The Sessions Memo: A Significant Reversal of Policy?

Nicholas C. Harbist and Melissa Fundora Murphy

In May 2017, Attorney General Jeff Sessions issued a memorandum to U.S. attorneys, ordering all federal prosecutors to “charge and pursue the most serious, readily provable offense” as a “core principle” of charging and sentencing policy. The memorandum defines the most serious offenses as “those that carry the most substantial guidelines sentence, including mandatory minimum sentences.”

This policy represents a significant reversal of the comparatively lenient stance established by Eric Holder, one of Sessions’ predecessors under President Barack Obama, who had ordered federal prosecutors in 2013 to refrain from charging defendants with certain offenses that could see long mandatory minimum sentences.

Prosecutors will now be expected to recommend a sentence within federal guidelines when before a federal judge, and must disclose to the sentencing court all of the facts that impact the sentencing guidelines or mandatory minimum sentences. Recommendations outside of the guidelines will require a documented explanation, as well as approval from a U.S. attorney, assistant attorney general, or a designated supervisor. Deviations from the “core principle” of pursing the most serious offenses will only be granted if “justified by unusual facts.”

Attorney General Sessions made it clear that he wants this shift in policy to be immediate, noting that “[a]ny inconsistent previous policy of the Department of Justice relating to these matters is rescinded, effective today.”

This article was originally published in the July 2017 edition of White Collar Watch. Click here to read the article online.

FCPA Under the New Administration

Mayling C. Blanco, Carlos F. Ortiz, Shawn M. Wright, Ariel S. Glasner

The single most frequently asked question by our international clients over the past several months is whether there will be changes in white collar prosecution priorities under the new administration, specifically with respect to the Foreign Corrupt Practices Act (“FCPA”). The FCPA, which criminalizes the payment of bribes to foreign officials around the world, has been subject to enforcement trends and scrutiny during its 40-year history. Prior to 2005, there were few notable prosecutions. However, over the past 12 years, the law has garnered much attention given the unparalleled increase in the number of prosecutions and the headline-grabbing monetary amounts of the settlements. This trend has straddled administrations from both sides of the aisle.

Of course, it is nearly impossible to answer the question posed directly with any degree of certainty. Venturing to do so would require reading tea leaves. However, there are certain indicia and reasoning that can guide our understanding of the direction that the new administration may be heading in.

Continue reading “FCPA Under the New Administration”

First Amendment Protects Right to Record Police Activity, Third Circuit Holds

Ethan M. Simon

The Third Circuit recently joined the growing consensus of courts recognizing that the First Amendment protects the act of recording police officers conducting their official duties in public. In Fields v. City of Philadelphia, — F.3d —, 2017 WL 2884391 (3d Cir. July 7, 2017), two individuals brought claims against the City of Philadelphia and certain police officers for violating their First Amendment rights to record public police activity. Continue reading “First Amendment Protects Right to Record Police Activity, Third Circuit Holds”

Single Racial Slur May Be Sufficient to Establish Workplace Harassment

Mark Blondman and Joel Michel

The Third Circuit Court of Appeals recently held that a single isolated use of a racial slur may be sufficient to establish unlawful workplace harassment.

Background and Analysis:

On July 14, 2017, a three-judge panel of the U.S. Court of Appeals for the Third Circuit ruled that a single racial slur may be sufficient to state a claim for unlawful workplace harassment.

In Castleberry v. STI Group, the plaintiffs—two African American general laborers working on a pipeline project—alleged that they were subjected to a hostile work environment when they were told by a supervisor that they would be fired if they “[n-word]-rigged” a fence that they had been instructed to remove. Defendants argued there was no precedent for a finding that a single racial epithet could be enough to create a hostile work environment. Judge Thomas Ambro, writing for the panel, rejected the defendants’ position, holding that the United States Supreme Court’s adoption of the “severe or pervasive” standard in harassment claims suggested that a “supervisor’s single use of a racial slur could be adequately ‘severe’ and sufficient to state a claim” for harassment.

The Third Circuit’s ruling clarified case law within the circuit (covering Delaware, New Jersey, and Pennsylvania) that has been somewhat in conflict for decades. Between 2001 and 2012, district courts within the circuit have used a number of different standards for determining whether a plaintiff has adequately pled workplace harassment. Some used the “severe or pervasive” standard, at least three used the “pervasive and regular” standard, and at least one case used the “severe and pervasive” standard. In its decision, the Court in Castleberry made clear that the proper standard for evaluating hostile work environment cases is whether the conduct is “severe or pervasive.”

In reversing the U.S. District Court for the Middle District of Pennsylvania’s dismissal of the plaintiffs’ claims, the Court held that the racially charged slur used in the presence of non-African American coworkers, coupled with threats of termination, could constitute sufficiently severe conduct that could result in the creation of a hostile work environment.

Takeaways:

The Castleberry decision reminds employers that even a single isolated incident, such as a repugnant comment, can result in legal liability for discrimination or harassment. Employers should take affirmative steps to train employees, especially management personnel, that slurs and epithets based on any protected category (for example, race and/or color) are not appropriate in the workplace.

Employers should do the following:

  • Clearly communicate through employee handbook policies that discrimination and harassment will not be tolerated, and ensure that all employees receive a copy of the handbook and sign an acknowledgement.
  • Immediately and thoroughly investigate any complaints of discrimination (including harassment) and implement prompt remedial measures, which are designed to correct any prior issues and prevent similar conduct from occurring in the future.
  • Periodically train all supervisors and employees regarding discrimination and harassment recognition and prevention.

For more information, please contact Mark Blondman, Joel Michel, or a member of Blank Rome’s Labor and Employment group.

Consumer Financial Protection Bureau Bans Class Action Waivers in Arbitration Clauses

Michael A. Iannucci and Richard Wolf

While questions remain about the Consumer Financial Protection Bureau’s (“CFPB”) future power, the agency, which was created by the Dodd-Frank Act in the wake of the 2008 economic crash, issued a powerful Final Rule that will ban companies from using class action waivers in arbitration clauses. The Final Rule will go into effect 60 days after its publication in the Federal Register, and arbitration agreements entered into 180 days after publication must comply with the new rule. Retail clients, banks and financial institutions, debt collectors, and credit card companies may be most impacted by the new rule, as they often utilize these arbitration clauses in consumer agreements as a less expensive—and private—alternative to litigation. The CFPB, which has faced intense scrutiny from the Trump Administration as well as challenges in federal courts,[1] reasoned that class action litigation waivers effectively foreclose consumers from pursuing small-dollar disputes on an individual basis because doing so is not cost effective.

Continue reading “Consumer Financial Protection Bureau Bans Class Action Waivers in Arbitration Clauses”

Supreme Court of United States Reaffirms Limits of Specific Jurisdiction

Richard Wolf

The Supreme Court of the United States recently reaffirmed the principle that there must be a direct connection between a forum state and the underlying controversy in order for a court to exercise specific jurisdiction over the claims. Bristol-Myers Squibb Co. v. Superior Ct. of Calif., No. 16-466 (U.S. June 19, 2017).

Bristol-Myers Squibb (“BMS”) is incorporated in Delaware and maintains headquarters in New York. It conducts business in California, including the sale of a blood-thinning drug called Plavix. A group of plaintiffs, consisting of residents and nonresidents of California, sued BMS, alleging that Plavix had damaged their health. The nonresident plaintiffs did not allege that they obtained Plavix through California doctors, nor did they claim that their injuries or treatment had any relation to California. BMS challenged the trial court’s finding that it had personal jurisdiction over BMS with respect to the nonresident plaintiffs’ claims. The California Supreme Court affirmed, finding that while the court lacked general jurisdiction, it had specific jurisdiction over the nonresident plaintiffs’ claims. Id. at 3. It found that BMS’s “extensive contacts” with California permitted the exercise of specific jurisdiction “based on a less direct connection between BMS’s forum activities and plaintiffs’ claims than might otherwise be required.” Id. This “less direct connection” was satisfied because the claims of the nonresident plaintiffs were similar to the claims of the California plaintiffs. Id.

The Supreme Court of the United States reversed. Under the Court’s precedent, a lawsuit “must arise out of or relate to the defendant’s contacts with the forum” in order for the trial court to exercise specific jurisdiction. Id. at 5 (citing Daimler AG v. Bauman, 571 U.S. ___ (2014), slip op. at 8). There needs to be “an affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place in the forum State…” Id. at 5-6 (citing Goodyear Dunlop Tires Ops., S.A. v. Brown, 564 U.S. 915, 919 (2011)). A defendant’s general connections with the forum state, such as regularly occurring sales of a product, are not enough for specific jurisdiction. Id. at 7. Instead, the connection must be specific to the claims of the plaintiff.

In this case, the nonresident plaintiffs were not prescribed Plavix in California, did not purchase or ingest the drug in California, and were not injured by it in California. “The mere fact that other plaintiffs were prescribed, obtained, and ingested Plavix in California—and allegedly sustained the same injuries as did the nonresidents—does not allow the State to assert specific jurisdiction over the nonresidents’ claims.” Id. at 8. It was not relevant that BMS conducted research in California on matters unrelated to Plavix. Id. Finally, the fact that BMS contracted with a California company, McKesson, to distribute Plavix nationally did not provide a basis for the exercise of specific jurisdiction. Id. at 11. BMS was not derivatively liable for McKesson’s conduct and did not engage in relevant acts together with McKesson.

In her dissent, Justice Sotomayor expressed her belief that since the nonresident plaintiffs’ claims against BMS concerned “conduct materially identical to acts the company took in California,” i.e. the marketing and distribution of Plavix, their claims “related to” BMS’s conduct in the forum state. She would have found specific jurisdiction.

New Jersey companies, specifically those who engage in business throughout the country, should take solace in this case. They cannot be sued in a foreign state under a theory of specific jurisdiction unless there is a direct relation between the company’s activities in the forum state and the plaintiffs’ allegations. The Supreme Court’s decision will also likely lead to increased filings in New Jersey, which is home to some of the largest pharmaceutical and consumer products companies in the country.

Blank Rome Secures Precedential Opinion on Personal Jurisdiction in Dutch Run-Mays Draft V. Wolf Block

Adrienne C. Rogove

On July 5, 2017, the Superior Court of New Jersey, Appellate Division, ruled in favor of our client WolfBlock LLP in the matter of Dutch Run-Mays Draft V. Wolf Block, making it the first published case in a New Jersey court to apply the U.S. Supreme Court’s latest rulings on personal jurisdiction.

Background

In 2004, Dutch Run, a West Virginia limited liability company having its place of business in Deerfield Beach, Florida, retained Pennsylvania attorney, Henry Miller, a partner with the law firm of WolfBlock LLP, a Pennsylvania limited liability partnership, in connection with Dutch Run’s acquisition of 5,000 acres of property in West Virginia. In March 2009, WolfBlock’s partners voted to dissolve the partnership, and all of its activities as a law firm ceased. At that time, WolfBlock shuttered all of its offices and its attorneys and staff were dismissed. Since that time, WolfBlock has been winding down its affairs. In 2014, Dutch Run filed suit against WolfBlock in the New Jersey Superior Court, Law Division, for legal malpractice arising out of its representation of Dutch Run in 2004. In this regard, Dutch Run claimed that there were title defects that rendered the West Virginia property unfit for residential development. Continue reading “Blank Rome Secures Precedential Opinion on Personal Jurisdiction in Dutch Run-Mays Draft V. Wolf Block