“One of the key activities of the American Law Institute (ALI) has been the researching, writing, and publication of Restatements. According to the ALI’s website, the basic idea was that the ALI ‘should address uncertainty in the law through a restatement of basic legal subjects that would tell judges and lawyers what the law was.’ This self-appointed task has a huge influence on the development of the law in the United States, and indeed around the world, mostly for the better. Restatements can and often do reduce uncertainty and eliminate unnecessary complexity and obfuscation. The ALI also holds itself out ‘promote those changes which will tend better to adapt the laws to the needs of life.’ The ALI has thus characterized its Restatements as having a “critical and constructive” goal as well as a clarifying and simplifying function,” writes Nathan A. Schachtman in his blog.

“This ambiguity in its mission statement makes ALI Restatement provisions occasionally controversial on occasion. Controversy can arise from the ALI’s addressing factual situations ‘not yet discussed by courts or dealt with by legislatures….’ Perhaps more disconcerting, however, are situations that have been addressed by courts and legislatures at length, but where the ALI attempts to impose its policy judgments in place of those that carry the imprimatur of a majority of jurisdictions in the United States.”

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“Robinhood Markets Inc’s user agreement is likely to protect the brokerage app from a barrage of lawsuits filed by customers after it blocked a frenzied trading rally in companies such as GameStop Corp that was fueled on social media forums,” discusses Tom Hals in Reuters’ Retail.

“The owners of internet platforms where much of the discussion took place are likewise shielded from liability for users’ activity under a 25-year-old law known as Section 230.”

“At least a dozen proposed class action lawsuits accuse Robinhood of breaching its contract with customers when it restricted trading on Thursday.”

Read the article.

“From time to time, private equity sponsors will exit a portfolio company investment by selling the portfolio company to buyers led by another fund managed by the same sponsor. Because the sponsor is essentially on both sides of the transaction, the sponsor must carefully consider and fairly address the customary business and legal issues arising in a typical private mergers and acquisitions (M&A) transaction. This note suggests a streamlined legal process that offers efficiencies of cost and timing, while still ensuring fairness to the investors in both the seller and buyer funds,” report Eitan Tabak and Abbe L. Dienstag in Kramer Levin’s Perspectives.

“At the outset, it should be noted that there is no shortcut to financial fairness, particularly a fair price for the asset. Achieving fair pricing of an interfund transaction is of special concern because of the sponsor’s control of both the buyer and the seller. The conflict should be addressed by outside fairness analyses and price negotiation conducted by independent committees of investors of the buy- and sell-side funds, generally outside the influence of the sponsor. It would be preferable for each of the funds to be separately advised and to receive its own fairness opinion. However, it may be possible to obtain a dual fairness opinion from a single adviser that has no relationship with either of the funds, or at least has not been preferentially engaged by one or the other of the funds.”

Read the article.

“Most contractors are well aware that they must abide by the performance standards and scope-of-work requirements in their contracts or potentially face legal action. What they might not realize is that there are situations that could render their contracts or a portion of those contracts unenforceable,” writes Kim Slowey in Construction Dive’s News.

“In the legal world, there are affirmative defenses available to someone being sued for breach of contract, said attorney Quinn Murphy with Sandberg Phoenix in St. Louis. If those affirmative defenses are established, he said, it could mean that the parties no longer have an enforceable agreement.”

“Contractors must keep in mind, though, that the issue of whether a contract is unenforceable is a nuanced one and dependent on the facts specific to each contract, according to attorney Brian Wolf of Smith, Currie & Hancock LLP in Ft. Lauderdale, Florida. This is why it’s important to seek legal counsel when faced with a potential contract issue.”

Read the article.

“The increase in loan and lease defaults in the wake of COVID-19 has brought to the forefront numerous legal defenses by borrowers and tenants, such as force majeure, impossibility, and frustration of purpose,” discuss Marc L. Hamroff and Danielle J. Marlow in Moritt Hock & Hamroff’s COVID Litigation Task Force Blog.

“Force majeure allows a party to suspend or terminate their obligations when certain circumstances beyond their control arise. Impossibility applies when the destruction of the subject matter of the contract or the means of performance makes contract compliance objectively impossible. Frustration of purpose applies when a change in circumstances makes one party’s performance virtually worthless to the other. The decision whether to permit these defenses boils down to allocation of risk, specifically (i) who should bear the risk of unforeseen circumstances, such as the pandemic; and (ii) does the governing contract address the allocation of risk?”

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“The United States Senate and the House of Representatives voted to override the President’s veto of the National Defense Authorization Act (‘NDAA’) on January 1, 2021 and December 28, 2020, respectively, resulting in the NDAA becoming effective law as of January 1, 2021. Within the NDAA was included the Corporate Transparency Act (‘CTA’) that became law upon the effective date of the NDAA. The CTA represents a substantial change in the transparency obligations for private companies, as the CTA will impose reporting obligations regarding beneficial ownership information for ‘reporting companies,’ which are primarily small-scale private companies with an operating presence in the U.S. As discussed below, although reporting companies will not be subject to these obligations until a later date, existing or newly formed reporting companies must be prepared to meet these obligations in the near future,” write Ryu Fukuyama, Benjamin F. Gould and Jennifer R.M.C. Watson in Masuda Funai’s News & Events.

“Under the CTA, a ‘reporting company’ must disclose to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (‘FinCEN’) and then update certain information pertaining to its ‘beneficial owners.'”

Read the article.

In March 2020, Foster Swift “published an article about how the Coronavirus impacts your contracts and whether force majeure clauses could excuse non-performance. Since then, our attorneys have received a number of questions from clients related to the Coronavirus/Covid-19 and how our clients may address issues of performance, delivery, and payment when the Coronavirus impacts a company’s ability to complete its responsibilities under a contract,” write Amanda J. Dernovshek and Emily R. Wisniewski in Foster Swift’s Biztech Law Blog.

“If any issues arise and your business ends up in court, the court will evaluate a contract and interpret the contract as written. Many contracts contain boilerplate provisions known as ‘force majeure’ clauses. Generally, a force majeure clause is used to excuse non-performance when performance becomes impossible. Whether or not a business’s circumstances rise to the level of being “impossible” will depend on a number of factors; however, a clearly written contract with a strong force majeure clause is essential.”

Read the article.

“In a unanimous decision, the California Supreme Court held that the worker friendly ‘ABC’ test set forth by the Court in its 2018 landmark ruling, Dynamex Operations West, Inc. v. Superior Court, applies retroactively. The ABC test thus applies to all pending cases governed by the California Wage Orders in determining whether a worker is an independent contractor or an employee,” write Eric Lloyd and Pamela L. Vartabedian in Seyfarth’s California Peculiarities Employment Law Blog.

Jan-Pro Franchising, a franchisor offering cleaning and janitorial services. A case was brought by independent contractor franchisees claiming “they should have been treated as Jan-Pro employees.”

“In Dynamex, the court held that, for purposes of claims arising from the Wage Orders, the ‘ABC’ test governs whether workers are properly classified as independent contractors rather than employees.”

Read the article to see what the hiring entity must prove through the ABC test.

“The … COVID relief bill passed by Congress at the end of last year … includes several COVID-related amendments to the U.S. Bankruptcy Code. Some of these changes will have a significant direct impact, at least temporarily, on the rights of commercial landlords and tenants in chapter 11 cases,” writes Ben Feder in Kelley Drye’s Bankruptcy Law Insights.

Feder discusses these amendments.

Read the article.

In late December 2020, the Trademark Modernization Act of 2020 became law, discusses Michael R. Graif and William S. Dixon in Mintz’ Insights Center.

The act includes important amendments to the Lanham Act as follows:

1. Establishes two new ex parte proceedings to cancel unused marks;
2. Creates a uniform rule establishing a rebuttable presumption of irreparable harm for trademark infringement;
3. Formalizes the procedure for Letters of Protest; and
4. Permits the examiner to set shorter response times for office actions.

Mintz examines these new procedures.

Read the article.

“The waves of employees let go in the COVID crisis will file a surge of employment claims. Worse, plaintiffs’ lawyers will scrutinize the many changes required by the pandemic and assert class actions and collective actions in response to practices or policies that are not on rock-solid legal ground,” examine John Ayers-Mann, Patrick Bannon, Anthony Califano, and Molly Mooney in Seyfarth’s News & Insights.

“To try to reduce the impact of the storm, some employers are considering arbitration agreements.”

Read the article.

“Merger and acquisition purchase agreements generally include indemnification provisions, pursuant to which a given party (‘indemnitor’) agrees to defend, hold harmless, and indemnify the other party or parties (‘indemnitees’) from specified claims or damages. These typically include claims arising from a breach of the indemnitor’s representations and warranties or covenants set forth in the purchase agreement, or with respect to other specific matters. Often the indemnification provisions are agreed to as between the parties as an exclusive remedy for asserting claims (also referred to as an ‘exclusivity of remedies’ or ‘EOR’ provision),” writes Daniel R. Avery in Goulston & Storrs’ What’s Market Blog.

The article reviews the use of EOR provisions in private company M&A transactions.

Read the article.

“A recent decision of the New York Court of Appeals, Sutton v. Pilevsky held that federal bankruptcy law does not preempt state law tortious interference claims against non-debtors who participated in a scheme that caused a debtor—in this case a bankruptcy remote special purpose entity—to breach contractual obligations intended to ensure that the entity remains a Special Purpose Entity (SPE) and to facilitate the lenders’ enforcement of remedies upon a future bankruptcy filing, if any,” discusses Dechert LLP in their Knowledge blog.

“The ruling likely has significant implications for structured finance providers and may have broader implications as well. Interestingly, in this case the defendants were strangers to SPE financing; after all, the sponsor and its related persons are usually subject to liability on the loan under standard bad acts carve-out guaranty, making it unnecessary to sue them for causes of actions outside the scope of their guaranty.”

Read the article.

“The COVID-19 pandemic has had profound effects on US health care markets,” write Roslyn Murray, Suzanne F. Delbanco and Jaime S. King in HealthAffairs Blog.

“As demand for office visits and elective procedures have declined, independent physician offices have suffered unprecedented revenue losses that make them vulnerable to foreclosure or acquisition by large health systems. Many independent hospitals, including safety-net and rural hospitals, likewise have sustained huge losses, and they have not received adequate support from the federal government. Funds allocated to hospitals via the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Paycheck Protection Program and Health Care Enhancement Act, have been distributed mainly to large health systems with sizable amounts of cash and investment income, a relatively large share of patient revenue from private insurance, and market power.”

This article highlights “three types of state legislation that could help maintain or encourage competition in the face of provider closures and acquisitions.”

Read the article.

“The COVID-19 pandemic continues to shake up the nation’s economy. Long-standing companies such as JC Penney, J. Crew, Neiman Marcus, Modell’s Sporting Goods, Brooks Brothers, Lord & Taylor, Men’s Wearhouse, GNC, California Pizza Kitchen, 24 Hour Fitness, and Gold’s Gym have filed for bankruptcy. Unfortunately, it is highly likely that many more companies, large and small, will file for bankruptcy protection in the coming months,” write Gary Kaplan and Greg Shean in Farella, Braun and Martel’s Publications.

“For landlords of commercial real estate, these bankruptcies can have significant impacts on their rights and remedies under their leases. When confronted with a tenant who has filed for bankruptcy or may be considering it, understanding the basics of those effects is helpful.”

Know the Code.

“On Sunday, December 27, 2020, President Trump signed into law a COVID-19 relief and government spending bill entitled the ‘Consolidated Appropriations Act, 2021.’ Within its nearly 5,600 pages are significant new trademark and copyright provisions unrelated to either the coronavirus or the funding of the government. For trademark owners, the legislation incorporates the Trademark Modernization Act of 2020, H.R. 6196, likely the most significant trademark legislation since the Lanham Act’s enactment nearly 75 years ago. It will change trademark practice in several ways, including: (i) providing a statutory rebuttable presumption of irreparable harm to benefit brand owners in trademark litigation; and (ii) creating new expungement and reexamination proceedings before the United States Patent and Trademark Office (USPTO) to more efficiently remove unused marks from the registry,” write David A. Bell, Jason P. Bloom, Joseph Matal and Wesley Lewis in Haynes and Boone’s News.

“For copyright owners, the legislation creates a new ‘Copyright Claims Board’ within the United States Copyright Office to adjudicate certain ‘small-claims’ copyright disputes rather than trying them in the courts. It also increases criminal penalties for illegally streaming content, making certain streaming of copyrighted content for profit a felony punishable by up to 10 years of imprisonment.”

Read the article.

“Earlier this month, both houses of Congress passed the 2021 National Defense Authorization Act (‘2021 NDAA’),” write Pooja Shah Kothari and Michael M. Lloyd in Covington’s Information Reporting.

“Included in Title LXIV of the 2021 NDAA (Title 64 for those of us rusty on Roman numerals), are new information reporting requirements intended to identify individual beneficial owners of certain business entities. Subject to a number of exceptions, the bill requires certain U.S. and foreign entities to file annual reports with the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) that will disclose information regarding the beneficial owners of reporting companies. Overall, the reporting will identify those individuals exercising “control,” as the term is defined, over those entities required to report. According to the legislation, over two million corporations, LLCs, and similar entities are formed under state law in the United States each year, and many “malign actors seek to conceal their ownership” of various entities intended to facilitate illegal activity. Accordingly, the reporting mandated by the legislation is intended to help protect national security interests and interstate and foreign commerce, as well as counter the financing of terrorism.”

Read the article.

“Non-compete agreements may all but disappear from the Washington, D.C. employment landscape in 2021,” discuss Garen E. Dodge, Nathaniel M. Glasser, Brian W. Steinbach, Maxine Adams & Eric Emanuelson in Epstein Becker Green’s Non-Compete Agreements.

“On December 15, 2020, the District of Columbia Council voted 12-0 to approve the Ban on Non-Compete Agreements Amendment Act of 2020 (B23-0494) (the ‘Bill’), which would prohibit the use and enforcement of non-compete agreements for all employees except certain highly paid physicians. If enacted into law, Washington, D.C. will have adopted a much stricter policy than several other states that have recently restricted the use of non-compete agreements—including its neighbors Maryland and Virginia. The Bill is currently awaiting approval by the Mayor before, absent a veto, it is sent to Congress for the required 30-days of session Congressional review period.

Read the article.

“As a general rule, courts do not save sophisticated parties from bad deals; instead, courts enforce both good deals and bad deals between sophisticated parties according to the express terms set forth in a written contract,” writes Glenn D. West in Global Private Equity Watch’s Insights.

“New York is particularly prone to upholding these freedom of contract principles because freedom of contract avoids ‘judicial upending of the balance struck at the conclusion of the parties’ negotiations,’ as well as ‘promotes certainty and predictability and respects the autonomy of commercial parties in ordering their own business arrangements.'[2] But most general rules have their exceptions. And a recent decision by New York’s highest court, The Trustees of Columbia University v. D’Agostino Supermarkets, Inc., 2020 WL 6875988 (N.Y. Nov. 24, 2020), illustrates the application of one of those exceptions to the otherwise strong policy favoring freedom of contract—unenforceable penalties for breach of contract.”

Read the article.

“Including a contractual dispute resolution provision in an agreement may reduce costs, expedite resolution, and potentially lead to a more favorable outcome. But a poorly crafted provision can do just the opposite.” Philip M. Guess, Elizabeth H. White and Meredith D. Bateman discuss the following key recommendations in K&L Gates’ Latest Thinking.

• If requiring arbitration, specify the particular rules for selecting an arbitrator.
• Do not include mandatory mediation clauses.
• Include all relevant dispute resolutions provisions in the same section.
• Pay attention to choice-of-forum and choice-of-law changes when drafting agreement amendments.
• Do not split subject matter into separate forums (without being very careful).
• Understand the pluses and minuses of bench trials, jury trials, arbitration, and other alternative dispute resolution.
• Do not ignore restrictions related to the waiver of a jury trial for certain jurisdictions and certain claims.
• Understand the importance of selecting a court to enforce arbitration and arbitration awards.

Read the article.