White Plains, NY

Insurers and business interests in New York were relieved to hear earlier this week that Governor Hochul had finally vetoed the Grieving Families Act (GFA), which, if signed, would have greatly increased allowable damages in wrongful death cases and the class of persons who could recover for them.

The Supreme Court of the United States will decide whether Andy Warhol’s use of Lynn Goldsmith’s photograph of singer-songwriter Prince Rogers Nelson (Prince) in his silkscreen Prince Series was transformative and therefore not an infringement on Goldsmith’s copyright. More sinister potential implications of the High Court’s decision are (1) who should decide on the merits and meaning of works of art, and (2) what prior restraints on artistic speech are the courts now comfortable with?

New York’s Comprehensive Insurance Disclosure Act (CIDA), which is now in effect, significantly amends CPLR §3101(f) and adds CPLR §3122-b, and requires defendants in civil litigation to disclose extensive information regarding their insurance coverage within 90 days of filing an Answer in all cases commenced after December 31, 2021.

The Marijuana Regulation and Taxation Act effectively requires employers to engage in a wholesale reassessment of their current policies around use and testing, codifies certain judicial holdings around medical use, and folds New York’s medical use law, the Compassionate Care Act, into the auspices of the Office of Cannabis Management governed by the Cannabis Control Board.

The Arizona Supreme Court held that unless a bar takes proactive steps to separate an intoxicated individual from their vehicle and/or finds them a safe ride home, the bar can be found liable, even if the intoxicated individual safely arrived home or at a similar resting place, and then decided to leave.

A recent Third Circuit decision examined the scope of the “any law pertaining to intellectual property” carveout to the immunity granted to internet platforms under the Communications Decency Act (CDA), ultimately choosing to significantly expand it to include the “nontraditional” intellectual property laws, including the right of publicity. In a previous decision addressing the same subject, the Ninth Circuit expressed concern that the interpretation that the Third Circuit now advanced will cause great uncertainty for the platforms and open the floodgates to litigation.

In accordance with the California Consumer Privacy Act and associated regulations, businesses that collect personal information from a consumer must provide notice at the time of collection. Recent enforcement actions by the California Attorney General illustrate this point and remind businesses of the importance of apprising consumers online and offline of their privacy policies.

Read the article in The Practical Lawyer.

This comparative law survey provides a comparison by state and the District of Columbia of regulations enacted to protect health care workers from liability, modify licensing requirements for health care providers and facilities, and/or extend the statute of limitations as states grapple with the social health care impact of the COVID-19 pandemic.

The information is accurate as of July 9, 2021.

If signed into law by New York Governor Andrew Cuomo, a bill recently passed by the New York State Senate would immediately strip nursing homes, hospitals and other providers of protection from civil liability for negligent acts or omissions committed during the COVID-19 crisis. That would mean COVID-19-related claims against health care providers would be litigated as typical malpractice cases.

The New York Department of Health opened the application process for cannabinoid hemp retailers and processors, building on the groundwork for the country’s most-regulated hemp program. Then, Governor Cuomo announced 30-day amendments to his adult-use legislation, indicating he is willing to work with the state Legislature, which has been pushing for defined social justice initiatives.

An executive order issued by Connecticut Governor Ned Lamont means that doctors, residents, nurses, physician assistants, aides and other practitioners will be shielded from liability for acts or omissions ordinarily constituting malpractice, whereas hospitals and nursing homes can be liable for those same acts or omissions.

By introducing the Cannabis Regulation and Taxation Act as part of his FY 2022 budget, Governor Cuomo anticipates that the tax revenue could bring in hundreds of millions of dollars over the next several years. Since the New York State Legislature must approve the budget by April, New York could see the legalization of adult-use cannabis become a reality within the next few months.

As the country awaits final FDA approval for emergency use of additional COVID-19 vaccines, employers are rapidly confronting the implications. For long-term care facilities in particular, availability of a COVID-19 vaccination raises urgent questions regarding the treatment of employees and residents.

The fourth amendment to HHS Secretary Azar’s PREP Act Declaration assertively addresses current disputes involving federal jurisdiction for courts hearing disputes about the Act’s application to claims for injury, and further suggests an intention for a broad application of the Act.

Under New York’s Hemp Cannabinoid Rules, the New York State Department of Health will hold the hemp-derived products industry to stringent standards that mandate comprehensive licensing requirements and high licensing fees, as well as strict testing, packaging and labeling requirements.

Wilson Elser’s Guide to National Transportation Safety Board Investigations prepares transportation providers, manufacturers and pipeline operators from various industries for a NTSB investigation.

Members of Wilson Elser’s Cannabis Law team Ian A. Stewart (Partner-Los Angeles) and Neil M Willner (Associate-White Plains) collaborated with the firm’s Appellate Practice Chair Melissa A. Murphy-Petros (Of Counsel-Chicago) to draft an amicus brief to the U.S. Supreme Court in the publicized case of Washington v Barr, which seeks to invalidate marijuana's Schedule I status under the Controlled Substances Act on constitutional grounds.

A new interim rule issued by the Drug Enforcement Administration states that all hemp derivatives or extracts that exceed 0.3% delta-9 THC remain schedule I controlled substances. This clarification may potentially create a profound practical obstacle to the legal manufacturing of most hemp-derived CBD products, since hemp extract almost invariably exceeds 0.3% delta-9 THC concentration at some point during the extraction process before it is brought back into legal compliance for the final product.

Some hemp-derived products contain amounts of THC comparable to state-regulated marijuana consumer products, which are still illegal under federal law and highly regulated by states with adult-use and medical cannabis programs. Do these new products impermissibly exploit a legal loophole or are they the first THC products that legitimately fall outside the Controlled Substances Act?

New York’s Executive Order No. 202.30 provides that any Article 28 general hospital shall not discharge a patient to a nursing home, unless the nursing home operator or administrator has first certified that it is able to properly care for such patient. It further provides that any Article 28 general hospital shall not discharge a patient to a nursing home without first performing a diagnostic test for COVID-19 and obtaining a negative result.

Many workplaces that traditionally have had few recordable or reportable work-related illnesses must now educate themselves on their obligations under federal and state health and safety laws or face expensive fines from regulators and greater exposure to workers’ compensation claims and liability lawsuits. By preparing an infectious disease preparedness and response plan, the employer will engage in the necessary exercise of creating clear lines of communication, identifying where and how workers might be exposed and implementing workplace controls. Performed properly, this exercise should result in better workplace morale, lower absenteeism, less business disruption and liability defenses if needed.

In an effort to stem the transmission of COVID-19, ensure that the New York’s general hospitals and trauma centers have sufficient bed capacity, and eliminate obstacles to obtaining medical supplies and providing treatment to all who need it, Governor Cuomo issued an executive order that will remain in effect through April 22, 2020. However, as the crisis further expands, the Order could be periodically extended for the duration of the COVID-19 crisis.

The Empire State Development (ESD) recently issued guidance on what constitutes an essential business. Accountants have been included and thus are not subject to the in-person workforce reduction. CPA firms still must comply with the guidance and directives for maintaining a clean and safe work environment issued by the Department of Health.

To protect patients and staff at long-term care facilities, and to avoid missteps, it is essential that such facilities immediately enact a written protocol to be disseminated to staff, residents and their families, and visitors.

Should doctors and nurses who currently work in another field or are retired with an active medical license be encouraged to “dust off their scrubs”? Many health care providers treating patients with the coronavirus have been forced to self-quarantine for at least two weeks after coming in contact with a confirmed case, thus creating a shortage of doctors and nurses available to treat patients for any medical need.

The U.S. Food and Drug Administration recently released a report that outlines a variety of actions taken or being considered by the FDA to advance the potential regulatory pathways for CBD, including “the agency's progress toward obtaining and analyzing data to help determine a policy of enforcement discretion and the process in which CBD meeting the definition of hemp will be evaluated for use in products.”

A review of Event Cancellation and Contingency Nonappearance factors that insurance stakeholders should consider when claims under these policies are brought forward.

New York’s proposed budget contains legislation to legalize adult-use cannabis within the state, and since the budget must be approved by April, New York could see adult-use cannabis become a reality within the next few months.

The governors of New York, Connecticut, New Jersey and Pennsylvania co-hosted the first Cannabis Regulation and Vaping Summit, which was committed to creating a set of uniform principles each state could implement into its adult-use legislation to standardize regulations across the region.

Use of a “one size fits all” CBD label is a bad idea because no single label is compliant with the different requirements of all states that presently allow the sale of ingestible CBD products. A CBD company also should be prepared to respond quickly to changes in state CBD laws, which may require label changes or withdrawal from the state market on short notice.

Two recent decisions touch upon the Holocaust Expropriated Art Recovery Act, which expanded the timeliness for actions to recover Nazi-looted artworks. The first decision by the Second Circuit allowed the Metropolitan Museum of Art to keep in its collection a monumental work by Pablo Picasso. The second upheld the return to the heirs of two gouaches by the Viennese modern artist Egon Schiele.

Effective July 1, 2019, the NYC  Department of Health and Mental Hygiene began enforcing a ban on CBD in foods and drinks; starting October 1, 2019, violations will be issued. Hot on the heels of the new regulation will be the disposition of S 6579A – New York’s Marijuana Decriminalization Legislation – and S 6184A – Industrial Hemp and Hemp Extracts Regulations.

In the 1930s, Paul Friedrich Leffmann, a successful German-Jewish entrepreneur, was forced to sell his home and business and flee from Germany to Italy. In 1938, Leffmann and his wife sold their Picasso, The Actor, to escape the Nazi regime’s growing influence in Italy and relocate to Brazil. On the grounds that the 1938 sale was under duress, Leffmann’s great-grandniece and sole heir sought replevin of the painting from New York’s Metropolitan Museum Art, which had acquired it nearly 58 years ago.

An invaluable resource regarding so-called “apology laws,” the 2019 Medical Provider Expressions of Sympathy Comparative Law Review presents an overview of statutes addressing the admissibility of medical providers’ statements or expressions of sympathy, as well as supplemental information for consideration in states and territories without laws or statutes regarding such expressions.

When the art world makes headlines, it becomes clear just how important the field is to all of us. From the sale of Sotheby’s auction house to a private owner, to a Ferrari judicially declared a work of art, to the story of UK artists’ work with “deepfake” video technology, Wilson Elser’s Art Law practice features summaries of recent world art news reports, including Hong Kong’s protests of planned extradition laws to a new viewing experience for the Mona Lisa.

A rider to the fiscal year 2020 Commerce-Justice-Science spending bill just passed by the House specifically prohibits the DOJ from using funds to prevent states, Washington, D.C., and U.S. territories from implementing their adult-use and medical marijuana programs. Considering that the existing policy enacted in 2014 protects only local medical cannabis, including adult-use programs is a huge expansion. The bill also must be approved by the Senate before it takes effect.

When the art world makes headlines, it becomes clear just how important the field of at law is to all of us. From the upcoming sale at auction of a lost Lewis Chessman, to a cruise ship crashing into Venice Harbor, to the auction of Madonna’s personal possessions, Wilson Elser’s Art Law practice features summaries of recent news reports pertaining to art law and art markets.

Last month, the NJ Department of Health announced it had revised the state’s medicinal marijuana program to expand its availability to more patients and extend its reach by reducing patient costs and adding more than two dozen diseases and symptoms as qualifying conditions for treatment.

When the art world makes headlines, it becomes clear just how important the field is to all of us. From the upcoming sale at auction of the artwork that incorporates six of the world’s deadliest computer viruses, to a notorious master forger now auctioning off his works, to the discovery of a cache of Weegee’s lost photographs  in a Seattle home, Wilson Elser’s Art Law practice features summaries of recent news reports pertaining to art law and art markets.

While manufacturing and retail sales of marijuana-derived CBD products are permitted in accordance with California’s cannabis regulations, hemp-derived CBD remains unapproved for use as a food ingredient, food additive or dietary supplement. Assembly Bill 228 is about to change that.

When the art world makes headlines, it becomes clear just how important the field is to all of us. From the recent record-breaking sale of one of art history’s most evocative Impressionist images, to the national debate over the fate of Confederate monuments, to science helping hidden art emerge again in one of Vermeer’s greatest works, Wilson Elser’s Art Law Blog features summaries of recent news reports pertaining to art law and art markets.

When the art world makes headlines, it becomes clear just how important the field is to all of us. From the discovery of a perfectly preserved 4,000-year-old tomb near Egypt’s capital, to Europe’s cultural heritage repatriation efforts, to the establishment of a new registry intended to protect street art in Chicago, Wilson Elser’s Art Law practice features summaries of recent news reports pertaining to art law and art markets.

The bill prohibits New York City employers from requiring a prospective employee to submit to a marijuana drug test as a condition of employment. The bill includes exceptions for safety and security sensitive jobs; those tied to a federal or state contract or grant; and law enforcement, commercial drivers, construction workers; and any position requiring the supervision and care of children, medical patients or vulnerable persons.

When the art world makes headlines, it becomes clear just how important the field is to all of us. From Notre Dame de Paris suffering a devastating fire, to the first-ever photograph of a Black Hole, to the discovery of ancient treasures in Lake Titicaca, Peru, Wilson Elser’s Art Law Perspectives blog features summaries of recent news reports pertaining to art law and art markets.

In March 2019 the U.S. Supreme Court issued decisions in two copyright cases, both of which concern narrow issues of statutory interpretation and are examples of matters that the Court addresses to ensure uniformity in the decisions of the lower courts.

In a recent press release, outgoing FDA Commissioner Scott Gottlieb reinforced the FDA’s position that it is unlawful to introduce food containing added CBD or THC into interstate commerce, or to market CBD and THC dietary supplements. While the availability of CBD products dramatically increased over the past several years, many unanswered questions and potential health risks remain.

On March 25, 2019, the New Jersey Legislature cancelled a planned vote on a bill that would have legalized recreational marijuana for adults 21 years and older. Governor Phil Murphy’s contingency plan for the vote’s cancellation includes adding between 30 and 50 licenses for those who cultivate medical marijuana and later expand licenses for manufacturers and dispensaries that sell it.

FDA Commissioner Scott Gottlieb’s resignation came only days following his testimony before the House Appropriations Committee regarding the FDA’s regulatory plans for CBD (cannabidiol). Congress also heard testimony from the Secretary of the U.S. Department of Agriculture on the status of industrial hemp cultivation pursuant to the 2018 Farm Bill.

The New York City Department of Health and Mental Hygiene announced that “restaurants in New York City are not permitted to add anything to food or drink that is not approved as safe to eat … Until cannabidiol (CBD) is deemed safe as a food additive the Department is ordering restaurants not to offer products containing CBD.”

Governor Andrew Cuomo has signaled his intent to legalize recreational marijuana within the coming months. Since the New York Legislature must approve the budget by April, New York could see adult-use cannabis much sooner than expected.

While the Trump Administration signaled its desire to discontinue or significantly change the EB-5 visa program, neither came to pass in 2018. The program is scheduled to expire as of December 21, 2018.  Meanwhile, the federal court for the District of Columbia issued an important decision striking down the USCIS’s interpretation of its own rules of what constitutes a capital investment. 

Taken together, New York’s newly issued FAQ and CBD processing agreement forecast the state’s intent to strictly regulate CBD products intended for human consumption. Industry members already processing and selling hemp-derived CBD products as well as those looking to enter the market should seek guidance on the quickly evolving regulatory environment.

With the increase in certified patients enrolled in New York’s medical marijuana program, medical malpractice carriers must understand the risks behind new legislation and educate their doctors about best practices for recommending medical marijuana.

Ultimately, the new federal protections contained in the 2018 Farm Bill will move the CBD-based food and supplement industry closer to unrestricted national and international distribution of hemp-derived CBD products. Until approved by the FDA, however, CBD as an ingredient in foods and supplements will continue to be risky.

Cannabidiol, or CBD, is a naturally occurring cannabinoid constituent of cannabis. It was discovered in 1940 and initially thought not to be pharmaceutically active. CBD is now known to have significant medical benefits, as is medical-use marijuana.

The complex regulatory framework governing federal flood insurance policies centers on the National Flood Insurance Program, which pays for claims that exceed the premiums collected from the insured parties. The extensive damage caused by Hurricanes Harvey and Irma and those that follow will mean close scrutiny and careful interpretation of defenses available to insurers.

Cannabidiol (CBD) now may be legally distributed, sold, imported or exported without restriction so long as it is from properly sourced industrial hemp, but CBD may be added to food products only if it is derived from marijuana. It is difficult to logically reconcile this “schizophrenic” state of the law.

Financial institutions should not underestimate the rigorous due diligence processes it must undertake to work with marijuana-related businesses. Although a recent New York State Department of Financial Services memo is a step in the right direction, financial institutions must fully understand the federal regulatory landscape and New York’s medical marijuana and industrial hemp laws.

Wilson Elser is pleased to provide the 2018 ESI Case Law Update, our annual compendium of cases dealing with issues and developments surrounding electronically stored information (ESI). It is a rare case that does not involve the preservation, review and production of ESI.  Your knowledge of the tools and regulations could mean the difference between sanctions and compliance.

The guidelines California and other states have issued regarding the recommending of cannabis for medical conditions serve as a starting point for the discussion surrounding the standard of care by creating baselines and establishing routine practices by which physicians can familiarize themselves with the requirements of the changing world of medicine and incorporation of cannabis as a modern treatment for their patients’ conditions.

A recent Ninth Circuit ruling serves as a reminder to litigants that a federal appellate court may choose to rule on matters it considers significant, despite a settlement that was reached possibly to avoid creating unfavorable precedent.

The United States District Court for the Eastern District of New York has awarded $6.75 million in statutory damages to 21 aerosol artists whose works were intentionally destroyed by the owner of the buildings on which they were painted. While this case has already been appealed to the Second Circuit, the ruling is of significance to artists and to property owners that have artworks in or on their buildings protected under the Visual Artists Rights Act.

The proposed Data Security and Breach Notification Act would apply to companies that acquire, maintain or use consumers’ personal information. If passed into law, this bill would replace the patchwork of 48 separate state breach notification laws and standardize breach reporting requirements, which currently vary from state to state.

Although the Model Law adopted by the National Association of Insurance Commissioners is more rigorous than most existing state laws, it may pave the way for more uniform, and therefore more predictable, state-by-state data security and regulatory breach notification laws and standards applicable to insurers and other regulated insurance entities.

The complex regulatory framework governing federal flood insurance policies centers on the National Flood Insurance Program, which pays for claims that exceed the premiums collected from the insured parties. The extensive damage caused by Hurricanes Harvey and Irma and those that may follow will mean close scrutiny and careful interpretation of defenses available to insurers.

Delaware has passed an amendment to its data breach notification law that expands the definition of "personal information,” adds a 60-day notification deadline, and requires private organizations to maintain reasonable security policies and procedures.

Sean Maraynes (Associate-White Plains) has published “Criminal Conduct in Hospitals: Is the Hospital Liable?” in The Risk Management Quarterly, Volume II 2017, published by The Association for Healthcare Risk Management of New York, Inc. Sean posits that although plaintiffs’ attorneys face an uphill battle when asserting claims against hospitals arising from sexual or physical assaults, “a hospital may leave itself open to a high-exposure claim unless it can demonstrate well-documented background checks, well-documented periodic evaluations, thoughtful chaperone policies and a well-trained security department.”

The New York Department of Financial Services has released Frequently Asked Questions to assist in compliance with its Cybersecurity Regulation, while the Colorado Division of Securities has adopted new cybersecurity rules applicable to broker-dealers.

The commitment of 38 state governors to the cybersecurity goals announced by the National Governors Association demonstrates that states will continue to be a driving force in the evolution of U.S. data privacy and security laws and best practices, especially where the federal government has refrained from outlining a clear strategy at the state level.

While there are distinct differences regarding reporting obligations to notify state regulators of “breach events” and the like, the new cybersecurity regulations promulgated by New York and Colorado essentially codify what broker-dealers, investment advisers and fund managers are or should be doing as required by their respective regulatory or self-regulatory bodies.

A Florida appellate court has upheld the suppression of data from an automobile’s event data recorder, focusing on the evolving nature of technology and privacy. It analogized the black box information to that of other electronic storage devices for which courts have recognized a reasonable expectation of privacy, such as a cell phone.

Early in 2017 there were three notable developments in state notification laws: New Mexico enacted a new data breach notification law; Tennessee further amended its existing law to reinstate the encryption exemption; and Virginia amended its existing laws to address the continuing trend involving the compromise of personal information that could lead to tax fraud.

It is generally thought that regulations such as those promulgated by the New York State Department of Financial Services to ensure that data is properly managed and secured by financial institutions may be the first of many steps taken by states. Financial institutions and insurers should continue to keep abreast of such regulations to avoid the possibility of a violation and litigation. 

The U.S. Department of Health and Human Services, Office for Civil Rights has announced the first settlement of a HIPAA enforcement action based on the untimely reporting of a breach of unsecured protected health information. 

An Advance Notice of Proposed Rulemaking jointly issued by federal banking regulators details a planned regulatory scheme intended to help ensure resiliency in the face of a cyber-attack or adverse IT event and to provide a practical framework for mitigating the potential consequences of an IT systems failure.

New York’s Governor Andrew M. Cuomo announced a proposed regulation that requires banks, insurance companies and other financial services institutions regulated by the State Department of Financial Services to establish and maintain a cybersecurity program to protect consumers and New York State’s financial services industry.

In an effort to address the problems caused by abandoned homes, New York State has enacted legislation making banks and mortgage lenders responsible for maintaining abandoned residential properties, even before they have foreclosed on such properties. The new law also may increase the exposure that lenders and insurers have for premises liability claims.

Will the Ancient Document Exception to the Hearsay Rule become Ancient History? The proposed abrogation of the Federal Rule of Evidence regarding the “ancient documents” exception to the hearsay rule, if enacted, would be effective December 1, 2017.  While enactment would have minimal or no effect on many areas of the law, it would profoundly affect other areas such as prosecution of sexual or child predators and war criminals. Additionally, it would have implications in the environmental and coverage arena where documents more than 20 years old are frequently used to establish liability and coverage.

In a recent case involving a police shooting, the U.S. Supreme Court ruled it is not enough to say that the use of excessive force violates the Fourth Amendment; the right must be defined in the context of the particular facts of each case. The Court concluded that “qualified immunity protects all but the plainly incompetent or those who knowingly violate the law.”

In a recent decision, the Western District of Tennessee included water as a “good” or “product” intended for consumption under the “Fungi or Bacteria Exclusion” to the Mold Exclusion. The conventional wisdom was that the exclusions were meant to apply to food items and the ingestion of water in a hotel or other such establishment was considered incidental and not “intended for consumption.”

In addition to tailoring prescription drugs to the needs of particular classes of patients, 3D printing opens the possibility of tailoring each tablet to the needs of one specific patient, regardless of the physical location of the printer. Until now, this has not been financially feasible with mass-produced medications.

On April 24, 2015, a Chinese court ordered an affiliate of New Balance Athletic Shoe, Inc. to stop using a trademark registered by a Chinese citizen in 1996. The company was also ordered to pay the plaintiff $16 million, which amounts to half the profits the defendant made during the period of infringement.

A recent decision by the U.S. District Court, Eastern District of Kentucky cautions excess insurers desiring to “follow” a primary policy would be well-advised to use language that ensures neither policy conflicts. In addition, claims-made and reporting requirements in directors and officers or professional liability policies are conditions precedent to coverage that cannot be trumped by the notice-prejudice rule applicable to occurrence-based policies.

A recent ruling by the Colorado Supreme Court represents a setback for the energy industry in its defense of fracking litigation in Colorado. Had they won, the industry could have used the decision to secure early dismissals of fracking suits. Now, as a consequence of this ruling, Colorado fracking defendants are likely to see an increase in defense costs, fewer dismissals and fewer early settlements.

statements of material fact or neglects to state a material fact. The March 25, 2015, decision by the U.S. Supreme Court has raised the burden of proof for plaintiffs bringing a Section 11 claim in securities law cases. Defendants, including accountants, will no longer be held strictly liable for opinions that later are found to be factually untrue.

The U.S. Bureau of Land Management has issued “final” rules governing hydraulic fracturing operations on federal lands and land owned by Indian tribes. It should be emphasized that only a small fraction of hydraulic fracturing activity in the United States takes place in these areas. In addition, the fracking rule-making process presented the bureau with a golden opportunity to grant the fracking opponents’ wish of completely banning fracking operations; yet it declined to do so.

The rising use of drones that weigh less than 55 pounds brings with it a host of legal issues manufacturers and operators need to take into account. Though the relevant fields of law are slow to catch up to the technological advancements, manufacturers and operators may still be hit with product liability, aviation and privacy claims.

A recent decision by Missouri’s Eastern District Court puts businesses entering into contracts for payment processing services on notice to have such agreements reviewed by a data privacy and security attorney. The decision will likely cause processors and banks to focus more carefully on the limitation-of-liability provision related to credit card breaches.

Does the Home Rule Amendment to Ohio’s Constitution permit localities to enact anti-fracking zoning regulations contrary to Ohio’s oil & gas development laws? No, said a majority of the Ohio Supreme Court on February 15, 2015.

Lawyers should never make discovery commitments regarding electronically stored information before they understand at least the general contours of the client’s systems and how expensive it would be to retrieve emails not in the active systems. In today’s litigation environment, every case is an e-discovery case, so a lawyer should be asking the "right questions" early in any litigation.

In two recent decisions, the Wisconsin Supreme Court sought to resolve conflicting court of appeals’ decisions on whether manure and septic waste are “pollutants” under standard insurance policy exclusions when they contaminate groundwater after being applied as fertilizer. The Court rejected categorically defining manure and septage as “pollutants,” instead determining that such fertilizing excrement unambiguously falls within the applicable policy’s definition of “pollutants” once it has contaminated a water supply.

In two recent cases, Advantage Builders & Exteriors v. Mid-Continent Casualty Co. No. WD 76880 (Mo. Ct. App. Sept. 2, 2014) and EAN Services, LLC v. Brunson, No. 2-14-118 (Ill. Ct. App. September 8, 2014), the courts remind insurance carriers that an ineffective reservation of rights can be costly. In Advantage Builders, the Missouri appeals court affirmed the trial court’s finding that the insurer was liable for compensatory damages for bad faith failure to settle.

On January 1, 2015, an amendment to California’s privacy and breach law goes into effect that may have a significant impact on the way entities respond to data breaches. In advance of the law’s effective date, in addition to evaluating their information security protocols and policies, entities that possess the personal information of California residents should review their insurance policies, first to make sure they have cyber insurance that provides data breach coverage, and second to determine if their policies will cover the potentially significant cost associated with notification and identity protection or mitigation services.

With the proposed imposition of a $10 million forfeiture penalty, the FCC becomes the latest governmental agency to actively levy penalties against entities that fail to adequately secure consumer data and fail to adhere to their own privacy policies. It is clear that the FCC is interested in becoming more active in the protection of consumer privacy.  

While most of the NTSB’s proposed changes merely bring the regulations into conformity with the manner in which investigations have been conducted for many years, there is an interesting mix of more significant changes that will be of interest to a variety of stakeholders.

A recent decision by the New York Court of Appeals clarifies rule 202.17(b)(1) of New York Codes Rules and Regulations: Prior to independent medical examinations, plaintiffs’ counsel must provide reports from treating physicians setting forth the injuries and conditions as to which testimony will be offered at the trial, referring to and identifying those X-ray and technicians' reports that will be offered at the trial, including a description of the injuries, a diagnosis and a prognosis.

In April, Microsoft ended support for Windows XP Professional for embedded systems. As the saying goes, “a chain is only as strong as the weakest link” and even a single Windows XP computer could provide a potential intruder with a “window” into your network environment.

Florida Federal Judge Approves Settlement Agreement Providing Payments to All Victims of Data Breach, Even Those Who Suffered No Monetary Loss Businesses should remember that strong security programs continue to be the best defense against both data breaches and potential data breach class action lawsuits. It is imperative that businesses of all sizes implement a comprehensive data protection plan that safeguards personal information and includes continual training and education.

In late February 2014, the U.S. District Court for the Eastern District of New York issued a case management order, scheduling all parties in cases dealing with Superstorm Sandy on an “express train to resolution.” In keeping with this approach, the Court has skipped all discovery conferences mandated by the Federal Rules of Civil Procedure and remained focused on resolving these disputes. 

A recent decision by New York’s Court of Appeals reaffirms that an assessment of specific causation is required in the scientific community and in the courts. A waiver of such assessment would require jurors to speculate whether a plaintiff’s personal injuries claims are the result of exposure to certain alleged toxins. Where scientists cannot establish a causal connection, a jury should not be asked to do so.

The U.S. Supreme Court has held that a defendant will be subject to general jurisdiction in a state only if its connections with the state are so continuous and systematic as to render the defendant “essentially at home” in the forum state. The decision demonstrates that the Supreme Court is clarifying and rationalizing the circumstances under which a foreign corporation can be subject to jurisdiction in the United States. 

Though no definitive judicial rulings have been issued, allowing plaintiffs to purchase insurance to pay for future medical care without regard to preexisting conditions and failing to allow defendants and insurers a setoff for the substantial savings realized would result in the plaintiff obtaining a double recovery and would represent a substantial injustice.

In a recent decision, the New York Court of Appeals, in response to a certified question from the U.S. Circuit Court of Appeals for the Second Circuit, ended the long-running debate over whether a separate, private plenary right of action could be implied under New York Civil Practice Law and Rules Article 52, including §5222-a.

On December 10, 2013, New York’s highest court, the Court of Appeals, dramatically reversed itself after reargument in a personal injury case, Maria Auqui v. Seven Thirty One Limited Partnership et al. The new decision seemingly eliminates the ability to argue that a New York Workers’ Compensation Board finding of no disability bars the plaintiff from seeking recovery for continuing disability in a separate personal injury action.

Rule 37(e) of the Federal Rules of Civil Procedure purports to provide a safety net for litigants when the “routine, good-faith operation of an electronic information system” causes the loss of electronically stored information, but only until there is an obligation to preserve it. At the same time, there are significant differences in the way federal courts impose spoliation sanctions. Proposed changes to the Rules, and Rule 37(e) in particular, may resolve some of the confusion and save some of the unnecessary expense. Regardless of whether the proposed amendments take effect, however, potential litigants should err on the side of caution and preserve documents as soon as an obligation to preserve is triggered.

The Public Company Accounting Oversight Board has proposed changes that include requiring auditors to report on “critical audit matters” and “other information” included in documents that contain the financial statements, as well as additional disclosures from auditors, including auditor tenure.

Answering two certified questions of first impression in New York, the Court of Appeals has expanded vandalism coverage under a Named Peril property policy where there was proof of malicious intent to damage or destroy property, even where the acts in question were not directed at – and did not bring vandals in direct contact with – the covered property.

According to Treasury Regulations, if a tax return preparer has obtained consent from the taxpayer, he may “use the tax return information of such taxpayer to solicit from the taxpayer any additional current business in matters not related to the Internal Revenue Service that the tax return preparer provides and offers to the public.” The operative word is consent.

An insurer was held to have a duty to defend, but not indemnify, trademark infringement claims under an “advertising injury” provision of a commercial general liability policy because of ambiguity in the policy.

A recent decision in New York’s Southern District clearly articulates that an auditor’s conclusions are to be treated as opinions rather than as statements of fact. Thus, the legal question shifts from focusing on the underlying company’s alleged fraud to whether the auditor actually held the opinion it professed to hold and whether it had a reasonable basis to hold such an opinion.

An October 23, 2012, ruling by the New York Court of Appeals holding that claims disposed of by motion practice early in a case are not really concluded until an appeal from the final judgment is decided will have an effect on strategy for trial lawyers.

Although requiring a party to defend itself in another country’s legal system imposes “unique burdens” that call for special scrutiny, the Fourth Circuit Court of Appeals concluded on July 9, 2012, in ESAB Group v. Zurich Insurance that a non-U.S. domiciled insurer had signaled that the burden of appearing in a forum such as South Carolina was “not exceedingly onerous” when it contracted to defend its insured on a worldwide basis.

Rejecting a key component of Judge Shira Sheindlin’s January 2010 Pension Committee holding, the Second Circuit, in Chin v. Port Authority of New York & New Jersey, has made the failure to issue a written litigation hold no longer per se gross negligence sanctionable by itself, with no need to prove prejudice or even the relevance of missing evidence.

The Pennsylvania Supreme Court has amended applicable rules of civil procedure to include e-discovery – expressly rejecting the federal rules in the process. In essence, the Court maintains the current rules of discovery and adds the term “electronically stored information” (ESI) to the list of items a party may request. Commentary to the amended rules adds further insight to the Court's position on how this change should be used, including the application of Pennsylvania’s “proportionality standard.”

The Centers for Disease Control has lowered the “at risk” levels for children, even though some experts do not believe there can be any demonstrable effects from exposure to lead at levels below 10 ug/dL and there will be limited funds to enforce the new guidelines.

Although the standard requiring that the party responding to a request from an adversary for electronically stored information (ESI) bear its own costs in doing so has been in place in the vast majority of states for some time, a New York appellate court for the first time has issued a decision that provides a definitive ruling on the issue.

In personal injury matters under New York Insurance Law §3420(d), insurers and their counsel are well advised to promptly deny coverage whenever a sound coverage defense is readily discernible, regardless of other issues.

In a case of national first impression, the Arkansas Supreme Court held that foreign manufacturers of products that end up in the United States through the “gray market” will not be subject to “general” jurisdiction in the forum state unless they have “continuous, systematic and substantial” general business contacts with that state, which is fairly atypical. In addition, the decision impacts U.S. subsidiaries of foreign manufacturers with gray market issues that are dragged into products liability litigation simply by virtue of having a name similar to that of the manufacturer.

Intermediate NY appellate court decision is binding on all New York courts unless or until another New York intermediate appellate court or the state’s highest court holds otherwise. This holding may potentially affect every case pending in New York.

The New York Law Journal published an article on the Nonadmitted and Reinsurance Reform Act by Steven Young.

Legal Insight, the Chartis Insurance Company’s internal newsletter, has published an article written by Russ Vignali (Partner-White Plains) entitled, “Defending an ‘Inherently Dangerous Product’ Has Become More Difficult in New York.”

The New York Court of Appeals recently held that an innocent insured’s death in a vehicular homicide is an “accident” for purposes of uninsured motorist coverage. Overturning precedent, the Court held that because the accident was unintentional from the perspective of the insured, a pedestrian, coverage must be provided to the decedent’s estate.

On Wednesday, August 17, 2011, New York State Governor Andrew M. Cuomo signed into law New York’s first CPA mobility statute, joining 47 other states that have enacted similar legislation.

Taking its place alongside generic top-level domain (gTLD) names such as .com, .edu, .net, .gov and host of others, .xxx can pose a threat to brand owners that want to distance themselves from the adult entertainment industry.

A recent decision issued by New York’s Court of Appeals strips manufacturers of inherently dangerous products of the defense that everyone knows the product is dangerous and it is labeled as such. Going forward they may need to defend the reasonableness of marketing such a product for use by lay persons.

In the context of a homeowner’s policy exclusion barring coverage where an insured receives “benefits” under the policy, if the term “benefit” does not unambiguously include an insured’s right to defense and indemnification, the policy would likely be obligated to defend and indemnify any insured against claims or suits by non-insured entities.

Several recent cases, including Gartner v. St. Paul and Marine Insurance Co., demonstrate that the analysis of insurance coverage for intellectual property claims under commercial general liability policies is a fact-intensive exercise based on the facts of a case, the language of the policy and the state in which the policy was delivered. A careful evaluation of potential exposures and policy language should be reviewed prior to an occurrence.

On June 15, 2011, the Securities and Exchange Commission (SEC) announced proposed changes to SEC rules under the Securities Exchange Act of 1934 that would impact broker-dealers’ reporting and compliance requirements.

The article explains what a “limited fund” settlement is and explores whether or not a broker-dealer being sued in a Ponzi scheme–related class action can use the “limited fund” settlement concept to buy its peace in order to maintain a viable business. 

In an opinion issued on June 27, 2011, the United States Supreme Court, in a plurality opinion, upheld the specific jurisdiction test set forth in International Shoe Co. v. Washington, 326 U.S. 310 (1945).

In May 2011, U.S. Sens. Al Franken (D-Minn.) and Richard Blumenthal (D-Conn.) and U.S. Rep. Hank Johnson (D-Ga.) introduced the Arbitration Fairness Act (the "Act"), which seeks to eliminate forced arbitration clauses in employment, consumer and civil rights cases, but would allow consumers and workers to elect arbitration after a dispute occurs.

Steven L. Young (Partner-White Plains) has co-authored an article entitled "Preventing Wrongful Termination Employment Claims" that appeared in the fourth quarter issue of FLAME. FLAME is the official publication of the The National Franchisee Association (NFA), which serves the BURGER KING® franchisee community through advocacy, education and training, networking and member-focused programs, services and benefits.

On January 1, 2011, the exception to state licensing requirements for "temporary and incidental" accounting practice within the Golden State was eliminated. Practice Privilege Notifications, with the attendant fees, must now be filed with the California Board of Accountancy (CBA) for services within California that are "temporary and incidental" to serving an out-of-state client.

The U.S. Consumer Product Safety Commission has issued a formal definition of "children's product" that resolves the dispute over age cutoffs.

The IRS had set a deadline of January 1, 2011, for all tax return preparers to register or reregister with the agency to obtain a Preparer Tax Identification Number (PTIN).

After considerable debate in the courts and elsewhere, Congress has now clarified that the Federal Trade Commission's "red flags" rule requiring a comprehensive plan and policy to protect the personal information of consumers does not apply to accounting firms and their clients.

This is the latest in a series of alerts on the federal government's efforts to curb greenhouse-gas emissions and on pending nuisance-based climate-change litigation.

On October 21, 2010, New York's highest court, the New York State Court of Appeals, issued an opinion strengthening, and unambiguously reaffirming, the viability of the in pari delicto doctrine in limiting the liability of independent auditors and other outside professionals. The court found that the "adverse interest" exception to the general imputation principles underpinning the in pari delicto doctrine and related federal Wagoner doctrine is particularly narrow in scope under New York law. Generally, the court's clarification of New York law provides that independent auditors may benefit from imputation to a corporation under the two doctrines so long as the agents' actions do not completely deviate from the corporation's interests. The decision is an important clarification of New York law and a clear limit on auditor liability in the context of corporate fraud.

Must an insurer who issued an umbrella policy defend and indemnify a negligence suit against a covered homeowner, after her son committed a murder and left the victim's remains on her property? Yes, said the Nassau County Supreme Court in Metropolitan Property and Casualty Insurance Co. v. Marshall. The court found that the murder amounted to a covered incident under the policy, in that the loss was essentially an accident that was "unexpected, unusual and unforeseen," from the homeowner's point of view.

Sticking one's head in the sand may be a helpful way for an ostrich to avoid issues in life, but for professionals such as attorneys and accountants, this tactic can be risky.  In a July 6, 2010, decision by the Appellate Division of the Supreme Court of the State of New York, First Department (the intermediary appellate court with authority over cases in Manhattan), the court sent a signal to professional services defendants that they may face expanded liability for the frauds perpetrated by their clients.

In today's litigation environment, evidence preservation responsibilities, particularly those concerning electronically stored information (ESI), seem to be constantly evolving.  This process not only involves identifying key players, relevant time frames, and the metrics and locations of  the information at issue, but also counseling sometimes unsuspecting clients about when preservation obligations attach and the consequences of not acting swiftly once a preservation trigger has been pulled.

The Financial Industry Regulatory Authority (FINRA) conducts annual examinations of its member firms.  These examinations are risk based and their frequency, scope and content will depend on the risk, scale and nature of a firm's operations.  On March 1, 2010, FINRA issued its 2010 Annual Examination Priorities Letter, which discusses the issues and topics that FINRA examiners will be focusing on in the upcoming year.

In several recent alerts, we have advised our clients of two federal appellate decisions, Connecticut v. American Electric Power Co., Inc. (582 F.3d 309 [2d Cir. 2009]) and Comer v. Murphy Oil USA (585 F.3d 855 [5th Cir. 2009]) that have allowed lawsuits seeking damages for global warming based on the federal common law of nuisance to go forward, and one district court decision, Native Village of Kivalina v. Exxon Mobil Corp. (663 F.Supp.2d 863 [N.D.Cal. 2009]) that has dismissed such a claim.

In December 2009 and January 2010 Environmental Alerts, Wilson Elser reported on several  recent federal court decisions concerning whether to allow private claims predicated on the federal common law of nuisance against parties whose greenhouse gas emissions have allegedly contributed to global warming.  As reported in the previous alerts, the courts addressing this issue have reached conflicting conclusions as to whether such claims may stand.

Skilled advocates, Wilson Elser's appellate attorneys have earned the firm a reputation for excellence in post-trial and appellate work.  Concentrating on the complex, highly technical, and constantly evolving discipline of appellate procedure, we have the experience needed to plan and execute the most effective post-trial and appellate strategy.  In addition to handling appeals, we provide critical assistance at the trial level, including consultation on the preparation of dispositive pre-trial motions, motions in limine, and jury instructions; participation at trial; and attendance at the jury instructions conference.

Where an insurer's disclaimer of coverage is not based on a policy exclusion, but rather on the basis that no coverage exists in the first instance, must the carrier still comply with the stringent notice requirements of New York Insurance Law § 3420(d)(2)?  No, said the Second Circuit in its recent ruling in NGM Insurance Company v. Blakely Pumping, Inc.

Anyone with even a passing familiarity with the duty to preserve and produce electronically stored information (ESI) in U.S. litigation is well-aware of the pivotal series of Zubulake v. UBS decisions written by U.S. District Court Judge Shira A. Scheindlin of the Southern District of New York in 2003 and 2004.  Shortly after those opinions were issued, the Federal Rules of Civil Procedure were amended to include specific ESI provisions.

Following our December 2009 advisory, "The Application of Nuisance Law to Greenhouse Gas Emissions," this is the latest in a series of client advisories concerning climate change-related liability.

Plaintiffs who had made claims for alleged global warming damages received a recent setback in the Northern District of California U.S. District Court. In Native Village of Kivalina et al vs. ExxonMobil Corporation et al. ((2000 N.D. Cal) 2009 U.S. Dist Lexis 99563), Judge Saundra Brown Armstrong granted a motion to dismiss the complaint filed against 24 oil, energy and utility companies alleging that their greenhouse gas emissions created a public nuisance and contributed to climate change brought on by global warming. This decision focuses on the fundamental problems with such claims and foretells a potential split between federal circuits and an issue that will ultimately need to be decided by the United States Supreme Court.

An old defense to claims brought by clients and former clients has been renewed and given broad application to end litigation against affiliates of the former client’s auditors.  U.S. District Judge for the Southern District of New York Lewis Kaplan ruled, on September 18, 2009, that all claims brought by the plaintiffs, Dr. Enrico Bondi, ("Bondi"), the Extraordinary Commissioner of Parmalat Finanziaria, S.p.A., Parmalat S.p.A., and their affiliates (jointly "Parmalat") in Italian reorganization proceedings, and Parmalat Capital Finance Limited, a subsidiary of Parmalat ("PCFL"), against defendants Grant Thornton International ("GTI") and Grant Thornton LLP ("GT-US") were barred under the in pari delicto defense.

In a decision recently issued in the Eastern District of New York, a court has questioned the enforceability of a website Terms of Use document that does not require a user to "click through," and is only noticed in a small link at the bottom of a long scroll-page.  The case, Hines v. Overstock.com, Inc., 09-cv-00991 (EDNY 2009), denied Overstock.com's request to stay litigation for arbitration, as it held that the plaintiff had not assented to the arbitration clause in Overstock.com's website Terms of Use due to a lack of sufficient notice.

The Federal Trade Commission's "Red Flags" Rule is designed to protect personally identifiable information from data thieves.  Among others, the Red Flags Rule applies to any business or individual that provides a product or service for which payment is received after the product or service is delivered.  While many might assume that data protection regulation applies only to hospitals and banks, the broad definition of who is covered by the Red Flags Rule very clearly applies to professional services firms that get paid by their clients after the services are provided, which, of course, includes accounting firms.

As we reported in an Insurance Alert on April 30, 2009, and as further elaborated in an article by Frederick J. Pomerantz (Partner-NY), that appeared in Vol. 20 Edition 2 - Summer 2009 of the FORC Journal, a publication of the Federation of Regulatory Counsel, Inc., the "Medicare, Medicaid, and SCHIP Extension Act of 2007" (the "Act") amends the Medicare Secondary Payer Act (MSPA), imposing significant new reporting obligations upon insurers and others subject to it.  Significantly, if an insurer fails to notify Medicare in accordance with the new reporting guidelines, a civil penalty of $1,000 per day may be assessed per claimant.  The new legislation clearly indicates a shift in federal policy that will result in the federal government monitoring recoveries in tort claims more closely to minimize costs to Medicare.

In a case closely watched by the accounting profession, a jury took only one hour to render a verdict in favor of BDO International (now known as BDO Global Coordination B.V.), saving that company, the umbrella organization of the BDO network, from huge vicarious liability for the acts of one of its member firms, BDO Seidman.

In an effort to protect our clients' current and future interests, the existing rules and regulations in place and any proposed changes which could have an impact on business practices should be recognized and evaluated.  On June 17, 2009, the Treasury Department and the White House released their proposed changes to the regulation of the financial industry entitled, Financial Regulatory Reform: A New Foundation (the "Proposal").  The Proposal could have a dramatic effect on how our clients manage their business and litigation.

Carefully crafted engagement letters are one of the best risk management tools for accountants.  The use of engagement letters across the broad and growing spectrum of services accountants provide is, however, sometimes uneven.  The result can be disastrous.

There have been several recent amendments to current FINRA rules, which impact broker-dealers and associated persons in the securities industry.  Some amendments are favorable, such as the increase in the threshold for customer complaint reporting, whereas the amendment requiring Form U-4 disclosure for all arbitrations and civil actions, even when the broker has not been named will negatively impact brokers.  Regardless of its impact, the following rule changes are important and our clients should be aware of them.

The risks that the insurance industry as a whole, and liability insurers in particular, face are being altered by climate change.   Experts may debate the scope of investment that the world needs to make to combat global warming, but the forecasts are all measured in trillions of dollars.

On April 17, 2009, the Obama administration's Environmental Protection Agency ("EPA") issued two proposed findings regarding the following greenhouse gases ("GHGs"): carbon dioxide; methane; nitrous oxide; hydrofluorocarbons; perfluorocarbons; and sulfur hexafluoride.

Securities brokers, financial planners and other professionals are facing serious repercussions from the current Credit Crisis and downturn in the economy in the form of increased and widespread investor claims. It would benefit these professionals to understand the Financial Industry Regulatory Authority (FINRA) arbitration process in order to better manage risk and prevent future claims, to bring disputes to early and economical resolutions, and to fully defend matters that should be contested on the merits. Looking ahead, 2009 may be a record-setting year for new FINRA claims due to the generalized bear market.

Governor David A. Paterson signed a bill on January 27, 2009, that imposes significant additional regulations upon accountants practicing in the State of New York. The bill amends the Education Law of New York applicable to the practice of accountancy in the state and becomes law six months from now. The new amendments will impact nearly all who practice within New York and, potentially, open the door for reciprocity with other states.

As we have repeatedly advised, carefully tailored engagement letters are of growing importance in reducing accountants' liability exposure.  There are numerous provisions incorporated in an engagement letter, some of which can protect the accountant from liability, both from the client and third parties.  However, until recently, it was unclear if one of the most important contractual provisions would be enforced if placed in an accountant's engagement letter: an indemnification and hold harmless provision.

The Treasury Department and the Internal Revenue Service have issued new regulations providing taxpayers improved safeguards and greater control over their tax return information held by tax return preparers.  These new regulations create additional obligations for tax preparers and continue to impose criminal and civil liability for failure to adhere to those obligations.