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Posts Tagged ‘New York’

Comma Wars: NY Case Illustrates the Importance of Punctuation and Grammar in an Insurance Policy

Posted on: June 16th, 2020

By: Justin Boron

In the insurance coverage world, hundreds of thousands of dollars—and sometimes even millions—often come down to a comma.

On such case came before the Second Circuit on oral arguments last Thursday. In an IP coverage dispute with Hartford Fire Insurance Co.,[1] Spandex House has hung its claim for coverage on a pair of commas in an exception to the Hartford policy’s intellectual property exclusion. The underlying action arises from Rex Fabric’s copyright infringement suit against Spandex House, and Spandex House is seeking coverage for its defense in the suit. 

On Thursday, a Second Circuit panel heard on the coverage dispute on appeal from a New York federal judge’s decision holding that an exception to an expansively phrased intellectual-property exclusion did not apply because the alleged infringement did not stem exclusively from acts “in [Spandex House’s] advertising or on [its] website.” In her decision, U.S. District Judge Valerie Caproni reasoned that, while the underlying action alleged Spandex House infringed Rex’s copyrights by advertising the alleged copycat attire, it also claimed the company committed infringement through its sale and distribution of the garments.

The parties’ oral arguments were notable for the extensive parsing of grammar and punctuation that occurred on both sides. For Spandex House’s part, its counsel asserted that the phrase “in your advertising or on your website” is separated from the rest of the provision by commas on either side:

The IP Exclusion “does not apply if the only allegation in the claim or ‘suit’ involving any intellectual property right is limited to: (1) Infringement, in your ‘advertisement’ or on ‘your web site’, of: (a) Copyright….”

As a result, Spandex counsel argued, the exception is not restrictive and restores coverage where the underlying action solely concerns the company’s alleged infringement, even if the alleged infringement stemmed from a source other than advertising or the web site.

In response, Hartford’s counsel argued that New York law requires courts to consider punctuation or grammar only “if the words themselves are already ambiguous.” He contended that it was not and that the underlying action “is full of garden-variety copyright infringement allegations: copying fabric patterns, making fabrics with those patterns, and selling and distributing those fabrics. It is not limited to ads or websites.”

The panel took the case under submission. 

[1] The case is Spandex House Inc. v. Hartford Fire Insurance Company et al., case number 19-2784, in the U.S. Court of Appeals for the Second Circuit

Massachusetts Enacts Legislation Authorizing Virtual Notarization During COVID-19 State of Emergency

Posted on: April 30th, 2020

By: Jennifer Markowski

On April 27, 2020, Governor Baker signed into law An Act Providing for Virtual Notarization to Address Challenges Related to COVID-19 (the “Virtual Notarization Act” or the “Act”). In doing so, Massachusetts joins a number of other states, including Rhode Island, Pennsylvania, Connecticut, New Jersey, New York, New Hampshire and Georgia (among others), in adopting temporary measures to permit virtual notarization during the COVID-19 pandemic. The Massachusetts Virtual Notarization Act shall remain in effect until three (3) business days after Governor Baker’s March 10, 2020 declaration of state of emergency terminates and permits a duly authorized notary public to virtually notarize signatures during this time. According to the Act, notaries shall adhere to the following protocols when performing an acknowledgment, affirmation, or other notarial act using real-time video conferencing:

  • Both the notary and the signer must be physically located within Massachusetts and the signer must swear under the pains and penalties of perjury as to his or her location.
  • The notary must observe the signing of the document.
  • The signer must verbally assent to the recording of the video conference.
  • The signer must disclose any other person present in the room and make that person viewable to the notary.
  • The signer must provide the notary with satisfactory evidence of identity per M.G.L. ch. 222, § 1. If the notary is reviewing government-issued identification, the signer must visually display the front and back of the identification to the notary and then send a copy of the identification (front and back) to the notary, which will be maintained securely and confidentially for ten (10) years.
  • The notary must indicate in the notarial certificate that the document was notarized remotely under the Act and indicate the county in which the notary was located at the time the notarial act was completed.
  • After the video conference, the signer must deliver the original executed documents to the notary.
  • The notary must make an audio and video recording of the notarial act and maintain the recordings for ten (10) years.

In addition to the preceding list of requirements, there are two additional steps to be taken for any documents executed in the course of a real estate transaction. If the signer is not personally known to the notary, during the initial video conference the signer must display a second form of identification containing the signer’s name. Another government-issued identification, credit card, social security card, tax or utility bill dated within 60 days of the video conference are acceptable forms of identification.  Additionally, upon receipt of the executed document(s), the notary and signer must engage in a second video conference during which the signer verifies to the notary that the document received by the notary is the same document executed during the first video conference. The signer must again disclose any other person present in the room and make him or her viewable to the notary.

The notary must also execute an affidavit that provides that he or she has:

  • Received a copy the signer’s identification and visually observed it during the video conference with the principal, if applicable;
  • Obtained the signer’s verbal assent to record the video conference;
  • Taken the signer’s affirmation that he or she was physically present within Massachusetts; and
  • Been informed of and noted on the affidavit any person present in the room and included a statement of the relationship of any person to the signer.

The notary shall retain the affidavit for ten (10) years.

The Act does not alter or amend the requirement in Massachusetts that the closing of a transaction involving a mortgage or other conveyance of title to real estate may only be conducted by an attorney duly admitted to practice law in the Commonwealth.

If a notary chooses to notarize documents under the Virtual Notarization Act, it is advisable to confirm with the client that a virtually notarized document is acceptable.  Additionally, it is also advisable to confirm that any applicable errors and omissions policy will cover professional acts involving a virtual notarization.

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

Additional Information:

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues on a regular basis. Topics include re-opening the workplace, protecting business interests, shelter in place orders and more. Click here to view upcoming webinars.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients.  Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments.  For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER:  The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19.  The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement.  We can only give legal advice to clients.  Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG.  An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest.  As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such.  We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**

New Jersey and New York Signal Intent to Force Coverage for COVID-19 Business Losses; Other States Will Follow Suit

Posted on: March 16th, 2020

By: Erin Lamb and Marc Shrake

Both New Jersey and New York have taken steps toward attempting to force coverage of business losses related to COVID-19. In New Jersey, Assembly Majority Leader Louis Greenwald and Assemblyman Roy Reiman have introduced Assembly Bill 3844. As written, the bill would force insurers to provide coverage for claimed business losses alleged to be caused by COVID-19, under policies that were in effect on March 9, 2020 (the date that New Jersey declared a state of emergency). If successful, these state governments would be taking an extraordinary step that not only changes the terms and conditions of an existing contract, but also creates coverage ex nihilo for virus-related losses expressly bargained between the contracting parties, and underwritten, to be excluded from coverage.

Back in 2006, ISO adopted a mandatory exclusion for such losses that specifically referenced the SARS (also a coronavirus) epidemic. Obviously, then, since at least that time purchasers of insurance, and agents, were on notice of such risks — which include damage and loss caused by COVID-19 — and the fact that they are not covered under the bargained-for terms and conditions of the insurance coverage.

The New Jersey bill seeks to wipe all of this out. The bill would apply to insureds with fewer than 100 eligible employees in New Jersey. (It defines “eligible” as “full-time employees who work more than 25 hours or more in a normal workweek.”) It is unclear whether the new bill would eliminate the requirement that there be direct physical loss of damage to covered property, or on an arguably more limited basis, void application of the 2006 Virus exclusion. The New Jersey bill is up for discussion on the floor of the Assembly today, March 16, 2020.

In New York, the Department of Financial Services ordered all authorized Property/Casualty Insurers to provide them with details on business interruption coverage for all business owner policies, commercial multiple peril policies, and specialized multiple peril policies. The letter instructed insurers that DFS considered their obligations to policyholders under business interruption policies a “heightened priority.” The letter demanded that every insurer provide DFS with its volume of business interruption coverage, civil authority coverage, contingent business interruption coverage, and supply chain coverage, including direct premium amounts, policy types, and numbers of each type of policy written. Each insurer is additionally instructed to prepare information regarding COVID-19 coverage not only as of today but “as the situation could develop to change the policyholders’ status.” Insurers were instructed to consider whether there was any potential for COVID-19 coverage.

It is notable that these steps are being taken in two states with major industries (including all shipping through the East Coast’s largest port) that have already suffered COVID-19 losses from the shutdowns in China, Asia, and now Europe. They have filed claims for those losses under some of these policies and have been denied. Policyholders have been marshaling their own resources and lobbying organizations to push to transfer their business risks, including having their losses paid for by insurance companies for reasons other than an arm’s-length, bargained-for agreement in place that would obligate the insurers to do so in exchange for a policy premium tied to the risk of loss being transferred.

Other states impacted by the COVID-19 outbreak, especially California and Washington, are also likely to try to spread the costs of the COVID-19 business losses to other businesses and entities who did not cause the loss and who did not contract to, were not paid to, did not expect to, and are not obligated to take on such risks.

In addition, FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

States are Busy on the Cyber Front

Posted on: February 19th, 2020

By: Amy C. Bender

2020 is off to a busy start, with several states taking action on cybersecurity legislation and issuing other legal updates. Highlights include:

California – California’s Attorney General has issued revised proposed regulations regarding the California Consumer Privacy Act (“CCPA”), which creates consumer rights relating to the access to, deletion of, and sharing of personal information that is collected by businesses. The updates, which are aimed at providing more relief for consumers and clarity to covered businesses, include changes to definitions, notice and other requirements for covered businesses, and consumer rights and requests. The revised proposed regulations are available here and are currently under a public comment period.

Maryland – In the first decision of its kind under Maryland law, a federal court has ruled that a loss of software and data due to a ransomware attack was covered under a business owner’s property insurance policy. Specifically, the court found that the loss qualified as a “direct physical loss of or damage” to covered property (the affected computer server and networked computers) based on the loss of the data and software in the computer system and the loss of functionality to the computer system itself. The court reasoned that the policy did not limit covered losses to tangible property only or to total property losses. The decision is available here.

Massachusetts – The state’s legislature has stalled a proposed consumer data privacy law (available here) that would have imposed notice and disclosure requirements on businesses that collect consumers’ personal information, provided consumers the right to delete and opt out of third-party disclosure of collected personal information, and allowed consumers to sue for violations of the act without having to show any resulting damage. The bill has been sent to a “study order,” where a committee will study it and report its findings.

New York – The Stop Hacks and Improve Electronic Data Security Act (“SHIELD ACT”), available here, amends the state’s existing data breach notification law to require any person or business that owns or licenses computerized data that includes private information of New York residents to develop, implement, and maintain reasonable safeguards to protect the security, confidentiality, and integrity of the private information, including disposal of data. The data security provisions go into effect on March 21, 2020.

Virginia – Similar to Massachusetts, Virginia’s legislature has delayed and referred to study several privacy-related bills, including bills relating to consumer rights regarding access and sale of their personal data, destruction and disposal of records containing personally identifiable information, and collection and safekeeping of biometric data by employers.

Washington – The legislature has introduced a revised version of a proposed law, the Washington Privacy Act (available here), which would apply to certain private business that control or process consumer personal data and that are located within or targeted to residents of the state. The law would provide consumers rights regarding their personal data, impose responsibilities on covered controllers and processors, and regulate facial recognition services. The bill is now scheduled for a public hearing.

Freeman Mathis & Gary’s Data Privacy and Security Practice Group is here to help clients with policies and training. If you have any questions or would like more information, please contact Amy Bender at [email protected].

“Sanctuary Cities” Get a Reprieve For Now

Posted on: January 10th, 2019

By: Pamela Everett

As many city, county and state attorneys are aware, in 2017 the US. Department of Justice (DOJ) added three conditions to the application process for the Edward Byrne Memorial Justice Assistance Grant (“Byrne JAG”) program in an effort to eliminate so called sanctuary cities. The Byrne JAG program originated from the Omnibus Crime Control and Safe Streets Act of 1968,  which created grants to assist the law enforcement efforts of state and local authorities. Under the Byrne JAG program, states and localities may apply for funds to support criminal justice programs in a variety of categories, including law enforcement, prosecution, crime prevention, corrections, drug treatment, technology, victim and witness services, and mental health.

The first condition, called the “Notice Condition” requires grantees, upon request, to give advance notice to the Department of Homeland Security of the scheduled release date and time of aliens housed in state or local correctional facilities. The second condition, called the “Access Condition,” requires grantees to give federal agents access to aliens in state or local correctional facilities in order to question them about their immigration status. The third condition, called the “Compliance Condition” requires grantees to certify their compliance with 8 U.S.C. § 1373, which prohibits states and localities from restricting their officials from communicating with immigration authorities regarding anyone’s citizenship or immigration status. Grantees are also required to monitor any subgrantees’ compliance with the three conditions, and to notify DOJ if they become aware of credible evidence of a violation of the Compliance Condition. Additionally, all grantees must certify their compliance with the three conditions, which carries the risk of criminal prosecution, civil penalties, and administrative remedies. The DOJ also requires the jurisdictions’’ legal counsel to certify compliance with the conditions.

A number of jurisdictions have sued the DOJ and the U. S. Attorney General regarding these new conditions and sought a nationwide injunction; however, so far, none have  been successful in obtaining a nationwide injunction.  Recently a partial win was handed to the states of New York, Connecticut, New Jersey, Rhode Island, Washington, and Commonwealths of Massachusetts and Virginia and the City of New York. The States and the City challenged the imposition of the three conditions on five bases: (1) the conditions violates the separation of powers, (2) the conditions were ultra vires under the Administrative Procedure Act (“APA”), (3) the conditions were not in accordance with law under the APA, (4) the conditions were arbitrary and capricious under the APA, and (5) § 1373 violated the Tenth Amendment’s prohibition on commandeering.  This case challenged the authority of the Executive Branch of the federal government to compel states to adopt its preferred immigration policies by imposing conditions on congressionally authorized funding to which the states are otherwise entitled.

While the court held that the plaintiffs did not make a sufficient showing of nationwide impact to demonstrate that a nationwide injunction was necessary to provide relief to them, it did find as follows: (1) The Notice, Access, and Compliance Conditions were ultra vires and not in accordance with law under the APA. (2) 8 U.S.C. § 1373(a)–(b), insofar as it applies to states and localities, is facially unconstitutional under the anticommandeering doctrine of the Tenth Amendment. (3)  The Notice, Access, and Compliance Conditions violated the constitutional separation of powers. (4)The Notice, Access, and Compliance Conditions were arbitrary and capricious under the APA.  (5) The DOJ was mandated to reissue the States’ FY 2017 Byrne JAG award documents without the Notice, Access, or Compliance Conditions, and upon acceptance to disburse those awards as they would in the ordinary course without regard to those conditions.  Additionally, the DOJ was prohibited from imposing or enforcing the Notice, Access, or Compliance Conditions for FY 2017 Byrne JAG funding for the States, the City, or any of their agencies or political subdivisions.

The DOJ was prohibited from imposing or enforcing the Notice, Access, or Compliance Conditions for FY 2017 Byrne JAG funding for the States, the City, or any of their agencies or political subdivisions.

There are several other cases pending, including one filed by the City of San Francisco, seeking the issuance of a nationwide injunction to prohibit the enforcement of the new conditions. Stay tuned for more developments in this area.

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


Related litigation: City of Chicago v. Sessions, 264 F. Supp. 3d 933 (N.D. Ill. 2017); affd. appeal, City of Chicago v. Sessions, 888 F.3d 272 (7th Cir. 2018), but later stayed the nationwide scope of the injunction pending en banc review. Conference City of Evanston v. Sessions, No. 18 Civ. 4853, slip op. at 11 (N.D. Ill. Aug. 9, 2018) City of Philadelphia v. Sessions, 280 F. Supp. 3d 579 (E.D. Pa. 2017); City of Philadelphia v. Sessions, 309 F. Supp. 3d 289 (E.D. Pa. 2018)(currently on appeal); California ex rel. Becerra v. Sessions, 284 F. Supp. 3d 1015 (N.D. Cal. 2018)