Gibbons Law Alert

Gibbons Law Alert Blog

New Jersey Corporate Reforms Become Law

by Jonathan S. Liss and Michael D. DeLoreto

On February 6, 2018

A package of bills that reform the New Jersey Business Corporation Act (“NJBCA”) were signed into law on January 16, 2018. We previously wrote about this legislation which was modeled upon provisions of the “Delaware Business Corporation Law” and was recommended for enactment by the “New Jersey Corporate and Business Law Study Commission.” These revisions generally benefit corporate boards of directors and modernize provisions of the NJBCA. Inspections of Corporate Books and Records (P.L. 2017, c.364) Assembly Bill 2975 (Diegnan/Pinkin) modifies the NJBCA to allow corporations to impose reasonable limitations or conditions on the use or distribution of requested corporate books and records. While the law does not define such “limitations and conditions,” the legislative statement provides an example of conditioning the receipt of requested materials on the demanding shareholder agreeing to customary confidentiality obligations. The measure preserves the ultimate authority of a court to decide and order relief in actions brought by shareholders for inspection of materials. Derivative Proceedings and Shareholder Class Actions (P.L. 2017, c.362) Assembly Bill 2970 (Diegnan/Pinkin) gives corporations greater flexibility to vary the applicability or effect of commencing and maintaining a derivative proceeding and shareholder class action. This new law deviates from the prior standards and requires that the NJBCA’s provisions shall apply to a corporation unless that corporation chooses to vary the...

David Freeman to Speak at New York University Brownfields Program

by Gibbons P.C.

Posted in Development/Redevelopment / Environmental and Green Issues

On February 6, 2018

David J. Freeman, a Director in the Gibbons Environmental Department, will participate in an upcoming program entitled “New Opportunities in Brownfield Urban Redevelopment.” The event will be hosted by the NYU School of Professional Studies (NYUSPS) Schack Institute of Real Estate on February 22 from 9:00 to 11:00 a.m. This event is free to attend, but registration is required. Mr. Freeman will discuss recent developments in the federal, New York State, and New York City brownfield programs, including the controversial proposal in Governor Cuomo’s budget bill to defer payment of certain tax credits earned under the New York State program. In addition to Mr. Freeman, panelists will include Barry Hersh, Clinical Associate Professor, NYUSPS Schack Institute of Real Estate; Jean Hamerman, Deputy Director, Center for Creative Land Recycling; Michael Taylor, President, Vita Nouva LLC; and Daniel Walsh, Director, New York City Mayor’s Office of Environmental Remediation.

Second Circuit Clarifies Burden of Rebutting the Basic Presumption Under Halliburton II

by Jason R. Halpin

Posted in Securities

On January 29, 2018

In In re Goldman Sachs Group, Inc. Sec. Litig., the Second Circuit confirmed that, at the class-certification stage in a securities-fraud class action, the defendant bears the burden of persuasion to rebut the presumption of reliance under Basic v. Levinson by a preponderance of the evidence. The decision follows on the heels of a separate Second Circuit panel’s similar decision in Waggoner v. Barclays PLC and clarifies that a defendant need not provide “conclusive evidence” to rebut the presumption. Goldman Sachs is one of several federal court decisions interpreting Halliburton Co. v. Erica P. John Fund, Inc. (Halliburton II), which declined to dispense with the Basic presumption of reliance – which is premised on the “fraud-on-the-market” theory – but held that the presumption can be rebutted by “any showing that severs the link between the alleged misrepresentation and either the price received (or paid) by the plaintiff, or his decision to trade at a fair market price.” Since Halliburton II was handed down, courts have wrestled with the proof a defendant must offer to rebut the presumption. In Waggoner v. Barclays PLC, issued in November 2017, the Second Circuit resolved the question by holding that a defendant bears the burden of persuasion to rebut the Basic presumption by a preponderance of the evidence. In Goldman Sachs,...

A Cloud of Confusion: The EDPA Compels Google to Disclose Data Stored Abroad Under the Stored Communications Act

by Gibbons P.C.

Posted in E-Discovery: Legal Decisions and Court Rules

On January 29, 2018

The Eastern District of Pennsylvania, in a departure from the Second Circuit’s Microsoft ruling, recently required Google to comply with search warrants issued pursuant to the Stored Communications Act (“SCA”), and produce data stored on servers abroad. The Eastern District joins other district courts, including the Northern District of California and the Eastern District of Wisconsin, in requiring technology companies to comply with subpoenas or warrants issued pursuant to the SCA and produce internationally-stored data. See In re Two Email Accounts Stored at Google, Inc., No. 17-1234, 2017 U.S. Dist. LEXIS 101691 (E.D. Wis. June 30, 2017); In re Search of Content that is Stored at Premises Controlled by Google, No. 16-80263, 2017 U.S. Dist. LEXIS 59990 (N.D. Cal., Apr. 19, 2017). In In re Google Search Warrants, the court found that Google’s compliance with the government’s warrants required a domestic application of the SCA because the relevant conduct, data retrieval and production, took place at Google’s headquarters in California. In support of its holding, the court distinguished Google’s method of data storage from Microsoft: whereas Microsoft stored its data in different centers abroad, Google breaks its data into “shards,” and “stores the shards in different network locations in different countries at the same time.” These data shards “only become comprehensible when the file is fully...

President Trump Nominates Fifth Board Member to Round Out NLRB

by Gibbons P.C.

Posted in Labor

On January 19, 2018

Earlier this month, President Donald Trump nominated management-side labor attorney, John F. Ring, to the National Labor Relations Board (NLRB). This is a significant nomination because, if Mr. Ring receives Senate approval, the Board will once again be poised to revisit pro-union actions that the NLRB took under the prior administration. This is good news for the business community. Last month, a fully-constituted five member Board took several actions that began a much anticipated releveling of the playing field between Big Labor and Corporate America in the aftermath of profound pro-union actions. Last month’s actions included decisions restoring traditional standards for deciding what constitutes an “appropriate collective bargaining unit” and when two or more entities are “joint employers.” These changes were welcomed by the business community because they provide a more balanced approach to deciding these issues. Shortly after the NLRB’s actions last month, the term of then-Chairman Philip A. Miscimarra expired, leaving one seat at the Board open and the NLRB presumably split two-to-two on a host of additional controversial pro-union actions taken by the Board under the prior administration. (Those actions include the propriety of the NLRB’s “quickie” election rule and a decision giving employees a presumptive right to use their employers’ email systems for non-business purposes.) Two of the current Board Members, Mark Gaston Pearce and Lauren...

Gov. Murphy’s First Executive Order Prohibits State Government from Asking Applicants about Salary History

by Gibbons P.C.

Posted in Discrimination / State Legislation

On January 18, 2018

Governor Phil Murphy has signed an executive order which bars state workers from asking job applicants seeking positions with the state about their previous salaries in his first official act after his swearing-in on January 16, 2018. State entities may now only inquire as to an applicant’s past salary history after the entity has made a conditional offer of employment, which includes an explanation of the compensation package being offered to the applicant. The goal of the executive order is to eliminate wage inequalities that result from female employees who accept lower starting salaries and then remain on a lower compensation track, with pay disparities compounding over time. Significantly, at the signing ceremony, the Governor stated that he would sign a bill that extended these same provisions to private sector employers which the legislative sponsors vowed to move quickly to his desk. In fact, legislation has already been introduced that prohibits an employer from inquiring about the salary history of an applicant. Assembly Bill 1094 was introduced on January 9, 2018 by Assemblywoman Joanne Downey (D-11) and referred to the Assembly Labor Committee. Senate Bill 559 was introduced by Senator Nia Gill (D-34) on January 9, 2018 and referred to the Senate Labor Committee. The legislation, described by legislative sponsors as an effort to promote...

Governor Murphy Takes the Oath of Office, Executive Action on Pay Equity

by David J. Pascrell and Michael D. DeLoreto

Posted in State Government

On January 16, 2018

Phil Murphy was sworn in as New Jersey’s 56th Governor on January 16, 2018. Also assuming office was New Jersey’s second Lt. Governor, Sheila Oliver. In his Inaugural Address, Governor Murphy’s theme was one of inclusiveness and making New Jersey fairer and stronger for all residents. He spoke of restoring confidence in state government, leading through progressive policies based on common sense, and enacting a State Budget that was both fiscally and morally responsible. He specifically challenged the Legislature to send him legislation to restore funding for women’s healthcare and Planned Parenthood; raise the minimum wage to $15 per hour; provide equal pay for women; require employers to provide earned sick leave; expand voting rights; and enact new gun safety laws. The Governor noted that each of these bills would be met with a signing ceremony upon its passage. The Governor also took action and signed an Executive Order barring state workers from asking job applicants seeking positions with the state about their previous salaries. At the signing ceremony, the Governor publicly stated he would sign a bill that extended these same provisions to private sector employers. As Governor Murphy takes office, he has already nominated most of his Cabinet and named his Senior Staff. The Senate is expected to take up the Cabinet nominations quickly...

DOL Adopts Primary Beneficiary Test to Determine Intern Status Under Wage Hour Law

by Gibbons P.C.

Posted in Wage and Hour

On January 16, 2018

On January 5, 2018, the Department of Labor (DOL) withdrew its six-factor test, established by a 2010 DOL guidance, used to determine whether interns and students are considered employees and, thus, covered by the Fair Labor Standard Act (FLSA), and, in its place, adopted a seven-factor test – listed in Fact Sheet 71 – applied by the Second Circuit in Glatt v. Fox Searchlight Pictures, Inc. The abandoned six-factor test, issued under the Obama Administration, required that all of the criteria be met in order to find that an intern is not an employee under the FLSA. In 2015, the Second Circuit disregarded the DOL test in the Glatt ruling. In deciding against the unpaid interns at Fox Searchlight, the Second Circuit held that the six-factor test was too rigid. Subsequently, the Second Circuit ruled that in determining whether interns are classified as employees under the FLSA, the “economic reality” between the intern and the employer should be evaluated to determine which party is the “primary beneficiary” of the relationship. The Second Circuit applied a non-exhaustive list of seven factors to use in the “primary beneficiary” test, but cautioned that “[a]pplying these considerations requires weighing and balancing all of the circumstances” and “[n]o one factor is dispositive.” Importantly, the new DOL guidance announcing the adoption...

TC Heartland Changed Controlling Law for Waiver of the Right to Object to Venue Under Rule 12

by Gibbons P.C.

Posted in Intellectual Property

On January 12, 2018

The Federal Circuit recently decided In re Micron, in which the panel resolved a district court split, holding that TC Heartland v. Kraft Foods changed controlling law for the purposes of Rule 12 waiver. Micron petitioned the Federal Circuit for a writ of mandamus to set aside the district court’s denial of Micron’s post-TC Heartland motion to dismiss or to transfer the case for improper venue. The district court held that Micron had waived its venue objection under Rule 12(g)(2) and (h)(1)(A) by failing to object to venue in its initial motion to dismiss, concluding that TC Heartland was not a change of law that would make waiver inappropriate. The Federal Circuit granted the petition for mandamus, vacated the district court order, and remanded. A defendant objecting to venue may file a motion to dismiss for improper venue under Rule 12(b)(3). The ability to file a Rule 12(b)(3) motion, however, is constrained by Rule 12(h)(1)(A), which says a venue defense under Rule 12 is waived if it is omitted from an earlier filed motion to dismiss under Rule 12, in which the venue defense was “available to the defendant.” The question before the Federal Circuit was “whether the [TC Heartland] venue defense was available to Micron in August 2016.” The panel answered in the negative because...

Committee Assignments for State Senate and General Assembly Announced

by David J. Pascrell and Michael D. DeLoreto

Posted in State Government

On January 11, 2018

Senate President Steve Sweeney and Assembly Speaker Craig Coughlin announced the committee chairpersons and committee members for the 218th Legislative Session. While most committee chairs remained the same, several important committees will see new leaders in both the Assembly and Senate. Assemblywoman Eliana Pintor Marin (D-28) became Chairwoman of the Assembly Budget Committee, succeeding Assemblyman Gary Schaer (D-36) who had chaired the committee for the past several sessions. Assemblyman Gordon Johnson (D-37) returned to his chairmanship of the Assembly Commerce Committee after having relinquished that role last session, and Assemblyman John McKeon (D-27) assumed the Chairmanship of the Assembly Financial Institutions and Insurance Committee. A new committee, the Assembly Science and Technology Committee, was formed and will be chaired by Assemblyman Andrew Zwicker (D-16). Lastly, Assemblywoman Nancy Pinkin (D-18) will chair the Assembly Environment and Solid Waste Committee. Senator Bob Gordon (D-38) took over the chairmanship of the Senate Transportation Committee, a position previously held by Senator Nick Sacco (D-32). By becoming Chair of Senate Transportation, Senator Gordon relinquished his Chairmanship of the Senate Legislative Oversight Committee, which will now be led by Senator Brian Stack (D-33). Senator Nilsa Cruz-Perez (D-5) is the new Chairwoman of the Senate Economic Growth Committee, which was previously chaired by Senator Raymond Lesniak who retired from the Senate. Senator...