California’s Fourth District Court of Appeal cracked down on dealership for backdating a contract and failing to itemize insurance costs in the contract. However, with regard to the buyer’s remedy, the Court confirmed that the buyer does not get to rescind the contract and keep the vehicle. In addition, the dealership may be entitled to an offset for the buyer’s use of the vehicle.

Taxpayers who have been relying upon Section 530 to provide relief with respect to their classification of service providers as independent contractors rather than employees should take note of the fact that Section 530 is now under attack from Congress and the Obama Administration.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) will significantly change the regulatory regime governing investment advisers, particularly investment advisers to private funds, such as hedge funds and private equity funds. The primary purpose of the new rules and requirements is to “fill the regulatory gap,” by requiring advisers to private funds to register as investment advisers with the Securities and Exchange Commission (SEC) or state securities regulators, unless an exemption applies, and provide information about their activities to the SEC.

The Collins Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) will have significant effects on the capital requirements for bank holding companies.

On July 21, the U.S. Court of Appeals for the Ninth Circuit provided important guidance on a credit card issuer’s obligation to disclose to consumers, in a “clear and conspicuous” manner, the annual percentage rate (“APR”) set forth in credit card solicitations. In Rubio v. Capital One Bank,¹ the court held that the “clarity” of credit card APR disclosures is a question of law and that Rubio stated a Truth in Lending Act (“TILA”)² claim, because the issuer failed to show, as a matter of law, that it made its APR disclosures “clearly and conspicuously” as required by Regulation Z.³ In so holding, the court focused on the issuer’s use of the term “fixed” and on disclosures outside the “Schumer Box” that the issuer could change the APR.

The staggered deadlines for filing Biennial Ownership Reports by noncommercial educational radio and television stations remain in effect and are tied to the anniversary date of their respective license renewal filing deadlines

In recent years, many hedge funds have significantly increased their holdings in exchange-traded funds (ETFs). Historically, hedge funds primarily acquired short positions in ETFs to hedge their long positions in a particular industry segment by obtaining short exposure to an entirely different industry segment. However, many hedge funds are now acquiring long positions in ETFs as part of their core investment strategies. Hedge funds and their managers should be aware that substantially increasing their long positions in ETFs could result in such hedge funds violating the ownership limit set forth in Section 12(d)(1)(A)(i) of the Investment Company Act of 1940 (the Investment Company Act). Although Section 12(d)(1)(A)’s limitations apply to investments in any registered investment company, including closed-end funds, the discussion below focuses on ETFs due to their popularity as a component of the investment strategies of hedge fund managers.

It used to be that patent rights were deemed to stop at the issuing country’s border. The EU is wrestling with the concept of a European Patent, but patents issued by the United States were not generally considered enforceable against manufacturing and sales activities that occurred outside the U.S.. Now comes the 2010 decision in SEB v. Montgomery Ward & Co., Inc. from the U.S. Court of Appeals for the Federal Circuit. SEB expands potential infringement liability for non-U.S. defendants in many respects, most notably by broadening the standard for inducement of infringement under 35 USC Section 271(b).

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) restricts a bank’s investments in proprietary trading and limits its aggregate investment in any and all hedge funds and private equity funds to no more than three percent of its Tier 1 capital.

Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act imposes a new derivatives regulation regime that will have a significant effect on a wide range of market participants.

The doctrine of without prejudice is as old as the hills but continues to be a contentious issue between parties when one seeks to rely on it. Two recent decisions of the English High Court and the UK Employment Appeal Tribunal respectively highlight the difficulty in defining the exact scope of the rule and emphasise that extreme care must be taken to ensure that communications intended to be privileged indeed attract privilege. Important points of detail regarding how a “without prejudice” marking applies must be kept in mind before seeking to rely on it.

This advisory is directed to television stations with locally-produced programming whose signals were carried by at least one cable system located outside the station’s local service area or by a satellite provider which provided service to at least one viewer outside the station’s local service area during 2009. Such stations are eligible to file royalty claims for compensation with the United States Copyright Royalty Board in Washington, DC. These filings are due by Monday, August 2, 2010 at 5pm (EDT) because the customary deadline of July 31 falls on a weekend.¹

This Broadcast Station EEO Advisory is directed to radio and television stations licensed to communities in: California, Illinois, North Carolina, South Carolina and Wisconsin, and highlights the upcoming deadlines for compliance with the FCC’s EEO Rule.

Anybody who recalls the Tom Cruise scene in Minority Report, where he is bombarded by marketing messages in response to the scanning of his “new” eyes by each store he passes, will have an idea of one possible advertisers’ utopia. In the real world, the pressure to have ever-more-targeted marketing based on detailed user/customer profiles is coming up against increasing attempts to restrict/control such efforts, given regulators’ privacy concerns. This tension is currently highlighted by the issue of cookie use and consents.

Communications counsel John K. Hane recently authored an article on changes in retransmission-consent markets which appeared in the July/August 2010 edition of The Financial Manager. You can read the article here: http://viewer.zmags.com/publication/72b4db28#/72b4db28/8.

On June 15, 2010, EPA withdrew a conditional exclusion from regulation under the hazardous waste rules of the Resource Conservation and Recovery Act (RCRA) for Emission Comparable Fuel (ECF), which had become effective on January 20, 2009.

The Dodd-Frank Act will enact significant financial reform legislation that will have a major and lasting impact on the operations of banks, financial institutions and other financial services organizations doing business in the United States.

The U.S. Senate voted today to approve the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which President Obama is expected to sign into law as early as next week. Upon enactment, the Dodd-Frank Act immediately alters the definition of accredited investor under Regulation D of the Securities Act of 1933 (Securities Act), which will reduce the pool of individuals qualified to invest in private offerings and immediately affect issuers currently engaged in private placements.

On July 15, 2010, the U.S. Senate approved the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The Dodd-Frank Act was approved by the House of Representatives on June 30, 2010 and is now expected to be signed into law by President Obama. The legislation primarily is a reform of the financial services industry but also contains disclosure provisions for companies in the oil, natural gas and minerals sectors.

On July 15, 2010, the U.S. Senate approved the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The Dodd-Frank Act was approved by the U.S. House of Representatives on June 30, 2010 and is now expected to be signed into law by President Obama. Title X of the Dodd-Frank Act, also cited as the Consumer Financial Protection Act of 2010, establishes a powerful new consumer protection agency.

Under legislation sent to President Obama today, non-accelerated filers will be permanently exempt from the requirement to file auditor attestation reports on management’s assessment of internal control over financial reporting.

With the United States Senate’s approval on July 15, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) is now expected to be signed into law by President Obama. The Dodd-Frank Act contains a number of significant executive compensation and corporate governance provisions that will apply to U.S. public companies. This alert briefly summarizes the key provisions in these areas and when they become effective.

FCC Eliminates Earlier Proposed Fee Reductions for Radio and Sets Hefty Increases for UHF Television Stations

Many people routinely click the Agree button on websites without reading the terms of service. Many application developers build tools or other software to work with other online services or software without regard to the terms of services or EULAs. Doing so can be perilous for many reasons. A pending case, Facebook v. Power Ventures dba/Power.com, highlights another reason, especially for application developers: potential criminal liability.

The United States and European Union entered into the second stage of their historic Open Skies Air Transport Agreement, providing fresh incentives to further liberalize air services and airline traffic rights.

The new rule adopted unanimously by the Securities and Exchange Commission (SEC) on June 30, 2010 is designed to close off the main avenues by which government officials reward investment advisers for making or coordinating campaign contributions.

As some of the toughest insurance reforms in history, this year’s sweeping health care reform legislation will have substantial effects on payors. According to the Association of Health Insurance Plans, every page of the health reform legislation will affect the industry.¹ The precise effects are as yet unknown, as many details will be determined by federal agencies through the regulatory process. This white paper examines the provisions that are likely to have the greatest impact on payors.

In 2007, six federal agencies² issued final Rules on Identity Theft Red Flags and Address Discrepancies Under the Fair and Accurate Credit Transactions (FACT) Act of 2003.³ The Rules implement Section 114 and Section 315 of the FACT Act, which specifically call for “establishment of procedures for the identification of possible instances of identity theft” and “reconciling addresses.”⁴ Guidelines and supplemental information were released to assist FTC-regulated entities who were originally required to comply by November 1, 2008. However, FTC-regulated entities now have until December 31, 2010 to comply. This new deadline, representing an extension of over two years from the initial compliance date, was requested by members of Congress to allow for time to clarify which industries should be covered by the rules. Meanwhile, a court has excluded attorneys from coverage, and the medical profession is seeking a similar exclusion.

On June 24, the U.S. District Court for the Southern District of New York dismissed the Securities and Exchange Commission’s first-ever complaint against individuals allegedly involved in insider trading in credit derivatives. This decision, in SEC v. Rorech et al., represents both a loss and a win for the SEC. While the court found the two defendants had not engaged in insider trading, and therefore dismissed the lawsuit, it also found the credit default swaps at issue to be "securities-based swap agreements" actionable under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.

A store in San Francisco recently received a makeover: a new coat of ecru-colored paint, a large green-colored logo and the addition of the term GREEN to its previous store name. Granted, in San Francisco “green” may have another connotation (especially when the store is run by a suspiciously relaxed hippie), but in this case it is clear that this store has made a commitment to providing environment-friendly goods and services. Or has it really?

In May, the FCC released a Notice of Inquiry (“NOI”) as part of its 2010 Quadrennial Review of its media ownership rules. According to the FCC, the purpose of the NOI is to take a “fresh look at the current rules to determine whether they promote the Commission’s goals of competition, localism and diversity.” The NOI is generally asking for comment regarding its policy goals and how to apply its specific media ownership rules in order to best achieve those goals. The Commission is planning on using the comments filed in this proceeding to help the agency formulate a subsequent formal Notice of Proposed Rulemaking. Pursuant to recent publication of the NOI in the Federal Register, comments are due July 12, 2010, with reply comments due July 26, 2010.

As of June 21, 2010, federal contractors and their subcontractors are required to post notices of their employees’ rights under the National Labor Relations Act (“NLRA”) to form, join or support a union and to bargain collectively with their employers, and to engage in other protected concerted activity with or without a union, or to refrain from such activity, according to recent U.S. Department of Labor (“DOL”) regulations implementing Executive Order 13496, signed by President Obama on January 30, 2009. In addition, federal contracts and subcontracts must include a specific provision requiring federal contractors and subcontractors to post the notice.

Co-head of Pillsbury’s energy industry team Robert A. James, senior environment, land use & natural resources associate Stella Dorman and energy partner Joseph H. Fagan co-author this article, in which they describe the key commercial aspects of the U.S. oil sector, the energy policy, key laws and regulations concerning oil activities, oil reservoir ownership and mineral rights, and oil exploration and production, and health and safety rules, and other issues affecting the oil regulation industry. Reproduced with permission from Law Business Research. The article, “United States,” was first published in Getting the Deal Through - Gas Regulation 2010 (published in March 2010; contributing editor Craig Spurn, Blake Cassels & Graydon LLP).

The Obama administration has taken the first step in export control reform by easing the pathway for U.S. companies to export certain encryption items. In this article, Sanjay Jose Mullick, a Washington-based member of Pillsbury's International Trade Practice, explains what the new encryption rules mean for U.S. exporters.

Frederick A. Brodie, partner in Pillsbury's litigation practice, authored this article, which originally appeared in the June/July 2010 issue of Executive Counsel.

Alex Tomaszczuk, a member of Pillsbury's Government Contracts & Disputes practice, authored this article, which originally appeared in Government Leasing News, Summer 2010.

The Honorable E. Leo Milonas and Frederick A. Brodie, partners in Pillsbury's litigation practice, authored this article which originally appeared in The New York Law Journal, June 29, 2010.

For the first time in years, the U.S. Patent and Trademark Office’s Trademark Trial and Appeal Board (“TTAB”) on June 11 issued a precedential decision sustaining an opposition based on a likelihood of trademark dilution. The decision (see http://ttabvue.uspto.gov/ttabvue/ttabvue-91166701-OPP-99.pdf) gives owners of well-known marks renewed hope of halting the unauthorized registration of similar marks without having to establish a likelihood of confusion. This rare outcome also illustrates the critical role that evidence—such as a well-designed consumer survey— plays in trademark dilution claims.

On June 25, 2010, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) published an interim final rule making substantial modifications to the review and classification procedures required for encryption items to be exported from the United States. The revisions to the Export Administration Regulations (EAR) modify the prior authorization requirements for the use of Export License Exception ENC and the requirements for qualifying an encryption commodity or software for export as a mass market encryption item.

On June 25, 2010, President Obama signed into law the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (the “Act”), which was passed by the House of Representatives the night before by a 417-1 margin and by the Senate on June 18.¹ Title II of the Act provides the much-anticipated pension funding relief for defined benefit pension plans that experienced large losses in asset values during 2008, expanding the prior funding relief provided under Worker, Retiree and Employer Recovery Act of 2008 (“WRERA”).² Here is a brief summary of the key provisions of the Act providing funding relief to single-employer defined benefit pension plans.

Among the many financial reforms enacted in the past year is the federal Credit Card Accountability, Responsibility and Disclosure Act, which includes provisions that apply to gift cards. These provisions, taking effect Aug. 22, will have a significant impact on banks because the act covers a broad range of products and services. This article, written by Consumer & Retail partner Deborah Thoren-Peden and Litigation associate Amy Pierce, originally appeared in the June 25, 2010 issue of American Banker.

On June 1, 2010, the Department of Energy (DOE) issued a Funding Opportunity Announcement (FOA) that aims to improve short-term wind forecasting and research the effect of improved forecasts on utility operations. The DOE will provide $2 million this year to the National Oceanic and Atmospheric Administration (NOAA) to fund its technical support of the selected projects and $1 million to one or two competitively selected awardees. The DOE also anticipates providing an additional $3 million in fiscal year 2011 to the NOAA and the recipient team(s) for completing the project.

As we wrote in an April 8, 2010 Client Alert, the FCC revised its Ownership Report form for commercial stations, Form 323, and announced that the deadline for all commercial broadcasters to file the new Form 323 is July 8, 2010. The FCC also expanded the types of entities and licensees required to file Form 323, and announced that owners of all commercial AM, FM, TV, LPTV and Class A TV stations would need to file the new form.

The next Children’s Television Programming Report must be filed with the FCC and placed in stations’ local Public Inspection Files by July 10, 2010, reflecting programming aired during the months of April, May and June, 2010.

In this white paper we summarize the prospective impact of recent U.S. health care reform legislation on hospitals, as seen in four major areas: changes in funding and reimbursement, changes in clinical operations, transparency requirements, and additional oversight measures. The specific effects include increased reporting requirements, increased funding for Medicaid and primary care, and increased taxes on medical devices.

Sponsors have made some tentative moves to share risk on new nuclear plant construction. But lender and investor perceptions are still obstacles to further shifts. Energy partners George Borovas and John Mauel and associate Li Zhang discuss emerging nuclear finance structures, emerging nuclear risk allocation methods, construction delays and EPC contracts, in this article, which originally appeared in the June 22, 2010 edition of Project Finance Magazine.

On June 17, the U.S. Supreme Court unanimously upheld the legality of the Ontario, California Police Department's audit of police Sgt. Jeff Quon’s text messages in his department-issued pager, in City of Ontario v. Quon. Declining to issue a broad holding on employee privacy rights in electronic communications, the Court decided the case on the narrow point that, even assuming that Quon had a reasonable expectation of privacy in his text messages, the search was reasonable because it was motivated by a legitimate work-related purpose and was not excessive in scope. Nonetheless, the opinion emphasized the importance of well-crafted employer privacy policies, noting that “employer policies concerning communications will of course shape the reasonable expectations of their employees, especially to the extent that such policies are clearly communicated.”

In an economic environment where students are often willing, and, in fact eager, to intern for for-profit companies for the experience alone, many companies are, for good reason, interested in considering this option. It is important, however, to proceed with extreme caution.

In September 2009, the Internal Revenue Service announced its intention to conduct an employment tax National Research Program beginning in 2010 (see our previous client alerts “Employment Issues & the IRS” and “IRS Employment Tax Audit Letters Are Coming”). This program will result in employment tax audits of approximately 6,000 U.S. companies over the next three years, and among other things, will focus on worker classifications. To be ready for such audits, employers should review worker classifications immediately.

The Delaware Court of Chancery recently issued two important decisions regarding controlling stockholder transactions. In re CNX Gas Corporation Shareholders Litigation¹ concluded that a proposed two-step freeze-out transaction is subject to the entire fairness standard (as opposed to the deferential business judgment rule) unless the tender offer is both recommended by a special committee of independent directors with the authority to negotiate with the controlling stockholder and has a majority-of-the-minority tender condition. In Gentile v. Rossette,² a controlling stockholder/director was found personally liable for participating in a debt conversion that was found to be unfair in price and process. Directors involved in controlling stockholder transactions should be mindful of the “unified” standard announced in CNX and the lessons of Gentile.

On May 28, 2010, the Internal Revenue Service released Private Letter Ruling 201021048 (the “Ruling”) addressing several issues related to the federal income and gift taxation of registered domestic partners in California. Under the Ruling, income of registered domestic partners is treated consistently with California state law, and thus is treated as community property for federal income tax purposes.

A recent decision of the English High Court makes clear that extreme care must be taken to ensure that communications intended to be privileged indeed attract privilege. Important points of detail regarding how a “without prejudice” marking applies must be kept in mind before seeking to rely on it. Parties should always check with counsel to prevent the label not being worth the paper it is written on. The decision also illustrates that specialist advice should always be sought when seeking to obtain an asset freezing order or to overturn one.

The Federal Deposit Insurance Corporation has released additional guidance regarding qualifications for failed bank acquisitions by private investors.

In American Needle, Inc. v. National Football League, et al. (560 U.S. __ (2010)), decided May 24, 2010, the Supreme Court held in a unanimous decision authored by Justice Stevens that the National Football League Properties’ exclusive contract with Reebok amounted to "concerted action" by separate entities that warranted scrutiny under Section 1 of the Sherman Act.

This month, the cable news documentary show On the Case with Paula Zahn (Discovery Investigation Network) features Pillsbury litigators Tom Hill and Alvin Dunn on a very significant and unusual death penalty case—that of John Spirko, who has now spent 30 years in prison for a murder based on evidence that the State of Ohio knew was false.

Caithness Energy has now broken ground in eastern Oregon for the world's largest wind farm, thanks to assistance from Pillsbury that helped convince the U.S. Department of Defense to remove its objection to the Federal Aviation Administration's favorable "no hazard" determination for the project.

On April 26, 2010, a closely divided Ninth Circuit issued its long-awaited en banc decision in Dukes v. Wal-Mart Stores, Inc., an action on behalf of a nationwide class of female Wal-Mart employees alleging gender discrimination in violation of Title VII of the Civil Rights Act of 1965. The court’s decision affirming class certification has received widespread attention due partly to the size of the class—up to 1.5 million members—and the commensurately high potential damages. In the long run, however, by aligning the Ninth Circuit with a recent trend in the federal courts toward stricter scrutiny of class certification motions, Dukes should benefit defendants in many cases, especially cases outside the employment class action arena.

The U.S. Department of Justice and the New York District Attorney’s Office, together with the Office of Foreign Assets Control and federal and state bank regulators, have brought a number of cases in 2009 – 2010 against foreign financial institutions that clear dollar transactions through the United States involving prohibited entities and individuals under U.S. sanctions regulations. In the past, banks not subject to U.S. jurisdiction have generally avoided penalties under these regulations. The U.S. Government, however, has widened its enforcement to target financial institutions outside the U.S. for allegedly “causing” U.S. persons to violate U.S. sanctions regulations.

This edition of Pillsbury's Perspectives on Insurance Recovery covers the latest developments and trends in commercial insurance coverage.

The Opportunity
Highly profitable companies have long used tax credit investments as a tool to reduce tax liability. For one Fortune 100 technology company, however, these investment opportunities were often too small to move the needle, generated low yields, or required too much administration to justify the return. But as banks, the traditional buyers of tax credits, began reporting quarterly losses in 2008, the tax credit market responded in several ways: expected returns rose, fund-of-fund offerings increased the size of individual investments, and tax credit syndicators began offering AA-rated guaranteed returns as inducements to buyers.

In response to divergent and increasingly complex interpretations among the federal courts of appeals, the United States Supreme Court has adopted the “nerve center” test for determining a corporation’s “principal place of business” in applying the federal diversity jurisdiction statute. The Court concluded that this phrase “refers to the place where the corporation’s high level officers direct, control, and coordinate the corporation’s activities.”

“[W]e are persuaded by Pacific Bell’s argument that the cause of action as framed is defective because the unfair competition law does not make available any remedy [the plaintiff] sought in the third amended complaint.”

—California Court of Appeal in Advanced Scientific Applications v. Pacific Bell Telephone Co.

“We came, we saw, we conquered, with the very professional support by Pillsbury.”

—Håkan Osvald, Vice President and Deputy General Counsel of Atlas Copco

“CA Inc., a maker of software for mainframe computers, won a Delaware judge’s ruling that it doesn’t have to pay as much as $60 million in damages to business partner Ingres Corp.”

—Bloomberg News

“I have never before seen such a surgically complete dissection of a complaint as achieved by you and your team.”

—Capitol Bancorp chairman Joseph D. Reid, a veteran litigator, in a letter congratulating Pillsbury attorneys on their victory

“Because plaintiffs bear the burden of proving breach, and because there is no evidence of breach, Chevron is entitled to summary judgment. In addition, even if plaintiffs could show a duty and breach, the nondisclosure claim fails for lack of causation.”

—U.S. District Court Order

“As the Administrator and Committee’s interpretation of the Plan was legally correct, no abuse of discretion occurred.”

—Fifth Circuit opinion in Stone v. Unocal Termination Allowance Plan

“[Petitioners] do not provide information to support their claims that cultural resources, water quality, and wildlife will be harmed by [Cogema’s] mining activities.”

—Memorandum and Order of the Nuclear Regulatory Commission Atomic Safety and Licensing Board

“This case exemplifies everything that is wrong with Guantanamo. He’s a completely innocent man and they torture him into confessing, right out of the North Korean and communist Chinese play book.”

—The Associated Press, quoting Pillsbury partner David Cynamon

“The failure to implement the contractual methodology constituted, as the trial court found, a breach of contract. But the record does not support the trial court’s finding that the breach caused no damages ….”

—Appellate opinion reversal, resulting in a victory for Health Net of California, and setting up potential future recoveries by Health Net and other health plans

“This was an extreme policy, far beyond what California law allows, and we are pleased that the court recognized this.”

—The Sacramento Bee, quoting Pillsbury partner Tom Loran

“A Cobb County judge has dismissed a Smyrna gun seller’s lawsuit that was brought against New York Mayor Michael Bloomberg.”

—The Atlanta Journal-Constitution

“The case … is believed to be the first successful asbestos verdict against that type of defendant.”

—Plaintiffs attorneys’ press release, touting the victory, before it was overturned through Pillsbury’s successful efforts

“The legal case, argued by Pillsbury Winthrop Shaw Pittman, follows favorable rulings [secured by Pillsbury] against opposing environmental groups in three other federal courts.”

—The Sacramento Bee

“The Sacramento Municipal Utility District and the company it hired to build a new power plant in the southeastern county are locked in a high-stakes legal dispute over the project’s delay.”

—The Sacramento Bee

“Where do new tools come from?
Angry workmen and this R&D squad.”

—Popular Science, in a profile of The Stanley Works’ innovation team behindthe FuBar^®, winner of the magazine’s “Best of What’s New” Award

“This is the third legal proceeding in which Lite-On seeks to avoid paying any royalties for its manufacture and sale of DVD drives.”

—Pillsbury’s brief in support of Toshiba’s first motion in limine

“The area around New Carrollton Station has long been considered an ideal candidate for redevelopment because it serves as a commuter hub and a gateway to Washington for travelers coming from the north and east.”

—The Washington Post

“It’s tough to think of a company that has done as much to meet our standards for becoming a commercial airline.”

—U.S. Secretary of Transportation Mary Peters

According to the Second Circuit, vague cautionary language related to a forward-looking statement does not warrant protection under the PSLRA’s safe harbor, but plaintiffs nonetheless face a heavy burden in establishing a defendant’s actual knowledge that a forward-looking statement was misleading.

On May 21, the Internal Revenue Service issued Notice 2010-45 (“IRS Notice”) providing details on applying for the Qualifying Therapeutic Discovery Project Program (“QTDP Program”) established by the Patient Protection and Affordable Care Act of 2010, including the application deadline of July 21, 2010. The $1 billion QTDP Program established both a tax credit (“QTDP Credit”) and a grant (“QTDP Grant”) for investments in 2009 and 2010 by small and mid-size companies developing therapeutic medical projects. This is an update to our May 13, 2010 publication on the QTDP Program.

Beginning August 22, 2010, the federal CARD Act will (at least in most instances) restrict fees, prohibit expiration in less than five years and impose strict disclosure requirements on prepaid “cards, codes and other devices.”

The IRS Employee Plans Compliance Unit has launched its 401(k) Compliance Check Questionnaire Project and is sending instruction letters to 1,200 randomly selected sponsors of 401(k) plans that filed a Form 5500 (Annual Report) for the 2007 plan year. The IRS intends to use the information gathered to identify key compliance issues for future guidance on, and enforcement of, these issues. Although this Project is not an IRS audit or investigation, failure to respond or provide complete information will result in IRS enforcement action, which may include an examination of the 401(k) plan. Plan sponsors that must complete the Questionnaire should develop a comprehensive review process with legal counsel and third-party administrators.

This Broadcast Station EEO Advisory is directed to radio and television stations licensed to communities in: Arizona, the District of Columbia, Idaho, Maryland, Michigan, Nevada, New Mexico, Ohio, Utah, Virginia, West Virginia and Wyoming, and highlights the upcoming deadlines for compliance with the FCC’s EEO Rule.

The recent decision in Glencore Energy UK Ltd v Transworld Oil Ltd, [2010] EWHC 141 (Comm), is worthy of note for parties to sale agreements governed by English law or who might be considering an English law clause in contract negotiations. Here the Court considered whether a FOB (Free On Board) crude oil sales contract remained open for performance despite product not being delivered within the specified contractual delivery window and how damages should be assessed in the event of a breach by non-delivery.

The staggered deadlines for filing Biennial Ownership Reports by noncommercial educational radio and television stations remain in effect and are tied to their respective anniversary renewal filing deadlines.

The FCC recently released a Notice of Proposed Rulemaking (“NPRM”) proposing to revise and streamline its Part 17 rules regarding construction, marking, and lighting of antenna structures. Pursuant to the Federal Register publication that occurred today, Comments are due on July 20, 2010, with Reply Comments due on August 19, 2010.

In Goodman v. Lozano, the California Supreme Court resolved a split among the state Courts of Appeal, holding that a plaintiff who obtains a monetary judgment that is reduced to zero due to offsets from settlements with other defendants is not automatically entitled to attorneys’ fees and costs as the “prevailing party.” Indeed, the justices affirmed an award of attorney's fees and costs to the defendants in the underlying case.

In another win for longtime Pillsbury client The Stanley Works—now Stanley Black & Decker—Pillsbury Northern Virginia IP partners Jack S. Barufka and Bryan P. Collins led a cross-office team of attorneys that helped the iconic tool manufacturer prevail in a patent dispute with industry rival Zircon Corp. over inventions powering stud finders. The win comes on the heels of another impressive victory for the same Pillsbury IP attorney team in the high-profile Richardson v. The Stanley Works design patent case, which has since received substantial national attention in IP circles and across industries.

The 18^th edition of Pillsbury's Newsletter: Perspectives on Real Estate features articles written by Pillsbury attorneys from practice groups across the firm including Real Estate, Insolvency & Restructuring, Corporate & Securities and Litigation.

Prepaid “cards, codes and other devices” redeemable solely for telephone services are exempt from a new federal law that goes into effect August 22, 2010. However, if they can also be redeemed for related technology services, these products will (at least in most instances) be subject to provisions restricting fees, prohibiting expiration in less than five years, and imposing strict disclosure requirements if fees are charged or the products expire.

Thomas M. deButts, international trade partner at Pillsbury and the former Director of the U.S. Bureau of Industry and Security's Exporter Assistance Staff, wrote this article, which originally appeared in the ?ay 18, 2010 issue of International Trade Law360.

The long strange trip of the Satellite Television Extension and Localism Act ("STELA" for short) seems finally to be ending. After satellite carriers' ability to import distant broadcast signals into stations' local markets expired on December 31, 2009, Congress passed a number of short-term extensions of the predecessor law, SHVERA. The Senate passed three different versions of the bill since late 2009. The House, with a lightning fast voice vote, accepted the Senate's last version unchanged and sent the legislation to the White House for a signature from the President. The President is expected to sign the bill shortly.

In a recent opinion, the Advocate General of the European Court of Justice stated that "under EU law [the legal professional privilege] applies solely to communications between a client and an independent lawyer.” This narrower definition of lawyer-client privilege, if endorsed by the Court in its decision, creates potential confusion for large, multi-jurisdictional cases. The decision may also threaten the long-standing application of the privilege to in-house lawyers in the UK. Clients with business activities in Europe should consider how to deal with the risk that this privilege may not apply to their internal communications.

The Patient Protection and Affordable Care Act of 2010, enacted on March 23, established a new $1 billion Qualifying Therapeutic Discovery Project program, with a tax credit (“QTDP Credit”) for investments in 2009 and 2010 by small and mid-size companies developing therapeutic medical products. Companies qualifying for the QTDP Credit may apply for a grant instead (the “QTDP Grant”). By May 21^st the Secretary of the Treasury must issue the form of application and criteria guidelines for the program. Recipients will receive a credit or grant for 50% of their qualifying investments. The application process is likely to be competitive, so now is the ideal time for companies to evaluate their eligibility and prepare for the application process.

Today, Secretary of the Interior Ken Salazar announced reforms to toughen inspections and oversight of offshore oil and gas operations. Secretary Salazar's announcement comes in response to the Deepwater Horizon incident that involved 11 fatalities and resulted in the growing oil spill in the Gulf of Mexico. According to a Department of Interior (DOI) press release, the reforms "will provide federal inspectors more tools, more resources, more independence, and greater authority to enforce laws and regulations that apply to oil and gas companies operating on the Outer Continental Shelf."

On August 11, 2010,¹ Colorado will be added to the list of states that currently require gift cards to be redeemable for cash if a certain value remains on the card. Currently, that list includes the following seven states: California, Maine, Massachusetts, Montana, Rhode Island, Vermont, and Washington.

Considerable publicity has surrounded the recent enactment by Parliament of the Bribery Act 2010 (Bribery Act), with many commentaries about the fundamental change in conduct this legislation will require. In fact, bribery was and is a crime at common law and statutorily in the UK’s Prevention of Corruption Acts 1889 – 1916. However, the law in this area was seen as fragmented, certainly very old, and not entirely in compliance with the Organization for Economic Co-Operation and Development (OECD) Anti-Bribery Convention. The new Bribery Act provides a single, modern statute to tackle bribery in the UK and abroad, in both the public and private sectors. It is aimed at issues companies face in the current economic environment, offering greater certainty and consistency regarding the do’s and don’ts. It also signals a greater focus by the UK Government on newly aggressive anti-corruption enforcement.

Effective August 22, 2010, loyalty, award and promotional “cards, codes and other devices” must comply with strict disclosure requirements set forth in new federal law, or otherwise (at least in most instances) be subject to the new federal law restricting fees on these instruments and prohibiting expiration in less than five years.

The New York Court of Appeals in Racepoint Partners, LLC et al. v. JPMorgan Chase Bank, N.A., 2010 NY slip op. 0267 (N.Y. 2010), recently reiterated and strengthened its holdings as to the limited obligations of indenture trustees. The Court, in affirming the dismissal of Enron noteholder claims against JPMorgan as indenture trustee, held that the trustee had no obligation to ensure that Enron’s filings with the Securities and Exchange Commission (“SEC”) were accurate. This decision aligns New York law with the position taken by federal courts as to the proper interpretation of Section 314(a) of the Trust Indenture Act of 1939 (“TIA”), and rejects this latest attempt to impose unbargained-for and onerous obligations upon indenture trustees.

This article originally appeared in the May 2010 issue of AAA Handbook on Construction Arbitration and ADR.

Underwriters of accelerated shelf offerings that are not otherwise exempt from filing under Financial Industry Regulatory Authority, Inc. (FINRA) Rule 5110 may obtain Same Day Clearance of their FINRA filings if specific representations are made regarding their accelerated shelf offerings. Earlier this week, FINRA released a list of Frequently Asked Questions (FAQs) on using the Same Day Clearance option. This option should help to alleviate delays associated with FINRA clearance for accelerated offerings such as overnight deals.

Several members of Congress led by Senator Schumer and Congressman Van Hollen introduced today the “Democracy Is Strengthened by Casting Light On Spending in Elections” Act—the DISCLOSE Act. The House and Senate versions differ, with the Senate version vastly expanding eligibility for Lowest Unit Charge, reducing the Lowest Unit Charge, prohibiting preemption of political ads, and requiring the FCC to perform political audits of broadcasters, cable, and satellite operators.

One of the most common misconceptions about copyright law is that if you pay someone to develop software for you, it is a work made for hire and you own it. This is not necessarily correct! Erroneously relying on this misunderstanding can result in you not owning software that you have paid to have developed.

Topics include:

• FCC Issues $30,000 and $12,000 Fines to Three Co-owned Commercial Television Stations and Three Co-owned Class A Television Stations for Failure to Publicize the Existence and Location of Their Quarterly Children’s Television Programming Reports
• FCC Fines Nonresponsive Texas Cable Operator $38,000 for Emergency Alert System and Antenna Structure Violations
• FCC Fines Broadcasters $7,000 for Failure to Timely File License Renewal Applications and for Unauthorized Operation
• Idaho Station Fined $4,000 for Failure to Fully Disclose All Material Terms of a Contest

The Tennessee Supreme Court handed Pillsbury client Dynegy and seven other national energy companies a victory on April 23 when it reversed a lower appellate court and ordered the dismissal of a putative class action in Leggett v. Duke Energy et al.

The Opportunity
A Chinese real estate investment group was considering its first investment in the U.S. commercial real estate market. It identified a 5,000-unit apartment project in Texas and Maryland that satisfied its investment parameters, but the project was in the midst of the prior owners’ complex Chapter 11 proceeding—the borrowers’ equity had been wiped out, the assets were encumbered by multiple layers of CMBS debt, and the appointed Special Servicer was actively scrutinizing any proposed restructuring transaction.

Green Seal, a Pillsbury pro bono client, works with manufacturers, industry sectors, purchasing groups and governments to “green” the production and purchasing chain. The DC-headquartered nonprofit also certifies products and companies that meet specific sustainability standards, so consumers can identify products (and services) that are environmentally preferable.

The recently enacted health care reform law, the Patient Protection and Affordable Healthcare Act (the “Act”) (Pub. L. No. 111-148), includes substantial modifications to federal fraud and abuse laws. One such change is to the physician self-referral law, commonly referred to as the “Stark Law,” which regulates the financial relationships between physicians and the health care entities to which the physicians refer. A brief summary of the more significant changes follows.

In another transaction for Pillsbury’s pioneering Virtual Worlds & Video Games team, Pillsbury partners Craig A. Barbarosh, William B. Freeman and Anna M. Graves recently advised Israel-based Qlipso on a pivotal acquisition of assets belonging to Veoh Networks, Inc., one of the Web’s most popular video content and Internet television sites. For Qlipso—which has developed a Web-based platform for users to watch videos and interact in a virtual environment—the deal infuses its community with Veoh’s massive library of popular content and provider partners, spanning movies, news, sports and television and other categories, which will help draw more users to its immersive virtual platform. Veoh was on the verge of a bankruptcy filing when Qlipso agreed to acquire the assets and preserve the technology by integrating it within Qlipso’s existing platform.

The FCC has announced its proposed schedule of annual regulatory fees for Fiscal Year 2010. The final fee amounts and filing deadline will be announced in a Public Notice following consideration of Comments to be filed by May 4, 2010 and Reply Comments to be filed by May 11, 2010.

Beginning on April 22, 2010, new rules will require that contracting officers consult the Federal Awardee Performance and Integrity Information System (“FAPIIS”) as part of the responsibility determination process. Additionally, the rules impose new self-reporting obligations on government contractors. The new rulemaking is significant because of the consolidation of contractor responsibility data into a single system that all contracting officers will be required to consult and the imposition of new requirements design to maintain the accuracy of the information available in FAPIIS.

As tax season reaches its zenith, Pillsbury partner Jeffery Yablon's latest edition of "As Certain as Death—Quotations About Taxes" (2010: Tax Analysts), provides a welcome respite from paperwork and number crunching. Featuring more than 1,500 quotations from some of history's most colorful and successful figures—from Emperor Constantine and Al Capone to Henry David Thoreau to Miss Manners—Yablon's book offers a light-hearted look at taxes which Fortune reviewer Allan Sloan describes as “chicken soup for the tax-weary.”

A primer on one of the fastest-growing industries and how it could change the way we do business.

The FCC’s Media Bureau has announced that a new version of the Biennial Ownership Report Form for commercial broadcast stations, FCC Form 323, will be available on its website as of April 9, 2010. All commercial broadcast station owners must file their biennial ownership reports using the new form by July 8, 2010. However, the data used to complete the form must be accurate as of November 1, 2009.

On March 30, 2010, the Supreme Court resolved a split among the courts of appeals regarding the standard for liability under Section 36(b) of the Investment Company Act of 1940, 15 U.S.C. Section 80a-35(b), which imposes on mutual fund investment advisers a “fiduciary duty with respect to the receipt of compensation for services” and provides mutual fund investors with a private cause of action if advisers breach that fiduciary duty by charging excessive fees. Jones v. Harris Associates, L.P., No. 08-586 (Mar. 30, 2010).

On March 22, 2010, the U.S. Environmental Protection Agency (EPA) released a “pre-publication” version of its proposed mandatory greenhouse gas (GHG) reporting requirements for facilities that inject carbon dioxide (CO₂) underground for the purpose of long-term geologic sequestration or to enhance oil and gas recovery.¹ The rule proposes a tiered reporting approach. The first tier establishes a set of reporting requirements that would cover all facilities that inject CO₂ underground. The second tier consists of additional requirements that would apply only to geologic sequestration (GS) facilities, including development of a site-specific monitoring, reporting, and verification (MRV) plan, and utilization of a mass balance approach to report the amount of CO₂ geologically sequestered.

Recovery of protest costs and bid and proposal costs in a bid protest are often seen as a secondary remedy. When protesting an award, a protester generally favors equitable remedies (such as injunctive and declaratory relief) directing an agency to correct errors in the procurement process that could eventually lead to the protester receiving the contract award. The potential recovery of some monetary relief—either alone or in tandem with equitable relief—still provides some incentive for protesters to challenge errors in the procurement process and violations of law.¹

In a new white paper published by the United States Industry Coalition (USIC), an association of high tech businesses and research institutions, Pillsbury attorneys Elina Teplinsky and Sanjay Mullick detail U.S. export control programs and economic sanctions administered by multiple federal agencies, and their growing influence over key industries in a globalized world, including nuclear energy, and information technology. They describe the purpose and scope of applicable regulations, their enforcement, and offer best practices for establishing effective and ongoing compliance programs. 

Wayne Matus and David Stanton, partners in Pillsbury Winthrop Shaw Pittman's E-Discovery practice, authored this article, which originally appeared in Corporate Counsel, March 31, 2010.