Seventh Circuit Guts FTC’s Powers — Setting up Supreme Court Showdown

Breaking with eight other circuits, the Seventh Circuit ruled Wednesday that the Federal Trade Commission lacks authority to seek restitution from companies that defraud consumers, and vacated a $5 million judgment against a credit-monitoring company, reports Courthouse News Service.

The case involves a lower court’s imposition of $5 million in restitution from the target of an FTC action. Regulators said Michael Brown and his company, Credit Bureau Center, offered consumers “free” credit reports and then automatically enrolled them in a $29.94 monthly membership to a credit-monitoring service without notice.

Section 13(b) of the Federal Trade Commission Act authorizes the FTC to seek restraining orders and injunctions, but not specifically restitution, writes Courthouse News’ Lorraine Bailey.

Read the Courthouse News Service article.

ICE Affidavit Says Plant ‘Knowlingly’ Hired Illegal Workers — No Charges for Company

The company that was the target in a sweep of workers allegedly living in the country illegally had a history of “knowingly hiring and employing illegal aliens,” according to allegations in an unsealed affidavit for a federal search warrant.

The Chicago Tribune reports that “Six of seven Mississippi chicken processing plants raided were ‘willfully and unlawfully’ employing people who lacked authorization to work in the United States, including workers wearing electronic monitoring bracelets at work for previous immigration violations, the affidavit alleges.”

The sworn statements supported the search warrants that led a judge to authorize the raids, and aren’t official charges.

A spokesman for the company, Koch Foods, denied that the company knowingly or willfully employed any unauthorized workers at its Morton, Miss., plant.

Read the Chicago Tribune article.

Rejecting Power-Purchase Agreements in Energy Cases: Do Bankruptcy Courts Have Exclusive Jurisdiction?

The U.S. Bankruptcy Court for the Northern District of California held that it has exclusive jurisdiction over the rejection of wholesale power-purchase agreements, reports Holland & Hart in an article written by Risa Wolf-Smith.

The court also found that the Federal Energy Regulatory Commission has no such jurisdiction and any determinations by FERC to the contrary would be void.

“While the decision might not be surprising to most bankruptcy practitioners, the proposition that FERC has no jurisdiction over the breach or modification of a power-purchase agreement is not only shocking to energy practitioners, but contrary to well-established authority in the energy arena,” writes Wolf-Smith.

Read the article.

Bailey Brauer Co-Founder Provides Insights for ABA’s Agriculture and Food Handbook

Trial lawyer Clayton Bailey, co-founder of Dallas litigation boutique Bailey Brauer, is a primary contributor to the first edition of the American Bar Association’s recently released Agriculture and Food Handbook.

The handbook provides a comprehensive review of the regulatory, antitrust and consumer protection issues affecting the food and agriculture industries.

The firm said Bailey contributed to sections exploring issues specifically affecting the beef and poultry industries. He also explained the administration and enforcement of the USDA’s Packers and Stockyards Act of 1921, which ensures fair competition and fair trade practices in the livestock and poultry industries.

Bailey’s legal practice involves trying and appealing cases in state and federal courts across the country. He also represents clients before federal and state agencies, including the Department of Justice and the U.S. Department of Agriculture. Bailey Brauer represents some of the world’s largest agriculture companies, including some that are engaged in the biggest litigation disputes in the industry.

The Agriculture and Food Handbook is available for purchase from the American Bar Association.

Equifax Data-Breach Settlement: Get Up to $20,000 If You Can Prove Harm

Two years after a major data breach exposed the personal information of around 147 million Americans, the credit bureau Equifax has agreed to pay at least $650 million to resolve consumer claims and multiple state and federal investigations stemming from the episode, according to The New York Times.

At least $300 million of that amount will go to consumers, with an additional $125 million available if the initial fund is exhausted.

Times reporter David Yaffe-Bellany writes that individual victims may be able to claim as much as $20,000 in compensation for losses resulting from the breach if they can prove they were harmed.

Read the NY Times article.

In Form Contracts, Don’t Silence Consumers with Gag Clauses: FTC’s Consumer Review Fairness Act

Some companies, hoping to prevent negative online consumer reviews, include clauses in form contracts stating that bad reviews are prohibited and punishable by fines. However, the Federal Trade Commission seeks to protect U.S. consumers and ensure fair competition and business practices, according to a post on the website of Ryley Carlock & Applewhite.

The FTC’s Consumer Review Fairness Act states that such gas clauses are illegal and void in form contracts.

Companies should treat such gag clauses in past contracts as void, and essentially should ignore negative reviews from a relatively few consumers, the authors advise.

Read the article.

Census Plaintiffs Seek Sanctions Against Trump Administration for Trial ‘Fraud’

Reuters reports that civil rights groups who successfully blocked the Trump administration from adding a citizenship question to the 2020 U.S. census are seeking sanctions against government officials, saying they brazenly hid the truth about the inquiry’s origins during trial.

The American Civil Liberties Union asked a New York court to grant new discovery into the alleged misconduct, as well as monetary sanctions for the government’s “concerted campaign of delay and obfuscation” during trial last November.

Reuters’ Nick Brown writes that the plaintiffs cited a list of “false or misleading” testimonies that amounted to “fraud on the court,” perpetrated by officers of the U.S. Department of Commerce, DOJ and Census Bureau.

Read the Reuters article.

Webinar – Not So Obvious: Secondary Considerations at the PTAB

Fitch, Even, Tabin & Flannery LLP will present a free webinar, “Not So Obvious: Secondary Considerations at the PTAB,” featuring Fitch Even attorneys Dave A. Gosse and Evan Kline-Wedeen.

The event will be on Thursday, July 18, 2019, at 9 am PDT / 10 am MDT / 11 am CDT / 12 noon EDT. It will also be available as an on-demand webinar after presentation.

Objective evidence of non-obviousness can overcome a prima facie case of obviousness, both in district court litigation and at the Patent Trial and Appeal Board. These “secondary considerations” are an important tool that patent owners can use to defeat obviousness challenges. Historically, the PTAB has not often been persuaded by such evidence. But in recent years, patent owners have found some success when presenting compelling objective evidence of commercial success, copying, long-felt need, and other secondary considerations.

During this webinar, presenters will discuss the following:
• Developing trends at the PTAB concerning secondary considerations
• How to insulate your petition from secondary considerations
• Best practices for patent owners developing evidence related to secondary considerations

Register for the webinar.

As Legal Glare Turns to Trump, His Faith in Supreme Court May Be Tested

President Donald Trump’s fondness for the U.S. Supreme Court could be tested by a series of legal disputes targeting him personally – from his taxes and businesses to his 2016 election campaign – that ultimately may be decided by the justices, according to a Reuters report.

Reuters reporters Andrew Chung and Lawrence Hurley write that some legal experts speculate that “as the focus of some of the major legal challenges shifts from his policies to Trump himself, there could be disappointments in store for him, … in particular if the Supreme Court stoutly defends the ability of Congress to pursue investigations of the president.”

J.W. Verret, an expert in corporate and securities law at George Mason University in Virginia, told the reporters that conservative justices “won’t feel any loyalty to Trump, but will instead support strong separation of powers” as delineated in the U.S. Constitution.

Read the Reuters article.

Alleged ‘Inappropriate Diatribes’ and ‘Vitriolic Emails’ Lead to Lawyer’s Suspension

Chicago attorney Joel Brodsky, who gained national notoriety for his representation of wife killer Drew Peterson, has been indefinitely suspended from practicing law amid an investigation into a series of bizarre antics that have drawn the ire of opponents and judges alike, reports the Chicago Tribune.

A filing by the Illinois Attorney Registration and Disciplinary Commission claims a license suspension is necessary before the investigation is complete because Brodsky allegedly “engaged in conduct that threatens irreparable injury to the public and to the orderly administration of justice.”

Tribune reporter Jason Meisner writes about one example cited: “In an insult-laced letter sent to a rival attorney in a divorce case, Brodsky said the lawyer ‘appears to be learning disabled,’ implied that the rival has a drinking problem and sarcastically asked if the attorney has gay ‘feelings for his client, the filing alleged.”

Read the Tribune article.

Trump Appeals Ruling Clearing Way for Release of His Banking Records

Image by Elliott Brown

President Trump’s lawyers are appealing a U.S. district judge’s ruling that rejected the president’s request that congressional inquiries into Trump’s banking records be blocked, according to The Washington Post.

The judge’s decision cleared the way for Deutsche Bank, the president’s biggest creditor, and Capital One to hand over years of financial records from Trump, his three eldest children and the Trump Organization to two House committees, reports the Post‘s Renae Merle.

“The [congressional] committees’ subpoenas are sweeping and unprecedented attempts to obtain the private financial information of a sitting President,” the appeal to the 2nd U.S. Circuit Court of Appeals said.

Read the Post article.

Is Your Bank Reviewing Its Technology Contracts?

In an article in the ABA Banking Journal, Brad Rustin and Samer Roshdy of Nelson Mullins Riley & Scarborough discuss the FDIC’s financial institutions letter FIL-19-2019, highlighting contractual deficiencies in banks’ contracts with technology service providers.

“The FDIC letter reaffirms the long-standing regulatory notion that a financial institution cannot discharge its responsibilities, which includes managing its business continuity and incident response processes, by outsourcing activities to third-party service providers,” they explain.

The authors also add that the letter serves as a reminder to the industry that federal banking regulators will continue to scrutinize relationships with technology service providers.

Read the article.

PG&E Ordered to Prove New Board is Fit to Serve

Seeking bankruptcy and scrambling to complete a $1.3 billion state-mandated wildfire prevention plan, Pacific Gas & Electric will now have to prove that its newly hired directors are fit to transform the mega-utility blamed for starting the 2018 Camp Fire in Northern California, reports Courthouse News Service.

While the new members have “impressive resumes,” said Commission president Michael Picker, it’s not clear they have the safety experience or time to manage the overhaul of a publicly traded utility facing an estimated $30 billion in wildfire liabilities.

Courthouse News Service reporter Nick Cahill writes that many state lawmakers and Gov. Gavin Newsom have been skeptical of the additions, citing the new members’ ties to Wall Street.

Read the Courthouse News article.

Understanding the New California Consumer Privacy Act

Duane Morris will present a webinar titled “Understanding the New California Consumer Privacy Act: Why The CCPA Applies to You and Practical Steps You Can Take Now to Comply.”

The event will be Thursday, May 23, 2019, beginning at 1 p.m. Pacific time.

The firm said the California Consumer Privacy Act (CCPA) of 2018 is the strictest privacy law in the United States and has national impact for anyone doing business in California. The new law takes effect January 1, 2020, and gives consumers greater control over their personal information, including the right to:

•Be informed which categories of their data will be collected by a business before it is collected;
•Opt out of the sale of their personal information;
•Delete their data from a business’ database;
•Be informed of any changes to categories of their data a business collects;
•Know the categories of the third parties with whom their data is being shared;
•Know the categories of sources of information from whom their data is acquired;
•Know the business purpose for collecting their data;
•Be aware of all their data a business has collected (annually and free of charge at the consumer’s request).

Enforcement of the CCPA will be through consumer lawsuits for data breaches, along with enforcement action by the California attorney general, who can impose fines of up to $2,500 per violation or $7,500 per intentional violation of the CCPA.

Led by an interdisciplinary team of Duane Morris attorneys, the California Consumer Privacy Act of 2018 Webinar Series offers a discussion and analysis of the CCPA, along with strategies to prepare a business for compliance with this complex rule.

The first session will discuss:

•Understanding the CCPA
•How this law affects your business
•What steps can a business take to ensure compliance?

Register for the webinar.

Man Spies GC Friend’s Merger Papers, Makes $250K Insider-Trading Profit, SEC Says

Financial Advisor reports that a Nevada man has settled charges with the SEC that he took inside information while a guest at the home of a longtime friend — Cintas Corp.’s general counsel — and used it to generate $250,000 in illegal profits.

The SEC’s complaint in the U.S. Southern District of Florida alleges that Brian Fettner, 51, of Henderson, Nev., “surreptiously viewed documents contemplating an acquisition of G&K Services Inc. by Cintas [Corp.]” while changing his golf shoes in the den of a longtime friend who was also the general counsel of Cintas.

Raymond Fazzi of Financial Advisor writes:

Without telling his friend, whom he attended middle school and high school with as a child, Fettner then started purchasing G&K Services stock that very same day on his mobile phone, as he played golf with his friend, the SEC said. He continued buying G&K stocks in the brokerage accounts of his ex-wife and a former girlfriend, and persuaded his father and another girlfriend to purchase G&K shares, the SEC said

Read the Financial Advisor article.

Outcry Over EPA Proposal to Weaken Standards for Cleanup of ‘Forever Chemicals’

The Environmental Protection Agency has proposed weaker standards for cleaning up dangerous groundwater contamination sites across the country where chemicals containing fluorine-based PFAS compounds threaten drinking supplies of millions of Americans, according to a post by Androvett Legal Media & Marketing. The proposal would lower existing requirements for addressing groundwater contamination at military bases where large amounts of contamination have been documented.

“We’ve seen companies like 3M and DuPont fail to take responsibility for the health risks caused by the chemicals they created. Federal regulators should be increasing – not decreasing – oversight at this time,” said water contamination attorney Bryan Fears of Dallas-based Fears Nachawati, who represents individuals and local governments in water contamination litigation against makers of the chemicals. “This problem is not going away and cleaning up these sites must be a priority.”

Called “forever chemicals” because they never fully degrade, PFAS compounds have been found in drinking water used by 110 million people across the nation and in the blood of 98 percent of Americans. The compounds, which are found in hundreds of consumer and industrial products, have been linked to immune system problems and cancer. The EPA proposal would extend the timetable for cleanup at more than 400 military bases where the use of fire-retardant foam containing the chemicals has been blamed for serious groundwater contamination problems.

The EPA proposal is under a 45-day review and comment period. “Now is the time for Americans to speak up about this problem and ensure that contamination is addressed sooner rather than later,” said Fears. “This is a fight for safe drinking water for our communities, families and future generations to come.”

Attorney: ‘Old White Males’ Ganged Up on Her. The Bar: She Used ‘Terrorist Legal Tactics’

The Florida Bar hit Fort Lauderdale lawyer Ashley Krapacs with an emergency suspension for alleged behavior including “terrorist legal tactics” and “cyberstalking restraining order” in online posts about two peers.

The Miami Herald reports that the case started with Krapacs filing for a restraining order against a man whom she claimed was violently abusive during their relationship. The Bar presented an example from Krapacs’ LinkedIn account that referred to one of the lawyers on the other side:

“Old White Male Attorney #2 steps up to the plate to harass a domestic violence victim with yet another baseless legal treat. Classy.”

She also accused the court of being biased, according to the Herald‘s David J. Neal.

Read the Miami Herald article.

Big Law Pay Equity Gets Closer Scrutiny by Small Labor Agency

A small Labor Department agency with sizable oversight is looking closely at Big Law firms like Morgan Lewis & Bockius, Fox Rothschild, and Paul Hastings, as part of its mission to address compensation and promotion practices in the legal industry, reports Bloomberg Law.

“The DOL’s Office of Federal Contract Compliance Programs recently cautioned law firms that do work with the federal government that it will be closely analyzing how their employment practices affect diversity,” reports Bloomberg’s Paige Smith. “At least 10 firms will be audited by the OFCCP in 2019, and the agency’s director Craig Leen said investigators may target the legal industry in particular in future probes.”

Some big law firms are facing a wave of litigation over alleged discrimination against women and people of color.

Read the Bloomberg Law article.

Ford Says Feds Have Opened Criminal Probe Into Its Emissions Certifications

CNBC is reporting that the Justice Department has launched a criminal investigation in a matter relating to Ford Motor’s emissions certification process.

“The matter stems from issues related to road load estimations, including analytical modeling and physical track testing,” writes CNBC’s Amelia Lucas. “Road load is a vehicle-specific resistance level that helps determine fuel economy ratings and emissions certifications. It does not involve the use of defeat devices to cheat on emissions tests.”

The company said it voluntarily disclosed disclosed the issue to the Environmental Protection Agency on Feb. 18 and has hired outside experts to investigate its vehicle fuel economy and testing procedures after employees raised concerns.

Read the CNBC article.

Anatomy of a Prosecutorial Meltdown

A prosecutor in Lancaster County, Pennsylvania, finds himself embroiled in a legal scorched earth conflict against his county commissioners — a fight that started when he used $21,000 in asset forfeiture funds to lease a car.

Above the Law traces the conflict between the commissioners and Lancaster District Attorney Craig Stedman.

Along the way, Stedman doubled down after commissioners said they would have leased him a vehicle through proper channels if he’d asked for one, but that using the forfeited funds to get a car on his own violated protocol, writes Above the Law senior editor Joe Patrice.

Stedman sued the commissioners, and they responded by blocking the use of county funds for the lawsuit. Stedman turned over documents, but the records didn’t include receipts documenting what specific seized items were sold and what items were bought with the proceeds.

Read the Above the Law article.