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Archive for February, 2018

Federal Jurisdictional Update

Posted on: February 19th, 2018

By: Owen T. Rooney

Title 28 of the United States Code Section 1367(d) allows for federal supplemental jurisdiction over state law claims. This statute, as now construed by the US Supreme Court in Artis v. District of Columbia, holds that the statutes of limitations on any state law claims stops while the claim is in federal court, such that the act of filing in federal court acts as a “stop clock” on any limitation period applied to a state law claim. This means that, in the event the district court enters judgment on federal claims and then dismisses state law claims, i.e., declines to retain jurisdiction over them, plaintiffs will have all of the remaining time on their state claims when the federal action was filed  plus 30 days.

Notably, this decision overrules the district court and the DC Circuit Court of Appeals decisions against Artis, as well as the California Supreme Court’s 2014 decision in City of Los Angeles v. County of Kern.

If you have any questions or would like more information, please contact Owen Rooney at [email protected].

Need a Lyft? Georgia Court of Appeals Decision Raises Coverage Questions for Ridesharing Services and Their Drivers

Posted on: February 19th, 2018

By: Connor M. Bateman

Most personal automobile insurance policies exclude coverage for damages that result from the ownership or operation of a vehicle used as a “public or livery conveyance.” Although typically undefined in the policy, this phrase has generally been understood to encompass vehicles that are “used indiscriminately in conveying the public, rather than being limited to certain persons and particular occasions or governed by special terms.”

The Georgia Court of Appeals recently weighed in on the scope of this exclusion in Haulers Insurance Co. v. Davenport.  In Davenport, the plaintiff sustained injuries in a car accident, sued the other driver, and served his uninsured motorist carrier (Haulers) with a copy of the complaint. At the time of the collision, the plaintiff was giving a ride to a female friend who would occasionally pay the plaintiff to drive her into town. There was no evidence, however, that the plaintiff ever offered paid rides to the general public. The Court of Appeals rejected Haulers’ argument that the policy’s public or livery exclusion barred coverage, reasoning that the exclusion was inapplicable absent evidence that the plaintiff “used his vehicle indiscriminately to transport members of the general public for hire, or regularly rented out his vehicle for hire.” The court recognized, however, that the exclusion would apply in cases where the driver “presents his services indiscriminately to the general public for hire.”

In light of the rising popularity of Transportation Network Companies (“TNCs”) such as Lyft and Uber, the coverage issues presented by this oft-forgotten exclusion should be carefully reexamined. TNC drivers, who use their personal vehicles to transport passengers, will often have no coverage under their personal policies due to the public or livery conveyance exclusion. This exclusion clearly applies to drivers actively transporting passengers and may even be triggered when the driver is simply using the ridesharing application to “troll” for potential customers. While some of these gaps have been addressed by commercial insurance policies provided by the TNCs, drivers may still be left without coverage in certain situations. For instance, although TNCs typically provide liability coverage for a driver who has the app turned on and is waiting to accept a ride, the TNC policies will not likely cover damages caused by someone or something else during that initial period. To account for this, the TNCs suggest that such damages may be covered by the at-fault driver’s policy or the TNC driver’s personal policy. However, the public or livery conveyance exclusion often extends to uninsured motorist, collision, and comprehensive coverage. And because courts have held that the public or livery conveyance exclusion applies when drivers “present their services” to the general public, the exclusion is arguably triggered even when the TNC driver is merely waiting for the application to connect to a customer.

Although the reach of this exclusion has yet to be fully examined in the context of ride-sharing services, these and other coverage issues will likely continue to arise. For additional information, please contact Connor Bateman at [email protected].

Latest Developments In DACA

Posted on: February 19th, 2018

By: Kenneth S. Levine

On 2/15/2018 four (4) separate legislative bills that sought to address the March 5th termination of the DACA program, border security, family-based immigration and the Diversity Lottery were put up for a vote in the U.S. Senate.  None of the bills garnered the necessary 60 votes to overcome a filibuster threshold and move the legislation to the House of Representatives.  At this point it seems doubtful that any piece of legislation will pass Congress that addresses DACA recipients, a border wall, the elimination of family-based categories and the Diversity visa lottery.

As to the March 5th date on which the DACA program was set to terminate, within the last several weeks two Federal Judges in the U.S. District Court in California and New York issued nationwide injunctions that, for now, keeps the DACA program intact beyond the March 5th deadline.  While the injunctions mean that the U.S. Department of Homeland Security must continue processing DACA renewal applications, the Judges are not requiring the Department to accept DACA applications from first time Applicants.

The latest major development on this issue is that the U.S. Supreme Court met on 2/16/18 to determine whether to accept a request from the U.S. Justice Department to take up the injunction cases. We expect their decision within the next few days.  An affirmative decision means that the Court would essentially leapfrog the relevant U.S. Court of Appeals in determining whether the injunctions are legally valid.  If the Supreme Court declines to accept immediate jurisdiction of the Justice Department’s appeals, then it will likely take 9-12 months for the 2nd and 9th U.S. Circuit Court of Appeals to render a decision.  Whatever the result, constitutional law legal experts widely anticipate that the U.S. Supreme Court will ultimately decide this issue.

The Immigration Attorneys of Freeman Mathis & Gary, LLP strongly advise all current DACA recipients to consider filing renewal applications immediately.  Although we do expect the DACA program to ultimately be terminated, those with pending renewal applications will likely be in a strong legal position to have their cases adjudicated.

For additional information related to this topic and for advice regarding how to navigate U.S. immigration laws you may contact Kenneth S. Levine of the law firm of Freeman, Mathis & Gary, LLP at (770-551-2700) or [email protected]

Unpaid FINRA Awards May Result in Tighter Membership Rules Governing Brokers and Member Firms

Posted on: February 16th, 2018

By: Theodore C. Peters

On February 8, the Financial Industry Regulatory Authority (“FINRA”) released a discussion paper: FINRA Perspectives on Customer Recovery, which openly addressed the reality that roughly one quarter of FINRA arbitration awards issued in 2016 were unpaid.  According to the paper, of the total of 2,457 arbitration cases in 2016, 1,747 were settled, 212 were withdrawn, 389 were closed by award, and 109 were closed “by other means.”  In releasing the paper, FINRA stated that it “hopes to encourage a continued dialogue about addressing the challenges of customer recovery across the industry.”  FINRA also indicated in the paper that it plans to organize discussions with other regulators and policy makers, “to further address the issue of customer recovery, identify additional data or analysis that may help inform effective decision-making in this area, and consider potential courses of action.”

On the same day, FINRA published Regulatory Notice 18-06, addressing its Membership Application Program (“MAP”).  The Notice does not alter FINRA’s current MAP protocols, but it clearly indicates FINRA’s intent to tighten rules governing membership including, among other things, the transfer of a registered persons from one broker-dealer to another when they have unpaid arbitration claims.  “FINRA is proposing to amend the MAP rules to allow FINRA to take a stronger approach to addressing the issue of pending arbitration claims, as well as arbitration awards and settlement agreements related to arbitration that have not been paid in full in accordance with their terms.”

In their current form, MAP rules permit consideration of a pending arbitration against an associated person as a factor in assessing whether the applicant meets the standards for admission.  However, “a pending arbitration does not create a presumption of denial.”  The amendments proposed by FINRA would give its Department of Member Regulation “rule-based authority to preemptively deny an NMA [new member application] if the applicant or its associated persons are subject to pending arbitration claims.”  This presumption would not apply to continuing membership applications. Further, the proposed amendments would allow the applicant to overcome this presumption if he demonstrated his “ability to satisfy the pending arbitration claims.”

In addition, the proposal would disallow certain business expansions where one or more of the associated persons involved have a “covered pending arbitration claim.”  Such claims are defined as “those whose amount (either individually or in the aggregate) exceed the member’s excess net capital.”

Finally, the amendments proposed by FINRA would disallow “any direct or indirect acquisitions or transfers of a member’s assets or any asset, business or line of operation where the transferring member or one or more of its associated persons has a covered pending arbitration claim, unpaid arbitration award or unpaid settlement related to an arbitration” under certain conditions.

The Notice seeks comment on the proposed amendments.  Comments are due by April 9, 2018.

If you have any questions or would like more information, please contact Ted Peters at [email protected].

South Dakota Introduces Data Breach Notification Legislation

Posted on: February 14th, 2018

By: Kacie L. Manisco

On January 23, 2018, South Dakota’s Senate Attorney Judicial Committee unanimously voted in favor of introducing data breach notification legislation. Senate Bill 62 would require an “Information Holder,” i.e., a person or business conducting business in South Dakota that owns or retains computerized personal or protected information, to notify South Dakota residents whose personal information was, or is reasonably believed to have been, acquired by an unauthorized person.

The law would require notification within 45 days from the discovery of the breach, unless notification would impede a criminal investigation. Moreover, when there is a breach affecting more than 250 South Dakota residents, the Information Holder would be required to notify the state’s Attorney General and all consumer reporting agencies of the timing, distribution and content of the breach notification.

The Bill defines a “breach” as “the acquisition of unencrypted computerized data or encrypted computerized data and the encryption key by an unauthorized person that materially compromises security, confidentiality, or integrity of personal or protected information maintained by the information holder.”

The Bill further empowers the South Dakota Attorney General’s office to investigate and enforce violations. The Attorney General would be authorized to impose criminal penalties for the failure to disclose a breach as an unfair or deceptive practice under South Dakota’s Deceptive Trade Practices and Consumer Protection law. In addition, the Attorney General could impose a civil penalty of $10,000 per day per violation and recover attorneys’ fees and costs associated with any action brought against the Information Holder.

Currently, Alabama and South Dakota are the only two states in the United States without data breach notification statutes. If the South Dakota legislation passes, Alabama may soon be the only state lacking a data breach notification law.

If you have any questions or would like more information, please contact Kacie Manisco at [email protected].