A recent Seventh Circuit decision indicates that companies may find it increasingly difficult to recover antitrust damages on behalf of foreign subsidiaries in US courts, conforming with the growing trend of curtailing extraterritorial antitrust enforcement and shifting recourse to foreign jurisdictions.

In Motorola Mobility LLC v. AU Optronics Corp., Motorola was barred from recovering damages on behalf of its foreign subsidiaries under the Foreign Trade Antitrust Improvements Act (FTAIA). Motorola alleged that the defendants, foreign manufacturers of panels incorporated into Motorola’s cellphones, violated antitrust laws by fixing the prices of panels that were sold directly to Motorola in the US or to Motorola’s foreign subsidiaries and incorporated into cellphones to be sold either in the US or abroad.

To recover damages regarding foreign subsidiaries, the FTAIA requires that the price-fixing:

The court denied recovery for Motorola’s foreign subsidiaries, reasoning that:

This decision is limited to civil actions under the Sherman Act to allow the Department of Justice to continue pursuing international criminal Sherman Act violations.

For more information on the FTAIA, see Practice Note, Foreign Trade Antitrust Improvements Act (FTAIA) and FTAIA: Determining Sherman Act Applicability Flowchart.

US companies doing business abroad and foreign companies conducting business in the US should review the reports recently published by Transparency International (TI) and the Organisation for Economic Co-operation and Development (OECD) to help minimize the risk of violating the Foreign Corrupt Practices Act of 1977 (FCPA) and international anti-corruption laws.

TI’s Corruption Perceptions Index (Index) annually scores and ranks countries according to perceived degrees of public corruption. The Index focuses on perceptions of corruption, rather than facts or data from corruption cases. Companies can use the 2014 Index to:

The OECD’s Foreign Bribery Report (Report) summarizes the 427 foreign bribery cases that have been concluded since the OECD’s Anti-Bribery Convention came into force. The Report describes patterns that emerged from the cases, for example:

Companies should analyze the Index and the Report to help inform their FCPA compliance and anti-corruption policies, as well as to assess the risk of specific business opportunities.

For resources to assist counsel in complying with anti-bribery and corruption laws and regulations, see the Bribery and Corruption Toolkit.

New legislation addressing the treatment of expatriate health plans under the Affordable Care Act (ACA) includes an exemption for both self-insured and insured plans. As one consequence, employers that sponsor insured plans may need to coordinate with their health insurers to determine how the exemption applies to expatriates.

The recently enacted Consolidated and Further Continuing Appropriations Act expands on earlier FAQ guidance issued by the Departments of Labor, Health and Human Services and Treasury to exempt expatriate health plans from many ACA requirements. The exemption applies to:

The exemption applies only to expatriate health plans issued or renewed after July 1, 2015.

For purposes of the exemption, an expatriate health plan must satisfy several criteria, including that:

Some ACA provisions continue to apply to expatriate plans, including ACA information reporting for employers and health insurers.

Some employers sponsoring group health coverage for expatriates will likely rely on health insurers to help them determine which employees are covered by the exemption. The exemption presents interpretative and compliance questions, at least some of which will likely be addressed in implementing guidance.

For more information on expatriate health plans, see Practice Note, Expatriate Coverage under the ACA.

A no-action letter recently issued by the Commodity Futures Trading Commission (CFTC) provides certain swap dealers, major swap participants and futures commission merchants (collectively, registrants) with an additional 30 days to file their annual Dodd-Frank Act chief compliance officer (CCO) reports. The CFTC also issued an advisory providing guidance on preparing the CCO report.

No-action letter 14-154 grants registrants that have a fiscal year ending on or before January 31, 2015 an additional 30 days (for a total of 90 days) to provide the CFTC with their CCO reports. Registrants that cannot comply within this extended 90-day period may furnish the CCO report up to 120 days after the end of their fiscal year as long as they inform the CFTC’s Division of Swap Dealer and Intermediary Oversight within those 90 days of any material noncompliance events that occurred during the fiscal year that is the subject of the CCO report.

In Staff Advisory No. 14-153, the CFTC provides guidance for registrants on preparing the CCO report. At a minimum, the CCO report must:

For more information on the requirements applicable to annual Dodd-Frank Act CCO reports, see Practice Note, The Dodd-Frank Act: Internal Business Conduct (IBC) Rules For Swap Dealers and MSPs: Designation of Chief Compliance Officer and Preparation of Annual Compliance Report by SDs, MSPs, and FCMs.

Counsel should review the report recently released by the American Bankruptcy Institute’s Commission to Study the Reform of Chapter 11 (ABI Commission), which contains proposed reforms to Chapter 11 of the Bankruptcy Code.

The report contains over 200 recommended proposals, many of which are debtor-friendly and may come at an expense to secured creditors. Significant recommendations include:

The ABI Commission was formed in 2012 in response to concerns that the high costs of filing a Chapter 11 bankruptcy were deterring companies from filing. The report was the result of a three-year effort by the ABI Commission, together with practitioners, academics and judges appointed to various topic-related subcommittees.

For more information on the proposed reforms, see Article, A New Chapter for Chapter 11?

ICANN (the Internet Corporation for Assigned Names and Numbers) recently announced a series of program implementation and policy reviews for early 2015 in preparation for a second round of applications for new generic top-level domain (gTLD) names under its New gTLD Program. Brand owners should reexamine whether their current brand protection strategies address the opportunities and challenges of the gTLD expansion.

The first round of applications has already resulted in 480 new top-level internet domains and well over three million second-level domain names registered within those domains. However, nearly half of the 1,900 first round applications are still under review.

Even if a brand owner decides not to apply for its own gTLD, it should:

Brand owners should also monitor ICANN’s internal program and policy review, which will include opportunities for public comment. Getting involved in this process may help ensure that ICANN adopts policies and procedures that allow brand owners to cost-effectively promote and protect their brands.

For more information on protecting a company’s brands online, see Practice Note, Brand Protection Online.

Following a recent US Supreme Court decision, employers are not required by the Fair Labor Standards Act (FLSA) to pay employees for time spent undergoing anti-theft security screenings.

Under the FLSA, employees must be paid for time spent performing their principal activities and any activities that are “integral and indispensable” to their principal activities. In Integrity Staffing Solutions, Inc. v. Busk, the Supreme Court found that the time spent in required anti-theft security screenings is not compensable because the screenings were not integral and indispensable to the employees’ principal activities. The Supreme Court held that integral and indispensable means that the activity:

However, Busk does not affect decisions requiring, for example, compensation for time spent by battery plant employees in post-shift decontamination.

In light of this decision, employers should:

For more information on compensable time under the FLSA, see Practice Note, Compensable Time.

According to a recent National Labor Relations Board (NLRB) decision, employers must allow employees with access to the employer’s e-mail system to use that e-mail during non-work time to communicate with each other about workplace issues, including union organizing.

In Purple Communications, Inc., the NLRB explicitly overruled its Register Guard decision which relied too heavily on the use of employers’ property rights in equipment and ignored the fact that e-mail has become an important means of workplace communication. Notably, the Purple Communications decision does not:

Employers should:

For more information on key issues employers should consider when monitoring employee e-mail use, see Practice Note, Electronic Workplace Monitoring and Surveillance.

A recent Fourth Circuit decision underscores for employers the importance of providing employees with notice of their rights under the FLSA.

In Cruz v. Maypa, the Fourth Circuit concluded that the statute of limitations on the plaintiff’s FLSA claim for minimum wage and overtime pay could be equitably tolled if her employer failed to comply with the FLSA’s notice requirements. Motions to dismiss based on the FLSA’s statute of limitations may be more difficult to resolve if employees claim lack of notice.

Steps that employers should take to ensure compliance with the FLSA’s notice requirements include:

Following a recent Eleventh Circuit decision, defendants in putative class actions may need to reevaluate their strategies for resolving class claims using offers of judgment under Federal Rule of Civil Procedure (FRCP) 68.

In Stein v. Buccaneers Limited Partnership, the Eleventh Circuit reversed a district court’s dismissal of a class action based on an unaccepted FRCP 68 offer of judgment that fully satisfied the named plaintiffs�� individual claims. The court held in the alternative that:

The Eleventh Circuit joined four other circuits and deepened an existing split of authority with the Seventh Circuit.

Absent further guidance from the US Supreme Court, putative class action defendants should reevaluate the effectiveness of their mooting strategy. In particular:

In all circuits, an accepted FRCP 68 offer of judgment remains an effective way to eliminate named plaintiffs before class certification, particularly if the merits of the underlying claims are weak.

A recent US District Court for the Southern District of New York (SDNY) decision serves as a reminder for counsel that they may only challenge an arbitrator’s rulings on limited grounds. A party or his counsel who brings a collateral attack against an award by suing an arbitrator or arbitral institution risks sanctions under Rule 11 of the FRCP.

In Landmark Ventures v. Cohen, Landmark was the losing party in an arbitration conducted under the rules of the International Chamber of Commerce (ICC). Landmark filed a lawsuit against the arbitrator and the ICC, alleging that the arbitrator violated her duties by ruling against Landmark and that the ICC failed to correct the ruling. Counsel for Landmark refused to dismiss the complaint despite the clearly settled law regarding arbitral immunity and even after defense counsel indicated that it would seek sanctions under Rule 11.

The SDNY granted the defense’s motion to dismiss and imposed a $20,000 sanction on Landmark’s counsel. In a companion proceeding, the SDNY confirmed the arbitral award and rejected the plaintiff’s allegations of arbitrator impropriety. Both rulings are currently under appeal.

Arbitrators and arbitral institutions enjoy absolute immunity from liability in connection with an arbitration. This principle is both codified in the rules of major arbitral institutions and is settled law. While a losing party in an arbitration may challenge an arbitral award on the limited grounds enumerated under the Federal Arbitration Act (for example, that the arbitrator exceeded his authority), that cause of action is against the opposing party and not against the arbitrator or the arbitral institution.

For an overview of the federal legal principles governing arbitration in the US, see Practice Note, Understanding the Federal Arbitration Act.

A recent Delaware Supreme Court decision reaffirms that boards have wide latitude to satisfy their Revlon duties in change-of-control transactions.

In C&J Energy Services, Inc. v. City of Miami General Employees’ and Sanitation Employees’ Retirement Trust, C&J and Nabors Industries Ltd. agreed to a transaction that was structured as a tax inversion for the benefit of C&J Following the transaction, C&J stockholders would own 47% of the stock of the combined entity. Because the transaction would cause a change of control of C&J, the Delaware Court of Chancery held that the board had a duty under Revlon to obtain the highest value reasonably attainable for its stockholders, and that the board had not satisfied that duty. As a remedy, the Court of Chancery ordered a 30-day delay for the board to solicit superior offers.

The Delaware Supreme Court reversed the Court of Chancery’s injunction. The Supreme Court held that the plaintiffs had not shown a reasonable probability of success on the merits, particularly because the board of C&J had negotiated a fiduciary out in the merger agreement that would allow for a passive market check in which any interested bidder could submit a bid to acquire C&J The Supreme Court stressed that there is no “single blueprint” for satisfying Revlon and the board is not mandated to conduct a pre-signing auction or affirmative post-signing market check. The Supreme Court added that the board had the right to take into account that the stockholders would hold an informed vote on the transaction.

For more information on this decision, see Legal Update, C&J Energy Services v. City of Miami GESERT: Delaware Supreme Court Reverses Chancery Court, Rules that Passive Market Check Satisfied Revlon.

Counsel advising on private mergers should take note of a recent Delaware Court of Chancery decision that invalidated an indemnification obligation binding stockholders who did not sign the merger agreement and that refused to enforce a release that non-signatory stockholders were required to sign before receiving the merger consideration.

In Cigna Health and Life Insurance Co. v. Audax Health Solutions, Inc., the merger agreement for the acquisition of Audax contained an indemnification obligation that made Audax stockholders liable for up to the pro rata amount of their merger consideration for breaches of Audax’s representations and warranties. Audax’s fundamental representations would survive indefinitely.

Under the merger agreement, Audax stockholders would receive the merger consideration after signing a letter of transmittal. The letter required them to agree to be bound by the indemnification obligation and also included a release of any claims against the buyer and its affiliates. Cigna Health, a preferred stockholder of Audax, refused to sign the letter of transmittal and brought suit to claim its share of the merger consideration.

The Court of Chancery held that:

Based on this decision, to ensure that indemnification obligations and releases in private mergers are enforceable, counsel should consider:

For more information on this decision, see Legal Update, Cigna v. Audax: Chancery Court Addresses Post-closing Rights and Obligations of Non-signatory Stockholders in Private Merger.

California commercial real estate brokers must now comply with the same disclosure regulations applicable to residential real estate brokers as a result of a statutory amendment expanding the definition of real property to include commercial property. California brokerage firms, individual commercial brokers and their counsel should update their standard forms to reflect these new disclosure standards and consult the statutes for additional rules.

Real estate brokers and agents in California are required to provide their clients with certain disclosures and to obtain written acknowledgments of receipt of these disclosures. The specific disclosure forms are prescribed in the regulations.

Although the statutory regulations include several important disclosure rules, the regulations pertaining to dual agency should be of particular interest to commercial brokers and agents. Prior to this new legislation, commercial real estate brokers acting as dual agents were not required to obtain written consent from the parties based on the theory that sophisticated parties in a commercial transaction do not need the same protection as the parties in a residential real estate transaction.

The disclosure and consent regulations regarding dual representation may be troubling for large commercial real estate brokerage firms in situations where its agents separately represent both parties in a transaction. This may create the potential for breaches of fiduciary duties owed by the brokerage firm to its clients.

For more information on real estate brokerage laws in California, see Legal Update, California Commercial Brokers Must Comply with Residential Disclosures and State Q&A, Real Estate Brokerage Laws and Customs: California.

The recently enacted Tax Increase Prevention Act of 2014 (Act) retroactively extends through 2014 a number of business tax provisions that had expired at the end of 2013. The Act does not make any of these provisions permanent.

The expired business tax provisions retroactively extended under the Act include:

Additionally, the Act extends the production tax credit for electricity produced from qualified energy resources at qualified facilities (including wind facilities). The extension generally applies to qualified facilities for which construction begins before January 1, 2015.

Because the Act provides only a retroactive extension, uncertainty remains in 2015 for these business tax provisions as they have once again expired.