SUMMARY

Effective January 15, 2009, the United States Citizenship and Immigration Service (USCIS) will require federal contractors to use its E-Verify system. E-Verify is an automated system of verifying employees’ identity and authorization to work through the databases of both the Social Security Administration and the Department of Homeland Security. Enrollment will be required for most prime federal contracts with a period of performance longer than 120 days, a value above the simplified acquisition threshold ($100,000), and for work to be performed in the United States. This requirement also will apply to indefinite delivery or indefinite quantity contracts. The federal contractor and any covered subcontractors will need to enroll in E-Verify within 30 days of the contract award date.

SUMMARY

On November 17, 2008, the Massachusetts Department of Environmental Protection (“MassDEP”) announced a proposed new set of regulations to implement a statewide stormwater management program. Whereas current stormwater regulations focus on the operators of municipal stormwater systems and owners of certain construction and industrial sites, the proposed regulations would also enlist private property owners of impervious surfaces (roadways, parking lots, roofs, etc.) of five acres or more in stormwater management. These proposed rules are intended to reduce nonpoint sources of pollution, but will have significant effects on commercial property owners.

SUMMARY

We recently informed you that Massachusetts enacted comprehensive data security regulations relating to a 2007 data security law intended to protect Massachusetts residents from identity theft. A copy of the bulleting explaining the regulations can be found here. These regulations, which had been slated to take effect on January 1, 2009, will impose a significant compliance obligation on virtually all businesses with employees or customers in Massachusetts. In light of current economic conditions, the general deadline for compliance with Massachusetts’ data security regulations has been extended to May 1, 2009, while the deadline for obtaining written certification of security compliance from third party providers, and for encrypting portable devices other than laptops, has been extended to January 1, 2010.

Foley Hoag is holding a seminar at its Boston office regarding the law and its regulations on December 10, 2008, beginning at 7:30 a.m.  Click here for more information.

SUMMARY

Excerpt:

Q: Has the current economic crisis altered the regulatory environment? If so, how?

A: The current economic crisis has altered the regulatory environment in two important and related respects.

First, the law has changed. Congress enacted the Emergency Economic Stabilization Act of 2008 (“EESA”), which requires all federal financial regulatory agencies to cooperate with the Federal Bureau of Investigation (“FBI”) and all “other law enforcement agencies,” including state regulatory agencies, that are “investigating fraud, misrepresentation, and malfeasance with respect to development, advertising, and sale of financial products.” As a practical matter, this requires financial regulatory agencies, such as the Securities and Exchange Commission (“SEC”) and Financial Industry Regulatory Authority (“FINRA,” formerly the NYSE), to provide support to the FBI’s and state law enforcement’s criminal investigations of financial fraud. As a result of this broad mandate, more criminal investigations concerning the current economic crisis should be expected. The EESA also creates new civil liabilities (e.g., for misrepresenting or falsely advertising the insured status of bank deposits) and new disclosure obligations (e.g., for those financial institutions participating in the Troubled Asset Relief Program (“TARP”)).

Second, the climate has also changed. The public desire to assign blame for the financial crisis and the attendant political pressure to prosecute entities or individuals who may be responsible will likely lead to more vigorous enforcement of familiar criminal laws and financial regulations, such as prohibitions on securities fraud and insider trading as well as wire, mail, bank and bankruptcy fraud. In addition, pending investigations may lead to high-profile prosecutions that press novel theories under more general laws, such as New York’s Martin Act. For example, New York Attorney General Andrew Cuomo is currently investigating executive compensation and corporate spending at major financial institutions that have received federal bailout funds, and he has threatened to “seek appropriate sanctions and remedies” against any company that “wastes” taxpayer funds—for example, by deeming employee bonuses to be fraudulent conveyances in violation of New York law. Massachusetts Secretary of State William Galvin has already charged investment banks with violating state securities laws by defrauding investors who purchased collateralized debt obligations and auction rate securities.

Other questions include: 

• Which government agencies are investigating activities relevant to the current economic crisis? And who is under investigation?
• What types of activities will investigators be looking at? Can you give some examples?
• What steps should we take if our company receives the proverbial “knock on the door”?
• Our best client/joint venture partner is under investigation. What steps should our company take?

SUMMARY

We know that the recent financial crisis and related economic downturn unfortunately are causing many employers to consider ways to reduce operational expenses, including through workforce restructuring and layoffs. We offer a few preliminary considerations: any such reduction-in-force (RIF) must be carefully planned and executed both to minimize exposure to liability under various employment laws and to mitigate negative effects on employee morale and operations. The following are some issues for employers to consider as they grapple with whether and how to implement a layoff.

Questions Include:

• Is a Layoff Necessary?
• Voluntary or Involuntary Program?
• Develop Uniform Selection Criteria
• Conduct a Layoff Analysis
• Is Advance Notice Required
• Severance and ERISA
• Asking for a Release
• Don't Forget Immigration Implications
• Don't Lose Sight of Termination Basics

SUMMARY

Excerpt:

Q: Has the situation on Wall Street made the current climate untenable for companies seeking funding?

A: No. While the threshold may be higher and funding sources more difficult to identify, they are still available. It depends on the company, its industry, its business model, its overall health and its operations. Creative companies will look for ways to raise capital in unconventional ways, or to make existing resources stretch longer than originally planned. But it is definitely an investor friendly environment, in which the lenders and venture capitalists who have money to put to work can be more selective and more demanding about the prices and other terms they can extract from issuers.

Other questions include:

• What are the industries likely to maintain their health and the activity during this time? Where do you see deals happening?
• What about debt financing? I heard that debt markets were completely closed.
• How is the crisis affecting due diligence? What should I expect to encounter?
• Where do IP assets fit into today’s dealmaking climate?
• I read that M&A is very slow. Is that true?

SUMMARY

The opportunity to purchase new .tel top-level domains (TLDs) is just around the corner, and trademark owners will have the first bite at the apple. During the “sunrise period” of December 3, 2008 to February 2, 2009, trademark owners will get a head start preferential period to apply for and register .tel domain names incorporating their valuable trademarks. After this period, registration opens to the general public.

SUMMARY

On October 31, 2008, the Department of Energy Resources (“DOER”) issued its Imports Feasibility Study (the “Report”), finding that it is not feasible to implement a capacity commitment or netting requirement for generators seeking renewable energy credits (“RECs”) in Massachusetts for energy imported into ISO-NE. The Report is mandated by subsection 105(g) of the Green Communities Act (the “Act”), which directs DOER to determine the feasibility of implementing two subsections, 105(c) and 105(e), governing the eligibility for RECs for energy imported from outside the ISO-NE control area. Subsection 105(c) would have required an importer to commit its capacity to the Forward Capacity Market (the “FCM”). Where an entity has generation assets both inside and outside ISO-NE, subsection 105(e) would have netted the entity’s energy exports against renewable energy imports when calculating the number of RECs that may be sought. Although the Report concluded that both provisions are not feasible to implement as drafted, it proposed a series of recommendations designed to capture what DOER believes is the policy behind those subsections. Those recommendations may appear as part of DOER’s new regulations governing renewable portfolio standards (“RPS”), due to be promulgated by January 1, 2009. Although the contours of those regulations are unknown, the Report’s proposals indicate potential new business opportunities and regulatory risks for renewable energy generators.

SUMMARY

Last week, in In re Bilski, No. 2007-1130, the United States Court of Appeals for the Federal Circuit, sitting en banc, articulated the test for whether a process is eligible for patent protection under section 101 of the Patent Act, 35 U.S.C. § 101. The majority opinion, joined by nine of the court’s twelve judges, relies heavily on decades-old Supreme Court precedent and rejects other tests, including State Street Bank’s “useful, concrete, and tangible result” inquiry. Although this case has been closely watched as a “business methods” patent case, the decision has profound implications for protecting inventions in life sciences. At the same time, it leaves open many questions that ultimately will determine the scope of section 101. The debate over what is patent-eligible subject matter has just begun.

SUMMARY

On Wednesday, October 22, 2008, the Federal Trade Commission issued an Enforcement Policy Statement that it will delay some elements of enforcement of recent “Red Flags” regulations until May 1, 2009, instead of the original November 1, 2008 date.

SUMMARY

Chapter 151B, the Massachusetts anti-discrimination statute, does not apply to small employers, meaning those with fewer than six employees. However, last Friday, the Massachusetts Supreme Judicial Court (“SJC”) held that an employee may nonetheless sue a small employer for discrimination under the Massachusetts Equal Rights Act. The decision has potential ramifications for all employers -- large or small -- because it suggests that a plaintiff has a claim for discrimination under the Massachusetts Equal Rights Act whenever Chapter 151B does not apply, such as discrimination claims brought by non-employees.

SUMMARY

Personalized medicine – getting the right treatment to the right patient at the right time – will be a major pillar of efforts to bring increased effectiveness and efficiency to healthcare. Today, we know far more about the molecular heterogeneity of major diseases, including cancer. It is clear that targeted and more effective medical treatments will often be unattainable unless physicians have precise molecular information about the patient’s disease. In short, is a priority that our healthcare system (both private payors and Medicare) facilitates the adoption of new molecular technologies when they are shown to be efficient and effective.

SUMMARY

Included in this Issue:

• A Market Perspective
  
• Selected New England "Series A" Round Transactions
  Commentary from Bruce Kinn
  
• Terms of Selected New England Series A Rounds 2008
  Commentary from Mark Haddad
  
• The Activity Level Summary: New England Series A and First Round Transactions by Industry
  
• Size of New England 2008 Year to Date Series A and First Round Transactions by Industry
  Commentary from Paul Sweeney

SUMMARY

Last year, in the wake of the TJ Maxx data security breach, Massachusetts enacted a data security law intended to protect residents from identity theft. The law provides that businesses must provide prompt notice of security breaches relating to personal information. “Personal information” means a person’s name together with either his or her Social Security Number, driver’s license number, state identification number, financial account number, credit card number or debit card number. Because all employers hold their employees’ Social Security numbers, the law applies to all employers in Massachusetts, not just those businesses that collect customer information, such as retailers. 

SUMMARY

In light of the turmoil currently affecting the world securities markets, on Thursday, October 16, 2008, NASDAQ announced that it has temporarily suspended enforcement of its rules requiring listed companies to maintain a minimum bid price of $1.00 and a specified minimum market value of publicly held shares. The suspension applies to shares of common stock, as well as other securities, including preferred stock, American Depository Receipts and limited partnership interests... (continues)

SUMMARY

On October 15, 2008, the Securities and Exchange Commission (“SEC” or the “Commission”) adopted an interim temporary final rule (.pdf) (the “Interim Rule” or “Rule 10a-3T) requiring institutional investment managers (those required to file Form 13F) to report information concerning daily short sales of securities. The previous emergency order regarding the filing requirements was due to terminate on October 17, 2008. The Interim Rule will take effect beginning October 18, 2008 and extend until August 1, 2009 unless it is terminated or extended... (continues)

SUMMARY

As soon as January 1, 2009, new construction or gut renovation of a healthcare facility in Massachusetts may need to meet green building standards.

On September 24, 2008, the Massachusetts Department of Public Health ("DPH") approved new guidelines (the "Guidelines") that incorporate the Leadership in Energy and Environmental Design-Health Care ("LEED-HC") and Green Guide for Health Care ("GGHC") green building standards into the Determination of Need ("DoN") process. The Guidelines will apply to all DoN applications filed on or after January 1, 2009 (for hospitals and clinics) or July 1, 2009 (for nursing homes). [continues...]

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 Federal District Court Grants Summary Judgment Against Failure-to-Warn Claim Involving Wall Heater Because Danger was Open and Obvious, and Against Design Defect Claim for Lack of Expert Testimony

• Massachusetts Federal District Court Remands Pharmaceutical Failure-to-Warn Claim to State Court, Holding Defendant’s Argument that Claim Challenged FDA’s Authority to Approve Warning Raised Preemption Defense Rather than Demonstrated that Claim Arises Under Federal Law

• Massachusetts Appeals Court Holds Employer’s Corporate Parent Cannot Be Held Vicariously Liable for Employer’s Allegedly Negligent Conduct Toward Employee Under Respondeat Superior Theory Where Suit Against Employer was Dismissed With Prejudice

• Massachusetts Appeals Court Reverses Judgment for Plaintiff on Chapter 93A Claims Based on Inadequate Notice Where Trial Court Did Not Construe Complaint to Allege Chapter 93A Claims Until First Day of Trial

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

SUMMARY

Borrowers Need to Monitor Whether to Elect Prime Rate rather than LIBOR under Credit Facilities

U.S. Companies that borrow under bank credit facilities that provide for the borrower to elect payment of interest at either a LIBOR-based rate (sometimes called a "Eurodollar" loan) or a Prime Rate-based rate (sometimes called a "Base Rate" loan) need to be aware of a significant development resulting from the recent turmoil in the world’s credit markets...

SUMMARY

Last week, the Massachusetts Division of Health Care Finance & Policy issued new regulations defining what is “a fair and reasonable” contribution by an employer towards health insurance under the Massachusetts Health Care Reform Law. Under that law, the state is permitted 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. The new regulations make this test more stringent in order to increase the number of employers who are subject to the FSC.