Delaware: The First State in Sustainability
Robert Whetzel, Richards Layton & Finger
On June 27, 2018, Delaware Governor John Carney signed legislation enacting the Delaware Certification of Adoption of Transparency and Sustainability Standards Act (the “Delaware Sustainability Act” or “DSA”), which will become effective on October 1, 2018. The Delaware Sustainability Act, which is the first of its kind in the United States, represents Delaware’s effort to support the sustainability initiatives of its corporate citizens. The DSA creates a framework for recognition of a Delaware entity’s adoption and implementation of sustainability standards, and reporting on sustainability practices, leading to the issuance of a certificate of adoption of transparency and sustainability standards.
The DSA is permissive and non-mandatory, applying only to those Delaware entities that affirmatively elect to pursue the certification process. The DSA recognizes that there is not a “one size fits all” approach to sustainability, and allows flexibility in the selection, adoption, and implementation of sustainability standards that are tailored to the business of a particular entity. The DSA also recognizes that many of Delaware’s largest and most prominent corporate citizens have well-established sustainability programs in place. Accordingly, the DSA focuses on governance processes in the adoption of sustainability standards and reporting; it does not require the adoption of specific standards, nor does it impose substantive requirements to meet or achieve particular goals.
Through the adoption of the DSA, the State of Delaware will support and facilitate the adoption of sustainable business practices, and will provide a certification for entities that elect to participate in Delaware’s sustainability reporting regime.
Consumer Finance Law
Sixth Circuit Rejects Account NSF Claims
By Jeffrey T. Karek, Maurice Wutscher LLP
In Lossia v. Flagstar Bancorp, Inc., the U.S. Court of Appeals for the Sixth Circuit held that a consumer failed to assert a valid breach of contract claim where his bank processed his Automated Clearing House (“ACH”) transactions in accordance with the terms of the relevant agreement, not in the order they were made by the consumer, which resulted in a greater number of non-sufficient funds (“NSF”) charges. The agreement between the bank and consumer provided that ACH transactions would be processed “as they occur on their effective date.” The agreement also incorporated national guidelines that defined the effective date as “the date specified by the Originator.” Over the course of four days, the consumer authorized merchants to initiate a series of ten ACH transactions to be debited from his checking account, but he did have sufficient funds to pay for the transactions. Still, had the transactions been processed in the order the consumer initiated them, he would have incurred only one NSF fee, but instead the consumer was charged five NSF fees. On appeal, the Sixth Circuit determined that because the agreement stated transactions would be processed as they occur “on their effective date,” and not necessarily the actual date that each transaction was initiated, and since the unrebutted evidence demonstrated that the bank followed the terms of the agreement in how it processed the consumer’s ACH transactions, there was no breach of contract.
SCOTUS Rules Credit Card Company's Anti-Steering Rules Did Not Violate Antitrust Law
By Jeffrey T. Karek, Maurice Wutscher LLP
In Ohio v. Am. Express Co., the U.S. Supreme Court held in a 5-4 decision that an anti-steering provision in a credit card company’s agreement with merchants did not violate federal antitrust law. Specifically, the credit card company required merchants accepting its credit cards to agree to a contractual provision generally prohibiting merchants from implying a preference for other cards or imposing special fees or restrictions. The government sued the credit card company claiming its anti-steering provisions violated § 1 of the Sherman Act, which prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States.” Ultimately, the Supreme Court held that the government did not meet its burden to prove anticompetitive effects in the relevant market, noting that it staked its “entire case on proving that [the credit card company’s] agreement increase[d] merchant fees,” which the Court found “unpersuasive.” Instead, the Court determined that the credit card company’s “business model has spurred robust Interbrand competition and has increased the quality and quantity of credit-card transactions,” and “[t]he promotion of Interbrand competition . . . is . . . ‘the primary purpose of the antitrust laws.’” Writing for the dissent, Justice Breyer determined that “the challenged contractual term clearly has serious anticompetitive effects.”