major

industry source MGP. Templeton was not able to use its historic recipe, and worked with a flavor engineering company to match the MGP product to its taste profile.

3. Templeton has changed its label for more disclosure.

B. Aliano et al. v. Louisville Distilling Co., LLC, 1:15-CV-00794, (N.D. Ill.

2015)

1. Claims filed against Angel's Envy by the same law firm as in the Templeton Rye case.

2. Angel's Envy also purchases product from MGP, which it

"finishes" by aging in barrels that have held other spirits.

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LEGAL ISSUES FOR TRADITIONAL "VICE" INDUSTRIES: VICE INDUSTRIES ARE HEAVILY REGULATED – TIPS ON WORKING WITH THE

RULE MAKERS Lisa E. Underwood

I. FIRST THINGS FIRST

A. Are You a Lobbyist?

1. KRS 6.611 – Legislative branch – klec.ky.gov. 2. KRS 11A.201 – Executive branch – ethics.ky.gov.

B. Other Potential Ethical Issue

If worked in state government may need to sit out for a period of time on certain investments and representations KRS 11A.040(6), (7), (8), and (9).

C. If You Were in the Legislator's Shoes

1. Offer to meet before the session. 2. Want to be educated on a topic. 3. Accurate and truthful information.

D. Legislator's Shoes

1. Short, executive summary. 2. Want to look smart.

E. Don't Want to be in the Middle of a Conflict F. No Surprises

II. OTHER RANDOM LESSONS LEARNED

A. Proofread Carefully

KRS 13A.050(2)(C) B. No Opinions on Unrelated Topics C. Count Your Votes Yourself D. Your Credibility Is Everything E. Figure out Who You Can Trust

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III. IF YOU WERE IN THE REGULATOR'S SHOES A. Want to Be Treated with Respect B. Majority of People in Government Are Hardworking – Acknowledge This C. Honest and Accurate Information D. Be Aware of Challenges of Regulators

1. Open meetings laws KRS 61.800-61.850. 2. Open records act KRS 61.870-61.884.

IV. OTHER RANDOM LESSONS LEARNED

A. Make Sure You are Dealing with the Correct Person for the Situation B. Think Hard about the Same Attorney Handling both a Messy Situation

(Investigation) and Something on a Positive Note (New Benefits for Industry)

C. Staff will often Meet with You about an Application before It Is Filed D. Face to Face Meetings

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LEGAL ISSUES FOR TRADITIONAL "VICE" INDUSTRIES: PRE-EMPTING THE ANGEL'S SHARE

Donald J. Kelly

I. THREE CLASS ACTION COMPLAINTS FILED IN THREE SEPARATE

VENUES IN JUNE 2012

A. Mills, et al. v. Buffalo Trace, Inc. and Beam, Inc., Franklin Cir. Ct. B. Merrick, et al. v. Brown-Forman Corporation and Heaven Hill Distilleries,

Inc., Jefferson Cir. Ct. C. Merrick, et al. v. Diageo Americas Supply Inc., U.S.D.C., W.D. Ky. D. Following Suits Threatened or Filed in USVI, Canada and Scotland

II. THEORIES OF LIABILITY

A. Negligence and Gross Negligence B. Temporary Nuisance C. Permanent Nuisance D. Trespass E. Injunctive Relief

III. FEDERAL LAW PRE-EMPTION

A. Under Supremacy Clause of the U.S. Constitution, federal laws pre-empt conflicting state laws ("any state law that 'interferes with or is contrary to federal law.'" Bell v. Cheswick Generating Station, 734 F.3d 188 (3rd Cir. 2013), quoting Free v. Bland, 369 U.S. 663, 666 (1962)).

B. Express Pre-emption C. Implied Pre-emption

1. Field pre-emption. 2. Conflict pre-emption.

IV. DISPLACEMENT OF FEDERAL COMMON LAW

A. A Product of the Limits of Federal Common Law

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B. International Paper Co. v. Ouellette, 479 U.S. 481 (1987)

1. Clean Water Act (CWA) preempts claims based on the common law of a state other than the state where the discharger is located.

2. CWA creates all-encompassing program of water pollution

regulation.

a. Permit program administered by EPA and states. b. Technology based standards. c. Balances competing public and industrial uses. d. Water pollution elimination not immediately achievable.

3. Contrasts this with regulation by nuisance law.

a. Vague and indeterminate standards. b. Undermines goals of efficiency and predictability in permit

systems.

4. Congress could not have intended to tolerate common law suits with a potential to undermine an elaborate permit system that sets clear standards.

5. Because CWA allows states to impose stricter standards, a claim

based on common law of the source state may not create the same conflict.

C. North Carolina ex rel. Cooper v. Tennessee Valley Authority, 615 F.3d

291 (4th Cir. 2010)

1. Clean Air Act (CAA) pre-empts state common law claims. 2. While Ouellette did not hold all nuisance claims pre-empted, "it

recognized the considerable mischief in those nuisance actions seeking to establish emission standards different from federal and state regulatory law…"

3. Found in the CAA a Congressional decision to have emission

standards set by expert regulatory bodies rather than courts.

a. Directs EPA to develop scientific expertise. b. Provides for notice and comment rulemaking. c. Facilitates a uniform application of standards.

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d. Provides certainty for entities faced with large investments required to reduce emissions.

e. Avoids practical effects of having multiple and conflicting

standards guide emissions, including the likelihood that would result in higher emissions.

4. Contrasted this with courts applying vague indeterminate

standards of public nuisance law, relying on information received through bench trials.

D. American Elec. Power Co., Inc. v. Connecticut, 131 S.Ct. 2527 (2011)

In holding that the CAA displaces federal common law rights to seek abatement of carbon dioxide emissions, the Court found emission standards developed by courts from common law principles cannot be reconciled with the decision-making scheme Congress prescribed in Act.

1. "The [CAA] entrusts … complex balancing (of competing interests,

achievable environmental benefits, energy needs, economic disruptions) to EPA in the first instance, in combination with state regulators."

2. EPA is better equipped to do the job than judges issuing ad hoc

injunctions. 3. Federal judges lack scientific, economic and technological

resources an agency can utilize, are confined to evidence parties present and lack authority to render decisions binding on facilities not before them.

4. Congress designated an expert agency to serve as primary

regulator of greenhouse gas emissions.

E. Bell v. Cheswick Generating Station, 734 F.3d 188 (3rd Cir. 2013), cert. denied, 134 S.Ct. 2696 (2014)

1. Reversing a Pennsylvania District Court, the Third Circuit Court of

Appeals held the CAA does not preempt claims based on common law of the state where the facility is located.

2. To reach its conclusion the Third Circuit:

a. Found the savings clauses in the CWA and CAA to be, for

all practical purposes, identical, and that both preserve a right for states to impose stricter standards.

b. Read the Supreme Court's decision in Ouellette to say that

stricter standards preserved by the CWA's savings clause include both statutory and common law standards.

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c. Rejected arguments that subjecting facilities to standards developed by courts in accordance with common law of the state in which the facility is located, interferes with the goals of the CAA.

3. U.S. Supreme Court denied a petition seeking review of this

decision.

F. Freeman v. Grain Processing Corp., 848 N.W.2d 58 (Iowa 2014)

1. Reversing a state trial court, the Iowa Supreme Court held that the CAA does not preempt claims based on common law of the state where the facility is located.

2. In reaching this decision the Court followed the reasoning in Bell v

Cheswick Generating Station and its reliance on:

a. Language in the U.S. Supreme Court's decision in Ouellette stating that the CWA savings clause preserves claims based on the common law of the state where the discharger is located.

b. Similarities in the savings clauses found in the CWA and

the CAA. 3. The Court also rejected arguments that amendments to the CAA

in 1990 give rise to conflict preemption. 4. U.S. Supreme Court denied petition for a Writ of Certiorari.

G. Comer v. Murphy Oil USA, Inc., 839 F.Supp.2d 849 (S.D. Miss. 2012),

aff'd on other grounds, 718 F.3d 469 (5th Cir. 2013)

1. State common law claims alleging defendants' emissions contribute to global warming and Hurricane Katrina held displaced by CAA.

2. Requires the court to determine "what amount of emissions is

unreasonable and what level of reduction is practical, feasible, and economically viable, a task entrusted by Congress to the EPA."

V. KENTUCKY IS NOW AT THE CENTER OF THE DEBATE

A. Merrick v. Brown-Forman Corp., Civ. Action No. 12-CI-3382 (Jefferson Cir. Ct., Div. 9, July 30, 2013)

1. CAA preempts Kentucky common law claims. 2. Kentucky Court of Appeals reversed, 2013-CA-002048-MR, 2014

WL 6092218 (Ky. App. Nov. 14, 2014).

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3. Amicus Brief filed by Kentucky Association of Manufacturers and Kentucky Chamber of Commerce.

4. Motion for Discretionary Review pending.

B. Merrick v. Diageo Americas Supply Inc., 5 F.Supp.3d 865 (W.D. Ky.

2014)

1. CAA does not preempt Kentucky common law claims. 2. Before the U.S. Court of Appeals for the Sixth Circuit on

Interlocutory Appeal.

C. Mills v. Buffalo Trace Distillery, Inc. and Beam, Inc., Civ. Action No. 12-CI-743 (Franklin Cir. Ct., Div. II August 28, 2013)

Rejects CAA preemption defense.

D. Little v. Louisville Gas & Elec. Co., 33 F.Supp.3d 791 (W.D. Ky. 2014)

1. Rejects CAA preemption defense. 2. Before the U.S. Court of Appeals for the Sixth Circuit on

Interlocutory Appeal.

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WHAT TO EXPECT WHEN YOU'RE A RESPONDENT Robbie Owen Clements

Respondent – the title no attorney wants to have. New lawyer or experienced lawyer; two years of experience or twenty, the jolt of that first bar complaint is the same. No attorney wants to be on the receiving end of one. The good news for most attorneys is that they probably never will be. Historically, only about 4 percent of Kentucky attorneys have complaints filed against them each year. The majority of those complaints do not result in the Inquiry Commission finding probable cause to believe the attorneys violated the Rules of Professional Conduct. It is statistically far more likely that the complaint will be closed or dismissed, either outright or with conditions. Nevertheless, a bar complaint is nothing to be taken lightly or ignored. At best, it interferes with schedules and commitments. At worst, it can be the beginning of the end of a career. Most attorneys know very little about the discipline process, and are quite content to keep it that way. Some, however, will not be so fortunate. Knowing what to do, and when and how to do it, will make the process much easier to face. I. "RESPONDENT" DEFINED

What does it mean to be a respondent? The attorney sought to be disciplined is identified as Respondent. It means a bar complaint has been filed against you to which you must now respond – nothing more, at least not yet. The more important thing to recognize is what it does NOT mean. Being named in a bar complaint does not automatically mean the attorney has done something wrong; it only means someone THINKS the attorney has done something wrong. That "someone" can be anyone – there is no standing required to file a bar complaint. The complainant need not be a client or former client. Frequently, complaints are filed by opposing parties or opposing counsel. Complaints may also be filed by third parties – witnesses, judges, or just individuals who believe the lawyer has violated the rules. Being a respondent does NOT mean the attorney should expect to close up shop and find another line of work. It does mean a respondent should be prepared to respond orally in an alternative disposition matter, or in writing if required. To do that, Respondents should first review the procedures, found in the Supreme Court Rules.

II. COMPLAINT STAGE

The Supreme Court of Kentucky has exclusive authority to discipline lawyers in the Commonwealth pursuant to Section 116 of the Kentucky Constitution, which provides in part: "The Supreme Court shall, by rule, govern admission to the bar and the discipline of members of the bar." To accomplish this, the Court promulgates the Kentucky Rules of Professional Conduct and the procedures to follow in determining whether those rules have been violated. SCR 3.130 and its subparts set forth the Kentucky Rules of Professional Conduct (KRPC), and SCR 3.140 through 3.530 set forth the procedures for enforcing them.

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Disciplinary proceedings differ from both criminal and civil proceedings. Disciplinary proceedings are inquisitorial, but civil in nature, not criminal or even quasi-criminal. Kentucky Bar Ass'n v. Signer, 558 S.W.2d 582 (Ky. 1977). The inquiry is to determine whether conduct constitutes unethical and unprofessional conduct. Generally, the function of the Office of Bar Counsel, the Trial Commissioner, and the Board of Governors is to prepare the case for review by the Court, and make appropriate recommendations to it through the Findings of Fact and Conclusions of Law determined by the Trial Commissioner and by the Board of Governors. The action is an original action in the Supreme Court. Initial proceedings are confidential. SCR 3.150 makes discipline matters confidential prior to a finding of a violation of the rules by the Trial Commissioner or the Board and the recommendation of the imposition of a public sanction. After that point, the matter is public. There are some exceptions to confidentiality, which are spelled out in the Rule itself.

A. Roles of Other Persons and Entities Involved

There are several parties involved in disciplinary matters at the complaint stage, in addition to respondents. By rule, the Court delegates certain functions in connection with the disciplinary process to the Inquiry Commission, the Office of Bar Counsel (OBC), the Trial Commissioner, and the Board of Governors of the Kentucky Bar Association (KBA). Disciplinary matters generally begin, however, with the filing of a sworn, written complaint. The person who submits this complaint is identified as the complainant, and remains so throughout the investigation phase. This person is a complaining witness, and is not a party at any phase of the proceeding and has no standing to appeal dismissal of the complaint. Complaints may also be initiated by the Inquiry Commission. If the case begins with an Inquiry Commission complaint, the Inquiry Commission is identified as the complainant during the investigation phase. If a charge is issued, the Kentucky Bar Association is officially identified as Complainant for the remainder of the case. The person who filed the complaint may continue to be involved as a witness, but is neither legally obligated, nor entitled, to participate. Specifically, the KBA acts as an agent of the Supreme Court in the disciplinary process. It performs this function pursuant to SCR 3.025, which provides in part: "The mission and purpose of the Association is to maintain a proper discipline of the members of the bar in accordance with these rules and with the principles of the legal profession as a public calling. . ." Disciplinary matters are investigated and prosecuted by attorneys in the Office of Bar Counsel (OBC), as authorized by the Supreme Court in SCR 3.155. They are appointed by, and serve at the pleasure of, the Board of Governors. Each file that comes into the office is assigned to one of those attorneys. The OBC attorney reviews and summarizes the complaint, response, and any additional materials, i.e. court records, bank documents, and responses to requests for additional information, and presents the cases to the probable cause panel, the Inquiry Commission.

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The Inquiry Commission consists of nine persons appointed by the Chief Justice with the consent of the Supreme Court. Six of these persons are lawyers who possess the qualifications of a circuit judge; the other three are citizens of Kentucky who are at least thirty (30) years of age and are not lawyers. The Inquiry Commission is divided into three panels, each comprised of two lawyers and one non-lawyer. One panel meets each month. The Commission has adopted administrative regulations to ensure consistent treatment of cases by and among the three panels, and provide for overall coordination with the OBC. Each disciplinary case will be assigned to one of the three panels after the lawyer in the OBC completes the initial investigation.

B. Alternative Disposition Track

Before sitting down to draft a written response, it is important to carefully read the letter that accompanies the bar complaint, because it is possible that a written response is not required – at least not yet. SCR 3.160(3)(A) allows the Office of Bar Counsel (OBC) to determine, under the direction of the Inquiry Commission, whether a complaint is appropriate for alternative disposition. Forms of alternative disposition include, but are not limited to: informal resolution, referral to fee or legal negligence arbitration, office management or legal education programs, remedial ethics education programs, KYLAP referral, or the issuance of a warning letter. Complaints assigned to this alternative track typically allege less serious conduct and more minor rule violations, such as failure to return a client file or to return client calls. Matters suitable for alternative disposition can typically be addressed in fairly short order through a preliminary investigation and are resolved, on average, within about three weeks. Complaints assigned to this track will be accompanied by a letter advising attorneys that they may be contacted by the assigned OBC attorney to discuss the complaint. There are instances in which the OBC attorney may be able to address the issues raised in the complaint without ever speaking to the attorney. Generally, however, the OBC attorney will contact the attorney, usually by telephone. Many of the matters assigned to this track can be resolved by simply answering a couple of questions, or faxing a document. Receipt of a complaint assigned to the alternative disposition track, then, should prompt the attorney to review the file and be ready for the call, or to make a call to the OBC attorney directly. After its review and preliminary investigation, the OBC may attempt informal resolution and close the complaint. A warning letter may be issued, or a referral to arbitration or KYLAP, or to some form of education program may be made, upon successful completion of which the file would be closed.

C. Traditional Complaint Process

Obviously, not all complaints will be appropriate for the alternative disposition process. The conduct may raise potentially serious rule violations requiring a more formal disposition process. The complaint may

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also have originally been assigned to the alternative track, only to have the attorney fail to participate in that process. The complaint could originate not from a client or an individual, but directly from the Inquiry Commission. In any of these situations, a formal written Response must be filed. When a formal written response is required, the letter accompanying the Complaint Form will indicate that one must be filed and will detail the steps to follow in doing so. The response should be filed within the time frame spelled out in your letter. All additional information needed to support the response should be attached. If additional time to respond is needed, a short extension can be granted by agreement with the OBC attorney. The attorney should confirm any informal extension with the OBC attorney in writing. Usually, an email will suffice. If a substantial extension (i.e., more than twenty days) is needed, a motion must be filed with the Inquiry Commission. Typically, OBC does not object to requests for additional time for the filing of a response. The importance of submitting a response cannot be understated. There is no more certain way to make a bad situation worse than to fail to respond to a bar complaint. No matter how distasteful the prospect of responding to a complaint may be, attorneys have an affirmative duty to do so. In an alternative disposition matter, failure to return a call from OBC will likely result in the complaint being moved to the traditional track, requiring a written response and review by the Inquiry Commission. Where an attorney has been notified that a written response is required, and none is received, the consequences are potentially much worse. First, failure to respond leaves the Inquiry Commission with only one side of the story – the complainant's. The Kentucky Supreme Court has held that where an attorney fails to respond, the allegations of the complaint "may be taken as confessed."1 From a practical standpoint, the absence of a response often leaves the Inquiry Commission with no real alternative but to accept the allegations of the complaint as true and proceed with a Charge. Second, and more damaging, the Charge the Inquiry Commission authorizes will likely include a count for violation of SCR 3.130-8.1(b), which states that lawyers, in connection with disciplinary matters, shall not "knowingly fail to respond to a lawful demand for information from an admissions or disciplinary authority…" Guilty findings on this rule violation alone have resulted in public reprimands from the Court.2 Keep in mind that this rule applies not only to responding to the complaint itself, but also to subsequent inquiries requesting additional information on the

1 Kentucky Bar Ass'n v. McDonner, 353 S.W.3d 612 (Ky. 2011) [citing Kentucky Bar Ass'n v.

Roney, 862 S.W.2d 315 (Ky. 1993)]. 2 Kentucky Bar Ass'n v. Thornton, 279 S.W.3d 516 (Ky. 2009) [citing Kentucky Bar Ass'n v. Beal,

169 S.W.3d 860 (Ky. 2005)].

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matter. The Court has held: "The KBA's ability to properly investigate disciplinary matters requires compliance with reasonable requests for information."3 The Complaint, Response, and other investigative materials are presented by the OBC attorney to the Inquiry Commission. The Inquiry Commission is primarily a "probable-cause panel." Respondent does not appear before the Inquiry Commission. The Commission considers all this information and determines whether probable cause exists for a charge to be filed against a respondent. The Commission may issue a warning letter or a conditional dismissal letter to the attorney. The Commission may direct a private admonition, with or without conditions, to the attorney, if the conduct does not warrant a greater degree of discipline. If a charge is authorized, it is issued by the Commission and filed with the Disciplinary Clerk. The Charge is a notice pleading, outlining the conduct and specifying the rule(s) the Commission has probable cause to believe Respondent has violated. 1. What a Response should contain.

Certainly, avoiding the issuance of a Charge is the preferable outcome. To assist the Inquiry Commission in making its determination, and to present the best possible case to avoid a Charge, certain information should be in the Response, and certain steps should be taken before filing it. a. Full and complete information.

Responses should focus on the allegations raised in the complaint and provide a clear, objective narrative of all facts relevant to those allegations. Responses should be carefully reviewed to avoid any factual inconsistencies which might give rise to questions when reviewed by the OBC. Candor and honesty are critical. Any information which might be considered a mitigating factor, such as a drug or alcohol problem which might be addressed through KYLAP should also be included.

b. Copies of relevant documents from file or court.

Often, responses can and should be supported by documents to paint the most complete picture of the attorney's position. Providing those documents as attachments to the Response will allow the OBC to review them immediately, rather than having to request them separately, speeding the process considerably. Such supporting documents may include, but are in no way limited to, court records or docket sheets, time records, copies of correspondence, and even affidavits from other

3 Id. at 519.

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parties. If there is a lawsuit pending, such as for the collection of Complainant's bill, it is important to provide information about that suit as well. It is important to recognize that responses are generally provided to complainants for their review. In certain instances, such as during pending litigation, that may have the potential to be damaging. If respondents specifically request that their responses not be given to complainants, the OBC will not provide them.

c. Relevant background on Complainant.

While responses should not focus too heavily on complainants, some facts may be important to any evaluation of the complaint. Past history with a complainant, issues with collecting a complainant's account or difficulties working with the complainant during the representation are all factors to be considered in reviewing the case. Similarly, if the complainant has a documented mental illness, substance abuse, or other issues that may affect his or her perception, the OBC and the Inquiry Commission need to know that. The fact that a complainant is difficult or is lying, however, may not be enough to resolve the real issue. For example, if no written contingency fee agreement exists, and that fact is uncovered, a complainant's other issues may not be relevant. In some situations, it may be appropriate for respondents to contact complainants regarding the issues raised in the bar complaint (refunding all or part of fee, for example). In other situations, the representation remains ongoing and the complaint may actually arise from lack of communi-cation. There is no prohibition on contacting the complainant and, if a resolution of the issues raised in the complaint is reached, it is important to advise the OBC that such resolution occurred. In an instance where a written response is required, even addressing the problem that gave rise to the complaint is not adequate to "make the bar complaint go away." Instead, any efforts to resolve the issues raised in the complaint should be described in the Response. Do not assume complainants will share that information with the OBC. Such information is important to the Inquiry Commission's evaluation of the bar complaint and could result in the issuance of a private admonition rather than a Charge of misconduct, or it might support an outright dismissal.

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d. Seek independent review of your Response.

The disciplinary process is foreign to most attorneys, and statistically speaking, many will never have to become familiar with it. For those who find themselves the recipients of complaints, however, navigating the process can be challenging. Though OBC can assist with pro-cedural questions or discuss brief extensions of time to respond, OBC attorneys cannot advise attorneys about what they should say in their responses. Many attorneys choose to retain counsel to assist them; others proceed alone. At a minimum, have a partner or colleague review any response before it is filed. An independent review will help ensure the Response addresses all matters raised in the complaint as fully and completely as possible.

2. What a Response should not argue.

a. Standing.

Lack of standing is not a defense in disciplinary proceedings, nor is the fact that the conduct wasn't related to any representation of a client. Anyone can assert a bar complaint; there is no requirement that it come from a client, or a former client. Complaints are often filed by opposing parties, judges or other attorneys, but they can come from any source. They may be related to the handling of a particular matter, but may also relate to conduct outside the practice of law, i.e. criminal conduct. Under the Supreme Court Rules, attorneys owe duties not only to their clients, but to other parties, the public, and the profession as well. Certainly, the source of the complaint may be significant to the Inquiry Commission. If the complainant is a disgruntled opposing party, for example, the attorney should raise that, but should not expect it to just make the complaint go away.

b. Statute of limitations.

While delay in bringing the complaint is worth noting in the response, particularly if the passage of time has resulted in loss of information or unavailability of witnesses, the rules do not establish a statute of limitations on the filing of bar complaints. A bar complaint cannot be time barred.

c. Character attacks on Complainant.

The complainant is merely a witness, not an adverse party. Do not use the response simply to vent about or attack the complainant. While relevant information regarding the complainant is helpful, demonizing the complainant is not.

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Past history with the complainant, issues with collecting the complainant's account, or difficulties working with the complainant during the representation are all factors to be considered in reviewing the case, as is the complainant's truthfulness, or lack thereof. The fact that the complainant is difficult or is lying, however, may not be enough to resolve the real issue. Further, irrelevant attacks on the complainant's background or character do nothing to assist the Inquiry Commission in their review of the matter at hand. Do not dismiss the complaint by saying, "This complainant is ridiculous. I shouldn't have to respond to his complaint." Focus on the issues raised in the complaint, and if there is relevant information about the complainant to provide, then provide it.

d. Motions to dismiss complaint.

While a motion to dismiss for failure to state a claim may be appropriate in a civil action, such is not the case here. There is no provision for a motion to dismiss at the complaint stage of the process. Making such a motion as opposed to simply responding to the Complaint may make the Inquiry Commission wonder what you might be trying to hide from them. The better course of action is to use the Response to show why the Complaint should be dismissed. Instead of just saying the complaint should be dismissed for failure to state a claim, attorneys should use their response to the complaint to show why it should be dismissed – one reason for which may be that there is no factual or legal basis for it.

e. Personal consequences.

Arguing that the malpractice judgment you've already paid or the criminal sentence you are about to serve should be punishment enough do not address the alleged conduct. Ethical violations are independent of any civil or criminal remedies. Likewise, arguing the financial consequences of suspension as a reason to dismiss the Complaint does not address the important issues. Any attorney who has been through a suspension could make that same argument, but it does not go to the real issue. The better plan is always to address the merits of the Complaint itself.

III. CHARGE STAGE

Best efforts of respondents notwithstanding, sometimes there is probable cause to believe respondents' conduct violates the Supreme Court Rules. When the Inquiry Commission makes such a finding and issues a Charge, a second round of proceedings begins.

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The position of Disciplinary Clerk is created by SCR 3.157 to function as the records custodian of all charge case files until they are sent to the Court. The Disciplinary Clerk is an employee of the Kentucky Bar Association, and is separate from the Office of Bar Counsel. In addition to the duty of a custodian, and unlike typical Circuit Court Clerks or Clerks of the Appellate Courts, the Disciplinary Clerk actually serves the pleadings in disciplinary proceedings. After a Charge is authorized, all pleadings are filed with the Disciplinary Clerk, and the Clerk forwards copies to Respondent and, later, the Trial Commissioner. Thus, the typical certificate of service will state that the pleading was filed with the Disciplinary Clerk with sufficient copies for distribution to the Respondent and the Trial Commissioner. The Disciplinary Clerk is also responsible for appointing the Trial Commissioner to serve in each case, subject to the approval of the Chief Justice. The Disciplinary Clerk will receive, receipt for, and serve any orders or reports issued by the Trial Commissioner in each case. Because motions to dismiss or amend charges can only be ruled upon by the Inquiry Commission, the Clerk will not forward a copy of these types of motions to the Trial Commissioner, but will instead forward a copy to the Inquiry Commission for its determination. The Trial Commission is comprised of fifteen volunteer members of the Bar, appointed by the Supreme Court, who hold the evidentiary hearings in discipline cases. A Trial Commissioner is appointed when a respondent files an Answer to a Charge which raises issues of fact and efforts at consensual resolution of the matter have been unsuccessful. The selected member of the Trial Commission cannot reside in the same Supreme Court district as the respondent. The Trial Commissioner's function is to conduct an evidentiary hearing, and to determine and regulate the order of proceedings at that hearing. Prehearing discovery is also conducted as directed by the Trial Commissioner, consistent with SCR 3.330 rather than the Civil Rules. At the conclusion of the hearing, and after the matter has been finally submitted, the Trial Commissioner must submit a written report containing findings of fact and conclusions of law and, if a violation of the Rules of Professional Conduct has been found, recommending an appropriate sanction. Available sanctions include private or public reprimands, suspensions, and permanent disbarment, along with any appropriate conditions. This report is advisory only. If no notice of appeal is timely filed, the case proceeds directly to the Supreme Court. If either side disagrees with the Trial Commissioner's report, an appeal may be made to the Board of Governors.

IV. APPELLATE PROCEEDINGS

The Board of Governors is comprised of fourteen elected members, two from each Supreme Court district, plus four lay members appointed directly by the Chief Justice. Each of those members votes on disciplinary matters, along with the President; the President-Elect; and the Vice President. Eleven of those members constitute a quorum.

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The case is heard by the Board of Governors through briefs and, if requested by either party or the Board, oral arguments. No new evidence is taken, but the Board may remand the case for additional evidence if appropriate. The Board may determine whether the decision of the Trial Commissioner is supported by substantial evidence or is clearly erroneous as a matter of law. However, it may also conduct a de novo review of the evidence presented at the hearing held by the Trial Commissioner. If Respondent fails to file an answer, admits the violation, or agrees that the answer raises only issues of law, the case is submitted directly to the Board of Governors (SCR 3.210). The absence of a factual dispute alleviates the need for a Trial Commissioner. After its review of any disciplinary matter, the Board issues written findings of fact and conclusions of law, including a recommendation of appropriate discipline if a violation has been found. The Board's report is advisory in nature and is not binding on the Court. The Disciplinary Clerk sends it, along with the record of the proceeding, to the Court. A disciplinary case reaches the Supreme Court in one of five ways: 1. For entry of an order adopting the decision of the Trial Commissioner, if

no appeal has been taken to the Board of Governors (SCR 3.370(9)); 2. For entry of an order adopting the decision of the Board of Governors, if

no request for review has been made (SCR 3.370(9)); 3. For review of the decision of the Board of Governors on a notice of review

filed by one of the parties (SCR 3.370(7)); 4. For review of a decision of the Board of Governors, based on a sua

sponte notice of review by the Supreme Court itself (SCR 3.370(8)); or 5. On a motion for consensual discipline (i.e., a motion to resign under terms

of disbarment) by the Respondent (SCR 3.480(2) and (3)). Regardless of the scenario, the Supreme Court has plenary authority to review the evidence, decide the case and impose discipline as it deems appropriate. It is not constrained by any concept of limited appellate review, because a disciplinary proceeding is an original proceeding in the Supreme Court.

V. CONCLUSION

Becoming a respondent for the first time is a daunting proposition under the best set of circumstances. It is not something to be taken lightly, given the potential impact on an attorney's ability to make a living, but it need not signal the end. Become acquainted with the Supreme Court Rules. Timely respond, and do so completely and thoroughly, in all candor, to tackle the complaint and move forward to the best possible resolution.

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INDIVIDUAL LIABILITY UNDER THE FAIR LABOR STANDARDS ACT Jeff Calabrese

I. THE FAIR LABOR STANDARDS ACT – GENERALLY

The Fair Labor Standards Act ("FLSA") is a federal law, passed as part of the New Deal, to ensure minimum working conditions. Its provisions govern the minimum wage, eligibility for overtime premiums, child labor, recordkeeping, and equal pay for men and women. It is a complicated and often counter-intuitive law that, if violated, can easily amount to substantial liability. Prevailing parties are eligible to receive up to three years' worth of lost back pay, an amount equal to back pay as liquidated damages, and their attorney's fees and costs. Both plaintiffs' lawyers and state and federal government agencies have pursued violations of the FLSA vigorously in recent years, albeit for different reasons. Trial lawyers love the relative ease with which violations can be proven, the ability to quickly construct a large collective action, and the presence of a fee award provision. The government seeks to boost employee protections and be in a position to recover taxes from recovered, formerly unpaid wages.

II. INDIVIDUAL LIABILITY UNDER THE FLSA

As part of its remedial purpose, the FLSA contains a very expansive definition of the term "employer":

The FLSA defines "employer" to include "any person acting directly or indirectly in the interest of an employer in relation to an employee… In deciding whether a party is an employer, "economic reality" controls rather than common law concepts of agency.

Dole v. Elliott Travel & Tours, Inc., 942 F.2d 962, 964 (6th Cir. 1991) (citations omitted). Most (but not all) federal courts, including the U.S. Court of Appeals for the Sixth Circuit, have construed this to include certain individuals that have substantial control over the finances and payroll of the company:

The overwhelming weight of authority is that a corporate officer with operational control of a corporation's covered enterprise is an employer along with the corporation, jointly and severally liable under the FLSA for unpaid wages…[C]orporate officers with a significant ownership interest who had operational control of significant aspects of the corporation's day to day functions, including compensation of employees…were employers under the FLSA. No one factor is dispositive, rather, it is incumbent upon the courts to transcend traditional concepts of the employer-employee relationship and assess the economic realities presented by the facts of each case.

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Id. (citations omitted). A plaintiff or government official could name such an individual in their complaint or citation and subject them, along with the employing entity, to joint and several liability. Naming an individual defendant permits plaintiffs to exert significant settlement pressure – and maintain a "target" in the event the employing business files for bankruptcy.

III. PREVENTIVE TIPS

Avoiding individual liability under the FLSA is not very different from avoiding enterprise liability. Management must take this issue seriously and invest in, at minimum, an internal audit that investigates issues such as (1) timeclock practices; (2) record keeping practices; (3) employee/independent contractor classification; and (4) non-exempt/"hourly" and exempt/"salaried" determinations. While all managers, human resources, and in-house counsel should be trained in wage and hour law and understand their various obligations, it is especially significant that a business owner or controlling figure acknowledge their risk for potential liability and "set the tone" for the rest of the organization.

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THE CAN-SPAM ACT Kathie McDonald-McClure, Esq.

I. OVERVIEW OF CAN-SPAM ACT

A. Full Name: Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM Act), 15 U.S.C §§7701-7713.1

B. Purpose

Congress passed the CAN-SPAM Act to protect consumers from unwanted commercial electronic mail messages. Accordingly, the jurisdiction for enforcement rests with the Federal Trade Commission (FTC).

C. What It Does

Sets rules for commercial email, establishes requirements for commercial messages, gives recipients the right to have a business stop emailing them, and spells out tough penalties for violations. (See the FTC's CAN-SPAM Act: A Compliance Guide for Business.2)

D. What Is Covered

It goes beyond merely bulk email and covers all commercial messages, which the law defines as "any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service," including email that promotes content on commercial websites.3

The law makes no exception for business-to-business email. That means all email – for example, a message to former customers announcing a new product line – must comply with the law.

E. Penalties

Each separate email in violation of the CAN-SPAM Act is subject to penalties of up to $16,000.4

1 The full text of the CAN-SPAM Act of 2003 is available at http://www.gpo.gov/fdsys/pkg/PLAW-

108publ187/pdf/PLAW-108publ187.pdf. 2 Available at http://www.ftc.gov/tips-advice/business-center/can-spam-act-compliance-guide-

business. 3 Id.

4 Id.

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F. Requirements CAN-SPAM's main requirements include:5

1. No false or misleading header information.

The email's "From," "To," "Reply-To," and routing information – including the originating domain name and email address – must be accurate and identify the person or business who initiated the message.

2. No deceptive subject lines.

The subject line must accurately reflect the content of the message.

3. Identify message as an ad.

The email must disclose clearly and conspicuously that the message is an advertisement.

4. Provide physical address for business location.

The email must advise recipients where the business is located, which must be a valid physical postal address. This can be the current street address for the business, a post office box registered with the U.S. Postal Service for the business, or a private mailbox that the business has registered with a commercial mail receiving agency established under Postal Service regulations.

5. Provide opt-out option.

The email must clearly and conspicuously tell recipients how to opt out of receiving future email from the business. The opt-out information must be crafted in a way that is easy for an ordinary person to recognize, read, and understand. It must provide a return email address or another easy Internet-based way to allow people to communicate their choice to the business. The business must ensure that its spam filter does not block these opt-out requests.

6. Honor opt-out request promptly.

Any opt-out mechanism offered must be able to process opt-out requests for at least thirty days after the message is sent. A recipient's opt-out request must be honored within ten business days. No fee can be charged for opting out nor may the opt-out require the recipient to provide any personally identifying

5 Id.

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information (PII) beyond an email address, nor make the recipient take any step other than sending a reply email or visiting a single page on an Internet website as a condition for honoring an opt-out request. Once a recipient opts out, the business cannot sell or transfer the recipient's email addresses, even in the form of a mailing list. The only exception to transferring the email address is that a business may transfer the opt-out addresses to a company hired to help the business comply with the CAN-SPAM Act.

7. Monitor contractors and agents hired to market the company.

Both the company whose product is promoted in the message and the company that actually sends the message may be held legally responsible for violations of the Can-Spam Act. Third-party contracts and indemnification provisions cannot shield a party from liability directly to the government for fines and penalties.

II. RECENT DEVELOPMENTS

A. Tales of Noncompliance

According to a January 27, 2015, blog post6 on Beyond Compliance, hosted by UnsubCentral, a company formed in 2003 to provide tools for companies to manage email recipient opt-out lists:

1. According to a July 2014 study conducted by Online Trust Alliance

(OTA) of the top 200 North American online and e-commerce brands, just over one in ten were still violating the CAN-SPAM Act by either "failing to honor an unsubscribe request within 10 business days or have a functional unsubscribe link within their emails."7 Of these, one-half continued to send emails for up to two weeks and almost 5 percent sent unsubscribe confirmation emails.

2. UnsubCentral asserts that bad email marketing practices not only

place advertisers at risk of CAN-SPAM Act penalties but that "the failure to track opt-outs and maintain up-to-date suppression lists can jeopardize a brand's deliverability" and "do long-term damage to the entire brand," primarily because IP addresses of offending advertisers end up on an Internet service provider's anti-spam database or ISP Black List.

6 See "Best Practices in CAN-SPAM Compliance," Beyond Compliance blog by UnsubCentral at

http://www.unsubcentral.com/blog/best-practices-in-can-spam-compliance. 7 See "2014 Email Unsub Best Practices & Audit", OTA Report, September 17, 2014, available at

https://otalliance.org/system/files/files/resource/documents/2014ota-unsubaudit.pdf.

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3. Brands, networks, and affiliates paying penalties for non-compliance with the CAN-SPAM Act include the following:8

ADVERTISER OR NETWORK

CAN-SPAM ACT VIOLATIONS FTC PENALTY

Kobeni, Inc. Emails did not include a functioning opt-out mechanism.

Emails did not include a valid postal address.

$350,000

Tango Pay Click Fusion TwoBucks Trading Ventures Pty

Email affiliate program used false header information to hide the origin of the messages.

Emails failed to provide an opt-out link and a valid postal address.

$15 million

Sili Neutraceuticals

Emails used misleading subject lines.

Emails failed to provide an opt-out link and a valid postal address.

$2.5 million

Kodak Imaging Network

Emails failed to provide an opt-out link and a valid postal address.

$32,000

B. Gordon v. Virtumundo, Inc., 575 F.3d 1040 (9th Cir. 2009) addressed who

has "standing" to bring a claim under the CAN-SPAM Act.9

1. Facts.

Gordon and his company, Omni Innovations, LLC ("Omni"), owned an Internet domain on which, shortly after the CAN-SPAM Act passed, he registered personal email accounts for himself and his friends and family. He monitored the email accounts for "data collection" and "research purposes."10 He registered the email addresses in response to between 100 and 150 different online promotions and prize giveaways.11 These accounts began receiving email advertisements, some of which were transmitted by online marketers, such as Virtumundo. Gordon's family and friends agreed to relinquish control of their email accounts to Gordon who continued to monitor the accounts for spam. He eventually configured these email accounts to send automated responses titled "NOTICE OF OFFER TO RECEIVE UNSOLICITED COMMERCIAL EMAIL (SPAM)" and "purported to consummate a 'binding contract' by which the sender agreed to

8 See supra n. 6 citing the OTA's 2014 Report, supra n. 7.

9 Available at http://www.nyls.edu/wp-content/uploads/sites/141/2013/08/575-F.3d-1040-Gordon-

v.-Virtumundo.pdf. 10

Id. at 1045-46. 11

Id. at 1046.

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either cease and desist or pay Gordon $500 for each additional unsolicited e-mail." In 2006, Gordon filed suit against Virtumundo, alleging violations of the CAN-SPAM Act as a result of Virtumundo's transmission of approximately 13,800 "materially misleading or otherwise unlawful commercial e-mail messages."12 The Defendants asserted that Gordon lacked standing to file the lawsuit.

2. Analysis.

The CAN-SPAM Act primarily provides for government actors (the FTC and state attorneys general) to enforce its provisions. However §7706(g) of the Act creates a limited private cause of action for "provider[s] of Internet access service adversely affected by a violation of" the Act.13 To address the standing issue, the Court of Appeals assessed whether (1) Gordon was an Internet Access Service ("IAS") provider, and (2) whether he had been "adversely affected" within the meaning of the statute.14

3. Holding.

The CAN-SPAM Act defines "Internet access service" by reference to the Communications Act:

The term "Internet access service" means a service that enables users to access content, information, electronic mail, or other services offered over the Internet, and may also include access to proprietary content, information, and other services as part of a package of services offered to consumers. Such term does not include telecommunications services.15

a. Because Gordon is merely a registrant of a domain name,

"which he, through Omni, hosts on leased server space," he does not satisfy the statutory definition of an IAS provider.16

b. Because Gordon's claims of harm "almost exclusively

relate to litigation preparation, not to the operation of a bona fide service [and] Gordon made no real effort to avoid, block, or delete commercial e-mail, but instead has

12

Id. 13

Id. at 1051. 14

Id. 1051-53. 15

15 U.S.C. §7702(11). 47 U.S.C. §231(e)(4). 16

575 F.3d at 1052.

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voluntarily assumed the role of a spam sleuth," Gordon had not been "adversely affected."17

c. Preemption: Gordon's state law claims fail as a matter of

law because they are precluded by the CAN-SPAM Act's express preemption clause.18

C. Zoobuh, Inc. v. Better Broadcasting, LLC, 2013 WL 2407669 (D. Utah,

May 31, 2013) (unpublished opinion), was a lawsuit brought by an email, chat, and blogging service on behalf of its 35,000 email customers, alleging violation of the CAN-SPAM Act. The court upheld the plaintiff's claims.19

1. Key take-aways regarding noncompliant activity under the

CAN-SPAM Act:

a. Emailers cannot use remotely stored images to provide the required CAN-SPAM Act disclosures. The disclosures must be part of the body of an email;20

b. Emailers cannot use a proxy server that obscures the

sender's true identity; and21 c. Emailers cannot obtain a domain name for purposes that

are prohibited by the domain-provider's registration agreement.22

2. Standing.

Unlike Gordon, ZooBuh is a bona fide IAS. The court stated: "ZooBuh owns, maintains and configures all the servers, routers, and switches on its network through which it hosts and provides its internet access services to its customers."23

17

Id. at 1056. 18

Id. at 1066. 19

Available at http://georgiabusinesslitigationblog.typepad.com/files/zoobuh-order-granting-default.pdf. 20

"Recent Case Teaches Important Can-Spam Lessons: Don't Use Remotely Stored Images for Required Disclosures; Don't Hide Behind Proxy Servers," by Tom Grant, The Georgia Internet and Technology Law Blog, June 17, 2013, at http://www.tomgrantblog.com/2013/06/recent-case-serves-as-great-can-spam-primer-dont-use-remotely-stored-images-for-required-disclosures.html. 21

Id. 22

Id. 23

2013 WL 2407669 at *3.

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3. Harm.

The court found: "The harm ZooBuh suffered, and continues to suffer, is manifested in financial expense and burden; lost time; lost profitability; decreases in the life span of ZooBuh's hardware; server and bandwidth spikes; server crashes; and pre-mature hardware replacements." ZooBuh had "experienced hardware crashes, server spikes, bandwidth spikes, kernel crashes, and customer complaints all as the result of a collective spam problem of which the emails in question were a part. . . . .[I]t had to double its server capacity, at significant expense, in order to successfully service its customers."24

D. Capp v. Nordstrom, Inc., 2013 WL 5739102 (E.D. Cal. Oct. 22, 2013), a

lawsuit in which the United States District Court rejected Nordstrom's claim that plaintiff's claims under the state's Credit Card Act were preempted by the CAN-SPAM Act.25

1. Facts.

Customer claims that a Nordstrom cashier asked him to provide his email address to receive an electronic receipt, which customer provided.26 Customer later received his receipt followed by many other marketing and promotional materials from Nordstrom "on a nearly daily basis."27

Customer argued that Nordstrom violated the state Song-Beverly Credit Card Act ("Credit Card Act"), which prohibits a company that accepts credit cards for business transactions from "request[ing], or require[ing] as a condition to accepting the credit card as payment in full or in part for goods or services, the cardholder to provide personal identification information, which the . . . corporation accepting the credit card . . . records upon the credit card transaction form or otherwise."28

2. Holding.

The district court rejected Nordstrom's argument that the CAN-SPAM Act preempts the state Credit Card Act. First, the court said retailers can request the customer's email address after issuing a written receipt thereby complying

24

Id. at *4 & *6. 25

Available at: http://scholar.google.com/scholar_case?case=991413108196460817&q= Capp+v.+Nordstrom&hl=en&as_sdt=4000006&as_vis=1 26

2013 WL 5739102 at *1. 27

Id. at *2. 28

Id. at *3; Cal. Civ. Code. §1747.08(a).

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with the Credit Card Act; the CAN-SPAM Act does not prohibit a request for "personal identifiable information" including an email address, but rather requires any commercial email messages to conform to the requirements of the CAN-SPAM Act regarding content. In essence, the Credit Card Act was not preempted by the CAN-SPAM Act because CAN-SPAM "preempts only state statutes that regulate the manner in which an email is actually transmitted and delivered, and the content of that email" and the Credit Card Act applies only to the request and recording of an email as "personally identifiable information" and does not regulate the content or transmission of emails.29

3. CAN-SPAM Act Overview Redux – Emails & Personally

Identifiable Information.

The CAN-SPAM Act prohibits a request for "personally identifiable information," excluding an email address, with regard to exercising a right to opt-out of a retailer's email transmissions.

29

Id. at *12.

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THE EEOC AND SEVERANCE AGREEMENTS: NOW WHAT? Judith B. Hoge

I. THE CVS CASE: EQUAL EMPLOYMENT OPPORTUNITY COMMISSION V.

CVS PHARMACY, INC., 14-CV-863, 2014 WL 5034657 (N.D. ILL. OCT. 7, 2014)

A. EEOC's Goal – "Ensure that employees retain the right to file

discrimination charges and communicate with the EEOC." B. Why CVS? Their agreement was "overly broad and misleading" and

consisted of five pages of small print, single-spaced; alleged "pattern or practice of resistance to rights protected by Title VII."

1. Employee prohibited from disclosing confidential information. 2. Non-disparagement clause. 3. Employee prohibited from filing lawsuit "for any and all causes of

actions, lawsuits, proceedings, complaints, charges, damages, claims, and attorney's fees. Including any claim of unlawful discrimination of any kind."

BUT – same clause specifically stated that the employee retained the right to participate in an EEOC investigation, charge or complaint.

II. CVS' MOTION TO DISMISS/MSJ

A. CVS Sought Dismissal

1. Contract contained garden-variety provisions that have been included in separation agreements for years.

2. The agreement contained the "right to participate in federal, state

or local governmental proceeding enforcing discrimination laws." 3. EEOC did not participate in conciliation procedures prior to filing

complaint. B. Judge John Darrah's decision: "The EEOC may sue only after it has

attempted to secure a conciliation agreement acceptable to the Commission."

C. CVS Motion was Granted on Procedural Grounds

1. Under §707(e), EEOC has authority to investigate a charge of pattern or practice discrimination.

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2. Such actions "shall" be conducted in accordance with §706. EEOC shall endeavor to eliminate any alleged unlawful employment practice by informal methods of conference, conciliation and persuasion. 42 USC §2000e-5(b)

III. NOW WHAT?

What guidance does this case provide employers? Not much, since Judge Darrah did not address the merits. The Takeaways: A. Include a "Carve-out" for EEOC Charges

While CVS did, it was buried in a laundry list of actions the employee was prohibited from undertaking.

Emphasize that employees retain the right to file an EEOC charge or to participate in a Commission investigation –

1. Separate section in the agreement. 2. Use of italics or bold. 3. Don't bury in clause titled "covenant not to sue."

B. Keep It Simple

1. Keep the agreement short – around two to three pages. 2. Keep the language easily understandable for rank-and-file

workers. C. Tailor the Agreement

1. Templates make life easier, but review content often. 2. Watch for language that could be interpreted as unlawfully

encroaching on workers' rights. 3. In the CVS case, the EEOC cited three sections that can cause

problems.

a. Provision requiring employees to cooperate with the company if they receive an inquiry related to an agency investigation;

b. Nondisclosure clauses; and c. Nondisparagement clauses can limit communications.

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IV. THE FUTURE

A. EEOC's most recent Strategic Enforcement Plan (for 2013-2016) identifies one of their six priorities as "preserving access to the legal system."

EEOC will still continue to closely scrutinize employer's severance agreements.

B. Next Case to Watch – Equal Employment Opportunity Commission v.

CollegeAmerica Denver, Inc., No. 1:14-cv-01232, 2014 WL 6790011 (D. Colo. Dec. 2, 2014)

1. Separation pact included agreement not to file any charge with a

government agency, and a nondisparagement clause. 2. Hopefully court will provide employers with some guidance.

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KENTUCKY NONCOMPETITION LAW Thomas. M. Williams

The Basics

Applicable Statutes

Protectable Interests

Enforceability Time/ Geographic Scope

Remedies Blue Pencil Availability

None.

Protection from business competition, employee raiding, publication of client/customer lists, and divulging confidential information. Higdon Food Service, Inc. v. Walker, 641 S.W.2d 750 (Ky. 1982).

Enforceable if reasonable or where, "on consideration and circumstances of the particular case, the restriction is such only as to afford fair protection to the interests of the [business] … and is not so large as to interfere with the public interest or impose undue hardship on the [employee]." Central Adjustment Bureau, Inc. v. Ingram Associates, Inc., 622 S.W.2d 681 (Ky. App. 1981).

A one-year restriction is generally enforceable. See, e.g., Hammons v. Big Sandy Claims Service, Inc., 567 S.W.2d 313 (Ky. App. 1978). Depending on the particular business, a nationwide non-compete has been held enforceable under Kentucky law. Genesis Medical Imaging, Inc. v. DeMars, 2008 U.S. Dist. LEXIS 68885, 2008 WL 4180263 (E.D. Ky. Sep. 5, 2008).

It is unclear whether a liquidated damages provision will preclude injunctive relief.

"Where the covenant as originally drawn has been found too broad, courts [may restrict] … it to its proper sphere and enforcing it only to that extent." Hammons v. Big Sandy Claims Service, Inc., 567 S.W.2d 313, 315 (Ky. App. 1978).

2014 CASE UPDATE I. CHARLES T. CREECH, INC. V. BROWN, 433 S.W.3D 345 (KY. 2014)

After sixteen years of employment, a hay and straw distributor asked an employee to sign a non-competition and non-disclosure agreement. No one told the employee that his continued employment was contingent on signing the

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agreement, and the employee did not receive any monetary consideration. After execution of the contract, the employee was not promoted, given additional training, or provided with a pay increase. The employee resigned and took a job with a competitor, and the distributor sued. The Kentucky Supreme Court held that because there was no consideration, the agreement was unenforceable.

II. GHARAD V. ST. CLAIRE MEDICAL CENTER, INC., 443 S.W.3D 609 (KY.

2014)

A hospital terminated an employment agreement with a physician, who, in turn, sued for wrongful termination. The physician, among other relief, sought a declaration that a covenant not to compete contained within the agreement was unenforceable. The noncompetition provision covered the hospital’s nine-county service area for a period of two years after employment separation. The Kentucky Supreme Court upheld a lower court’s refusal to grant the physician a temporary injunction because he failed to show that job loss and loss of income pending disposition of the lawsuit would cause irreparable injury.

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KENTUCKY NONCOMPETITION LAW: THE BASICS & 2014 CASE LAW UPDATE

Thomas M. Williams

The Basics

• Applicable statutes: none

• Protectable interests

– Employee raiding, customer lists,

confidential information.

• Enforceability: reasonableness

• Time/geographic scope limitations

• Liquidated damages/injunction

• Blue penciling: available

_____________________________

_____________________________

_____________________________

_____________________________

_____________________________

_____________________________

_____________________________

Case Law Update

Charles T. Creech, Inc.

v. Brown,

433 S.W.3d 345 (Ky.

2014)

Gharad v. St. Claire Medical

Center, Inc.

443 S.W.3d 609 (Ky. 2014)

_____________________________

_____________________________

_____________________________

_____________________________

_____________________________

_____________________________

_____________________________

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CLOUD SECURITY IN THE AGE OF DATA BREACH Douglas F. Brent

I. CLOUD COMPUTING DEFINED

A. Non-legal and Informal

There was a time when we referred to "application service providers." Today it's Cloud Computing, an informal term often used to refer either to data storage or computing services provided using resources provided by a third party. Cloud computing can also include remote client access to computing resources located on your own property. National Institute of Standards and Technology ("NIST") Special Publication 800-145, The NIST Definition of Cloud Computing, describes various service and deployment models, and all share these essential characteristics:

1. On-demand self-service. 2. Broad network access (connect with standard mechanisms and

platforms). 3. Resource pooling. 4. Rapid elasticity. 5. Measured service.

B. Legal and Formal

1. Cloud Computing is not defined by federal statute, but Congress refers to NIST concepts when legislating on cyber issues. Congress gave NIST the "mission of developing standards, guidelines and associated methods and techniques for information systems." 15 U.S.C. §278g-3.

2. Most recently, when Congress enacted the Cybersecurity

Enhancement Act of 2014, 113 Pub. L. 274 (establishing a federal cybersecurity research and development strategic plan), it referred to cloud computing but did not define it. See 15 U.S.C. §7431. The new law says protecting information "processed, transmitted, or stored using cloud computing" is a goal. 15 U.S.C. §7431(a)(1)(J). The new law also sets up a collaborative process to develop a "cloud computing strategy" to address these aspects of security and privacy: a. Physical security of cloud computing data centers and the

data stored in such centers.

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b. Secure access to the data stored in cloud computing data centers.

c. Security standards as required under section 20 of the

National Institute of Standards and Technology Act (15 U.S.C. §278g-3).

d. Automation of continuous monitoring systems.

3. There are other examples of undefined use of cloud computing,

e.g., in the National Defense Authorization Act for 2014. See 10 U.S.C. §2223a (IT planning and oversight for U.S. Defense Department). This statute contemplates migrating Defense data and government provided services from government owned data centers to "cloud computing services generally available within the private sector that provide a better capability at a lower cost with the same or greater degree of security."

4. Remote Computing Service is a statutory term meaning the

provision to the public of computer storage or processing services by means of an electronic communications system. 18 U.S.C.A. §2711(2). This definition is part of the Stored Communications Act, enacted in 1986 as part of the Electronic Communications Privacy Act.

II. IS THERE A STANDARD FOR CLOUD SECURITY THAT CAN INFORM YOUR

LEGAL DUTIES? SEVERAL REFERENCES MAY BE HELPFUL TO CONSIDER.

A. National Institute of Standards and Technology Special Publication 800-

144: Guidelines on Security and Privacy in Public Cloud Computing, (2011).

B. National Institute of Standards and Technology Special Publication 500-

293: U.S. Government Cloud Computing Technology Roadmap Volume 1, High-Priority Requirements to Further USG Agency Cloud Computing Adoption (2014).

C. International Organization for Standardization/International Electro-

technical Commission, ISO/IEC 27018, adopted in July, 2014. It is a voluntary certification standard governing the processing of personally identifiable information ("PII") by cloud providers. Abstract: https://www.iso.org/obp/ui/#iso:std:61498:en.

D. Kentucky enterprise policies established by the Commonwealth Office of

Technology. See KRS 61.932.

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III. ISSUES RELATED TO DATA HOSTED ON SERVERS IN FOREIGN COUNTRIES/CROSS-BORDER DATA TRANSFERS

A. Ireland Controversy re: Discovery/Subpoena of Information Hosted on

Foreign Server, currently before U.S. Second Circuit Court of Appeals. In re Warrant to Search Certain E-mail Account Controlled and Maintained by Microsoft Corp., 2d. Cir., No. 14-02985. (Brief of U.S. due on March 9, 2015)

B. What Privacy Law Applies to the Data? What Treaties May Apply to

Discovery by Law Enforcement? C. Cloud Services Distributed among Foreign Sites, including China

1. U.S.-China Economic and Security Review Commission has

raised questions about security of data hosted in China. 2. Microsoft Azure, Chinese data center.

IV. PRIVACY COMPLIANCE AND POSSIBLE ENFORCEMENT ACTIVITY, EVEN

IN THE FACE OF A BREACH

A. Be Aware of FTC's Aggressive Use of "Unfairness Doctrine" to Pursue Claims against Businesses that were Crime Victims

1. Federal Trade Commission v. Wyndham Worldwide Corp., infra. 2. LabMD v. FTC.

B. Document a Security Policy

It is good business, and certain data security statutes may require that you have one. If you do business with state and local government in Kentucky, KRS 61.932, which became effective January 1, 2015, says "An agency or nonaffiliated third party that maintains or otherwise possesses personal information, regardless of the form in which the personal information is maintained, shall implement, maintain, and update security procedures and practices, including taking any appropriate corrective action, to protect and safeguard against security breaches." KRS 61.932(2)(a) imposes on third party contractors an obligation to maintain security procedures "appropriate to the nature of the information disclosed."

V. RECENT CASES INVOLVING SECURITY BREACHES AND CLOUD

SERVICES

A. In re Adobe Sys. Privacy Litigation, 2014 U.S. Dist. LEXIS 124126, 2014 WL 4379916 (N.D. Cal. Sep. 9, 2014)

This is a good example of the types of claims that can flow from failure to secure data in the cloud. Hackers gained unauthorized access to Adobe's

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servers and spent several weeks inside Adobe's network without being detected. The hackers reached the databases containing customers' personal information, as well as the source code repositories for Adobe products. The hackers then spent up to several weeks removing customer data and Adobe source code from Adobe's network, all while remaining undetected. The data breach did not come to light until independent security researchers discovered stolen Adobe source code on the Internet. Adobe announced the data breach on October 3, 2013. Adobe announced that the hackers accessed the personal information of at least 38 million customers, including names, login IDs, passwords, credit and debit card numbers, expiration dates, and mailing and email addresses. Adobe confirmed that the hackers copied the source code for a number of its products, including ColdFusion. Adobe subsequently disclosed that the hackers were able to use Adobe's systems to decrypt customers' credit card numbers, which had been stored in an encrypted form. Following the 2013 data breach, researchers concluded that Adobe's security practices were deeply flawed and did not conform to industry standards. For example, though customers' passwords had been stored in encrypted form, independent security researchers analyzing the stolen passwords discovered that Adobe's encryption scheme was poorly implemented, such that the researchers were able to decrypt a substantial portion of the stolen passwords in short order. Adobe similarly failed to employ intrusion detection systems, properly segment its network, or implement user or network level system controls. As a result of the 2013 data breach, Adobe offered its customers one year of free credit monitoring services and advised customers to monitor their accounts and credit reports for fraud and theft. The Court dismissed some class claims arising from the breach but found Plaintiffs plausibly alleged that Adobe's purported failure to provide industry-standard security undermines policy objective of state unfair competition law, and denied motion to dismiss that claim.

B. Federal Trade Commission v. Wyndham Worldwide Corp., 10 F.Supp.3d

602 (D. N.J. 2014) (allegation that Wyndham failed to maintain reasonable and appropriate data security for PII was sufficient to support an unfairness claim under Section 5 of the FTC Act, overcoming motion to dismiss).

C. Riley v. California, 134 S.Ct. 2473 (2014).

This is the seminal Fourth Amendment case from 2014 involving wireless phone privacy. Supreme Court ruled that a warrant is required to search data on arrestee's wireless phone. The Court talked about the cloud, explaining how remote storage was relevant to the privacy analysis itself:

To further complicate the scope of the privacy interests at stake, the data a user views on many modern cell phones may not in fact be stored on the device itself. Treating a cell phone as a container whose contents may be searched incident to an arrest is a bit strained as an initial matter. But the analogy crumbles entirely when a cell

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phone is used to access data located elsewhere, at the tap of a screen. That is what cell phones, with increasing frequency, are designed to do by taking advantage of "cloud computing." Cloud computing is the capacity of Internet-connected devices to display data stored on remote servers rather than on the device itself. Cell phone users often may not know whether particular information is stored on the device or in the cloud, and it generally makes little difference. The United States concedes that the search incident to arrest exception may not be stretched to cover a search of files accessed remotely – that is, a search of files stored in the cloud. Such a search would be like finding a key in a suspect's pocket and arguing that it allowed law enforcement to unlock and search a house. But officers searching a phone's data would not typically know whether the information they are viewing was stored locally at the time of the arrest or has been pulled from the cloud. [internal citations omitted]

D. U.S. v. Shahulhameed, (E.D. Ky. Feb. 2014).

Federal jury in Lexington convicted former Toyota contractor of intentionally damaging a protected computer through the transmission of malicious information, codes, and commands. Testimony at trial proved that Shahulhameed was fired from his contractor position at Toyota on August 23, 2012. During the hours following his termination, Shahulhameed used a Toyota-issued laptop and his Toyota credentials to access the company's computer network on several occasions from his home. Shahulhameed then made numerous unauthorized changes to the programming of different Toyota computer systems. Shahulhameed also attempted to delete and alter evidence that he had changed the settings of these computer systems. Shahulhameed's actions caused multiple Toyota computer systems to malfunction. In the months that followed, Toyota spent substantial resources diagnosing and repairing the problems that Shahulhameed caused within a seven-hour span.

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FCRA CLASS ACTIONS AGAINST EMPLOYERS: MILLIONS OF REASONS TO COMPLY WITH FCRA REQUIREMENTS FOR

BACKGROUND INVESTIGATIONS Leila G. O'Carra

I. INTRODUCTION

Many employers conduct background checks on potential employees as a regular part of the hiring process. Some may be surprised to discover that routine background checks are covered by the federal Fair Credit Reporting Act, 15 U.S.C. §1681 et seq. ("FCRA"). Because many employers inadvertently violate the FCRA, and there are significant monetary damages available for technical violations of the statute, it is a lucrative basis for class action litigation. Employers who conduct background checks must understand their obligations under FCRA.

II. FCRA'S APPLICATION TO EMPLOYERS

FCRA applies when employers utilize third parties ("consumer reporting agencies") to conduct background checks ("consumer reports") on prospective or current employees. FCRA does not apply when an employer conducts its own background checks in-house, but be careful – Internet record search services that assemble information, including public record information such as criminal histories, are considered "consumer reporting agencies" for purposes of FCRA. Therefore, if an employer utilizes an Internet record search site in order to obtain information about a prospective or current employee, even if the information obtained is "public record," FCRA applies.

III. EMPLOYERS' OBLIGATIONS UNDER FCRA

A. Provide Notice and Obtain Authorization before Ordering a Background Investigation

1. Prior to obtaining a consumer report on a prospective or current

employee from a consumer reporting agency, the employer must provide to the current or prospective employee a "clear and conspicuous" written notice that a report may be obtained and used in employment decisions. The notice must appear in a "stand alone" document and may not contain any extraneous information. 15 U.S.C. §1681b.

2. The employer must obtain from the prospective or current

employee written authorization to procure the report. 15 U.S.C. §1681b.

3. The employer must certify to the consumer reporting agency that it

has complied with these notice and authorization requirements

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and that it will not use the report for any illegal purpose. 15 U.S.C. §1681b.

B. Provide Pre- and Post-adverse Action Notifications and Disclosures

1. Before the employer takes any "adverse action" against the

prospective or current employee based in whole or in part on information contained in the report, the employer must provide to the prospective or current employee a "pre-adverse action notice" containing the following: (1) a copy of the report; and (2) a document prepared by the Consumer Financial Protection Bureau entitled "A Summary of Your Rights under the Fair Credit Reporting Act." 15 U.S.C. §1681b.

2. Once these materials are provided, the prospective or current

employee must be given a "reasonable" amount of time to review the report and dispute any inaccurate information contained in the report before the employer's adverse action decision becomes final.

3. Upon taking adverse action based on the report, the employer

must provide a separate "adverse action notice" containing the following: (1) notice of the adverse action and an explanation that it was based in whole or in part on the information contained in the report; (2) the contact information of the consumer reporting agency that furnished the report; (3) a statement that the consumer reporting agency did not make the adverse action decision and cannot provide the prospective or current employee with the specific reasons as to why the adverse action was taken; and (4) a notice of the prospective or current employee's right to obtain a free copy of the consumer report from the credit reporting agency within sixty days, as well as information regarding the prospective or current employee's right to dispute the information with the consumer reporting agency. 15 U.S.C. §1681m.

IV. CONSEQUENCES OF VIOLATING THE FCRA

A. Private Right of Action

The FCRA provides a private right of action against an employer for failing to comply with any of FCRA's requirements. 15 U.S.C. §1681n.

B. Statute of Limitations

A lawsuit must be brought by the earlier of two years after the date the plaintiff discovers the violation, or five years after the date on which the violation occurred. 15 U.S.C. §1681p.

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C. Damages

The types of damages available to plaintiffs vary depending on whether the employer's FCRA violation was "negligent" or "willful."

1. Negligent violation.

If a court determines that an employer has negligently violated FCRA, damages are limited to the actual damages sustained by the plaintiff, plus attorney's fees and costs. 15 U.S.C. §1681o.

2. Willful violation.

If, on the other hand, the employer's violation is determined to have been "willful," the available damages are much more substantial: plaintiffs may elect to seek either actual damages or statutory damages of between $100 to $1,000 per violation (in which case the plaintiff is not required to prove actual damages at all), as well as punitive damages and attorney's fees and costs. 15 U.S.C. §1681n. The Supreme Court has set a fairly low bar for what constitutes a "willful" violation, defining "willfulness" under FCRA as including both "knowing" and "reckless" violations. Safeco Ins. Co. of America v. Burr, 551 U.S. 47 (2007).

V. RECENT FCRA CLASS ACTIONS

Class action lawsuits alleging employer violations of the FCRA are on the rise. Careful technical compliance with the FCRA is very important, as illustrated by the multi-million dollar class action settlements, and pending class actions, summarized below.

A. Ellis v. Swift Transportation Co. of Arizona

In April 2014, trucking conglomerate Swift Transportation Co. agreed to pay $4.4 million to settle a class action that was originally filed in the summer of 2013 by plaintiffs claiming that they were denied employment as a result of their background checks. The class action alleged that Swift failed to provide notice of its intent to conduct background checks and failed to receive the requisite authorization. The class action further alleged that Swift did not provide pre-adverse action notices informing prospective employees of their right to dispute inaccurate information on their background check reports. The class covered consumers in Virginia, North Carolina, and South Carolina, and the time period spanned from 2008 to 2012, covering approximately 160,000 members.

B. McPherson v. Canon Business Solutions, Inc.

In September 2014, Canon agreed to settle a proposed class action brought by a former employee who was fired in 2012 while transitioning from a temporary to a permanent position. The plaintiff was allegedly informed by Canon that she failed her background check due to a twelve-

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year-old conviction, and was fired that same day without being given a copy of her background check report. As a result, the plaintiff claimed she was never given an opportunity to explain that she was eligible to have the felony expunged. Canon made several attempts to dismiss the suit, but after a judge denied Canon's motions and ordered discovery of Canon's employment termination and job applicant rejection records over the last two to five years, Canon agreed to settle the case for an undisclosed amount.

C. Marcum v. Dolgencorp Inc.

In October 2014, discount retail chain Dollar General agreed to pay $4 million to settle a proposed class action alleging that the company did not properly notify more than 200,000 prospective employees that they would be screened by background checks. Rather, applicants were notified after the fact that they had been screened, and allegedly were not given a reasonable opportunity to review the required pre-adverse action materials before the employment decision became final. The class included all persons who were subject to a background check used for an adverse employment decision between 2007 and 2013.

D. Knights v. Publix Super Markets, Inc.

In November 2014, Florida-based supermarket chain Publix agreed to settle a FCRA class action with over 90,000 members in Tennessee federal court for approximately $6.8 million. The class action accused Publix of failing to provide prospective employees with "stand-alone disclosure" stating that a background check would be run; rather, such disclosure was included within the employment application, which also included a liability release relating to background checks.

E. Gezahegne v. Whole Foods Market California, Inc.

In February 2014, a class action was filed against Whole Foods for allegedly routinely ordering background checks prior to obtaining valid consent. According to the complaint, the plaintiff submitted an online job application in April 2011 requiring him to agree to a "consent" form that contained extraneous information, including a release of liability for companies receiving or providing information for the background report. The complaint alleges that Whole Foods later attempted to "fix" the FCRA violation by obtaining a different and seemingly legal consent form, but by that point the background check had already been conducted. The purported class includes thousands of prospective employees who executed online authorization forms as part of the Whole Foods online employment application in the last five years.

F. Raphael Saye et al. v. CSK Auto Inc. et al.

In May 2014, a class action was filed against O'Reilly Auto Parts alleging that the company failed to provide proper authorization and pre-adverse action procedures. Specifically, the plaintiff alleges that he applied for a

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job at O'Reilly in July 2013 by completing an online employment application that consisted of various sections and topics for a prospective employee to click through and fill out. One such section, labeled "Terms and Conditions," contained a checkbox stating "I accept the background terms and conditions" and another checkbox requesting a copy of any criminal background report procured. The plaintiff was offered a position with O'Reilly in August, but was terminated in September based in part on information obtained in his background report. The complaint claims that the plaintiff was never provided with a copy of the report or a summary of his rights, even though he specifically asked for them in his application. The suit seeks damages for a proposed class of prospective employees nationwide that were subjected to a background check in the past two years.

G. Henderson v. The Home Depot Inc.

In July 2014, a class action was filed in a Georgia federal court against Home Depot alleging that the home improvement company violated FCRA by conducting background checks without properly notifying prospective and current employees and failing to provide copies of the background checks before taking adverse action against them based on the information in the reports. The lawsuit was filed by a plaintiff who claims that he applied for a job at his local Home Depot in early 2014 via an online application that included an "I Agree" button preceded by terms and disclosures. The class action seeks to certify a class of individuals who applied to Home Depot, agreed to the terms and disclosures, and were subject to a background check on or after July 3, 2013, as well as those who faced adverse employment action without receiving copies of these reports – a number which could easily reach into the thousands.

H. Tracee Sweet, et al. v. LinkedIn Corp.

In October 2014, a class action was filed in the Central District of California against LinkedIn, the world's largest web-based professional network, alleging that it violated FCRA through its "search for references" feature that allows LinkedIn subscribers to run a reference report on prospective employees without them receiving any notification whatsoever. Thus, as the complaint alleges, "any potential employer can anonymously dig into the employment history of any LinkedIn member, and make hiring and firing decisions based upon the information they gather, without the knowledge of the member, and without any safeguards in place as to the accuracy of the information that the potential employer has obtained." The class seeks to certify all persons in the United States who had such a reference report run on them in the last two years.

I. Mohamed v. Uber Technologies Inc., et al.

In November 2014, a class action was filed against Uber Technologies, a mobile app that helps users find transportation. The plaintiff, a Boston cab driver, claims that he had been employed by Uber as an "Uber Black

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driver," and wanted to become an "Uber X" driver. In October, he was informed via email that his proposal to become an Uber X driver had been rejected because of information from a consumer report. Though the email stated that the plaintiff had received a copy of the report in accordance with FCRA, the plaintiff alleges that he received notice only after the final decision to reject him had already been made and that he was never given an opportunity to explain the contents of the report, nor did he ever receive a summary of his FCRA rights. The lawsuit, which also claims that Uber violated state credit reporting laws in California and Massachusetts, asks the court to order Uber to pay thousands of dollars to former and prospective drivers across the country.

J. Graham v. Michaels Stores Inc.

In December 2014, a class action was filed against Michaels Stores by plaintiffs alleging that the retailer did not properly notify them that the company routinely runs background checks, including criminal records and consumer reports, as part of its employment screening process. According to the complaint, the only indication prospective employees received was a disclosure statement tacked on the end of written and online job applications, buried underneath a liability release and various pieces of extraneous information. The suit seeks to represent all individuals who applied to Michaels and on whom a background check was procured within the last two years.

K. Peikoff v. Paramount Pictures Corporation

On January 7, 2015, a complaint was filed in a California federal court alleging that the plaintiff, who applied for a job with the film company in February 2011, was presented with a disclosure and authorization form contained within his employment application that purported to give permission to ex-employers and others to provide Paramount with background information and release the company from liability from any use or disclosure of the information. Including release language in the disclosure violates FCRA, the suit claims. The suit seeks to represent a nationwide class of people whose consumer reports were obtained by Paramount for employment purposes.

VI. CONCLUSION

Several aspects of FCRA's damages provisions make the statute particularly attractive to plaintiffs and attorneys looking to file class actions against employers. For one thing, there are often a large number of potential class members, given that employers typically utilize the same background check process for each prospective or current employee. Moreover, because FCRA provides automatic statutory damages for willful FCRA violations, class members can circumvent individual damages assessments and hold an employer liable regardless of whether the violations resulted in any actual losses for individual plaintiffs. Finally, FCRA contains no cap on total liability. Thus, the amount of damages that an employer, if liable, would have to pay can add up quickly. As a

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result, employers often negotiate out-of-court settlements to avoid costly legal fees and the chance that the plaintiffs will recover an enormous trial verdict.

The good news for employers is that technical compliance with the FCRA is not difficult. Corporate counsel should consider auditing the company's background investigation procedures, paying close attention to consent and disclosure forms, and ensuring that the forms are FCRA-compliant. Further, corporate counsel should examine the process that is used, ensuring that employees and applicants sign FCRA-compliant consents and receive FCRA-compliant dis-closures before background investigations are ordered or adverse actions taken.

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PRESERVING PRIVILEGE IN INTERNAL INVESTIGATIONS Jeremy S. Rogers & Alina Klimkina

I. TODAY'S GOALS

A. Review Elements and Application of Privilege B. Identify Common Issues Implicated during Internal Investigations C. Discuss Recent Trends and Developments D. Develop Better Practices for Preserving Privilege

II. ATTORNEY-CLIENT PRIVILEGE

A. The attorney-client privilege protects from disclosure confidential communications between a client and his attorney for the purpose of giving legal advice or assistance. Fisher v. U.S., 425 U.S. 391 (1976).

B. Elements under Upjohn Co. v. U.S., 449 U.S. 383, 385-89 (1981)

1. The person asserting the privilege is or seeks to be a client. 2. The person to whom the communication was made is an attorney

(or an agent of the attorney) and is acting in the capacity as an attorney with respect to the communication.

3. The communication relates to a fact of which the attorney was

informed by the client in confidence. 4. The communication relates to the seeking of legal advice or

assistance, not for the purpose of committing a crime or tort. 5. The privilege has not been waived.

C. Under KRE 503(a) and The St. Luke Hospitals, Inc. v. Kopowski, 160

S.W.3d 771, 776 (Ky. 2005), confidential communications between counsel and an employee or representative of a company are protected if:

1. The communication is not intended to be disclosed to third

persons other than those to whom disclosure is made in furtherance of the rendition of professional legal services to the client.

2. Reasonably necessary for the transmission of the communi-

cations. 3. The subject matter of the communication is in the course and

scope of the employee's employment.

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III. APPLICATION OF ATTORNEY-CLIENT PRIVILEGE

A. The privilege serves to "encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice." Upjohn Co., 449 U.S. at 389.

The privilege does not apply to communications with an attorney for the purpose of business advice only.

B. The privilege protects communications; it does not protect facts.

But see Graff v. Haverhill North Coke Co., 2012 U.S. Dist. LEXIS 162013, 2012 WL 5495514, **21-22 (S.D. Ohio Nov. 13, 2012) (not reported in F.Supp.2d) (summary of information gathered in audit protected).

C. The attorney-client privilege applies in the internal investigation context

and reaches confidential communications between an attorney and company's employees.

1. "Attorney" includes:

a. In-house, investigation, or litigation counsel or b. An attorney's representative.

2. "Employee."

a. Includes mid-level and lower level employees, not just upper management.

b. "Common Interest Doctrine."

i. Includes current and former employees. ii. Communications between counsel for parent and

representatives of a subsidiary are privileged regardless of whether they have different counsel. See, e.g., In re Teleglobe Communications Corp., 493 F.3d 345 (3d Cir. 2007).

iii. This doctrine "expands the coverage of the

attorney-client privilege where two or more clients with a common interest in a matter are represented by separate lawyers and agree to exchange information concerning the matter." Reed v. Baxter, 134 F.3d 351, 357 (6th Cir. 1998). See also Lee v. Medical Protective Co., 858 F.Supp.2d 803 (E.D. Ky. 2012) (insurer and insured situation).

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IV. INTERNAL INVESTIGATION: THE UPJOHN FACTORS A. The interviews occurred at the direction of corporate counsel. B. Employee communications were made to corporate counsel acting as

such. C. The information sought was not available from "control group"

management. D. The communications were within the scope of the employees' duties. E. The employees were aware that they were being questioned in order for

the corporation to secure legal advice. V. RECENT TRENDS AFTER UPJOHN

A. In Re Kellogg Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014)

1. KBR "initiated an internal investigation to gather facts and ensure compliance with the law after being informed of potential misconduct" and "investigation was conducted under the auspices of KBR's in-house legal department, acting in its legal capacity."

2. The Court held communications and materials created during a

confidential internal investigation are protected by the attorney-client privilege "[s]o long as obtaining or providing legal advice was one of the significant purposes of the internal investigation . . . even if there were also other purposes for the investigation and even if the investigation was mandated by regulation" or company policy.

B. Take Aways from Kellogg

1. A lawyer's in-house status "does not dilute the privilege." 2. The investigation need not be done by an attorney because

"communications made by and to non-attorneys serving as agents of attorneys in internal investigations are routinely protected by the attorney-client privilege."

3. There are no "magic words" through which a company can notify

its employees and preserve privilege. 4. Privilege is not lost when investigation conducted to ensure legal

compliance.

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VI. WAIVER OF PRIVILEGE

A. Company May Waive Privilege to:

1. Share investigation with third parties in litigation. 2. Assist government investigation or law enforcement. 3. Further its defense.

B. Generally, Privilege Is Waived by Disclosure to Any Third Party Who Is

Not the Client VII. HOW DOES WAIVER WORK?

A. Majority Rule: If the company discloses privileged materials from an internal investigation to a third party, the privilege is waived in its entirety. See In re Columbia/HCA Healthcare Corp. Billing Practices Litigation, 293 F.3d 289 (6th Cir. 2002); U.S. v. Massachusetts Institute of Technology, 129 F.3d 681, 686 (1st Cir. 1997); Genentech, Inc. v. U.S. Intern. Trade Com'n, 122 F.3d 1409, 1416-18 (Fed. Cir. 1997); In re Steinhardt Partners, L.P., 9 F.3d 230, 236 (2d Cir. 1993); Westinghouse Elec. Corp. v. Republic of Philippines, 951 F.2d 1414, 1425 (3d Cir. 1991); In re Martin Marietta Corp., 856 F.2d 619, 623-24 (4th Cir. 1988); Permian Corp. v. U.S., 665 F.2d 1214, 1221 (D.C. Cir. 1981); In re Qwest Communications Intern. Inc., 450 F.3d 1179 (10th Cir. 2006); Burden-Meeks v. Welch, 319 F.3d 897 (7th Cir. 2003).

B. Minority Rule: "Selective waiver." See Diversified Industries, Inc. v.

Meredith, 572 F.2d 596 (8th Cir. 1977) (en banc). VIII. DUTY TO INVESTIGATE

A. Under Title VII, employers have a duty to promptly and thoroughly investigate harassment and take prompt and appropriate remedial action. See, e.g., Powell v. Yellow Book USA, Inc., 445 F.3d 1074 (8th Cir. 2006); Swenson v. Potter, 271 F.3d 1184 (9th Cir. 2001).

1. The sufficiency of the employer's investigation and response may

become a substantive issue in litigation or administrative action. 2. In Faragher v. City of Boca Raton, 524 U.S. 775 (1998) and

Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1990), the Supreme Court held that employers are vicariously liable for sexual harassment perpetrated by supervisors.

Where the plaintiff did not suffer a tangible employment action, the employer will not be liable if it can show that: a. The employer exercised reasonable care to prevent and

correct promptly any sexual harassment.

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b. The employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.

B. If the Investigation is a Defense, Can the Company still Claim Privilege?

1. When the company asserts the adequacy of its investigation as a defense, the employer cannot claim privilege with respect to attorney-client communications. See, e.g., Barton v. Zimmer, Inc., 2007 WL 80647 (N.D. Ind. Jan. 7, 2008) (not reported in F.Supp.2d).

2. When the company "affirmatively uses privileged communications

to defend itself or attack its opponent in the action[,]" the privilege is waived. Hodak v. Madison Capital Mgmt., LLC, 2008 U.S. Dist. LEXIS 44342, 2008 WL 3884314 (E.D. Ky. Aug. 19, 2008) (not reported in F.Supp.2d).

IX. KEEP IN MIND: CRIME-FRAUD EXCEPTION

A. The privilege is waived as a matter of law where this exception is applicable.

B. The party claiming that this exception is applicable must show, through

"evidence sufficient to support a reasonable belief that in camera review might yield evidence that" –

1. Sufficiently serious crime or fraud occurred. 2. There is some relationship between the communication at issues

and the prima facie violation. X. THE DANGER IN USING INVESTIGATIONS AS A DEFENSE

A. Lawyer as Witness, Model Rule 3.7 1. A lawyer shall not act as advocate at a trial in which the lawyer is

likely to be a necessary witness unless:

a. The testimony relates to an uncontested issue; b. The testimony relates to the nature and value of legal

services rendered in the case; or c. Disqualification of the lawyer would work substantial

hardship on the client. 2. A lawyer may act as advocate in a trial in which another lawyer in

the lawyer's firm is likely to be called as a witness unless precluded from doing so by Rule 1.7 or Rule 1.9.

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B. Likely Waiver of Privilege with respect to:

1. Interview notes.

2. Summary memorandum related to findings.

3. Remedial measures.

XI. TIPS AND BEST PRACTICES

A. Involve a Lawyer

B. Obtain Direction for Internal Investigation

1. Explicit request for legal advice.

2. Counsel is acting as attorney (legal advice) to company.

3. Retention letter or internal memorandum.

4. Document purpose of investigation.

C. Communicate to Employees that:

1. Investigation is for the purposes of the provision of legal advice.

2. Confidentiality should be maintained.

3. The company is the client.

4. The privilege belongs to the company and the employee cannot waive the privilege.

5. All questions should be directed to you.

D. Designate all Memoranda and Documents with Appropriate Confidentiality Designations

1. The party asserting a claim of privilege bears the burden of proof on the necessary elements.

2. Counsel should assume primary responsibility for maintaining confidentiality and documenting efforts.

E. Keep a Separate Investigation File F. Keep Thorough Memoranda or Interview Notes

1. Who, what, where, when, why. 2. Restrict dissemination within the corporation.

G. Deliver Reports directly to Counsel instead of Using Intermediaries

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eDISCOVERY PITFALLS Patrick Michael

What are the five most important eDiscovery issues that in-house counsel should consider to avoid the inevitable eDiscovery nightmare? I. IMPLEMENT A RECORD RETENTION & DESTRUCTION POLICY

A. Establish a record retention policy that is consistent with and tailored to the needs of your business. There is no one-size fits all. A successful record retention policy must be designed for the particular needs of your organization. An appropriately designed policy incorporates existing business practices and needs, with regulatory and statutory retention requirements. This includes the identification of records to be retained, the method for retaining the records, and the period of time each specific record should be retained.

B. The record retention policy should include a record destruction process.

The duration for the retention of each particular class of records should reflect business needs, regulatory and compliance requirements, and limitation periods for litigation. In summary, the record retention destruction process should occur in line with principled reasons for keeping and destroying the records.

C. The record destruction or Purge Procedure should be routine. The record

destruction process should be established to occur on a regular, periodic basis, for example, on a quarterly or semi-annual basis. In addition to the timing for conducting the Purge Procedure, a process should be established for the record destruction. It should be a methodology that fits within normal business activities, is efficient to perform and to document.

D. The record destruction process should be defined and implemented.

Records should not be destroyed on an ad hoc basis. In the event of litigation or a compliance audit, arbitrary and inconsistent record destruction activities invite a detailed examination into the decision to delete EACH document.

II. PRESERVATION HOLD PROCEDURE

A. A Litigation Hold Policy & Procedure should be established as an exception to the record retention and destruction policy.

B. The organization should designate an "Owner" for managing the multiple

hold obligations. This obligation should be the responsibility of the individual who chairs the eDiscovery Team discussed below.

C. The organization should develop a system for communicating the

preservation holds. This process should be bidirectional; communication

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from the eDiscovery Team, and back to the Team that the individuals required to implement the hold are complying.

D. It is not enough to issue a hold. It must be monitored on a periodic basis

to assure compliance. The organization should implement a process and procedure for auditing adherence, which process should be escalated as the circumstances require.

E. The organization may elect to gather all records subject to a hold in a

single location. Alternatively, a hold may be implemented in which the records are "held-in-place." In other words, the custodian maintains the document in its normal record repository, but the record is no longer on a track for normal destruction as part of the purge process.

F. The organization should examine the extent to which employees with

records subject to a preservation hold may be taken out of the preservation loop. This may be accomplished by coordinating the hold through the MIS group.

III. CREATE DATA MAP

A. A data map shows the flow of information and records within the organization's information structure. The map should be high-level showing the primary information flow pattern. There is no need to be heavily detailed because the map tends to change over time. To the extent necessary, there should be a map "Owner" who is responsible for keeping it up-to-date.

B. The map should start with information flow areas that are most often

requested or the subject of preservation holds. C. In conjunction with the creation of the data map, the organization should

identify the system owners, managers, policies, and the actual record retention practices.

IV. SET UP eDISCOVERY TEAM

A. The company should identify the leaders, or their designee, in each of the organization's key business units that are responsible for maintaining business records. These individuals should be interviewed to determine the method used for retaining their unit's records. Finally, the leadership team should select the individuals who will serve on the eDiscovery team.

B. The organization should develop a routine process for record retention

and destruction management. The eDiscovery team should be charged with developing and monitoring these procedures.

C. The eDiscovery team should have regularly scheduled meetings with

short-and-long-term objectives established by the organization's leadership team for management of organizational records.

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D. The eDiscovery team should implement a periodic audit procedure to assure compliance with the record retention and destruction policy. This is in essence a periodic "fire drill." The drill should be conducted, the results evaluated and any corrective action implemented.

V. PROCESS FOR DEPARTING EMPLOYEES

A. The company should develop a procedure for identifying the records retained by the departing employees. Once identified, the eDiscovery team or HR should be responsible for assuring that these records have been appropriately stored and marked for destruction.

B. The records that the departing employee was responsible for maintaining

should be transitioned to the individual who takes on the departing employee's responsibilities, or transitioned to another custodian while the job function is in the process of being filled.

C. The final step will be to purge any electronic devices used by the former

employee after all records have been appropriately transitioned.

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SOCIAL MEDIA POLICIES FOR EMPLOYERS Matthew W. Barszcz

I. NATIONAL LABOR RELATIONS ACT §7

A. Protects the Rights of Employees to Discuss Terms and Conditions of Their Employment Freely and without Reprisal by Employer

1. Salary. 2. Bonuses. 3. Working conditions.

B. Purple Communications, Inc., 361 NLRB No. 126 (2014)

1. Employees who have access to email through their employers may use that email service to discuss the terms and conditions of their employment and may utilize that email service to engage in union-organizing activity.

2. Employees have a presumptive right to use their employer's email

system during non-work time to engage in activity protected by §7. II. CHALLENGES IN CREATING A SOCIAL MEDIA POLICY

A. Dealing with Workplace Harassment B. Preventing Damage to the Company Brand or Image C. Preventing the Disclosure of Non-public, Proprietary, Confidential

Information III. DOS AND DO NOT DOS

A. Be Specific about What Information the Company is Attempting to Prevent from Being Disclosed

0 1. Trade secrets. 2. Legal matters. 3. Customer lists. 4. Financial information.

B. Define What the Company Considers to Be Social Media C. Define What the Company Will Do for Violations of the Policy

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D. Be Consistent in the Application of Violations of the Policy E. Do Not Attempt to Limit Employees from Talking about Their Job F. Do Not Attempt to Define "Confidential" Information in a Broad Sense G. Do Not Attempt to Restrict Employees from Associating with or

"Friending" Each Other on Social Media IV. BOTTOM LINE

All rules that apply to employees at work should apply online – nothing more.

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CRAFTING A "BRING YOUR OWN DEVICE" POLICY THAT MEETS YOUR ORGANIZATION'S NEEDS

Catherine Salmen Wright, Esq.1

I. INITIAL BYOD CONSIDERATIONS

Employees' use of personal handheld devices for personal and company business, a so-called "dual-use," is an increasingly popular practice in today's workplaces. The pros and cons of this practice have been widely discussed. Employees want the flexibility that mobile access to work allows. Advocates for the BYOD trend say it makes employees happier and more productive and reduces costs for businesses that have traditionally furnished their employees a company-owned device. The concerns, however, for businesses seeking to implement this practice are real and unique to each business. Such concerns include the costs of monitoring or supporting dual-use devices, preventing data breaches, complying with the company's various legal obligations, protecting intellectual property, and avoiding employee overtime and privacy issues – just to name a few. A BYOD policy is designed to explain the rules of the road as it relates to dual-use devices and in doing so, minimize the risks associated with the practice for your business.

II. CONTENTS OF POLICY

Like any other employer policy, a BYOD policy is designed with fundamental principles of notice, consent and communication in mind. A BYOD policy puts employees on notice of their rights, responsibilities and expectations as it relates to dual-use devices and secures their consent prospectively. Communicating clearly on critical BYOD issues minimizes later misunderstandings and litigation. A recent court decision illustrates that an employer's failure to communicate on these issues can result in costly litigation. In Rajaee v. Design Tech Homes, Ltd.,2 the employee sued his former employer after it remotely wiped his dual-use phone, without any notice or consent, destroying his personal data (personal photos, contacts, and passwords, etc.). The policy should also take into account what company data is accessible to the employee. The three well-recognized approaches to what is accessible are (1) virtualization, providing remote access to computing resources so that no corporate application processing is stored or conducted on a personal device; (2) walled garden, containing data or corporate application processing within a secure application on the device which segregates it from personal data; and (3) limited separation, allowing comingled corporate and personal data and/or

1 Dinsmore & Shohl LLP, 250 West Main Street, Suite 1400, Lexington, Kentucky 40507, 859-

425-1068, catherine.wright@dinsmore.com. 2 Rajaee, No. 4:13-cv-0257, 2014 U.S. Dist. 159180, 2014 WL 5878477 (S.D. Tex. Nov. 11,

2014) (rejecting claims under Electronic Communications Privacy Act and Computer Fraud and Abuse Act and declining to exercise supplemental jurisdiction over multiple state claims).

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application processing on the personal device with policies enacted to ensure minimum security controls.

A. Eligibility/Access

Not all employees need or want access to company data through their personal device. Employers must evaluate who the employees are who should have this benefit and consider the potential consequences of providing access. For example, permitting a non-exempt employee to work from home can create unpaid overtime issues. Having provided the employee ability to work outside of normal work hours, it is an employer's responsibility to communicate what the expectations are regarding reporting any time worked outside normal hours. Thus, who is eligible for this benefit must be defined and where necessary, employees should be referred to established wage and hour policies or given guidance relating to working remotely outside of normal work hours. The employer must also be transparent about what access it will require to install/upgrade software, retrieve documents (to respond to subpoena/ discovery requests/litigation holds), conduct company investigations, and inspect the device at reasonable intervals/as needed for compliance with the BYOD policy. Similarly, the policy should be equally transparent about what employer monitoring of the device will take place so as to avoid employee privacy claims. Communicating carefully and directly about these issues avoids employee privacy concerns, including compliance with various state and federal statutes which protect individuals from third parties who improperly or without authorization access their electronic communications.

B. Security

Some of the most critical security issues are what happens if a device is lost or stolen, or when an employee terminates employment or decommissions a device. The policy should outline the protocols. Immediate notification to the company by employees of a lost or stolen device should be expressly required. Employers should also obtain the employee's agreement that the device can be remotely wiped and clearly communicate this process to the employee, including what type of data will be wiped. Even if the intent is to only wipe company data, the employee must be apprised of the risk that personal data could be affected. Terminated employees should understand that a review of their device is part of the exit interview. Use of passwords is a well-established security requirement that must be addressed, along with time frames for locking the device. Employees should also be directed as to what software is prohibited or required on the device. For example, having anti-malware software loaded on the device may be a condition of access to company data. Many employers utilize "mobility management software" which allows them to remotely locate and wipe devices, install anti-malware software and enforce

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corporate policies. "Jailbreaking" and "rooting" should also be expressly prohibited. Depending on what company data an employee can access remotely, it may be necessary to address the storage of corporate information on devices or use of cloud type storage applications. Further security measures may need to be addressed depending on the nature of company data (e.g., compliance with the Health Insurance Portability and Accountability Act). Limiting or prohibiting access to the internet via a public wi-fi connection may be necessary depending on the security of the data.

C. Acceptable Use

The policy should also contain guidance on what is acceptable use of a dual-use device. Employees should be reminded that when using even their personal devices for company purposes, they will still be expected to follow all other company policies governing the use of communications systems. Employees should similarly be aware that they must comply with company policies that govern overtime, sexually harassing behavior, the use of confidential or trade secret information and copyright violations. Employers should also address who may use the device and reiterate the expectation that the employee follow all laws related to use of the equipment, such as no texting while driving.

D. Other Significant Provisions

A BYOD policy should specify what types of devices can be used as dual-use and what, if any, reimbursement of costs to employees will occur. To the extent that reimbursement is made, the rights of ownership at any given point should be clearly stated. Similarly, the employees should understand what end user support must, or will be, provided by the employer as opposed to a third party source. In addition, the policy should address what will occur if a user violates the policy. Disciplinary action may vary on the violation at issue. Finally, language confirming the employee's agreement to comply with the terms of the policy should be highlighted. It is critical that employees agree to the company's use of remote wipe, monitoring of the personal device when connected to the corporate network, producing the device for inspection upon reasonable request and releasing the company from any liability for destruction, or incidental viewing, of personal information.

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PRESIDENT OBAMA’S EXECUTIVE ACTION ON IMMIGRATION REFORM Nicholas M. Haering1

I. BACKGROUND – IMMIGRATION REFORM

A. Current Immigration Issues in the U.S.A.

1. Child migrants at the border. 2. Reputation for long processing times for visa and citizenship

applications and renewals. 3. Uncertainty as to the definitions of certain terms or the scope of

certain programs. B. Congress Unable to Pass through Reform C. Precedent for Executive Actions on Immigration

Every president since Eisenhower has taken executive action on immigration.

D. President Obama Announces Executive Action on November 14, 2014

1. The President’s reforms cover a wide range of issues in immigration, including deferred action for qualifying un-documented immigrants, public awareness campaigns, and the expansion of provisional waiver programs to promote family unity.

2. This presentation focuses on the major reforms that will impact

businesses the most. II. PRESIDENT OBAMA’S EXECUTIVE ACTION ON IMMIGRATION

A. Deferred Action – DACA and DAPA

1. Two main components of "deferred action."

a. No deportation for a set period of time. b. Work authorizations allow undocumented immigrants to be

paid and taxed "on the books." 2. DACA originally.

a. DACA introduced in 2012 – Two years of deferred deportation and work authorization.

1 Dinsmore & Shohl LLP, nicholas.haering@dinsmore.com, 502-540-2355.

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b. Eligibility.

i. Born after June 15, 1981 (under thirty-one on June 15, 2012);

ii. Entered the U.S. before June 15, 2007, and; iii. Entered the U.S. under the age of sixteen years.

3. Expansion of DACA.

a. Three years of deferred deportation and work authorization. b. Eligibility.

i. Entered the U.S. before January 1, 2010, and; ii. Entered the U.S. under the age of sixteen years.

4. Extend deferred action to parents of American and lawful

permanent residents – new DAPA program.

a. Three years of deferred deportation and work authorization. b. Eligibility.

i. Parents of U.S. citizens of lawful permanent

residents; ii. Lived continuously in the U.S. for five years, and; iii. Pass a background check of all relevant national

security and criminal databases. B. Modernizing the Employment-Based Immigrant Visa System

1. Problem – backlog for immigrant visas (green cards), causes:

a. Caps on immigrant visas established by Congress in 1990. b. The system does not issue all of the visas authorized by

Congress for a fiscal year. c. Requirements for certain green card categories.

Ex. – Employer may need to test the labor market and show the unavailability of other U.S. workers for the position.

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2. Currently, U.S. businesses rely on temporary visas (H-1B, L-1B, O-1), to retain individuals with needed skills as they work through backlogs.

If this doesn't work, the worker’s temporary status expires and he is required to leave the country.

3. Reform.

a. U.S. Citizenship and Immigration Services (USCIS) to work with the Department of State to:

i. Ensure all immigrants' visas authorized by

Congress are used when there is sufficient demand; and

ii. Improve the system for determining when

immigrant visas are available to applicants during the fiscal year.

Department of State has agreed to modify its visa bulletin system.

b. USCIS to provide clarity on adjustment portability to

remove unnecessary restrictions on natural career progression and general job mobility as workers face lengthy adjustment delays.

C. Policies Supporting U.S. High-Skilled Businesses and Workers

1. Current situation – "National interest waiver" permits certain non-citizens with advanced degrees or exceptional ability to seek green cards without employer sponsorship if their admission is in the national interest, but the waiver is underutilized

Reform – USCIS to clarify the standard by which a national interest waiver may be granted.

2. Authorize parole, to eligible inventors, researchers and founders

of start-up enterprises who may not yet qualify for a national interest waiver, but who have been awarded substantial U.S. investor financing or otherwise hold the promise of innovation and job creation through the development of new technologies or the pursuit of cutting-edge research.

a. Parole would allow these individuals to temporarily pursue

research and the development of promising new ideas and business in the U.S., rather than abroad.

b. Legal basis – the "significant public benefit" parole

authority found in INA §212(d)(5).

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c. This regulation is to include income and resource thresholds to ensure that individuals eligible for parole under this program are not eligible for federal public benefits or premium tax credits.

D. Greater Consistency for the L1-B Visa Program

1. Current L-1B visa program for "intracompany transferees" allows multinational companies to transfer employees who are managerial or executives, or who have "specialized knowledge" of the company’s products or processes, to the U.S. from foreign operations.

Problem – vague guidance and inconsistent interpretation of the term "specialized knowledge" has created uncertainty.

2. Reform – USCIS to issue a memorandum that provides clear,

consolidated guidance on the meaning of "specialized knowledge."

E. Increasing Worker Portability

1. Current law allows immigrant workers to change jobs without jeopardizing their ability to seek legal permanent residence only if the new job is in a "same or similar" occupational classification as their old job.

2. Problem – uncertainty surrounding what constitutes a "same or

similar" job.

This prevents many workers from changing employers, seeking new job opportunities, or even accepting promotions out of fear that such action might void their currently approved visas.

3. Reform – USCIS to issue a policy memorandum that provides

additional agency guidance, bringing clarity to the definition of "same or similar" job under current law.

III. YET TO COME

A. Further Guidance from the Federal Government on How These Programs Will Be Implemented

USCIS to begin accepting applications related to the expansion of DACA on February 18, 2015.

B. USCIS Memoranda Addressing the Topics and Issues Identified by

Secretary Johnson of DHS C. Potential Challenges

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1. Bringing undocumented immigrants "out of the shadows."

a. DACA and DAPA do not offer pathways to citizenship, and they are limited in scope and time.

b. 2012 – Around 1.1 million undocumented immigrants were

thought to be eligible for DACA.

Slightly over 700,000 had their applications accepted for review, according to data analyzed by the Pew Research Center in December 2014.

c. Four to five million people are estimated to be eligible

under the new reforms. d. Reasons to not come forward.

i. Don’t meet the criteria. ii. Unaware of the program. iii. Application problems. iv. Fear of deportation.

2. Congressional attempts to impede or defund President Obama’s

immigration reform. IV. BIBLIOGRAPHY

A. U.S. Citizenship and Immigration Services, "Executive Actions on Immigration," available at http://www.uscis.gov/immigrationaction, accessed January 22, 2015

B. Department of Homeland Security, "Fixing Our Broken Immigration

System through Executive Action – Key Facts," available at http://dhs.gov/immigration-action, accessed January 26, 2015

C. Jeh Charles Johnson, Secretary of the U.S. Department of Homeland

Security, November 20, 2014, Memoranda to Leon Rodriguez, Director of the U.S. Citizenship and Immigration Services, and Thomas S. Winkowski, Acting Director of the U.S. Immigration and Customers Enforcement: 1. "Policies Supporting U.S. High-Skilled Businesses and Workers." 2. "Exercising Prosecutorial Discretion with Respect to Individuals

Who Came to the United States as Children and with Respect to Certain Individuals Who Are the Parents of U.S. Citizens of Permanent Residents."

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D. The White House Blog, "'We Were Strangers Once, Too': The President Announces New Steps on Immigration," available at http://www.whitehouse.gov/blog/2014/11/20, accessed January 26, 2015

E. Sparrow, Thomas, "The Silent Enemy of Obama’s Migrant Plans," BBC,

January 30, 2015, available at http://www.bbc.com/news/world-us-canada-30646945, accessed February 1, 2015.

F. Mascaro, Lisa, "Obama to begin new immigration plan rollout Feb. 18,"

Los Angeles Times, January 31, 2015, available at http://www.latimes.com/nation/la-na-immigration-daca-obama-20150131-story.html, accessed February 1, 2015

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PREMISES LIABILITY IN KENTUCKY W. Craig Robertson III,

I. INTRODUCTION

To prevail in a negligence action in Kentucky, a plaintiff must prove three elements: (1) a duty on the part of the defendant; (2) a breach of that duty; and (3) a consequent injury. West v. KKI, LLC, 300 S.W.3d 184, 190 (Ky. App. 2008); M & T Chemicals, Inc. v. Westrick, 525 S.W.2d 740, 741 (Ky. 1974). Duty is a question of law, while breach and injury are questions of fact. West, 300 S.W.3d at 190. It is well established that "[a] premises owner has a duty to conduct his activities in such a way as not to expose others to what in the circumstances would be an unreasonable risk of harm." Id. at 191 (quoting Baker v. McIntosh, 132 S.W.3d 230, 232 (Ky. App. 2004)). For premises liability, the nature and scope of the duty is dependent upon the visitor's classification. Id.

II. CLASSIFICATIONS AND SUBSEQUENT DUTIES

Kentucky law recognizes three types of visitors upon another's land: trespassers, licensees, and invitees. Hardin v. Harris, 507 S.W.2d 172, 174 (Ky. 1974). Each one is discussed in greater detail below.

A. Trespasser

A trespasser is defined as "one who comes upon the land without any legal right to do so[.]" Hardin, 507 S.W.2d at 174. A landowner owes no duty to a trespasser to keep the premises safe, "but he must refrain from inflicting or exposing him to wanton or willful injury or from setting a trap for him." Bradford v. Clifton, 379 S.W.2d 249, 251 (Ky. 1964). KRS 381.232 provides that landowners "shall not be liable to any trespasser for injuries sustained by the trespasser on the real estate of the owner, except for injuries which are intentionally inflicted by the owner or someone acting for the owner."

B. Licensee

A licensee "enters by the express invitation or implied acquiescence of the owner solely on the licensee's own business, pleasure or convenience." Hincapie v. Charron, 2006 WL 1947765, *4 (Ky. App. Jul. 14, 2006) (unpublished) (citing Scuddy Coal Co. v. Couch, 274 S.W.2d 388, 390 (Ky. 1954)). Social guests are classified as "licensees from the standpoint of the law." Hincapie, 2006 WL 1947765 at *4 (citing Gross v. Bloom, 411 S.W.2d 326, 327 (Ky. 1967)). A landowner "owes no duty to provide the licensee with reasonably safe premises and need only abstain from doing any intentional, willful or grossly negligent act endangering the safety of the licensee." Scuddy Coal, 274 S.W.2d at 390. However, a landowner may be liable if he has

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actual knowledge of an unreasonably safe condition on his land. Under Kentucky law,

The key to the land occupier's liability to the licensee lies in knowledge of a condition which a reasonably prudent person would realize is dangerous to an unsuspecting licensee, should one come upon the premises. It is not necessary that the land occupier admit that he knew the condition was unsafe because if he knows of the condition and it is unsafe, the law requires him to know it is unsafe.

Perry v. Williamson, 824 S.W.2d 869, 874 (Ky. 1992) (emphasis in original).

C. Invitee

An individual is an invitee if: "(1) he enters by invitation, express or implied, (2) his entry is connected with the owner's business or with an activity the owner conducts or permits to be conducted on his land and (3) there is mutuality of benefit or benefit to the owner." West, 300 S.W.3d at 190 (quoting Johnson v. Lone Star Steakhouse & Saloon of Kentucky, Inc., 997 S.W.2d 490, 491-492 (Ky. App. 1999). The Kentucky Supreme Court explained the distinction between an invitee and a licensee in the following manner:

[T]he distinction between an invitee and a licensee is oftentimes shadowy and indistinct. … An invitee enters upon the premises at the express or implied invitation of the owner or occupant on business of mutual interest to them both, or in connection with business of the owner or occupant. A licensee enters by express invitation or implied acquiescence of the owner or occupant solely on the licensee's own business, pleasure or convenience.

Cozine v. Shuff, 378 S.W.2d 635, 637 (Ky. 1964) (quoting Scuddy Coal, 274 S.W.2d at 388). If a visitor is classified as an invitee, "[t]he owner or occupant of premises owes a duty to the invitee to use ordinary care to have the premises in reasonably safe condition, but does not insure his safety[.]" Scuddy Coal, 274 S.W.2d at 390. The difference between the duty that is owed to a licensee as opposed to an invitee is as follows:

[T]he basic distinction between the duties of the possessor is that he owes an invitee the duty of discovering a dangerous condition, whereas he owes a licensee only the duty to warn him of a dangerous condition already known to the possessor. If the possessor is aware of a condition involving unreasonable risk to the licensee and by the exercise of ordinary care should foresee that the licensee

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will not discover it or realize the risk, he has at least a duty to warn him.

Mackey v. Allen, 396 S.W.2d 55, 58 (Ky. 1965) (citations omitted) (emphasis in original). In Whelen v. Van Natta, 382 S.W.2d 205 (Ky. 1964), the Kentucky Court of Appeals recognized that a visitor's status may change depending on his or her actions on the property. The plaintiff in Whelen entered a grocery store to purchase several items. Once he was inside, the plaintiff asked the store's owner if he had any empty boxes and the owner directed him to the back storage area. The court held that the plaintiff entered the store as an invitee, but he became a licensee when he entered the storage area since it was for his own purpose. Id.

III. OPEN AND OBVIOUS DEFENSE

Historically, in Kentucky, a plaintiff could not recover for a slip and fall accident that resulted from an open and obvious condition. Horne v. Precision Cars of Lexington, Inc., 170 S.W.3d 364, 368 (Ky. 2005); Johnson v. Lone Star Steak House & Saloon of Ky., Inc., 997 S.W.2d 490, 492 (Ky. App. 1999); Corbin Motor Lodge v. Combs, 740 S.W.2d 944, 946 (Ky. 1987) (holding summary judgment proper because risk of falling on icy sidewalk was open and obvious). Indeed, the "duty to keep premises safe for invitees applies only to defects which are in the nature of hidden dangers, and the invitee assumes all normal or obvious risks attendant on the use of the premises." Standard Oil Co. v. Manis, 433 S.W.2d 856, 857 (Ky. 1968). For this reason, a premises owner in Kentucky was not liable for injuries resulting from a danger that was as obvious to the visitor as it was to the owner. Bonn v. Sears, Roebuck & Co., 440 S.W.2d 526, 528 (Ky. 1969); O'Nan v. Kroger Co., 279 S.W.2d 236 (Ky. 1955). However, the open and obvious doctrine tide began to change with Kentucky River Medical Center v. McIntosh, 319 S.W.3d 385 (Ky. 2010). Adopting the Restatement (Second) of Torts § 343A(1), the Kentucky Supreme Court held that Kentucky River Medical Center owed the plaintiff, who tripped over an unobstructed curb as she transported a patient into the hospital, a duty because it should have foreseen that she would have been distracted. Subsequent courts tended to limit the McIntosh decision to its facts until very recently. See Lewis v. Faulkner Real Estate Corp., 403 S.W.3d 64 (Ky. App. 2013); True v. Fath Bluegrass Manor Apartment, 358 S.W.3d 23 (Ky. App. 2011); Lucas v. Gateway Community Services Organization, Inc., 343 S.W.3d 341 (Ky. App. 2011); Bentley v. Bentley, 2012 WL 5308472 (Ky. App. Oct. 26, 2012) (unpublished). In 2013, the Kentucky Supreme Court "substantially alter[ed] the approach to premises liability in the Commonwealth" with its opinions in Shelton v. Kentucky Easter Seals Soc., Inc., 413 S.W.3d 901 (Ky. 2013), and Dick's Sporting Goods, Inc. v. Webb, 413 S.W.3d 891 (Ky. 2013). Ward v. JKP Investments, LLC, No. 2013-CA-004617, 2015 WL 293332, *1 (Ky. App. Jan. 23, 2015). In Shelton, the court announced its new approach to open and obvious conditions:

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[A]n open-and-obvious condition does not eliminate a landowner's duty. Rather, in the event that the defendant is shielded from liability, it is because the defendant fulfilled its duty of care and nothing further is required. The obviousness of the condition is a "circumstance" to be factored under the standard of care. No liability is imposed when the defendant is deemed to have acted reasonably under the given circumstances. So a more precise statement of the law would be that a landowner's duty to exercise reasonable care or warn of or eliminate unreasonable dangers is not breached. "When courts say the defendant owed no duty, they usually mean only that the defendant owed no duty that was breached or that he owed no duty that was relevant on the facts." And without breach, there can be no negligence as a matter of law.

Id. at 911-12. Despite this significant shift, the court reaffirmed that "summary judgment remains a viable concept under this approach…." Id. at 916. According to Shelton, "[i]f reasonable minds cannot differ or it would be unreasonable for a jury to find breach or causation, summary judgment is still available to a landowner." Id. Kentucky courts are still wrangling with the impact of the Shelton and Dick's Sporting Goods decisions. Some have affirmed summary judgment on behalf of the defendant in spite of these decisions, see Ward, 2015 WL 293332 at *3; Cobb v. Kamer, 2014 WL 1004619 (Ky. App. Mar. 14, 2014) (unpublished); Dishman v. C & R Asphalt, LLC, No. 2012-CA-001139, 2014 WL 3537051 (Ky. App. Jul. 18, 2014); Smith v. Grubb, No. 2011-CA-000223, 2014 WL 4782937 (Ky. App. Sep. 26, 2014) (reversing lower court's denial of defendant's motion for directed verdict), while others have done just the opposite. See McKinley v. Circle K, 435 S.W.3d 77 (Ky. App. 2014); Embry v. Mac's Convenience Stores, LLC, 2014 WL 2640240 (Ky. App. Jun. 13, 2014). In the very recent Ward decision, which was issued on January 23, 2015, Ward attended a Derby party at a rental location where she fell on outdoor steps and injured her wrist. She sued the landlord of the property, claiming that the steps were defective and that they had been negligently maintained and repaired. The landlord moved for summary judgment on the basis that it owed no duty to Ward since the condition of the steps was open and obvious. The trial court granted the motion and Ward appealed. While the case was on appeal, the Kentucky Supreme Court issued Shelton and Dick's Sporting Goods. Based upon the modified analysis, the Ward Court explained that to survive summary judgment, Ward must "come forward with affirmative evidence, viewed in a light favorable to her, showing that [the landlord] should have reasonably foreseen that visitors would be distracted, would be engaging in some activity while traveling on the deteriorating step, or would otherwise not proceed with caution given the surrounding area." Id. at *3. Because she failed to do so, the court upheld summary judgment. In support of its holding, the court concluded that "[w]e believe this case presents the scenario contemplated in Shelton in which

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summary judgment is viable and appropriate." Id. at *3. It remains to be seen how Kentucky courts will interpret the open and obvious doctrine in the future.

IV. NATURALLY OCCURRING HAZARDS

Naturally occurring outdoor hazards are a unique subset of premises liability. With regard to these types of hazards, such as snow and ice, the Kentucky Supreme Court has explained that "natural outdoor hazards which are as obvious to an invitee as to the owner of the premises do not constitute unreasonable risks to the former which the landowner has a duty to remove or warn against." Standard Oil Co. v. Manis, 433 S.W.2d 856, 858 (Ky. 1968). In other words, a landowner is not under a duty to prevent or warn against the accumulation of snow and/or ice on its premises, or to make one's premises "absolutely safe." Standard Oil Co. v. Manis, 433 S.W.2d 856, 859 (Ky. 1968). See also Shaqdeih v. Signature Inn South, No. 2002-CA-000768-MR, 2003 WL 21512448 (Ky. App. Jul. 3, 2003) (unpublished) (holding that snow and ice in a hotel parking lot created an open and obvious condition because it was as evident to the plaintiff as it was to the owner). In PNC Bank, Kentucky, Inc. v. Greene, 30 S.W.3d 185 (Ky. 2000), a customer sued PNC Bank after she slipped and fell on a snowy and icy sidewalk as she entered the premises. The Kentucky Supreme Court held that summary judgment in favor of PNC was proper because the bank took reasonably prudent measures by attempting to clear the sidewalk of snow and ice for the safety of its customers and it did not take any steps to make the natural hazard less obvious. As a result, the Court determined that the plaintiff could not recover based on the open and obvious nature of the snow and ice. Id. at 186. Similarly, the Court held that a parking lot that was still wet and snowy after it had been plowed the day after a snowstorm constituted an open and obvious condition in Carrier v. Dairy Queen Wholly Owned Stores, Inc., No. 2003-CA-002729-MR, 2005 WL 567190, *1 (Ky. App. Mar. 11, 2005) (unpublished). See also Curtis v. Becker, 2005 WL 678759 (Ky. App. Mar. 25, 2005) (discretionary review denied, August 17, 2005) (unpublished) (holding that a residential driveway with snow and ice is an open and obvious condition). In yet another case upholding the reasoning of Standard Oil, the Kentucky Court of Appeals held that a shopping center was under "no duty … to stay the elements or make its parking lot absolutely safe" or "warn [shoppers] that the obvious natural conditions may have created a risk" after a customer slipped and fell on ice in the parking lot in Logsdon v. PAJ, No. 2006-CA-001485-MR, 2007 WL 2994607, *3 (Ky. App. Oct. 12, 2007) (unpublished). In support of its holding, the Court noted that the shopping center could not have foreseen that the plaintiff would proceed without exercising caution since the plaintiff was a frequent shopper who was familiar with the parking lot and had traversed the same path only fifteen minutes before his accident. The plaintiff was aware of the accumulation of ice and snow in the area and should have been aware of the possibility of ice since the temperatures decreased while he was inside the store. Based on these facts, the court was "unable to find a breach of duty." Id. While it is true that a landowner has no duty to protect against naturally occurring hazards, "a duty voluntarily assumed cannot be carelessly undertaken without

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incurring liability therefore." Estep v. B.F. Saul Real Estate Inv. Trust, 843 S.W.2d 911, 914 (Ky. App. 1992). Thus, if a landowner undertakes protective measures that heighten or conceal the condition, thus making it worse, he or she will be liable. Id. For example, in Estep, the Kentucky Court of Appeals held that factual issues remained with regard to the obviousness of the natural hazard because the customer slipped and fell on ice that was concealed under a thin layer of snow following the owner's attempt to clear the sidewalk. On the other hand, recovery was barred in Vickers v. Bellerive Development Inc., 2004 WL 67857 (Ky. App. Jan. 16 2004) (unpublished), because prior attempts to clear a snowy parking lot the day before an accident did not make the natural hazard any less obvious or increase the likelihood that the plaintiff would fall.