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Archive for October, 2016

Eleventh Circuit Applies Spokeo’s Stringent Article III Standing Requirements

Posted on: October 27th, 2016

By: Robyn Flegal

Earlier this year, the Supreme Court clarified the pleading requirements to establish standing in federal lawsuits arising out of alleged statutory violations. A detailed explanation of the Supreme Court’s Spokeo[1] opinion can be found on the FMGBlogLine. As we observed, “the specific line drawing as to what a plaintiff must allege to establish standing ultimately will be determined by the lower courts.” Recently, the Eleventh Circuit sharpened its pencil on this issue.

In Nicknaw v. CitiMortgage, Inc.,[2] the Eleventh Circuit considered whether Nicknaw had standing to bring suit in federal court. Nicknaw alleged that CitiMortgage violated a New York statute when it failed to timely record a certificate of discharge proving he satisfied his mortgage. Relying upon the Spokeo decision, the Eleventh Circuit dismissed Nicknaw’s appeal for lack of jurisdiction because he failed to allege a sufficient “injury in fact.” The Court explained that an injury in fact, which can include intangible harm, requires “an invasion of a legally protected interest that is concrete, particularized, and actual or imminent.”

Applying this standard, the Eleventh Circuit held that the intangible harm caused by CitiMortgate’s recording delay was insufficient to establish standing because Nicknaw failed to allege (1) that he lost money because of CitiMortgage’s failure to timely record, or (2) that he or anyone else was even aware that the certificate of discharge was not recorded during the relevant time. Furthermore, no material risk of harm existed, as Nicknaw filed his suit two years after CitiMortgage recorded the certificate. The Court noted that while Nicknaw failed to allege a concrete and particularized injury as required under Article III, his failure “does not mean that New York law does not create a right that, when violated, could form the basis of a cause of action in a court of New York.”

In conclusion, plaintiffs alleging a technical statutory violation now face a heightened standard to establish standing in federal court. Plaintiffs pursuing claims based upon violations of state statutes may be more inclined to pursue their claims in the state court system to avoid these stringent standing requirements of Article III.

[1] Spokeo v. Robins, 136 S. Ct. 1540 (2016).

[2] Nicknaw v. CitiMortgage, Inc., No. 2:15-CV-14125-JEM,  — F.3d — (October 5, 2016).

Clearer Skies Ahead for HIPPA-Covered Entities Using Cloud Service Providers

Posted on: October 27th, 2016

By: Mandy Proctor

Earlier this month, the Department of Health and Human Services’ Office of Civil Rights (OCR) issued guidelines to HIPPA-covered entities that use or may use cloud service providers (CSPs) in connection with the processing of electronic Personal Health Information (ePHI).  The guidelines provide that covered entities may utilize CSPs to create, receive, maintain, or transmit ePHI as long as certain requirements are met.  Specifically, when a covered entity uses a CSP to handle ePHI on its behalf, the covered entity and the CSP must enter into a business associate agreement (BAA) which prescribes the permitted and required uses and disclosures of ePHI by the CSP and obligates the CSP to safeguard ePHI in accordance with HIPPA’s Security Rule.  In connection with these guidelines, OCR also created guidance on the necessary elements of a HIPPA-compliant BAA.

Once the BAA is executed, the guidelines provide that CSPs can be used to handle ePHI.  This includes the use of mobile devices to access ePHI stored in the cloud as long as appropriate safeguards are in place to protect the confidentiality, integrity, and availability of the ePHI.  Also, a BAA should be entered into with any third party service providers which may have access to the ePHI on the mobile device.  Covered entities may also use CSPs that store ePHI on servers outside the United States, but OCR notes that the risks to ePHI may vary depending on the geographic location and such risks should be considered in establishing the appropriate safeguards in the BAA.    

Importantly, OCR’s guidelines also clarify that CSPs that handle ePHI on behalf of HIPPA-covered entities constitute “business associates” and therefore must comply with HIPAA Privacy, Security and Breach Notification Rules.  This is true even if the CSP only handles encrypted ePHI for which the CSP lacks and encryption key for the data.  This creates an affirmative duty on the part of the CSP to respond to suspected security incidents, including mitigating any harmful effects resulting from those incidents, and failure to safeguard the ePHI could expose the CSP to direct liability as prescribed by HIPPA’s Security Rule. 

For more information, the text of the new guidelines summarized herein are available online at:


USCIS Increases Fees

Posted on: October 26th, 2016

By: Agne Krutules

On October 24, 2016, U.S. Citizenship and Immigration Services announced a final rule published in the Federal Register adjusting the fees required for most immigration applications and petitions. The fees increased by a weighted average of 21 percent. For example, application fees to register permanent residence or adjust status increased from $985 to $1,140 (Form I-485), and an immigrant petition by alien entrepreneur increased from $1,500 to $3,675 (Form I-526). The fees were last increased on November 23, 2010. The new fees will become effective on December 23, 2016. Applications and petitions mailed, postmarked, or otherwise filed on or after December 23, 2016, must include new fees. The new fees can be found at

CFPB’s Unilateral Power Structure Held Unconstitutional

Posted on: October 24th, 2016

By: Kristian N. Smith

After more than five years of heavy regulation and enforcement targeting financial institutions and the automotive industry, the Consumer Financial Protection Bureau (CFPB) faces a new hurdle. Last week, the D.C. Circuit Court of Appeals ruled that the structure of the CFPB is unconstitutional.

The court emphasized the lack of oversight over the CFPB’s judgments and the “unilateral power” given to the agency’s director, explaining that, other than the President, the Director is the “single most powerful official in the entire United States Government, at least when measured in terms of unilateral power.”

The CFPB — created in the wake of the financial crisis by the Dodd-Frank Act as a consumer watchdog — has the ability to “administer, enforce, and otherwise implement federal consumer financial laws, which includes the power to make rules, issue orders, and issue guidance.”

Although the Director is appointed by the President and confirmed by the Senate, neither the Director nor the CFPB are subject to direct oversight from any of the branches of government, and the Director can only be removed for cause.

The D.C. Circuit’s ruling changes this structure.  Now, the CFPB will be given presidential oversight, with the sitting president able to supervise, fire, and direct the head of the CFPB.

Many groups who have been against the CFPB’s existence since its creation welcome this ruling, including those in the financial industry.  Other groups, including those involved with financial reform and consumer banking, have denounced the ruling, calling it a loss for consumers, the very group the CFPB was created to protect.

To date, the CFPB has realized more than $11.7 billion in “relief,” meaning penalties and other items such as forgiven debt balances, passing the benefits on to more than 27 million consumers. The ruling could, however, weaken the CFPB’s effectiveness and its ability to pursue certain cases and retroactively apply new rules.

The ruling could also have wider-reaching implications.  For example, other agencies whose structures are similar to the CFPB’s — including the Office of the Comptroller of the Currency and the Federal Housing Finance Agency — could face similar changes to their power and authority.

The D.C Circuit’s decision will not likely go unchallenged.  A CFPB spokeswoman said that the agency is “considering options for seeking further review of the Court’s decision.” In addition, we will likely see litigation over whether the CFPB’s past rulings, which, according to the D.C. Circuit, took place under an unconstitutional structure, will remain binding.

A New Ruling in the SawStop vs. Bosch Lawsuit

Posted on: October 24th, 2016

By: Daniel A. Nicholson

A favorable court ruling should be giving SawStop some confidence in its ongoing patent dispute with Bosch concerning the sale of Bosch’s REAXX table saws, but it doesn’t mean that REAXX customers will be left in the sawdust.

On September 9, 2016, an Administrative Law Judge with the United States International Trade Commission (USITC) ordered that Bosch had violated the law under section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337) with its REAXX table saws after they were determined to infringe upon two SawStop U.S. patents.

Developed in 1999, SawStop’s technology allows table saws to detect when flesh comes into contact with the saw blade and triggers an automatic, five-millisecond braking system. This safety mechanism is a promising feature for the 4,000 Americans who will suffer a major amputation due to saws each year.

This recent ruling may seem like a final win for SawStop, but it is just an initial determination. Under the authority of section 19 U.S.C. § 1337, the USITC investigates allegations of intellectual property violations and unfair competitive practices in import trade. The first step of the process is an investigation. At this point, the commission takes notice of an allegation of unfair trade practices and an Administrative Law Judge is appointed to hear the case and render an initial determination – which is what this ruling is. The commission may adopt that initial determination, or it may modify or reverse it. The parties can request the USITC review any initial decision, which, according to Bosch’s press release, is already in the works, with the decision expected early January 2017. Even if the judge’s decision is upheld in the commission’s review, its final determination can still be appealed, an option that Bosch will undoubtedly use if necessary.

Early on in the development of this safety technology, SawStop sought to license the technology to the major manufacturers, but their offer was rebuked. A lawsuit followed, alleging the major power-tool manufacturers conspired to keep SawStop’s technology from becoming the industry standard; the suit continues. SawStop, who eventually began producing its own line of table saws, gained some notoriety and customers took notice. After a series of hard- hitting personal-injury lawsuits for which SawStop’s technology played a major role in determining the safety standard, the major manufacturers did a 180° about face and looked to develop their own flesh-detecting injury-mitigation technology. Bosch brought the REAXX line of table saws to the U.S. market and SawStop responded with a patent infringement lawsuit.

According to Bosch’s press release, the “ongoing litigation has no effect on distributors’ ability to buy or sell Bosch REAXX table saws. REAXX cartridges, accessories and service parts are available” and they are correct. At this time consumers may still purchase all of the REAXX products they want, pending a final determination by the USITC. Once that final determination is released, we’ll better know if REAXX products have a future in the U.S. market.

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