The economic fallout from the COVID-19 pandemic and the sudden and worldwide shuttering of large and small businesses may be felt for a long time. One of the resulting issues is the applicability of a force majeure clause, or common-law impossibility, frustration of purpose, or commercial impracticability excuses for contract performance and obligations. Force majeure clauses come into effect when events occurring beyond the control of the parties prevent performance of contract obligations. Some contracts include specific force majeure events that will excuse performance at this time, such as a pandemic (the World Health Organization declared a pandemic on March 11, 2020) or when governmental or administrative action is taken that disrupts or precludes performance under a contract.Read More
The Lawletter Blog
The Lawletter Vol 44 No 6
In Return Mail, Inc. v. USPS, 139 S. Ct. 1853 (2019), the U.S. Supreme Court held that a federal agency is not considered a "person" for purposes of seeking review of the validity of a patent under the Leahy-Smith America Invents Act of 2011 ("AIA"), 35 U.S.C. §§ 1 et seq. The AIA, enacted on September 16, 2011, changed the patent system from a first-to-invent to a first-inventor-to-file system. The transition to a first-to-file system took place over a period of approximately 18 months.
The AIA also created the Patent Trial and Appeal Board and established three types of administrative review proceedings before the Board. See 35 U.S.C. § 6. The reviews include an "inter partes review," a "post-grant review," and a "covered-business-method" ("CBM") review. See id. §§ 311, 321.Read More
The Lawletter Vol 44 No 1
When a spouse places a Global Positioning Systems ("GPS") device in the other spouse's vehicle without consent to monitor that spouse's movements and position around town, the admissibility of the GPS data in the divorce trial is likely to be challenged. In United States v. Jones, 565 U.S. 400 (2012), the United States Supreme Court held that a GPS tracing device is a "search" under the Fourth Amendment to the United States Constitution, and absent a warrant allowing for the device to be used, data from the GPS device will be considered inadmissible. Further, in Carpenter v. United States, 138 S. Ct. 2206 (2018), the United States Supreme Court held that the Fourth Amendment protections against search and seizure also requires the government to obtain a search warrant before acquiring cell phone data, which the Court analogized to GPS tracking data.Read More
The Lawletter Vol 43 No 7
Courts are reluctant to enforce prepetition automatic stay waivers, but will not rule out the possibility of enforcement. Often found as a clause in a forbearance agreement, a prepetition automatic stay waiver is therefore not per se unenforceable, notwithstanding the fact that its close relative, a prepetition waiver of a bankruptcy filing, is per se unenforceable. See In re Simpson, Case No. 17-10442, 2018 WL 1940378 (Bankr. D. Vt. Apr. 23, 2018). Generally, courts will hold that the debtor must carry the burden of proving that such contractual waiver should not be enforced. In re A. Hirsch Realty, LLC, 583 B.R. 583 (Bankr. D. Mass. 2018).Read More
The Lawletter Vol 42 No 9
Since the United States Supreme Court's decision in Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971), federal courts have allowed individuals to seek damages for unconstitutional conduct by individual federal officers. A Bivens action, as they are known, recognizes an implied cause of action directly under authority of the U.S. Constitution, where there is an absence of any statute specifically conferring the cause of action.
Recently, in Ziglar v. Abbasi, 137 S. Ct. 1843 (2017), the Supreme Court recognized Bivens actions but held that it will now take a more "cautious" approach to each Bivens case presented to the Court to determine if the action falls under the previous Bivens claims and will not accept a Bivens action that is brought in a new context. The Court's stated purpose in taking this new cautious approach is to avoid intruding on the role of Congress to enact statutes for claims outside of the current Bivens context. To determine whether a Bivens action falls outside of the current Bivens context and is thus "novel" and not actionable, the Court rejected the Second Circuit Court of Appeals' previous two-part test and instead stated that the proper test for determining whether a case presents a new Bivens context is "[i]f the case is different in a meaningful way from previous Bivens cases decided by this Court." Id. at 1859.Read More
The Lawletter Vol 42 No 5
In SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 137 S. Ct. 954 (2017), the United States Supreme Court held that the defense of laches is not proper in a patent infringement case when suit is brought within the six-year statute of limitations period for patent infringement cases, set forth in 35 U.S.C. § 286. This decision abrogated decisions in numerous federal circuit courts which allowed the laches defense.
Under federal law, damages are limited in patent infringement cases by the statute of limitations set forth in § 286 to cover only infringement that occurred within the six-year period prior to the filing of the complaint. This six-year period is counted backward from the filing of the complaint, not forward to the time of the patent infringement event.Read More
The Lawletter Vol 41 No 10
On June 13, 2016, in Commonwealth of Puerto Rico v. Franklin California Tax-Free Trust, 136 S. Ct. 1938 (2016), the United States Supreme Court was asked to decide whether the Commonwealth of Puerto Rico should remain a "state" for purposes of 11 U.S.C. § 903(a), the subsection of Chapter 9 of the United States Bankruptcy Code that states that "a State law prescribing a method of composition of indebtedness of such municipality may not bind any creditor that does not consent to such composition." This issue came to the Court on an injunction proceeding by bondholders suing the Puerto Rico government to enjoin the application of the Puerto Rico Corporation Debt Enforcement and Recovery Act (the "Puerto Rico Act"). Enacted by Puerto Rico in an effort to deal with its extraordinary financial crisis and, specifically, to create its own bankruptcy scheme to restructure the debt of its insolvent public utilities. The bondholder's issue was presented in federal court notwithstanding an amendment to the Code to exclude Puerto Rico from the definition of a "state." See 11 U.S.C. § 101(52).Read More
A personal service contract, such as one between an artist and a manager or between a recording group and a record company, may be rejected or assumed under the U.S. Bankruptcy Code. Generally, such management or promotional agreements are considered to be executory contracts under 11 U.S.C. § 365(a). An executory contract under § 365 is not specifically defined, but the term commonly refers to a contract that has performance due from both the debtor and the contracting party. In re Gen. Datacomm Indus., 407 F.3d 616 (3d Cir. 2005). Professor Vern Countryman's definition in Executory Contracts in Bankruptcy: Part I, 57 Minn. L. Rev. 439, 460 (1973), is considered to be the definitive definition of an executory contract.
A trustee or debtor-in-possession has a right to assume or reject executory contracts under § 365 within the time frames set forth in § 365(d), but the agreement remains in effect pending the actual act of assumption or rejection. In re Nat'l Steel Corp., 316 B.R. 287 (Bankr. N.D. Ill. 2004). If a personal service contract is rejected, it is considered breached under § 365(g) as of the date immediately preceding the date the bankruptcy petition was filed.Read More
The Lawletter Vol 41 No 5
Under the Equal Pay Act, 29 U.S.C. § 206(d), no covered employer shall discriminate on the basis of sex by paying wages to employees at a rate less than the rate paid to employees of the opposite sex for equal work. In Hesterberg v. Tyson Foods, Inc., Case No. 5:14-CV-05382, 2016 WL 483017 (W.D. Ark. signed Feb. 5, 2016), the court held that to establish a prima facie claim for damages under the Equal Pay Act, the complaining party must show by a preponderance of the evidence that "(1) she was paid less than a male employed in the same establishment, (2) for work on jobs requiring skill, effort and responsibility, (3) which were performed under similar working conditions." Id. at *5. The employer will be entitled to summary judgment and dismissal of the equal pay suit if it can show that any pay differential between the plaintiff and her male counterpart is explained by a statutory defense such as a merit system or some excuse other than sex.
The plaintiff in the case alleged that her immediate supervisor, who was male, had total discretionary authority over the amount of bonuses paid and percentage raises given to her and her male counterparts and that his decisions regarding these forms of compensation were largely subjective. She argued that her comparatively lower bonuses and percentage raises in the years in question were the result of the males' being treated more favorably. Recognizing that employers can "easily circumvent the Equal Pay Act by relying substantially on bonuses to compensate employees," id. at *6, the court denied the employer's motion for summary judgment. Genuine issues of material fact existed as to whether the employer's merit system, on which the employer relied to justify the pay differential in this case, had been implemented at the company in a truly nondiscriminatory way.Read More
The Lawletter Vol 40 No 11
There are a variety of reasons why a federal bankruptcy case may be reopened after the debtor has been discharged and the case closed. A debtor may discover a claim, not known at the time the case was pending, and seek to reopen the case to discharge the claim. More typically, a Chapter 7 trustee may seek to reopen a case after discovering potential bankruptcy estate assets that the debtor failed to schedule. The party seeking to reopen may find intense challenges to the motion to reopen, because the reopening can result in a major redistribution of assets. Under the Bankruptcy Code, the bankruptcy court has broad discretionary authority to reopen a case "to administer assets, to accord relief to the debtor, or for other cause." 11 U.S.C. § 350(b).
Recently, in In re Ludvigsen, BAP No. MB 14-039, Bankr. No. 13-12232-WCH, 2015 WL 3733193 (B.A.P. 1st Cir. Jan. 16, 2015) (not for publication), the First Circuit Appellate Panel stated that a bankruptcy court properly exercises its discretionary authority to reopen a closed bankruptcy case when it does so to determine a substantive dispute on its merits, but does not exercise proper discretionary authority when only technical defects with the closed case are at issue. Further, when determining whether to exercise its discretionary authority, the court should look at each § 350(b) motion on a fact-by-fact basis. Id. at *4 (citing In re Dalezios, 507 B.R. 54, 58 (Bankr. D. Mass. 2014).Read More