Gibbons Law Alert

Case Law Alert: Third Circuit Finds No Fraudulent Transfer Liability in Connection With Revocation of Pennsylvania Gaming License

On July 6, 2021

In a June 29, 2021 decision concerning an alleged $50 million fraudulent transfer to the Commonwealth of Pennsylvania, the United States Court of Appeals for the Third Circuit affirmed the dismissal of an action by the liquidating trustee of Philadelphia Entertainment and Development Partners (d/b/a Foxwoods Casino Philadelphia) (the “Debtor”) under Bankruptcy Code Sections 544(b), 548, 550, and 551 to recover the value of a gaming license that had been revoked by the Commonwealth. The Third Circuit determined that, because the license was not a property right under Pennsylvania state law, sovereign immunity barred the trustee’s action against the Commonwealth. The decision turned on the distinction between transferable ownership rights in property versus mere “privileges.” Although the Third Circuit’s opinion in this matter is non-precedential, it nevertheless underscores the importance that state law plays in determining “property of the estate,” and the resulting consequences for debtors and their creditors. By way of example, we would expect to see the same result under New York law with respect to liquor licenses, which – unlike in New Jersey and certain other states – are non-transferable licenses and thus not estate property under Bankruptcy Code Section 541 and state law.

United States Supreme Court Decision Explains that Public School Students Have Broader Free Speech Protections When Off Campus

by Mary Frances Palisano

Posted in Federal Legislation / Media

On June 30, 2021

In an 8-1 majority opinion, the United States Supreme Court ruled on June 23, 2021 that the Mahanoy School District in Pennsylvania violated the First Amendment rights of a high school cheerleader who argued that she could not be punished by her school for a social media post she made outside of school. With ubiquitous social media in the pockets of everyone from ages 8 to 88, this case has been closely followed to see how the highest Court balances the free speech rights of public school students and the concerns of school administrators over off-campus speech, including speech occurring online that could be considered bullying or that disrupts a school’s ability to educate its students. Background In Mahanoy Area School District v. B.L., a Minor, By and Through her Father, LEVY, et al., No. 20-55 (June 23, 2021), Brandi Levy, a student of Mahanoy Area High School, was cut from the school’s varsity cheerleading squad and placed on the junior varsity squad. She reacted, as many young adults might, through social media and posted Snapchat images while off campus on a Saturday, voicing her disappointment about not making the school’s varsity cheerleading squad. The images were posted to Levy’s Snapchat story, allowing any of her approximately 250 friend group members to view the images...

Fourth Time’s a Charm: The Third Circuit Reverses Dismissal of Trade Secrets Complaint and Clarifies Pleading Standard

by Gibbons P.C.

Posted in Appellate

On June 29, 2021

The Third Circuit issued a precedential decision in Oakwood Laboratories LLC v. Bagavathikanun Thanoo et al. that clarified the pleading requirements for trade secrets misappropriation claims under the Defend Trade Secrets Act, 18 U.S.C. § 1836(b) (DTSA). In that decision, the Third Circuit held that the Third Amended Complaint was “so factually detailed that, on appeal, we conclude it easily meets the pleading requirements of the Federal Rules of Civil Procedure and pertinent substantive law.” Earlier, the District Court for the District of New Jersey had dismissed four of Oakwood Laboratories LLC’s (“Oakwood”) complaints on the grounds that each complaint was not specific enough to support a claim. The District Court dismissed Oakwood’s Third Amended Complaint (its most recent attempt), because it did not show precisely how defendants misappropriated Oakwood’s trade secrets, but noted that Oakwood did plead facts sufficient to identify its trade secrets and support the information’s protected status. Oakwood appealed, and the Third Circuit reversed. Oakwood alleged that defendants Aurobindo Pharma U.S.A. and its subsidiaries misappropriated Oakwood’s trade secrets regarding microsphere technology when Aurobindo hired an Oakwood employee who specializes in this technology, Dr. Bagavathikanun Thanoo, and relied on a memorandum provided for the limited purpose of exploring a business opportunity to develop Aurobindo’s own microsphere technology. In reversing the District Court’s...

OSHA Issues Long-Awaited COVID Guidance and Emergency Temporary Standard

by Susan L. Nardone

Posted in Labor

On June 28, 2021

On June 10, 2021, the United States Department of Labor’s Occupational Safety and Health Administration (OSHA) finally issued its long-awaited update to its COVID-19 workplace safety guidance, setting forth best practices for all employers as employees return to the physical workplace after a lengthy absence. The same day, OSHA issued an Emergency Temporary Standard (ETS)—pursuant to the DOL’s rule-making authority—establishing mandatory procedures for “covered healthcare employers.” We summarize the obligations and recommendations imposed on healthcare and non-healthcare employers below.

Inviting Scrutiny: “Obstructionist” Conduct Leads to District Court Ordering Forensic Examination of Defendant’s Cell Phone

by Gibbons P.C.

Posted in General Litigation

On June 23, 2021

Courts have been authorizing forensic experts to conduct examinations of electronic devices for decades. However, we have noticed a recent uptick of district courts ordering the appointment of an independent forensic expert to create images of and forensically examine cell phones to ensure the preservation and production of relevant electronic data particularly where the party in control of the evidence has been less than forthcoming in their discovery obligations. The District Court for the Southern District of Florida is one of the latest courts to order such a remedy, granting plaintiff’s motion to compel a forensic examination and ordering that an independent expert “mirror image and/or acquire all data present on Defendant’s cell phone.”

Reminder to Alcoholic Beverage Licensees: Annual TTB Filing Due July 1

by Howard D. Geneslaw

Posted in Liquor Licensing

On June 22, 2021

Businesses that sell or serve alcoholic beverages, such as liquor stores, grocery stores, bars, and restaurants, not only must obtain the appropriate retail license within the jurisdictions in which they operate, but are also subject to Alcohol Dealer Registration with the Alcohol and Tobacco Tax and Trade Bureau (“TTB”) within the U.S. Department of the Treasury. This often overlooked registration requirement must be satisfied prior to commencement of alcoholic beverage sales, and any changes in the ownership of the business, business locations, and certain other information must be disclosed annually in a filing that is due July 1. The registration requirement arises from Title 26 of the United States Code (specifically, Subtitle E, Chapter 51 of the Internal Revenue Code) and applies to any “dealer,” which is defined in 27 CFR § 31.1 as “[a]ny person who sells, or offers for sale, any distilled spirits, wines, or beer.” Thus, retail dealers include liquor stores, restaurants, bars, private clubs, fraternal organizations, grocery stores, supermarkets, hotels, sports stadiums, caterers, trains, aircraft, and vessels. Wholesalers and importers are also included within the definition of “dealer.” Subject to certain exceptions, both retail dealers and wholesale dealers must comply with the applicable registration requirements. Registration entails filing TTB Form 5630.5d before engaging in business and on or before July 1...

Consumer Fraud Class Action Dismissed With Prejudice: Law Enforcement Tows Are Not Covered by the New Jersey Predatory Towing Prevention Act

by Michael R. McDonald and Caroline E. Oks

Posted in Class Action Defense

On June 21, 2021

On June 14, 2021, Judge Thomas J. Walsh of the Superior Court of New Jersey put an end to the long-running putative class action lawsuit in Kiley v. Tumino’s Towing, which sought to exploit regulations promulgated under the Predatory Towing Prevention Act (PTPA) by the Director of the Division of Consumer Affairs (DCA). The action was removed to federal court under the Class Action Fairness Act, where the magistrate judge initially denied a motion to remand and permitted jurisdictional discovery, but the district court judge later remanded back to state court. Finally addressing the merits, the Superior Court granted the defendants’ motion to dismiss the complaint, with prejudice, agreeing with Tumino’s Towing that the PTPA was not applicable to the towing services requested by law enforcement and performed in accordance with a duly-authorized municipal ordinance. As such, the plaintiff’s sole remaining cause of action for alleged violation of the Consumer Fraud Act (CFA) could not stand. In Kiley, the complaint alleged that the plaintiff’s vehicle was towed by Tumino’s Towing, at the request of the Ridgefield Park Police Department, because his vehicle was illegally parked during a snow emergency. After paying his parking ticket at police headquarters, the plaintiff was given a vehicle release authorization, which he brought to Tumino’s Towing to obtain the release...

EEOC Issues Updated COVID-19 Technical Assistance Guidance for Employers

by Gibbons P.C.

Posted in COVID-19

On June 11, 2021

The Equal Employment Opportunity Commission (EEOC) recently issued updated and expanded guidance concerning the COVID-19 pandemic (“Guidance”), addressing questions arising under the federal equal employment opportunity (EEO) laws concerning mandatory employer vaccination programs and accommodation requirements, along with vaccine incentives.

Gibbons Director David J. Freeman Receives Distinguished Service Award From New York City Brownfield Partnership

by Gibbons P.C.

Posted in Development/Redevelopment

On June 8, 2021

David J. Freeman, a Director in the Environmental Group of Gibbons P.C., has been honored by the New York City Brownfield Partnership (NYCBP) as the 2021 recipient of the organization’s Distinguished Service Award. The Award promotes excellence in brownfield redevelopment each year by honoring an individual who has made a significant impact on brownfield redevelopment in New York City.

Timing Is Everything: SDNY Limits Relief for Plaintiffs Prematurely Seeking Serious ESI-Related Sanctions Under Rule 37(e)(2)

by Gibbons P.C.

Posted in General Litigation

On June 3, 2021

In DoubleLine Capital LP v. Odebrecht Finance, Ltd., the Southern District of New York issued a decision with important implications regarding the timing of spoliation motions and imposition of e-discovery sanctions under Federal Rule of Civil Procedure 37(e)(2). The decision highlights the challenges litigants face when seeking relief under this provision and, in particular, satisfying the onus to establish an “intent to deprive” the opposing party of deleted discovery. As this blog has previously discussed, the sanctions available under this subsection are available only in “egregious cases,” require a high evidentiary bar, and are highly dependent on timing and the proper development of a factual record. In this securities fraud case, the plaintiffs sought a mandatory adverse inference based on the claim that the defendants destroyed encryption keys needed to access the “MyWebDay” platform, an internal “shadow” accounting system used to track illicit bribe payments, which they contended contained evidence essential to the litigation. Despite ultimately admitting to destroying the encryption keys, the defendants argued that it was too early in discovery for the court to impose sanctions. Specifically, the defendants argued that spoliation sanctions would be inappropriate because the plaintiffs “have not (and cannot) demonstrate that the lost information cannot be replaced in discovery, and therefore have not shown that any relevant facts ‘have...