BLT: May 2020

 

Featured Articles

Business & Corporate

Implications of the Micro-Captive Soft Letter

Although most of the nation has been anxiously watching the stock market and daily coronavirus updates from White House officials, some business owners have been sidetracked with captive insurance issues. For many business owners who participate in micro-captive insurance programs, and as highlighted in the March 20th issue of the New York Times, the recent cessation of business has prompted a review of captive coverages to determine whether relief can be provided in the form of a claim for business interruption.

Business & Corporate

Good-Faith Determinations under the CARES Act Paycheck Protection Program

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act). In section 1102 of the CARES Act, Congress established the Paycheck Protection Program (PPP), which provides for hundreds of billions of dollars’ worth of loans under section 7(a) of the Small Business Act (SBA) to borrowers that consist of, among others, eligible small businesses.

Business & Corporate

MERS’s “Maine” Purpose: Recognizing Key Differences Between MERS Mortgages

Maine’s Supreme Court recently held that a foreclosing lender’s equitable interest in the mortgage does not by itself equate to ownership of the mortgage and does now allow courts to compel the mortgage’s assignment.* Beal Bank USA v. New Century Mortg. Corp., 2019 ME 150, ¶ 15. The opinion revives concerns over the viability of foreclosing Maine mortgages involving Mortgage Electronic Registration Systems, Inc. (MERS).

Business & Corporate

Cross-Border Lending: A Brief Guide for U.S. Secured Creditors to the UCC Rules for Perfecting Security Interests in Assets of Foreign Obligors

In today’s global economy, cross-border lending activity is on the rise, with an increase in both the number of loans made to foreign borrowers and the number of participating foreign jurisdictions. A secured lender in the United States entering into a transaction with one or more foreign obligors must comply with the complex provisions of the Uniform Commercial Code (UCC) in order to perfect or crystalize its security interests in the assets of foreign obligors that are pledged as collateral. This article provides a brief guide to applicable UCC provisions and highlights some of the other enforcement and conflict-of-laws challenges lenders should understand when structuring and evaluating the merits of a proposed cross-border secured transaction.

Business & Corporate

Glasser v. Hilton: Citing Principles of Statutory Interpretation, the Eleventh Circuit Drastically Reduces the Scope of TCPA

The Telephone Consumer Protection Act (TCPA, or the Act) has limited telephone calls that can be placed using certain automated equipment since 1991. However, since passage of the Act, there has been considerable debate about the type of automated equipment subject to the Act’s restrictions. The TCPA specifically restricts the use of any “automated telephone dialing system” (ATDS). The statute defines ATDS as “equipment which has the capacity—(A) to store or produce telephone numbers to be called using a random or sequential number generator; and (B) to dial such numbers.” 47 U.S.C. § 227(a)(1).

Business & Corporate

Is Hair Discrimination Race Discrimination?

Is hair discrimination a new form of race discrimination?[1] Sadly, it is not new, and it is not novel. Minorities have suffered hair discrimination for years. A recent study[2] found that African American women face the highest instances of hair discrimination and are more likely to be sent home from the workplace because of their hair. The study also uncovered that 80 percent of African American women felt they needed to switch their hairstyle to align with more conservative standards in order to fit in at work.

Business & Corporate

The Top-10 Tech Tips for Working Remotely during the Coronavirus Pandemic

Over the years many of us have imagined what the world would be like in some sort of global pandemic. There have been books, movies, and short stories all “imagining” the day a global pandemic might hit. The time, tragically, is upon us. For those of you who have geared your practices toward a remote working environment, you are several steps ahead of the game. For the majority, now is the time to consider what tools you should have in your toolkit to survive this and perhaps future experiences. Fortunately, we have not had to experience a mass disaster such as an earthquake, but many of the concepts discussed in this article are applicable to all sorts of disasters.

10 Characteristics of Inclusive Leadership

Business & Corporate

10 Characteristics of Inclusive Leadership

Ensuring that a legal organization both represents and is inclusive of a wide array of backgrounds, viewpoints, and beliefs is a business imperative; yet, legal organizations struggle to translate big-picture concepts like diversity and inclusion into practical steps and actionable plans. Although many will say that the key lies in the actions and behaviors of top leaders modeling inclusion, what actually opens doors are the mid-level leaders and every day relationships that make or break an individual’s experience in a law firm.

Business & Corporate

Safe Harbors in Stormy Seas: A Survey of Key Regulations Affecting Arrangements Between Nonprofit Healthcare Organizations and Physicians

Healthcare and tax regulations require nonprofit healthcare organizations to consider fraud and abuse and private inurement issues when engaging with physicians. Acquisitions of physician-owned entities, employment agreements, service agreements, and many other arrangements can involve multiple regulatory hurdles. Compliance necessitates consideration of fair market value (FMV), commercial reasonableness (CR), and reasonable compensation (RC) when employing physicians.

Business & Corporate

Conversion, Domestication, Transfer, and Continuation of Entities under the DGCL

Recent developments in the global markets, including changes in tax and regulatory regimes, have motivated businesses to seek new jurisdictions for incorporation by entities in their corporate structure.* Although such a change may be accomplished by merger of the relevant entity with another entity located in the desired destination where applicable law permits, many recent migrations and transformations have taken advantage of the conversion provisions of sections 265 and 266 of the Delaware General Corporation Law (DGCL) and the transfer, domestication, and continuation provisions of sections 388 and 390 of the DGCL.

Business & Corporate

Recklessly Disregarding a Nonexistent Risk of Harm: Does Including the Expiration Date on Electronically Printed Receipts Constitute Willful Noncompliance under FACTA?

The Fair and Accurate Credit Transactions Act (FACTA), 15 U.S.C. § 1681 et seq., prohibits merchants from including, among other information, credit- and debit-card expiration dates on printed receipts.* See 15 U.S.C. § 1681c(g)(1). After this provision originally became effective in 2004, plaintiff class-action firms flooded courts with expiration date lawsuits, which courts and others “met with varying degrees of contempt.” Sieber v. Havana Harry’s, 604 F. Supp. 2d 1368, 1369 (S.D. Fla. 2009).

Business & Corporate

Should Canadian Entrepreneurs Incorporate in the United States?

Canadian entrepreneurs often look to the United States for the future financial prospects of their startups, primarily through development funding from angel investors and venture capitalists or a transformative exit deal with a larger acquirer. This reality raises the stakes on a key initial corporate decision of where to start their company, and can cause Canadian entrepreneurs to wonder whether they are better off incorporating in the United States.

Business & Corporate

Privacy Law for Start-Ups

Start-ups in any industry have a lot to think about: funding, staffing, intellectual property, market share, product viability, among other considerations. I want to add one topic to the list that should be on the minds of those involved in start-ups in an increasing range of situations: privacy law. Privacy law (and its kissing cousin, data security law) now impacts virtually any company in any industry, anywhere in the world, if it gathers, collects, uses, or analyzes the personal data of employees, customers, consumers, or others.

Business & Corporate

When Algorithms Inherited the Earth, How They Learned to Discriminate and What You Can Do About It

Imagine that John Smith goes to a lending website to borrow $20,000 to start a new business, or to remodel a home office, or to pay off credit-card debt at a lower interest rate. The information provided through the online application is fairly limited: legal name, Social Security number, address for the last 10 years, level of education, occupation, etc. Thereafter, the online system takes the captured information and crunches it with the underwriting algorithm against additional internal data to evaluate John’s loan request and credit worthiness. What exactly is the algorithm doing to evaluate the risk of underwriting this particular loan?

Business & Corporate

Brazil Passes Landmark Privacy Law: The General Law for the Protection of Privacy

Joining the global trend originating in Europe with the General Data Protection Regulation (GDPR), Brazil recently enacted its own omnibus law governing the use of personal data, the Lei Geral de Proteção de Dados (LGPD), or General Law for the Protection of Privacy. Similar to the EU’s GDPR and California’s Consumer Privacy Act (CCPA), LGPD is intended to regulate the processing of personal data. The stated purpose of the law is to protect “the fundamental rights of freedom and privacy and the free development of the personality of the natural person.”

Business & Corporate

Cybersecurity in the Time of a Pandemic—Practicing “Safe Computing” While Working at Home

As we hunker down in our home offices and endeavour to protect ourselves and our communities from the ravages of COVID-19, it is worth remembering that in addition to the threats posed by the virus, we are also increasingly at risk from scammers and hackers seeking to exploit existing cybersecurity gaps (and our general sense of panic) through various phishing efforts, spear phishing campaigns, and malware scams.

Business & Corporate

SEC Regulation Best Interest: A Practical Guide for Broker-Dealers and Investment Advisers

On June 30, 2020, registered securities broker-dealers must begin their compliance with the new SEC Regulation Best Interest and Form CRS Relationship Summary/Form ADV Part 3,† which were announced by the Securities and Exchange Commission on June 5, 2019.[1] These new regulations were promulgated under authority given to the SEC by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Regulation Best Interest has four components: (1) the disclosure obligation; (2) the care obligation; (3) the conflicts-of-interest obligation; and (4) the compliance obligation.

Month-In-Brief