BLT: February 2021

 

Featured Articles

Business & Corporate

When COVID Met MAE in the Ordinary Course of Business: Canadian and US Courts Take Different Approaches

Since the outbreak of the COVID-19 pandemic, there has been a wave of cases in Canada and the United States where buyers have sought to walk away from an acquisition.[1] In justifying their decision not to close, buyers have invoked material adverse effect (“MAE”) clauses and covenants to carry on business in the ordinary course. The recent decision of the Ontario Superior Court of Justice in Fairstone Financial Holdings Inc. v. Duo Bank of Canada has established an important Canadian precedent for the interpretation of these commonly-found provisions in M&A transaction agreements.

Business & Corporate

Massive Defense Bill Includes Broad SEC Disgorgement Authority and Anti-Money Laundering Provisions: A Recommendation for Treasury Secretary Janet Yellen

Buried in the $740.5 billion National Defense Authorization Act for 2021[1] (“NDAA”) are numerous provisions that affect financial services law. Although the news media directed most of their coverage to Congress’s override of President Trump’s veto of the massive bill[2], this article discusses a few of the provisions that should be of interest to the financial services bar.

Business & Corporate

Recent Case Law and the Newly Enacted Amendments to the Bankruptcy Code May Enable Your Commercial Client to Get Much Needed Rent Relief

The COVID-19 pandemic has been a global shock to businesses everywhere. Uncertainty about its path, duration and magnitude has wreaked havoc on many of our commercial clients. The associated government-mandated shutdown orders have drastically impacted businesses’ ability to make timely rental payments.

Business & Corporate

Lease Defaults and Restructuring: The Impact of Bankruptcy on Commercial Landlords and Tenants

The COVID-19 pandemic has wreaked havoc on the commercial real estate industry for the last year. For commercial tenants, customers are scarce, demand for goods and services has dried up, and supply chains have been severely disrupted. Additionally, many jurisdictions have implemented (and later re-implemented) restrictive measures, such as “stay at home” orders, leading to the widespread closure or limitation of nonessential businesses. Although COVID-19 vaccines have been approved and have begun to be distributed, the distribution process has been very slow. Accordingly, there is no clear timeline by which businesses can “return to normal.”

Business & Corporate

COVID-19, Governmental Insolvencies, and Malfunctioning Chapter 9

State and local governments must spend increasing amounts to save their citizens’ health and welfare through emergency treatment, testing, tracking, and unemployment insurance. The COVID-19 lock down cut retail sales, road tolls, and mass transit fares dramatically and immediately, putting budgets under immediate pressure. The Center on Budget Priorities estimated that state budget shortfalls will total $615 billion for the fiscal year ending (for most states) on June 30, 2020. Finally, a decrease in interest rates will increase pension plan liabilities (and annual funding requirements) for states with already challenged pension plans.

Business & Corporate

U.S. Supreme Court Hears Oral Argument in the TCPA “Autodialer” Case

On December 8, 2020, the U.S. Supreme Court heard oral arguments in Facebook, Inc. v. Duguid, a case that should establish a nationwide standard for the “autodialer” definition adopted by the Telephone Consumer Protection Act (TCPA). The Court must resolve a split among federal appellate courts regarding that definition. While predicting the outcome of Supreme Court decisions based on oral argument is a risky venture, the likelihood of a decision in Facebook’s favor, with a narrower “autodialer” interpretation, seems greater than a decision supporting Duguid.

Business & Corporate

Ten Key FCRA Decisions of 2020

The year 2020 was an unprecedented year, but one thing remained constant: the number of Fair Credit Reporting Act (FCRA) case filings continued to increase dramatically.[1] In addition to new filings, the year saw several key decisions handed down by federal courts, shedding light on diverse issues such as the matching procedures of credit reporting agencies (CRAs), Article III standing, the meaning of “maximum possible accuracy,” and preemption of state credit reporting laws.

Business & Corporate

Filing Patent Lawsuits as an Anonymous Plaintiff in the N.D. Ill.—Is it Possible?

On September 4, 2020, in ABC Corporation I, et al. v. The Partnerships and Unincorporated Associations Identified on Schedule “A,” the U.S. District Court for the Northern District of Illinois held that plaintiffs could not conceal their identities in patent infringement suits by filing suit under pseudonyms. The plaintiffs had filed using pseudonyms to avoid tipping off the defendants and giving them the opportunity to reorganize under new seller aliases and to evade prosecution.

Business & Corporate

It’s the End of Corporate Law as We Know It (and I Feel Fine)*

For decades, even centuries, whether in law, accounting, or economics, we have been led to believe that shareowners own corporations, that shareowners are beneficial owners of the corporation, that shareowners are residual claimants, that directors are the agents of shareowners, and that directors are trustees of shareowners. But where is the evidence or legal argument that supports those beliefs? There is none. The evidence and legal arguments in fact prove the opposite. Shareowners do not own corporations. Shareowners are not beneficial owners. Shareowners are not residual claimants. Directors are not agents of shareowners. And directors are not trustees of shareowners.

Business & Corporate

Evolving Relationship of Business and Human Rights

Recognized international human rights have traditionally been framed in terms of the duties and obligations of states under treaties and other instruments and elements of international human rights law.[1] The main concern of human rights activists has generally been vertical protection, which refers to ensuring that individuals and groups get protection and required services and resources from the state. In the past, relatively little or no attention was paid to businesses’ responsibility for human rights.

Business & Corporate

The Corporate Transparency Act: Augmented Federal Anti-Money Laundering Legislation Brings New Reporting Requirements of Company Ownership

New anti-money laundering legislation was included as part of the National Defense Authorization Act (NDAA) enacted by Congress on January 1, 2021, through the override of a presidential veto. The NDAA is a series of federal laws primarily specifying the annual budget and expenditures of the United States Department of Defense.

Business & Corporate

Historic Biometric Privacy Suit Settles for $650 Million

One of the biggest legal stories of 2020 barely made any headlines because, understandably, reporting on the COVID-19 pandemic and the presidential election dominated the news cycle. Mainstream attention on data privacy focused largely on the implementation and subsequent referendum expanding the California Consumer Privacy Act (“CCPA”), while the Schrems II invalidation of the GDPR Privacy Shield framework also gained widespread attention.

Business & Corporate

The GDPR Two Years On

On May 25, 2018, the European Union’s General Data Protection Regulation (GDPR)1 came into effect, replacing the EU’s 1995 Data Protection Directive.2 With the aim of modernizing and harmonizing the patchwork of laws across the European Union, the GDPR strengthened the protection afforded to data that identify individuals under the Data Protection Directive and clarified a number of key principles. Most notably, the GDPR extended the territorial reach of European data privacy law to organizations outside of the EU.

Business & Corporate

AI Law Could Drive the Biden Legacy

For the future of the interconnectivity of business and cybersecurity, it is imperative that the Biden administration make international cooperation in the regulation of artificial intelligence a key component of the United States’ reentry into international cooperation and leadership. The Biden administration is expected to take a cooperative tone on international matters, and it is critical that the administration look at the areas where international model rules are needed for the protection of countries and individuals as well as the technology being created to service each.

Business & Corporate

Sports Betting and Data Security: Cybersecurity, Data Protection, and Privacy Rights in Gaming Law Practice

At the ABA Business Law Section’s annual meeting in Spring 2020, which went virtual for the first time due to the pandemic, the Section’s Gaming Law Committee took up the issue of sports betting and data security as a key emerging area that intersects with numerous other areas of law practice, including contracts, commercial transactions, securities regulation, business entity issues, tribal-state compacting, and intellectual property.

Business & Corporate

Recent Guidance on Relationships with Other Lawyers and Personal Interest Conflicts

A recent[1] ABA ethics opinion addresses conflicts arising out of a lawyer’s personal relationship with opposing counsel under Rule 1.7(a)(2) of the Model Rules of Professional Conduct. That Rule prohibits a lawyer from representing a client without informed consent if there is a significant risk that the representation of the client will be materially limited either by a lawyer’s responsibilities to others (another client, a former client, a third person) or by a personal interest of the lawyer.

Business & Corporate

SEC Disgorgement Authority May Be Limited Even After Recent Amendments to the Exchange Act

On January 1, 2021, Congress overrode the presidential veto of the National Defense Authorization Act for Fiscal Year 2021 (NDAA).[1] While the new law dealt mostly with national security, it also included a provision that substantially amended the SEC’s remedial powers, expressly authorizing the SEC to obtain disgorgement in federal court and doubling the statute of limitations for some types of relief. Early reactions to the amendments have viewed them as attempting to overturn the Supreme Court’s recent decisions in Kokesh v. SEC[2] and Liu v. SEC[3] that had curtailed the SEC’s remedial powers.

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