BLT: October 2020

     

    Featured Articles

    Business & Corporate

    Discovering a Limit to Power: A Statute of Limitations Applied to the CFPB

    Lucy E. Morris, Caleb N. Rosenberg

    The substantial powers of the Consumer Financial Protection Bureau (CFPB) have recently received renewed attention following the U.S. Supreme Court’s decision in Seila Law LLC v. CFPB.[1] That case held that the CFPB was unconstitutionally structured and that the director is removable at will by the President.[2] In making that determination, the Court discussed the CFPB’s authority to use “the coercive power of the state to bear on millions of private citizens and businesses, imposing potentially billion-dollar penalties through administrative adjudications and civil actions.”[3] That authority includes the enforcement of a broad prohibition on unfair, deceptive, or abusive acts or practices (UDAAP) in consumer finance transactions.[4] Although the Court reformed the President’s removal authority, the CFPB retains that immense power over vast segments of the economy.

    Business & Corporate

    Anti-Racist Speech and Action: Where Does the Legal Profession and Model Rule 8.4(g) Go from Here?

    Suhuyini Abudulai, Winda Chan, Jasmine D. Smith, Simi Solebo

    Systemic racism continues to be embedded in every fabric of our society and, in light of recent events, the world can no longer ignore the disproportionate impacts on African-American and Black communities stemming from systemic racism. In response to the deaths of George Floyd, Ahmaud Arbery, Breonna Taylor, and countless other African-Americans, the leadership of the Business Law Section (“Section”) of the American Bar Association issued a statement in support of Black Lives Matter and to stand, without presumption, in solidarity with the Black community and with all people seeking an end to racism and intolerance. The statement reaffirms the Section’s fundamental commitment to diversity, inclusion, and social justice, and names the Section’s commitment to redouble its efforts to eliminate systemic racism and to advocate for needed legal reforms through the power of business law, business lawyers, and business court judges.

    Business & Corporate

    Three Tips for International Online Dispute Resolution in the Age of COVID-19

    Ryan Abbott, Hiro Aragaki

    The COVID-19 pandemic has made online dispute resolution (ODR) a mainstream feature of appropriate or alternative dispute resolution (ADR). Historically, ODR tended to be used for cases where the cost of in-person meetings or hearings was impractical, or by parties enthusiastic about the use of technology. Now, with the limited ability to travel and hold in-person meetings, ODR has become a necessity.

    Business & Corporate

    Businesses’ Commitments and Contributions to Racial Justice and Equality

    Alan S. Gutterman

    Discrimination on the basis of race is a fundamental human rights issue. The UN Universal Declaration of Human Rights (UDHR) proclaims that all human beings are born free and equal in dignity and rights, and that everyone is entitled to all the rights and freedoms set out therein, without distinction of any kind, in particular as to race, color, or national origin. The preamble to the International Convention on the Elimination of All Forms of Racial Discrimination (ICERD), adopted by the UN General Assembly in 1965 and entered into force in 1969, includes a reaffirmation that discrimination among human beings on the grounds of race, color, or ethnic origin is capable of disturbing peace and security among peoples, and the harmony of persons living side by side even within one and the same state.

    Business & Corporate

    Pro Bono in a Pandemic

    Hon. Elizabeth S. Stong

    A whole lot has changed in the last seven months, but one thing that seems to remain constant is a common desire to do something—anything—to make a difference. Many lawyers, and all judges, are lucky enough still to have jobs and meaningful work, but we are surrounded by people who don’t. Many individuals and families in our communities that always expected to be able to pay their bills now find themselves unable to do so. Sometimes, those bills are the monthly rent. And sometimes landlords who no longer are able to collect the monthly rent are unable to pay their mortgage and real estate taxes, perhaps for the first time ever.

    Business & Corporate

    Networking Internally: Building Relationships While Working Remotely

    Carol Schiro Greenwald

    Does the following scenario sound familiar? You are relatively new to a law firm or in-house law department. Your entire interview process was conducted online. You really know nobody. How will you get to be friends with people you don’t see in the office every day? How will they get to know you? How will you succeed in a no-touch, keep-your-distance, no-water-cooler-meet-ups, work-from-home environment?

    Business & Corporate

    Fairness Gone Viral: Fair Lending Considerations for Financial Institutions Amid COVID-19

    Jonice Gray Tucker, Caroline M. Stapleton

    The COVID-19 pandemic has had a disproportionate impact on certain protected classes in the United States, including, in particular, minority populations. Non-white populations have seen higher hospitalization rates, more deaths, and higher unemployment numbers over the past six months as compared to their non-minority counterparts.[1] These and other pandemic-fueled disparities are layered on top of a long history of health, wealth, and education inequality for minorities. The synergistic impact of these two trend lines holds the potential to further deepen the economic divide, positioning minority communities to have decreased access to credit and potentially less favorable terms when such credit is extended. In addition, minority consumers may encounter greater loan servicing needs as they reach out to customer service personnel and seek solutions to address temporary or permanent hardship.

    Business & Corporate

    Protecting Workers When Reopening Small Businesses in the COVID-19 Pandemic

    Alan S. Gutterman

    Reopening a business during the pandemic is essential and inevitable, but it will certainly be a daunting process that will require consideration of how workers can be brought on board safely, how customer concerns will be addressed, and how everything can be done in a way that allows the company to survive financially.[1] Larger companies have been investing significant amounts of resources on designing and implementing their reopening plans; however, small businesses don’t have the same resources but still need to address all of the same challenges. In this article, we’re going to take a look at how recommended “big company” strategies can be retooled to meet the needs of your small business clients.

    Business & Corporate

    Insurtech Regulatory Developments in Latin America

    Thomas F. Morante, Yani R. Contreras

    Insurtech companies continue to expand their reach into the Latin America market, particularly in Brazil, Mexico, and Peru. Insurtech, defined as the combination of insurance and technology, develops and leverages new digital tools to optimize the insurance business. Latin America affords an attractive environment for insurtech companies to develop innovative business models including new distribution channels and systems to compare insurance products and provide services to insurance companies. The fact that the insurance industry in Latin America is highly regulated, combined with the absence of regulatory frameworks specific to insurtech, explains, in part, why insurtech has experienced slow growth to date, representing roughly only 6% of all start-up fintech companies in Latin America. Recognizing insurtech’s potential benefits, insurance regulators in Latin America have begun to explore how to facilitate modernization of the insurance sector through the use of new digital technologies without compromising consumer protection.

    Business & Corporate

    Defining Accurate Credit Reporting Under the CARES Act During the Pandemic

    Aaron Kouhoupt

    The credit reporting system is an integral part of the fabric of consumer credit in the United States. Credit scores, derived from data provided to credit reporting agencies, from creditors of all shapes and sizes, dictate whether a consumer can obtain credit and how much that credit will cost. As such, there is a need for the data furnished to be accurate and complete to ensure the integrity of the system. Enter a global pandemic due to the new coronavirus (“COVID-19”) with businesses shuttered around the country. People have been furloughed, laid off, or otherwise left jobless and unable to pay their bills, circumstances that threaten to cripple the US credit market.

    Business & Corporate

    Holy Minority, Batman, Can Equity Really Do That?

    Stuart L. Pachman

    Two business “partners,” whether coshareholders, LLC members, or operating in partnership form, are like spouses in a marriage. At some point, a large percentage of both unions which began in happiness end in acrimonious divorce. Each “partner” in both has a parental claim to the “baby.” Hence, who retains custody becomes a critical issue. Judges with equitable jurisdiction are asked to exercise their broad discretion with as much flexibility as warranted to fashion an appropriate remedy.[1] Equity’s power to fashion a remedy to fit the circumstances is not limited by the express authority granted to courts in statutes that authorize relief for minority oppression or provide other dissolution authority.[2] The Revised Uniform Limited Liability Company Act explicitly provides that it is supplemented by principles of equity.

    Business & Corporate

    LLC in Chapter 7 Bankruptcy Not Obligated to Remit State Taxes on Behalf of Out-of-State Members

    Thomas E. Rutledge, Jonathan M. Stemerman

    North Carolina has a statute providing that the manager of an LLC doing business in North Carolina must on behalf of out-of-state members remit to the state the estimated tax obligations of those out-of-state members. A recent decision from a bankruptcy court, In re North Carolina Tobacco International, LLC, Case No. 17-51077, 2020 WL 4582282 (Bankr. M.D.N.C. Aug. 10, 2020), considered whether an LLC in bankruptcy is obligated to make those tax payments. Spoiler alert—the court said “no.”

    Business & Corporate

    Employment Law Red Flags in the Use of Artificial Intelligence in Hiring

    Gary D. Friedman, Thomas McCarthy

    While the COVID-19 pandemic has had an effect on almost every aspect of employment, perhaps the biggest change for most employers (and the change that is most likely to have a lasting impact) is the transition of many employees to some form of remote work. Relatedly, many businesses have been forced to recruit and screen job applicants remotely, abandoning traditional in-person interviews and job assessments in favor of virtual meetings and online tools to measure, among other things, cognitive capabilities, emotional intelligence, personality traits, and skill sets. Even prior to the pandemic, many companies were beginning to migrate towards the use of artificial intelligence (“A.I.”) in screening applicants, in hopes that computers would speed up the hiring process, more accurately identify the right candidates for the position, and eliminate human bias and subjectivity in selecting candidates.

    Business & Corporate

    GPT-3: An AI That Makes Cars, Not Wrenches, and What It Means for the Legal Profession

    Rudy DeFelice

    One doesn’t have to dig too deep into legal organizations to find AI skeptics. AI is getting tremendous attention and significant venture capital, but AI tools frequently underwhelm in the trenches. Here are a few reasons why that is and why I believe GPT-3, a beta version of which was recently released by the OpenAI Foundation, might be a game-changer in legal and other knowledge-focused organizations.

    Business & Corporate

    Deal Certainty in the Netherlands Despite COVID-19

    Rebecca Runa Pinto-Noome, Marieke Faber

    The economic impact and uncertainties related to the spread of COVID-19 might put pressure on business agreements, especially M&A transactions nearing signing or closing. It comes as no surprise that actual and potential business repercussions of the COVID-19 pandemic have prompted parties to try to walk away from a deal that suddenly appears less appealing than before the pandemic. Aside from force majeure, the most commonly used argument to go back on existing deal terms has been unforeseen circumstances.

    Business & Corporate

    Securitizing the Notes of Needy Small Businesses and Workers

    Tamar Frankel

    Many small businesses, whether restaurants or small shops, are presently closed, and many of their employees are laid off. Currently, the government is lending money to small businesses and unemployed workers for their sustenance then collects the payments from some of the borrowers and the rest from taxes.[1] Given that not all, or perhaps only a few, small businesses own real estate, they sign notes to repay the loans but can offer no asset backing. Presumably, then, the nation’s financial deficit is growing.[2] The government adds the aggregate of the loans to the country’s costs and tax collection. However, even though support and politics might rub shoulders, they often harm each other.

    Month-In-Brief