Yesterday, the U.S. Supreme Court issued an 8-0 decision in TC Heartland LLC v. Kraft Foods Group Brands LLC that should put an end to “patent trolls” filing lawsuits in “friendly” venues of their choosing.
Patent trolls are individuals and companies that profit from suing over patents, instead of using their patents to make products. Trolls consistently file lawsuits in the most plaintiff/troll-friendly courts they can find, such as the rural Eastern District of Texas. The Supreme Court’s decision could save the companies targeted by patent trolls millions of dollars per year in fees spent litigating patent disputes in jurisdictions that are far away from where those companies are headquartered or incorporated.
In rendering its decision, the Supreme Court construed the word “resides” in 28 U.S.C. § 1400(b), the venue statute for patent lawsuits, to require plaintiffs to file patent claims in the state where the defendant is incorporated. Before Kraft, patent trolls were able to file lawsuits wherever the defendant could be subject to personal jurisdiction, which effectively allowed trolls to subject companies to the jurisdiction of courts in states where they merely sold a minimal number of products.
Now that patent trolls are required to sue companies in less friendly jurisdictions, oftentimes where the companies are located and their employees live, they may think twice before filing a lawsuit.
Earlier this week, the US Supreme Court again invoked the federal policy of enforcing arbitration agreements. The Court reversed a Kentucky state court opinion holding that an arbitration agreement is unenforceable if it is signed by an individual with power of attorney, unless the power of attorney expressly authorizes waiver of the right to a jury trial.
In Kindred Nursing Centers LP v. Clark, two individuals who had power of attorney for their elderly relatives signed paperwork to move the relatives into a nursing home. The paperwork included an agreement to arbitrate any disputes. When the relatives later sued claiming substandard care, the nursing home moved to dismiss, citing the arbitration clause. The Kentucky Supreme Court observed that the state constitution declares the right of access to the court and trial by jury to be “sacred” and “inviolate.” On that basis, the Kentucky court held that an agent – in this case, a person with a power of attorney – cannot deprive her principal of such rights unless it is expressly so provided in the power of attorney.
On review, Justice Kagan, writing for the majority, stated that the Federal Arbitration Act (FAA) requires courts to place arbitration agreements on an equal footing with all other contracts. Regardless of whether access to court and right to trial by jury are given special status by the state constitution, the Kentucky court’s ruling would impermissibly put arbitration agreements on a different footing than other contracts entered into pursuant to a power of attorney. On that basis, the lower court’s holding was reversed.
The Defend Trade Secrets Act (DTSA) provides an important tool for protecting trade secrets from misappropriation by affording owners a federal right of action for misappropriation of trade secrets related to a product or service used, or intended for use in interstate or foreign commerce. The DTSA provides a variety of remedies that track those available under state uniform trade secret statutes, such as actual damages, damages for unjust enrichment, royalties, injunctive and exemplary relief, and attorney fees.
However, the DTSA differs from uniform state laws in some significant respects. The DTSA provides, in extraordinary circumstances, for the ex parte seizure of property to prevent the propagation or dissemination of the trade secret. The DTSA further expands trade secret protection by enabling trade secret owners to seek nationwide relief, without preempting state law remedies. Another significant feature of the DTSA is the immunity from criminal and civil liability it provides to whistleblowers who comply with the Act's reporting provisions.
Employers are required to notify employees and contractors who are subject to confidentiality agreements of the DTSA's immunity provisions. An employer may comply by including the notice in the confidentiality agreement, or by including a cross-reference to a policy document provided to the employee that sets forth the employer's reporting policy for suspected violations of the law. An employer that fails to comply with the notice requirement may not be awarded exemplary damages or attorney fees in an action under the DTSA. The statute applies to contracts governing confidentiality entered into on or after May 11, 2016.
Confidentiality provisions are commonly included in employment and independent contractor agreements, confidentiality/proprietary rights agreements, noncompete and nonsolicitation agreements, and in separation/release agreements, among other employment documents. Employers who have written contracts with employees or contractors entered into on or after May 11, 2016, containing confidentiality obligations should consider adding the DTSA disclosure and perhaps also reviewing their handbook.
Employers may contact Ater Wynne's employment group for assistance with DTSA compliance.
We recently reported on BOLI 's new guidance overturning its long-standing interpretation of ORS 652.020, Oregon's overtime rule applicable to manufacturing establishments. The Oregon Legislature has now weighed in on this issue.
Under ORS 652.020, nonexempt employees working in mills, factories, and manufacturing establishments must be paid overtime for hours worked in excess of 10 in any day and hours worked in excess of 40 per week. BOLI's prior interpretation of that rule required employers to calculate overtime hours worked on both a daily and weekly basis and pay the greater of the two. Under the new guidance, employers are required to pay both daily and weekly overtime.
The revised BOLI guidance has raised many questions. Not only has BOLI done an about-face, the timing of the new guidance is puzzling as the interpretation of the manufacturing overtime rule is the subject of a pending class action filed in Multnomah County Circuit Court, which is likely to resolve the issue.
In an attempt to address the uncertainty created by the new guidance in the manufacturing sector, the Oregon Legislature introduced a bill last Thursday to put the issue to rest. Under SB 984, manufacturers would only be required to pay the greater of the daily or weekly overtime.
Ater Wynne's employment group is available to answer questions regarding the application of the manufacturing overtime rule and other wage and hour concerns.
On January 30, 2017, the House Judiciary Committee received two bills that could have a significant impact on litigators and their clients. One bill seeks to impose mandatory penalties on lawyers, law firms, and parties who file frivolous lawsuits. The other bill seeks to prevent fraudulent joinder of parties and prevent plaintiffs from adding defendants solely for the purpose of destroying federal jurisdiction, only to drop those defendants later.
The Lawsuit Abuse and Reduction Act, H.R. 720, would amend FRCP 11 to require judges to sanction attorneys, law firms, or parties who file frivolous pleadings. The mandatory sanction under the new rule would require parties to pay costs and attorneys’ fees. The rule would also give the court broad discretion to impose a variety of other sanctions, including striking pleadings, dismissing the lawsuit, and requiring that a party pay a penalty to the court. Further, the amendment would eliminate a party’s ability to avoid sanctions by voluntarily withdrawing claims within 21 days. The House Judiciary Committee already voted 17-6 in favor of H.R. 720. If it is passed, it will likely cause a substantial decrease in lawyers asserting frivolous claims, as they will have to consider the possibility of mandatory sanctions.
The Innocent Party Protection Act, H.R. 725, seeks to prevent small businesses from being subject to fraudulent joinder. The bill seeks to protect these small businesses by allowing judges more discretion to see through an attorneys’ motives for naming a party and dismiss a party that was fraudulently joined in a lawsuit. The House Judiciary Committee already voted 17-4 in favor of H.R. 725. If it is passed, it may help protect small businesses from the hardship caused by paying attorneys’ fees in a lawsuit in which the business should have never been involved in the first place.
President Trump signed an Executive Order on January 27th banning entry into the United States by people from seven Muslim-majority countries. Other Executive Orders, including one affecting temporary visas, have been drafted by the new administration. In light of that information, it is even more important to get an early start on applications.
Unless changes are announced, the United States Citizenship and Immigration Service ("USCIS") will begin accepting new H-1B petitions starting April 1, 2017, for employment commencing on October 1, 2017.
In past years, only 85,000 H-1B visas were available annually, and historically there has been very high demand for these visas. Businesses considering employment of foreign workers in need of an H-1B visa,should file their H-1B petitions no later than April 1, 2017 to avoid a potential shortage.
Federal legislators have renewed steps to repeal -- or at least undermine -- the prevailing wage requirements under the Davis-Bacon Act, which mandates payment of prevailing wages and benefits to workers employed under federally-funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works.
U.S. Senator Jeff Flake (R-Ariz.) recently introduced the Transportation Investment Calibration to Equality (TIRE) Act, which would eliminate prevailing wage requirements under the Davis-Bacon Act on all federal highway construction contracts. In addition, U.S. Senator Mike Lee (R-Utah) introduced a bill to repeal all prevailing wage requirements under the Davis-Bacon Act (S. 244), and Representative Steve King (R-Iowa) re-introduced a companion bill in the House (H. 743), entitled the "Davis-Bacon Repeal Act."
Federal law also requires federal contractors who provide certain services and manufactured goods to the Federal Government to pay prevailing wages under the McNamara-O'Hara Service Contract Act and the Walsh-Healey Public Contracts Act, respectively. Although previous steps to repeal these laws failed (see., e.g., S. 1229 (1993), co-sponsored by Senator John McCain (R-Ariz.)), it seems likely that repeal efforts will be renewed under the current administration.
Already complex prevailing wage requirements were expanded under the Obama administration. Mistakes can be expensive and result in debarment. Federal contractors are, therefore, well-advised to stay informed and comply with their obligations. Ater Wynne's labor and employment attorneys can provide assistance with your wage and hour questions.
In January, BOLI issued new guidance expanding the scope of overtime compensation owed to nonexempt employees who work in mills, factories, or manufacturing establishments. The new guidance reverses BOLI's long-standing interpretation on this issue.
Under Oregon law, most nonexempt employees who work in mills, factories, and manufacturing establishments must be paid overtime for hours worked in excess of 10 in any day and hours worked in excess of 40 per week. ORS 652.020; ORS 653.261. Until recently, BOLI advised manufacturers that "when employees who are entitled to daily overtime have worked more than 40 hours in the workweek and have also exceeded the maximum number of hours on one or more days, thereby earning daily overtime, the employer should calculate overtime hours worked on both the daily and weekly bases and pay the greater amount." However, under the new guidance, BOLI states that covered employers must pay daily and weekly overtime compensation because "[t]he two statutes enact distinct overtime requirements and serve different purposes with respect to restrictions on hours worked by employees."
For example, if a manufacturing establishment employee works three daily overtime hours and one weekly overtime hour, under BOLI's previous interpretation of the overtime statutes, the employee should receive three hours of overtime compensation. Under BOLI's new interpretation, the employee should receive four hours of overtime compensation. Additional examples and information are available on BOLI's Technical Assistance website.
BOLI does not explain the reason for this sudden about-face, which is bound to catch many employers unaware. In addition, the interpretation of the manufacturing overtime rule is currently being considered in a pending class action. In light of these events, manufacturing companies in Oregon are well-advised to review their overtime practices with counsel. Ater Wynne's employment group is available to assist with any questions on BOLI's new guidance.
Today, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction blocking the U.S. Department of Labor ("DOL") from implementing its latest revisions to the Fair Labor Standards Act ("FLSA").
In March 2014, President Obama issued a memorandum directing the Secretary of Labor to "modernize and streamline" the existing overtime regulations for executive, administrative, and professional employees. On May 23, 2016, the DOL published the Final Rule, increasing the salary level required to qualify for "white collar" overtime exemptions from $23,660 ($455 per week) to $47,476 ($913 per week). Additionally, the Final Rule increased the total annual compensation requirement for "highly compensated employees" from $100,000 to $134,000. The Final Rule was to take effect on December 1, 2016, with a mechanism for automatically updating the salary and compensation levels every three years.
A coalition of 21 states and more than 50 business organizations challenged the DOL's Final Rule in federal court, arguing that the Obama administration overstepped its authority. The court ultimately concluded that the states established a prima facie case that the DOL's salary level under the Final Rule and the automatic updating mechanism are without statutory authority and issued a nationwide preliminary injunction.
In June of this year, we reported that a judge in Texas issued a nationwide preliminary injunction blocking enforcement of the Department of Labor's controversial Persuader Rule, which would have required disclosures by any consultant -- including a company's attorney -- who engaged in activities for the purpose of directly or indirectly persuading employees in connection with their right to union representation. In a November 16 order, Judge Sam Cummings made the earlier injunction permanent, with nationwide effect. Judge Cummings' order notes that his preliminary injunction is currently on appeal to the U.S. Court of Appeals for the Fifth Circuit.
Given the upcoming change to a Republican administration, it seems unlikely that the Persuader Rule will be revived.
Our prior report on the Persuader Rule is available here.