SUMMARY

The Supreme Judicial Court (SJC) recently provided important guidance for determining whether a Massachusetts organization is properly classified as a nonprofit entity for exemption from local property tax.

SUMMARY

The Massachusetts Health Care Reform Law permits the state to assess an annual per-employee fee called the Fair Share Contribution (FSC) against non-contributing employers with 11 or more full-time equivalent employees. The fee can be as much as $295 per employee. To avoid the fee, the law requires an employer to offer a group health insurance plan and to make a “fair and reasonable” premium contribution towards that insurance.

SUMMARY

Foley Hoag LLP publishes this quarterly Update concerning developments in Product Liability and related law of interest to product manufacturers and sellers.

Included In This Update:

• Massachusetts Supreme Judicial Court Holds Motor Vehicles’ Failure to Comply with Applicable Safety Regulations Constitutes Injury For Purposes of Unfair or Deceptive Practices Statute Even Where Plaintiffs Suffer No Physical Injury or Financial Loss; Also Adopts Heightened Pleading Standards
• Massachusetts Federal District Court Remands Asbestos Failure-to-Warn Claims to State Court Where Affidavits Failed to Demonstrate Colorable Federal Contractor Defense
• Massachusetts Federal District Court Upholds Removal of Asbestos Failure-to-Warn Claims to Federal Court Under Federal Officer Removal Statute Because Defendant Established Colorable Military Contractor Defense
• Massachusetts Federal District Court in Tractor Back-Over Case Grants Summary Judgment Against Failure-to-Warn Claims Because Plaintiff Did Not Read Warnings, Grants Summary Judgment Against Punitive Damages Claims, Finds Genuine Issues of Fact Regarding Design Defect Claim
• First Circuit Enforces Contractual Provision Relieving Manufacturer in Commercial Case of Liability for Negligent Design, Manufacture and Advertising of Goods
• Massachusetts Federal District Court Holds Medical Journal’s Interest in Confidentiality of Peer Review Process Outweighs Defendant’s Need for Discovery of Communications Between Journal Editors and Authors

For more information about the Product Liability and Complex Tort Practice Group, please contact Dave Geiger.

SUMMARY

On August 7, 2008, Massachusetts Governor Deval Patrick signed the "Global Warming Solutions Act," which will impose the most stringent greenhouse gas (GHG) reduction requirements in the nation. The Act creates Chapter 21N, which mandates a reduction of GHG emissions of 10% to 25% below 1990 levels by 2020 and 80% below 1990 levels by 2050, with intermediate caps for 2030 and 2040. Although the details for implementing these caps will not be known until regulations are promulgated, the emission reductions required to meet these caps must be measurable and enforceable.

Whereas most existing GHG reduction programs in the United States focus on the electric generating sector, this Act empowers the Executive Office of Energy and Environmental Affairs (EEA) to regulate a wide variety of sources across the commonwealth, and sets in motion the regulatory process to enforce an economy-wide cap on GHGs. Failure to meet the required reductions can result in administrative civil penalties for violators as high as $25,000 per day.

SUMMARY

We recognize that many Massachusetts- and New England-based companies have employees in California, and therefore wanted to make you aware of a recent decision from California’s Supreme Court holding that noncompetition agreements are invalid under California law, even when they are carefully drafted to prohibit only certain competitive activity.

SUMMARY

In a notice published in the August 1, 2008 Federal Register, the United States Environmental Protection Agency (“EPA”) announced that it will begin following a new approach to applying its policy on Incentives for Self-Policing: Discovery, Disclosure, Correction and Prevention of Violations (65 Fed. Reg. 19618) (“Audit Policy”) to new owners that wish to make a “clean start” at newly acquired facilities. EPA will begin applying the Interim Approach to Applying the Audit Policy to New Owners (the “Interim Approach”) in order to encourage new owners to audit newly acquired facilities and to disclose, correct and prevent to recurrence of instances of environmental noncompliance.

SUMMARY

In a decision that will have far reaching implications for drug and medical device development, the Court of Appeals for the Federal Circuit held yesterday that the Hatch-Waxman safe harbor of 35 U.S.C. § 271(e)(1) is inapplicable to patented research tools that are not themselves subject to the FDA review process. While the decision is good news for the providers of research tools such as drug screening assays, it will make drug and medical device development in the United States costlier and more risky.

SUMMARY

In recent months, the Massachusetts Legislature has been considering legislation to limit or ban certain marketing activities of pharmaceutical and medical device companies. On the last day of the legislative session, July 31, the House and Senate voted to accept the conference committee report concerning health care cost containment legislation, (Senate 2863.) This legislation includes the provision regulating gifts by pharmaceutical and medical device manufacturers to physicians.

SUMMARY

Global Bio-Chem Technology Group Company Limited (GBT), a Chinese biotechnology company, has prevailed in a patent litigation brought by Ajinomoto Co., Inc in the International Trade Commission.

A Foley Hoag patent litigation team, including Claire Laporte, DeAnn Smith, and Jeremy Younkin, invalidated the asserted claims of two US patents. The Administrative Law Judge of the International Trade Commission also found both patents unenforceable because Ajinomoto committed inequitable conduct.

The decision represents an important victory for the Chinese biotechnology industry. Li Weigang, Assistant General Manager of GBT, said, "We are pleased that the Administrative Law Judge has determined there was no violation of Section 337. This ruling maintains continued competition in the marketplace, which will benefit American consumers during this time of rising food prices."

The Washington, DC firm Adduci, Mastriani & Schaumberg LLP are co-counsel with Foley Hoag LLP. 

The full Press Release is available here.

SUMMARY

The Office of Chief Counsel, Division of Investment Management of the Securities and Exchange Commission (the “SEC”) has issued an Interpretative Letter (the “Interpretative Letter”) dated July 15, 2008, clarifying its position concerning the applicability of Rule 206(4)-3 under the Investment Advisers Act of 1940 (the “Advisers Act”) in the context of a fund or other investment pool. In the Interpretative Letter, the SEC indicated that it believes Rule 206(4)-3 does not generally apply to a registered investment adviser’s cash payment to a person for soliciting or referring investors for an investment pool managed by that adviser since these investors are not “clients” of the investment adviser.

SUMMARY

Implementation of the Electronic System of Travel Authorization

The Department of Homeland Security (DHS) has announced the implementation of the Electronic System for Travel Authorization (ESTA), which will be used to apply for travel to the United States under the Visa Waiver Program (VWP). To apply for travel authorization to the United States, VWP travelers will access the ESTA web-based system and complete an application online. The application will consist of the biographical and eligibility information currently required on the I-94 paper form, and will be used to determine traveler eligibility and to assess any law enforcement and/or security risks posed by a VWP traveler. DHS is recommending that VWP travelers obtain an ESTA approval as soon as possible, and no later than 72 hours prior to departing to the United States. However, ESTA has been designed to accommodate last minute and emergency travel as well.

(continues)...

SUMMARY

U.S. Citizenship and Immigration Services (USCIS) has reinstituted Premium Processing on a limited basis for certain employment-based immigrant I-140 Preference Petitions. USCIS will accept Form 1-907, Request for Premium Processing Service, for I-140 Petitions filed for alien Beneficiaries who meet all of the following specific criteria: (continues ...)

SUMMARY

On July 15, 2008, the Securities and Exchange Commission (“SEC” or the “Commission”) issued an emergency order (the “Order”) to enhance investor protections against “naked” short selling in the securities of Fannie Mae, Freddie Mac and primary dealers at commercial and investment banks (the “Securities”), which are identified in Exhibit A (.pdf). The Order was issued pursuant to the Commission’s authority under Section 12(k)(2) of the Securities Exchange Act of 1934. In addition, the SEC will undertake rulemaking to address these issues across the entire market.

Under the Order, anyone effecting a short sale in the Securities must arrange beforehand to borrow the Securities and deliver them at settlement. The Order took effect at 12:01 a.m. ET on Monday, July 21, 2008 and will terminate at 11:59 p.m. ET on Tuesday, July 29, 2008. The SEC may extend the Order if the SEC determines that the continuation of the Order is necessary in the public interest and for the protection of investors, but not for more than 30 calendar days in total duration.

SUMMARY

The Securities and Exchange Commission (“SEC”), Financial Industry Regulatory Authority (“FINRA”) and New York Stock Exchange Regulation, Inc. (“NYSE Regulation”) have taken unprecedented steps in response to the concern that the stock collapse of Bear Stearns and Lehman Brothers resulted from the spread of false and misleading rumors, and that the rumors may have been linked to “naked” short selling.  

SUMMARY

Included in this Issue:

• A Market Perspective: Foster Hinshaw on 'B' Rounds - Opportunity in 'Gloom and Doom'

  In 2002, during the valley of the tech bubble burst, one of the most respected VC’s in the tech community said to me, "It’s all about survival, survival, survival – I don’t know if we will ever recover". Notwithstanding, the resiliency of our tech community proved its intrinsic value to the economy and there were some nice IPO’s and exits from companies that were incubating during the bubble years (including FAST, EqualLogic and Netezza). Today the news is similar: (a) zero IPOs in Q2 2008; (b) the financial sector is in a major, albeit predictably cyclical, reset; and worse (c) another 1970’s style energy crisis is on us. (continues...)

• Selected New England "Series B" and Later Round Transactions
• Terms of New England Series B and Later Rounds
• The Activity Level Summary

SUMMARY

Massachusetts substantially changed its energy portfolio programs on July 2, 2008, when Governor Deval Patrick signed into law the state’s long-awaited energy bill, the Green Communities Act (the “Act”). The changes include replacing the existing renewable energy portfolio standard (“RPS”) program with a two-tiered RPS program and creating a new alternative energy portfolio standards (“APS”) program to promote lower emission, non-renewable power generation technologies. The changes give the Department of Energy Resources (“DOER”) (formerly the “Division of Energy Resources”) additional influence over the development of renewable energy in Massachusetts and create new market opportunities for businesses in the energy technology and renewables sector.

SUMMARY

In recent months, the Massachusetts Legislature has been considering legislation to limit or ban certain marketing activities of pharmaceutical and medical device companies. In April 2008, the Massachusetts Senate approved a proposal that would significantly restrict pharmaceutical marketing to physicians and health care facilities. This proposal was subsequently revised by the Massachusetts House on July 16, 2008. The progress and outcome of this marketing legislation is of significant importance to anyone involved in the Massachusetts biotechnology, health care, and drug and device sectors.

SUMMARY

Three recent Massachusetts Supreme Judicial Court (“SJC”) decisions have clarified two areas of uncertainty relative to the Massachusetts Comprehensive Permit Statute, Mass. Gen. Laws Chapter 40B. The SJC has provided much-needed guidance as to (1) when municipalities can challenge Subsidized Housing Inventory (SHI) calculations, and (2) when developers are entitled to challenge comprehensive permit conditions. These decisions are of importance to anyone involved in the development, financing, or permitting of affordable housing projects in Massachusetts.

In two related cases decided on May 27, 2008, the SJC ruled that a municipality must exhaust its administrative remedies before bringing a court action contesting the Department of Housing and Community Development (DHCD)’s calculation of the municipality’s SHI. In the third case, decided on June 10, 2008, the SJC ruled that developers cannot successfully challenge conditions attached by local zoning boards to comprehensive permits unless they can demonstrate that those conditions render the proposed project uneconomic.

SUMMARY

In Kentucky Retirement Systems v. EEOC, the Supreme Court held that Kentucky’s pension and disability system did not discriminate against older workers in violation of the Age Discrimination in Employment Act (ADEA). Under Kentucky’s system, pension benefits are calculated based upon years of service. Employees are eligible for normal retirement benefits after 20 years of service or after the employee works 5 years and has reached the age of 55. The system also provides benefits to employees who become disabled before becoming eligible for normal retirement benefits. A disabled employee is treated as if he or she had 20 years of service or 5 years of service, if the employee is already 55 years old. The purpose of this rule is to treat disabled workers as if they are retirement eligible upon becoming disabled.

SUMMARY

Last week, the U.S. Supreme Court held in Metropolitan Life Insurance Co. v. Glenn, that a conflict of interest exists if an entity such as an employer or an insurance company evaluates claims for benefits under an employee benefit plan and also pays out those benefits from its own pocket. This conflict does not disqualify entities from occupying this dual role, however the dual role will be considered as a factor in determining whether the plan administrator abused its discretion in denying benefits. The decision is significant because it affects the plan administrator’s discretionary authority to determine eligibility for benefits and to construe the terms of the plan. Employers now need to worry about such a conflict whenever they make determinations about whether employees are eligible for benefits.