2020 Business Law Seminar...2020/08/28 · Ryan Sevcik, Koley Jessen P.C., L.L.O. The NSBA’s Business Law Section presents: This page intentionally left blank. AGENDA 2020 Business

2020 Business Law Seminar

Friday, August 28, 2020

WEBCAST

Kristin Krueger, Koley Jessen P.C., L.L.O. Erin Ebeler Rolf, Woods Aitken LLP

Jeff Schaffart, Koley Jessen P.C., L.L.O. Tom Ashby, Baird Holm LLP

Brian J. Blackford, Blackford Law LLC Heidi Oligmueller, Oligmueller Law Firm PC, LLO

Ryan Sevcik, Koley Jessen P.C., L.L.O.

The NSBA’s Business Law Section presents:

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AGENDA 2020 Business Law Seminar

The 2020 Business Law Seminar, organized by and for lawyers who practice business law, will cover current hot topics related to bankruptcy, labor and employment, taxation, intellectual property, and immigration.

10:15 am

Commercial Leases in Bankruptcy Kristin Krueger, Koley Jessen P.C., L.L.O. This program will examine the treatment of commercial leases in Chapter 11 and claims for payment under leases. The discussion will include the process of assuming and rejecting leases undessumr section 365 of the Bankruptcy Code, what rights a lessor has when a debtor elects to ae or reject a lease, claims for pre-petition and post-petition rent, a lessor’s rights outside of bankruptcy, what happens when a landlord files bankruptcy, and COVID-19’s impact on commercial leases in bankruptcy.

11:00 am Break

11:10 am

Implications of the New NLRB and DOL Rules for Joint Employers Erin Ebeler Rolf, Woods Aitken LLP The Department of Labor announced its final rule on joint employment on January 12, 2020, following (i) actions by the Obama administration and Obama-era NLRB that greatly expanded the concept of a joint employer and (ii) actions by the Trump administration and Trump-era NLRB to undo those expansions. The rule went into effect on March 16, 2020, and this presentation will review the new rule and discuss the practical implications of the rule for employers, including the risks of being deemed a joint employer with another entity.

12:10 pm Break

1:00 pm

Overview of CARES Act Impact on Federal Tax Issues Jeff Schaffart, Koley Jessen P.C., L.L.O. The program will cover the Coronavirus Aid, Relief, and Economic Security (CARES) Act impact on:

Net operating loss rules

Bonus depreciation

Qualified improvement property

Payroll tax deferrals

Employee retention credits

Charitable contributions

Retirement plans

1:45 pm Break

1:55 pm

Consensual and Nonconsensual Liens on Intellectual Property Tom Ashby, Baird Holm LLP Intellectual property is a crucial and increasingly valuable set of assets. People extending credit to or seeking a tort recovery against any agricultural, town or urban enterprise or counseling or investing in those enterprises benefit from knowing intellectual property lien law.

2:40 pm Break

2:50 pm

Immigrants: Essential...and Banned? Ryan Sevcik, Koley Jessen P.C., L.L.O.; Brian J. Blackford, Blackford Law LLC; Heidi Oligmueller, Oligmueller Law Firm PC, LLO;

The COVID-19 pandemic has been a game changer for many areas of law – and perhaps none more so than immigration law. Many businesses rely on the lawful employment of foreign national workers and that contingent of their workforce may now face significant challenges in maintaining status and being available to work. This presentation will summarize the immigration-related obstacles that have been created in the wake of the COVID-19 pandemic as well as considerations for employers trying to comply with the same.

SPEAKER BIOS

Kristin Krueger is a shareholder at Koley Jessen where she counsels and advocates for clients in the event of a dispute, through all stages of the litigation process. Her practice also involves bankruptcy and creditors’ rights litigation, representing creditors and debtors in bankruptcy court to maximize client rights and minimize losses. Kristin has substantial appellate experience, arguing cases before the Nebraska Court of Appeals, Nebraska Supreme Court, Eighth Circuit Bankruptcy Appellate Panel, and the Eighth Circuit Court of Appeals. Kristin received her J.D. from The University of Nebraska College of Law (with high distinction) and her B.S. from the University of Nebraska at Kearney.

Erin Ebeler Rolf joined Woods Aitken in 2008 after clerking in the firm for two years. As a member of the firm’s litigation department, Erin works with clients in the commercial, construction, and labor and employment practice areas to develop legal and common-sense solutions during all stages of the litigation process. Erin is a past chair of the ABA Forum on Construction Law’s Division 6 (Workforce Management and Human Resources), and she is one of the co-editors of the Construction Lawyer’s Guide to Labor & Employment Law (2nd edition).

Jeff Schaffart, recognized by Chambers and Partners as a leading tax attorney, solves complex tax and legal issues by providing timely, pragmatic advice to private equity sponsors, general counsel, management teams, and business owners. He chairs Koley Jessen’s Tax Practice Group.

Jeff closely tracks legal developments and is currently advising clients on the impact of the Families First Coronavirus Relief Act, the Coronavirus Aid, Relief, and Economic Recovery Act (CARES Act), and the Paycheck Protection Program (PPP). He is also currently advising on structuring, forming, and investing in qualified opportunity funds and the potential tax-deferral and exclusion benefits of reinvesting capital gains into qualified opportunity funds.

Tom Ashby is a partner at Baird Holm law firm. Tom is a founding member and Executive Committee member of Nebraska State Bar Association's Bankruptcy Section; a Section Council member and seminar chairman of Iowa State Bar Association's Commercial and Bankruptcy Law Section; and a member and former seminar chairman for the Debtor-Creditor Committee of the South Dakota Bar.

Licensed in NE, MO, IA, SD and (federally) in CO, Tom is a frequent speaker and author on bankruptcy, class action prosecution and defense, and creditor-debtor topics. Tom also counsels clients on e-commerce websites and forms and traditional commerce credit forms and procedures.

Brian J. Blackford has dedicated his career to advocacy for the rights of immigrants in the courtroom and in the community. Since 2014, he has been the managing partner and owner of Blackford Law LLC in Omaha, Nebraska which specializes in immigration law. His practice focuses on a variety of immigration cases in the areas of removal defense and “crimmigration,” family-based visa petitions, victim and juvenile visas, asylum, naturalization, and federal court litigation. Brian regularly gives immigration presentations at the Mexican Consulate, churches, schools, organizations, community forums, and continuing legal education seminars.

Brian is a member of the American Immigration Lawyers Association (AILA) and the Nebraska State Bar Association (NSBA) where he is actively involved in many important immigration issues on the national and local levels. From 2016-2017 he was the Chair of, and he is the current Immigration and Customs Enforcement (ICE) liaison for, the Iowa-Nebraska Chapter of AILA. He previously served on the AILA National ICE Liaison Committee, AILA National Pro Bono Committee, and the AILA National Consumer Protection and Unauthorized Practice of Law Action Committee. Additionally, Brian is a member of the NSBA's House of Delegates and is on the executive committee for the NSBA's Immigration Law Section. Born and raised in Omaha, Nebraska, Brian embraces the increasingly diverse community. From 2016-2017 he was the President of, and continues to assist, the Board of Directors for the Refugee Empowerment Center, one of three refugee resettlement organizations in Nebraska that resettles refugees from around the world.

Heidi Oligmueller is an attorney licensed in Nebraska, Iowa and South Dakota. Her practice consists primarily of immigration law including family petitions, refugee assistance, waivers, naturalization, and removal defense. She also practices in the area of I-9 compliance, and well as business law. Heidi is committed to not only representing diverse populations with their legal needs, she also tirelessly promotes and advocates for integration and inclusion processes within the Siouxland area. Prior to starting her own law practice, she worked at the Heidman Law Firm and for the Mary J. Treglia Community House as an immigration attorney. Heidi recently served on the Rental Inspection Board for the City of South Sioux City, Nebraska and works alongside numerous community leaders to ensure the needs of the immigrant community are met and the diverse populations are represented. She was also recognized as one of the 2018 Women Aware, Women of Excellence recipients for

“Women Developing the Community.” Heidi participates in many other local and regional, volunteer and community building programs including: Iowa’s Volunteer Lawyer Project, Board of Immigration Appeals Pro Bono Project, Iowa Supreme Court’s Language Access in the Court’s Committee, Leadership Dakota County Executive Board, Heartland Counseling Executive Board and St. Michael’s School Parent’s Club.

Ryan Sevcik’s professional focus is to provide sensible, business-savvy counsel to clients as they address workforce-related issues and considerations. His laser-focus on his clients’ strategic objectives allows him to provide practical employment advice that they can implement in order to further those objectives. Ryan regularly guides clients through the challenging regulatory landscape and strategic considerations as they sponsor workers for nonimmigrant visas and immigrant visas (a/k/a “green cards”). He has expertise in counseling employers through the response process related to a variety of U.S. Department of Labor (DOL) audits as well as Form I-9 inspections / audits conducted by Immigration and Customs Enforcement (ICE). Ryan frequently provides assistance with self-audits, and provides presentations and training seminars designed to foster development of proactive policies and procedures for employer compliance.


Commercial Leases in Bankruptcy

Kristin Krueger Koley Jessen P.C., L.L.O.


Webcast

8/25/2020

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Commercial Leases in Bankruptcy KRISTIN KRUEGER

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Overview • The process of assuming and rejecting leases under § 365 of the Bankruptcy Code;

• What rights a lessor has when a debtor elects to assume a lease;• What rights a lessor has when a debtor elects to reject a lease;• Claims for pre‐petition and post‐petition rent under the Bankruptcy Code;• When the lessor – not tenant – files bankruptcy; • What protections a lessor can take pre‐bankruptcy; and• Recent small business bankruptcy law development.

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Chapter 11 Bankruptcy and COVID-19

• Total commercial chapter 11 filings during the first 6 months of 2020 increased 26% from same time period in 2019

• May 2020 = 48% increase from May 2019• June 2020 = 44% increase from June 2019• July 2020 = 52% increase from July 2019

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Notable Recent Chapter 11 Bankruptcies

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Section 365 of the Bankruptcy Code – The Basics

• Section 365 governs a debtor’s executory contracts and unexpired leases

• Basic premise: a debtor may assume or reject an executory contractor or unexpired lease

•Deferential Standard: debtor’s decision is subject to the “business judgment rule”

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§ 365(d): Timing. When is a lease assumed or rejected?• Commercial real estate = a debtor/tenant has 120 days to decide whether to assume or reject an unexpired lease. 11 U.S.C. § 365(d)

• An unexpired lease of nonresidential real property shall be deemed rejected, and the lease must be immediately surrendered, if the lease is not assumed or rejected within the earlier of (i) 120 days of the petition date, or (ii) the date of an order confirming a plan. 11 U.S.C. § 365(d)(4).

• The 120‐day period may be extended up to 90 days for cause (as a practical matter, this frequently occurs; and after the initial 90‐day extension, it can be extended by agreement of the parties).

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What happens during the “waiting” period?• Some good news: § 365(d)(3) requires a debtor to timely perform all obligations under an unexpired lease until the lease is assumed or rejected.

• Likewise: a lessor also has to timely perform its obligations • Limited exception: a bankruptcy court “may extend, for cause” the time for performance of an obligation that arises within the 60‐day period, “but the time for performance shall not be extended” beyond the 60‐day period.

• COVID‐19 Development• “Mothball” Motions • Bankruptcy courts have permitted debtors to press “pause” on paying rent beyond the 60‐day time period

• Modell’s Sporting Goods; Pier 1 Imports

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Claims for Payment of Post-Petition Rent are Administrative Claims

• If a debtor fails to perform its obligations under § 365(d)(3), then a lessor has an administrative claim for the post‐petition lease obligations.

• Eighth Circuit: the administrative claim arises under § 365(d)(3), separate and apart from administrative claims that arise under §503(b)(1) of the Bankruptcy Code.

• Chapter 11 priority scheme: this places lessors in the administrative class – which includes estate professionals – well above unsecured creditors. 11 U.S.C. § 507(a)(2).

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Why does it matter what type of administrative claim?• § 503(b)(1)(A) provides a creditor an allowed administrative expense claim for the “actual, necessary costs and expenses of preserving the estate.”

• Common utilization for unsecured creditors: § 503(b)(9) claims • The distinction matters when dealing with post‐petition lease obligations, per Shopko:

• To the extent administrative claims arise under § 365(d)(3), lessors are entitled to immediate payment, particularly once a lease has been rejected; however ‐

• To the extent administrative claims arise under § 503(b)(1)(A), immediate payment is not required and payment is addressed in the plan.

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A Wrinkle in Timing: Stub Rent • Stub rent: the amount due to a landlord for the period of occupancy and use between the petition date and the first post‐petition rent payment.

• Not entitled to administrative priority under § 365(d)(3): rent became due pre‐petition.

• Example (from Shopko):• Rent is due on first of month• Debtor fails to pay rent January 1• Debtor files bankruptcy January 16• Debtor is obligated to pay rent February 1 under Bankruptcy Code • Stub rent = January 16 and January 31

• Shopko: lessors have an administrative claim under § 503(b)(1)(A) for “actual, necessary costs and expenses of preserving the estate” for stub rent period.

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Assumption of a Lease • Good news: a debtor wants to assume the lease. What happens?• Lessor is getting paid! Best possible outcome. • The debtor must (per § 365(b)(1)) –

• Cure any defaults or provide adequate assurance that it will promptly do so;

• This includes pre‐petition defaults • Compensate a lessor for “any actual pecuniary loss” resulting from the default; and

• Provide adequate assurance of future performance.

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Rejection of a Lease • Bad news – debtor is rejecting the lease. What happens?• Rejection Damages Claim

• *Unsecured*• Calculation

• Rejection Damages Claim = Unpaid pre‐petition amounts due under lease + future rent under the lease that would have been due but for debtor’s rejection;

• (Note: post‐petition rent is given administrative priority)• Future rent is capped by the Bankruptcy Code – cannot exceed the greater of:

• (1) one year’s rent; or • (2) the rent for 15%, not to exceed 3 years, of the remaining term of the lease.• 11 U.S.C. § 502(b)(6)

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§ 363 Sales & Assumption and Assignment of Leases• § 363 Sales – Common Scenario

• Many debtors file bankruptcy not to reorganize and continue on operating, but to facilitate a sale of substantially all of their assets free and clear of liens, claims, and encumbrances

• A debtor can assign a lease, notwithstanding an anti‐assignment provision. 11 U.S.C. § 365(f)

• Assumption and assignment coincide, so existing defaults will be cured, assignee/purchaser must provide adequate assurance of future performance

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Shopping Center Leases – Special Rules • Shopping centers have historically been provided special protections under the Bankruptcy Code

• To assume or assign a shopping center lease:• The financial condition and operating performance of the reorganized debtor or the proposed assignee and its guarantors, if any, “shall be similar to the financial condition and the operator performance” of the debtor and its guarantors;

• Any “percentage rent” due under the lease will not decline substantially;• Assumption or assignment of the lease will be subject to all provisions, including radius, location, use, or exclusivity, and will not breach any other lease or master agreement relating to such shopping center; and

• Assumption or assignment will not disrupt any tenant mix or balance in such shopping center.

• 11 U.S.C. § 365(b)(3).

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Turning the table: when the lessor files bankruptcy

Source: Busted Retailers Use Bankruptcy to Break Leases by the Thousands, Katherine Doherty and Jeremy Hill, August 6, 2020, Bloomberg

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Protections for Tenants • Bankruptcy Code is intended to protect tenants from a debtor‐landlord rejecting a lease and immediately evicting tenants

• If debtor, acting as lessor, moves to reject the unexpired lease, the tenant has two options:

• (1) tenant can treat the lease as terminated and make a claim for rejection damages; or

• (2) continue in possession, retain its rights under lease, and pay rent.

• 11 U.S.C. § 365(h)(1)(A)

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What happens to tenants . . .• If the tenant retains its rights and remains in possession, the tenant may offset against the rent it owes the value of any damage caused by nonperformance after rejection of the lease, but that is the extent of the tenant’s remedies – there is no other right against the estate or debtor as a result of non‐performance. § 365(h)(1)(B)

• Also applies if debtor is subleasing space – your client is sublessee.

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Interplay of Sections 363(f) and 365• What if debtor is seeking to sell its leasehold interest free and clear under § 363?

• Scenario: a debtor, as either a lessor or as a sub‐lessor, seeks to sell the property in question free and clear of your client’s lease.

• Interplay between § 365(h) and a sale under § 363(f)• Majority of courts = § 365(h) are the exclusive remedies of a debtor‐lessor and a debtor cannot avail itself of § 363 to sell property and extinguish a tenant’s leasehold interest

• Minority of courts = still permit the tenant or sublessee the right to adequate protection under § 363(e) – which may mean staying in possession

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Can a lessor protect itself before a bankruptcy filing?• Third‐Party Guarantor(s)

• Automatic stay generally does not apply to actions versus guarantor(s) (provided also not in BK)

• Claim is not subject to rejection damages cap • Security Deposit

• Security deposit is property of the bankruptcy estate • Lessors may be able to setoff claims against the deposit (any amount leftover would be returned to the bankruptcy estate) – strengthens recovery for a rejection damages claim (need bankruptcy court permission)

• Rejection damages still capped

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Lessor Protections Continued . . .

• Letter of Credit • Require tenant to post a letter of credit • Generally not considered property of the bankruptcy estate• Allow a lessor to draw down on a letter of credit on terms provided in lease

• Consider defining premises as being located in a shopping center

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Notable Bankruptcy Law Development • Small Business Reorganization Act of 2019 (the “SBRA”)

• Took effect February 19, 2020• Goal is to minimize time and expense of bankruptcy• Eligibility

• When enacted = $2,725,625 maximum debt threshold • CARES Act amendment = temporary increase of debt threshold to $7.5M; increase sunsets one year from enactment

• A trustee is appointed in every case – not to operate the business, but to facilitate the development of a “consensual plan of reorganization”

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SBRA Continued . . .• SBRA has removed one requirement that made it difficult to obtain a Chapter 11 confirmed plan: the absolute priority rule

• Owners can retain their interests in the business• Relief for small business guarantors: at least some bankruptcy courts have held small business owners‐guarantors are eligible for relief under SBRA, provided a majority of their debt is business debt, even if some of those businesses are now defunct.

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Bio Kristin Krueger counsels and advocates for clients in the event of acommercial dispute, through all stages of the litigation process,working with each client to decide on a path forward toward asuccessful outcome. A key component of her practice is counselingclients in the event of financial distress and uncertainty. Sheadvocates for clients in the commercial bankruptcy setting tomaximize their rights and minimize their losses.

Kristin has worked with a variety of clients in bankruptcy andcreditors’ rights matters, representing the interests of debtors,secured creditors, unsecured creditors, bankruptcy trustees, andcreditor committees. Her experience includes representing clientsinside and outside of bankruptcy, navigating businesses andindividuals through financial distress, negotiating out‐of‐courtworkout agreements, and enforcing client rights and remedies,including in foreclosures, deed of trust sales, and UCC sales.

Kristin’s business and commercial litigation practice regularlyinvolves complex contractual disputes and construction disputes.She has substantial experience advocating for clients and securingvictories in and out‐of‐court, litigating cases in various state andfederal courts, in arbitration, and in administrative agencies.Kristin has substantial appellate experience, successfully arguingcases before the Nebraska Supreme Court, Eighth CircuitBankruptcy Appellate Panel, and the Eighth Circuit Court ofAppeals.

Kristin [email protected]

Omaha402.343.3878

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Implications of the New NLRB and DOL Rules for Joint Employers

Erin Ebeler Rolf Woods Aitken LLP


Webcast

ERIN EBELER ROLF

WOODS AITKEN LLP

402-437-8500

[email protected]

IMPLICATIONS OF THE NEW NLRB AND DOL RULES FOR

JOINT EMPLOYERS

AUGUST 28, 2020

JOINT EMPLOYMENT RULE CHANGES

o Historical Rules

o Obama Era Rules

o Trump Administration Changes

– National Labor Relations Board Revised Rules

– Department of Labor Revised Rules

o Why It Matters: Practical Implications for Employers

HISTORICAL DEFINITIONS OF JOINT EMPLOYERS

1980s through July 2015…

o NLRB generally required that two employers “share or codetermine those matters governing the essential terms and conditions of employment” in order to be deemed joint employers.

o There had to be a showing that an entity “meaningfully affects matters relating to the employment relationship such as hiring, firing, discipline, supervision, and direction.”

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Browning-Ferris Industries of California, Inc. (August 2015)

The NLRB adopted a much looser standard of who is a joint employer

of an employee.


Browning-Ferris Industries of California, Inc.

The NLRB expressly rejected prior requirements that a putative joint employer:

Possess the authority to control employees’ terms and conditions of employment ANDexercise that authority.

Exercise direct and immediate control.

“Reserved authority” that had not been exercised would now be considered.

Indirect control alone could be sufficient.


Browning-Ferris Industries of California, Inc.

o Reasons Stated by the NLRB for the Shift:

• The nature of employment had changed over the years

• Employees are now often procured through “staffing and subcontracting arrangements or contingent employment.”

• The joint employer standard had to be broadened in order to more effectively govern employment relationships.

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HYPOTHETICAL: AFTER BROWNING-FERRIS

o Construction Site with a Construction Manager or General Contractor and Multiple Subcontracts under which Work is Performed

o Typical jobsite safety rules (pre-pandemic)

o CM/GC generally manages site and coordinates work

Who is(are) the employer(s)?


HYPOTHETICAL: AFTER BROWNING-FERRIS

o Language of NLRB Opinion:

“Where the user firm owns and controls the premises, dictates the essential nature of the job, and imposes the broad, operational contours of the work, and the supplier firm, pursuant to the user’s guidance, makes specific personnel decisions and administers job performance on a day-to-day basis, employees’ working conditions are a byproduct of two layers of control.”

HISTORICAL DEFINITIONS OF JOINT EMPLOYERS2016: Department of Labor’s WHD Enters the MixAdministrator’s Interpretation No. 2016-1 (Jan. 20, 2016) (subsequently withdrawn in June 2017)

o Targets: Construction, agricultural, janitorial, warehouse and logistics, staffing, and hospitality industries.

o Seeks to answer questions such as whether “a construction worker who works for a subcontractor is also employed by the general contractor.”

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HISTORICAL DEFINITIONS OF JOINT EMPLOYERSDOL WHD Administrator’s Interpretation No. 2016-1 (Jan. 20, 2016) (subsequently withdrawn in June 2017)

o “Certainly, not every subcontract, farm labor contractor, or other labor provider relationship will result in joint employment.”

BUT

o The DOL WHD admitted that if joint employment is found, then “larger and more established” employers could be used to help “implement policy or systemic changes to ensure compliance. WHD would “consider joint employment to achieve statutory coverage, financial recovery, and future compliance, and to hold all responsible parties accountable for their legal obligations.”

HISTORICAL DEFINITIONS OF JOINT EMPLOYERSDOL WHD Administrator’s Interpretation No. 2016-1 (Jan. 20, 2016) (subsequently withdrawn in June 2017)

o THEREFORE: “The concept of joint employment . . . should be defined expansively under the FLSA.”

o Key Takeaway: Greater Likelihood of Finding Joint Employment =

• Pressure on Larger Employers / Upstream Contractors to Police the Wage, Hour, and Employment Practices of Smaller Subcontractors and Independent Contractors

• Deeper Pockets to Pay Unpaid Wage/Overtime Claims, Etc.


o 2017: Department of Labor Withdraws 2016 Opinion Letter on Joint Employers and 2015 Opinion Letter on Independent Contractors

o 2018: D.C. Circuit Court of Appeals Reviews NLRB’s Browning-Ferris Decision and Remands Case to NLRB

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HISTORICAL DEFINITION OF JOINT EMPLOYERSo 2018: D.C. Circuit’s Mixed Decision on Browning-Ferris

• Upheld: Reserved Rights of Control and Indirect Control are Appropriate Factors to Consider

• But: Consideration of Indirect Controls must be limited to issues related to the essential terms and conditions of employment.

NLRB should not have considered indirect control inherent to contractual business relationships (e.g., basic ground rules, objectives, and expectations for a third-party contractor).

NLRB failed to identify what terms & conditions of employment are “essential” in the context of “meaningful collective bargaining” (or what either of those terms meant).

• Did Not Decide: Whether indirect/reserved control was enough alone.

NLRB REVISED RULE

Announced: February 26, 2020

Effective: April 27, 2020

“[A]n entity may be considered a joint employer of a separate employer’s employees only if the two share or

codetermine the employees’ essential terms and conditions of employment, which are exclusively defined as wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.”

29 C.F.R. Part 103 (Summary Statement at Publication of Final Rule); see also 29 C.F.R. §103.40 (a) and (b) (Final Rule and definition of t/c of employment)

NLRB REVISED RULE

The purported joint employer “must possess and exercise such substantial direct and immediate

control over one or more essential terms or conditions of their employment as would warrant finding that the entity meaningfully affects matters relating to the employment relationship with those

employees.”

29 C.F.R. Part 103.40(a) (Final Rule)

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NLRB REVISED RULEo Contractually Reserved Control over Term or Condition of

Employment is Probative of:

• Direct or Immediate Control over Essential T/C

– Final Rule extensively defines what is and isn’t meant by each item identified as an Essential T/C of Employment (e.g., wages, benefits, discharge, etc.)

– Example: Wages

“(1) Wages. An entity exercises direct and immediate control over wages if it actually determines the wage rates, salary or other rate of pay that is paid to another employer’s individual employees or job classifications. An entity does not exercise direct and immediate control over wages by entering into a cost-plus contract (with or without a maximum reimbursable wage rate).”

NLRB REVISED RULEo Contractually Reserved Control over Term or Condition of

Employment is Probative of:

• Whether the Control Possessed is Substantial

– “Substantial” direct and immediate control means direct and immediate control that has a regular or continuous consequential effect on an essential T/C of employment of another employer’s employees.

– Control is not “substantial” if it is only exercised on a sporadic, isolated, or de minimis basis.

NLRB REVISED RULEo Indirect Control is Insufficient by Itself.

o It is Probative, though, of Joint-Employer Status to the Extent that it Supplements and Reinforces Evidence of Direct and Immediate Control Over Essential Terms and Conditions of Employment.

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NLRB REVISED RULEo Example: Hours of Work

A company opens a cafeteria in its building that will be available to employees during the hours of 8 am to 2 pm. It contracts with a third-party vendor to cook the food, run the cash registers, and clean the cafeteria during its operations and at the end of the day. As a condition of the contract, the cafeteria must stay open and fully operational during the entirety of this 6-hour period even if very few employees come by between 8:00 am and 11:00 am.

Is the company exercising either direct or indirect control over the vendor’s employees’ hours of work?

NLRB REVISED RULEo Example: Hours of Work

• “Hours of Work” are expressly identified as an essential T/C of employment in the baseline rule.

• D.C. Circuit (2018) – Basic ground rules and expectations for third-party contractors aren’t to be considered when evaluating indirect control.

• Definition of Hours of Work in Final Rule:

– Establishing operating hours does not mean an entity is exercising direct or immediate control over an employee’s “hours of work”.

– Explanation provided with final rule says that establishment of operating hours can’t be used as evidence of indirect control either.

NLRB REVISED RULEo Example: Safety Issues

• Key Question: Does a safety rule constitute an essential T/C of employment?

• Safety issues are not expressly listed in the baseline rule.

• NLRB Guidance with Final Rule: “[C]ontractual safety, performance, and quality standards are generally ‘routine components of a company-to-company contract’ and do not support a finding of joint-employer status.”

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NLRB REVISED RULEo Example: Where to Work, When to Work, and

What to Do

o Supervision and direction are both identified as essential T/C of employment in the baseline rule

o BUT NLRB Guidance on Final Rule States: “An entity does not exercise direct and immediate control over supervision when its instructions are limited and routine and consist primarily of telling another employer’s employees what work to perform, or where and when to perform the work, but not how to perform it.”

NLRB REVISED RULEo Example: Where to Work, When to Work, and

What to Do

o (7) Supervision. An entity exercises direct and immediate control over supervision by actually instructing another employer’s employees how to perform their work or by actually issuing employee performance appraisals. An entity does not exercise direct and immediate control over supervision when its instructions are limited and routine and consist primarily of telling another employer’s employees what work to perform, or where and when to perform the work, but not how to perform it.

o (8) Direction. An entity exercises direct and immediate control over direction by assigning particular employees their individual work schedules, positions, and tasks. An entity does not exercise direct and immediate control over direction by setting schedules for completion of a project or by describing the work to be accomplished on a project.

DOL REVISED RULEAnnounced: January 16, 2020

Effective Date: March 16, 2020

Summary: DOL “is updating and revising the Department’s interpretation of joint employer status under the Fair Labor Standards Act …in order to promote certainty for employers and employees, reduce litigation, promote greater uniformity among court decisions, and encourage innovation in the economy.”

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DOL REVISED RULE1958 Interpretive Regulation (29 CFR Part 791)

o Joint employer status depends on whether multiple persons are ‘‘not completely disassociated’’ or ‘‘acting entirely independently of each other’’ with respect to the employee’s employment. (23 FR 5905 (Aug. 5, 1958) and 29 CFR § 791.2(a).


o Three Situations where Joint Employment Generally Exists:

• There’s an agreement to share employees.

• One employer acts directly or indirectly in the interest of the other employer in relation to the employee.

• Employers are “not completely disassociated” with respect to a particular employee’s employment AND they may be deemed to directly or indirectly share control of employee because one employer controls, is controlled by, or is under common control with the other employer.

29 CFR 791.2(b)


o Key Change: Restructured the test in situations where the same hours worked by an employee simultaneously benefits two people/entities.

o (EER Note: You may get the impression that the DOL and NLRB talked with one another when you hear the new test…just sayin’.)

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o Scenario 1 (§791.2(a)(1)): Employee’s work for one employer simultaneous benefits another person.

Key Question: Is the other person “acting directly or indirectly in the interest of the employer in relation to the employee?”

If Yes Joint Employment (after going through 4 factor evaluation to answer that question)

DOL REVISED RULEo Four Factors: Whether the Other Person –

• Hires or fires the employee;

• Supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;

• Determines the employee’s rate and method of payment; and

• Maintains the employee’s employment records (this factor alone is not determinative).

o No single factor is dispositive.

DOL REVISED RULEo Potential joint employer must actually

exercise (directly or indirectly) one or more of the indicia of control to be jointly liable as a joint employer.

o A reserved power may be relevant in determining joint employer status, but it is insufficient without some actual exercise of control.

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DOL REVISED RULEo Standard contract language reserving the

right to act is insufficient by itself to demonstrate joint employer status.

o Joint employment depends on all facts and circumstances.

DOL REVISED RULEo What Constitutes Indirect Control?

• Indirect Control =Mandatory directions to the employer that directly controls the employee

• Indirect Control ≠ Requests, recommendations, and suggestions that are voluntarily granted/followed by the direct employer

DOL REVISED RULEo Four Factors PLUS MORE:

“Additional factors may be relevant for determining joint employer status in this

scenario, but only if they are indicia of whether the potential joint employer exercises significant control over the terms and conditions of the employee’s work.”

29 C.F.R. § 791.2(b).

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DOL REVISED RULEo HOWEVER, Thou Shalt Not Consider the

Following Factors:

• Whether the employee is economically dependent on the potential joint employer.

• Whether a franchise relationship or brand/supply agreement exists.

29 C.F.R. § 791.2(c)-(d).

DOL REVISED RULEo HOWEVER, Thou Shalt Not Consider the

Following Factors:

• Contractual agreements requiring compliance with legal obligations, safety standards for employees and the public, or the FLSA or similar laws.

• Contractual agreements requiring sexual harassment policies, background checks, workplace safety practices & protocols, and employee training on such matters.

29 C.F.R. § 791.2(d).

DOL REVISED RULEo Other factors do not make joint employment

more or less likely:

• Providing a sample handbook or other employment forms

• Allowing the employer to operate a business on its premises (a store within a store)

• Allowing participation in benefit plans

• Jointing participating in apprenticeship programs

• “Similar business practices”

29 C.F.R. § 791.2(d).

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DOL REVISED RULEo Currently Under Attack by 18 States (Not

Nebraska)

• Feb. 2020 – Sued in U.S. District Court for S.D.N.Y. to vacate the rule based on alleged violations of APA

Alleged Harms: Lower resident wages, decrease compliance with employment laws, reduce tax revenue, and increase enforcement costs associated with state wage and hour laws

• June 2020 – Court denied DOL’s motion to dismiss for lack of constitutional and prudential standing

• June 2020 – Motion for Summary Judgment filed by the StatesJuly 2020 – Motion for Summary Judgment filed by DOL

PRACTICAL IMPLICATIONSo No one wants to “find out” that they’re a joint

employer of employees they didn’t know about.

o Parade of Horribles (Just a Few):

• Liability for Wage and Hour Violations

• OSHA/Safety Violations and Citations

• Workers Comp Issues

• Union / Bargaining Issues

PRACTICAL IMPLICATIONSo Avoiding Surprise Joint Employer Status:

• Respect corporate boundaries and forms

• Consider your contractual powers:

– What rights/privileges do you really need?

– What rights/privileges are you really intending to act on and what is “boilerplate” or there “just in case”?

• Does your contract specify who has control over the means and methods of performing the tasks that are to be performed? (Hint: the non-employer does not want that control. Consider specifying that such power remains with the actual employer.)

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• Before diving into another entity’s employment matters, ask:

– Do I need to? No, really…is this the only/best option?

– What is the least intrusive way of addressing this situation?

– Can I frame the matter as a request, suggestion, or concern as opposed to a demand?


• Pay close attention to those third parties with which a company works ALL. THE. TIME. These are probably the entities with which it’s easiest to “fall into” a joint employment relationship.

– Are detailed job instructions (the “how to do it” issues) given to employees simply based on whichever entity’s supervisor is closest?

– Have “requests & suggestions” about which employees shouldn’t be brought back to a job site become de facto instructions for firings that are “always” carried out?

– Do employees understand that there are different employers? Who do employees go to with their questions/concerns?

– Is current contract language sufficient to make clear that no joint employment relationship exists?

PRACTICAL IMPLICATIONSo Prepare for the possibility of a joint

employment determination

• Establish contractual indemnity for wage & hour violations, OSHA citations, etc.

• Work with good people/entities who do things the right way. (If they’re paying the correct wages, operating safely, etc., then there’s not a lot of reason for someone to chase another wallet or try to establish a joint employment relationship.)

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RESOURCES: NLRBo NLRB Final Rule: https://s3.amazonaws.com/public-

inspection.federalregister.gov/2020-03373.pdf

o NLRB Fact Sheet:https://www.nlrb.gov/sites/default/files/attachments/basic-page/node-7581/fact-sheet-joint-employer-final-rule.pdf

RESOURCES: DOLo DOL Final Rule:

https://www.federalregister.gov/documents/2020/01/16/2019-28343/joint-employer-status-under-the-fair-labor-standards-act

o DOL Fact Sheet:https://www.dol.gov/agencies/whd/flsa/2020-joint-employment/fact-sheet

o DOL Small Entity Compliance Guide:https://www.dol.gov/sites/dolgov/files/WHD/publications/SmallBusinessGuideJE.pdf

o DOL FAQ on Joint Employment:https://www.dol.gov/agencies/whd/flsa/2020-joint-employment/faq

www.woodsaitken.com

ERIN EBELER ROLF

[email protected]

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Overview of CARES Act Impact on Federal Tax Issues

Jeff Schaffart

Koley Jessen P.C., L.L.O.


Webcast

8/27/2020

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PPP NON-DEDUCTIBLE EXPENSES, CARES ACT AND OTHER UPDATES

NSBA 2020 Business Law Seminar Tax Presentation

Jeffery R. Schaffart

August 29, 2020

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UPDATED GUIDANCE

Paycheck Protection Program Non-Deductible Expenses

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8/27/2020

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Paycheck Protection Program•The CARES Act creates the Paycheck Protection Program

•PPP loans to “small” businesses may be forgiven•Under CARES Act § 1106(i) of the CARES Act forgiven PPP loans do not generate taxable cancelation of indebtedness income

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Paycheck Protection Program Forgiveness• IRS Notice 2020‐32 rules that expenses funded with forgiven PPP loan proceeds are not deductible

•The IRS cites Section 265, which disallows the deduction of expenses relating to tax‐exempt income

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Paycheck Protection Program Forgiveness•Are PPP loans indebtedness for federal income tax purposes?

•For tax partnerships, do partners get § 752 outside basis?

•Do non‐deductible expenses paid with PPP proceeds decrease a partner’s outside basis?

• Impact of forgiveness on partner’s outside basis?

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TAX PROVISIONS

CARES Act

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8/27/2020

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CARES Act: Net Operating Loss Limitations•A net operating loss (“NOL”) occurs when a company’s tax deductions exceed its taxable income for a taxable period

•The Tax Cuts and Jobs Act of 2017 (the “TCJA”) eliminated the carryback of NOLs to prior taxable years

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CARES Act: Net Operating Losses• The TCJA also allowed an indefinite carryforward of NOLs to future taxable years, but generally only allowed NOLs to offset 80% of current‐year taxable income

•Under the CARES Act, taxpayers may generally carryback NOLs for tax years 2018, 2019, and 2020 to each of the five tax years preceding the loss year

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CARES Act: Net Operating Losses• In addition, the CARES Act temporarily repeals the TCJA’s 80% limitation on the use of NOLs and taxpayers may use NOLs to offset 100% of their taxable income for tax years 2018, 2019, and 2020

• Indefinite carry‐forward still allowed•NOL carryback rules apply to corporations, individuals, estates and trusts

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CARES Act: Net Operating Losses•C corporations who can carryback NOLs to pre‐2018 tax years may experience favorable rate differential

•Generally carrybacks must be to the earliest taxable year that the NOL may be carried back to

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8/27/2020

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CARES Act: Loosening of Excess Business Loss Rules • Section 461(l) generally limits the ability for individuals, trusts and estates to deduct “excess business losses

•Under the TCJA, noncorporate taxpayers were permitted deductions attributable to a trade or business only up to the amount of the income or gain attributable to that trade or business for the tax year plus $250,000 ($500,000 for joint filers)

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CARES Act: Loosening of Excess Business Loss Rules •CARES temporarily suspends § 461(l) excess business loss limitation for individuals, trusts and estates for the 2018, 2019 and 2020 tax years

• Effectively extends NOL relief to these taxpayers allowing excess business losses to become NOLs that can be carried back

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CARES Act: “Retail Glitch” Fixed• Improvements to non‐residential rental property historically had a 39‐year depreciation period

•Pre TCJA, under a first‐year bonus depreciation rule, qualified improvement property, qualified restaurant property, and qualified retail improvement property were treated as 15‐year property

• Thus, interior business property was eligible for first‐year bonus depreciation

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CARES Act: “Retail Glitch” Fixed•Due to a drafting error, the TCJA required “qualified improvement property” (generally, the interior of non‐residential buildings) to be depreciated over a 39‐year period

•The CARES Act retroactively fixes this glitch for tax years beginning on or after January 1, 2018, and treats qualified improvement property as 15‐year property for depreciation purposes

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CARES Act: “Retail Glitch” Fixed•Due to a drafting error, the TCJA failed to provide that “qualified improvement property” (generally, the interior of non‐residential buildings) would have 15‐year recovery period, and instead was treated as 39‐year property

•Only property with a depreciation period of 20 years or less is eligible for bonus depreciation, thus QIP was ineligible

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CARES Act: “Retail Glitch” Fixed•CARES Act makes technical correction allowing retail establishments, including restaurants and other hospitality businesses, to claim bonus depreciation for, and therefore immediately expense, QIP placed in service on or after January 1, 2018

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CARES Act: Employer Payroll Tax Deferral•Required payment of the 6.2% Social Security employer payroll tax is deferred for the period beginning on March 27, 2020, and ending on December 31, 2020

•Half of the deferred payroll taxes are due on December 31, 2021, with the other half being due on December 31, 2022.

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CARES Act: Employer Payroll Tax Deferral•The CARES Act, however, denied the benefits of payroll tax deferral to any taxpayer receiving PPP loan forgiveness

•Under the PPPFA, this limitation on PPP borrowers to benefit from payroll tax deferral is now completely removed

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CARES Act: Employee Retention Credit•The CARES Act grants eligible employers an employment tax credit equal to 50% of qualified wages (including health benefits) paid after March 12, 2020, and prior to January 1, 2021, to eligible employees during a calendar quarter, up to $10,000 per employee

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CARES Act: Employee Retention Credit•To be eligible, businesses must either (i) be subject to a COVID‐19 government order partially or fully suspending their operations, or (ii) suffer a 50% decline in gross receipts from the same quarter in 2019

• If an employer received PPP it is not eligible to receive an employee retention credit

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CARES Act: Employee Retention Credit• The IRS has released FAQs as a form of guidance for taxpayers

• FAQ 32 concludes that, a business that is required by an order to change its operations—by closing, reducing hours, providing only curbside pickup, or offering carryout service—would be eligible for the employee retention credit

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CARES Act: Employee Retention Credit•Nebraska issued Directed Health Measure Order 2020‐010

• The order limits 10 persons (not including employees) to an indoor confined space

• In order for an employer to qualify it would have to show that because of not allowing more than 10 persons, the order caused the business to fully or partially suspend their operations

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CARES Act: Expanded Charitable Contribution Deductions•The Cares Act now allows for an above‐the‐line deduction of up to $300 for charitable contributions made by individuals•Only for cash contributions

• Individuals may claim an unlimited itemized deduction for a charitable contribution; the limit was previously 50% of AGI

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CARES Act: Expanded Charitable Contribution Deductions•25% taxable income limit for corporations •Unlimited contributions must be made to public charity, operating private foundations, conduit private foundations – Donor advised funds and supporting organizations not allowed

•2020 only

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CARES Act: Retirement Plans•The CARES Act allows individuals to withdraw up to $100,000 from qualified retirement plans for coronavirus‐related distributions without incurring the 10% early withdrawal penalty

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CARES Act: Retirement Plans•A coronavirus‐related distribution is one made during 2020 to an individual:• (i) who is diagnosed with COVID‐19• (ii) whose spouse or dependent is diagnosed with COVID‐19, or

• (iii) who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off or having work hours reduced

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CARES Act: Retirement Plans•Any income tax attributable to a qualified early withdrawal may be paid over a three‐year period, and taxpayers may re‐contribute the withdrawn amounts to a qualified retirement plan without regard to annual caps on contributions if such contributions are made within three years

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CARES Act: Retirement Plans•CARES Act also temporarily waives the minimum distribution requirements for qualified retirement plans

• Increases the loan amount permitted from a qualified plan to the lesser of $100,000 or 100% of the participant’s vested account balance, an increase from $50,000 or 50% of the participant’s vested account balance

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UPDATED GUIDANCE

Other Updates

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Disaster Losses•Under § 165(i), taxpayers may take any loss occurring in a federally declared disaster area and attributable to a federally declared disaster in immediately preceding tax year

•Loss must otherwise a § 165 loss – casualty, abandonment and disaster losses generally qualify

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Disaster Losses•Virtually all of the U.S. (including all of Nebraska, EM‐3483‐NE) is currently covered by disaster declarations

•Uncertainty on “attributable to”, but case law is flexible

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Executive Order on Employee Payroll Taxes•On August 8th, a Presidential Memorandum directing the Secretary of the Treasury to use his authority pursuant to 7508A to defer the withholding, deposit, and payment of the tax on wages paid during the period of September 1st, through December 31st

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Executive Order on Employee Payroll Taxes•The deferral is available with respect to an employee whose pay during a biweekly pay period is “generally” less than $4,000, calculated on a pretax basis, or the equivalent amount with respect to non‐biweekly pay periods• This would generally apply to employees whose pre‐tax wages are less than $104,000 annually

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Executive Order•Treasury Secretary Steven Mnuchin stated on August 12th that the tax deferral is voluntary

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8th Circuit Appeals Court •The 8th circuit held that the taxpayer was liable for the negligence penalty because the reasonable‐basis defense requires evidence of actual reliance on the relevant authority on the part of the taxpayer•Requiring a taxpayer consult the relevant authorities to be able to demonstrate that the position taken on its tax return was “based” on such authorities

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8th Circuit Appeals Court •An issue arising from this ruling is from a privilege standpoint

•When asserting a reasonable basis or reasonable cause defense it could waive privilege because such defense is subjective and puts the taxpayer’s state of mind at issue•Wells Fargo & Company v. United States, No. 17‐3578 (8th Cir. 2020)

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Tax Court•Tax Professionals Held to Higher Legal Understanding• The U.S. Tax Court held in a memorandum opinion that a Taxpayer was liable for an accuracy‐related penalties and that a “misunderstanding” of the law is not an excuse for a tax professional

•Babu v. Commissioner, T.C. Memo 2020‐121 (Aug. 17, 2020)

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Omaha

Bio

Jeffery R. [email protected]

402.343.3716

Recognized by Chambers and Partners as a leadingtax attorney, Jeff Schaffart solves complex tax andlegal issues by providing timely, pragmatic advice toprivate equity sponsors, general counsel,management teams, and business owners. He chairsKoley Jessen’s Tax Practice Group.

When advising on corporate and partnership taxmatters, Jeff helps clients defer, reduce, andeliminate taxes by structuring and implementingstrategic transactions. He advises clients on tax‐freerollovers of equity, taxable and tax‐free mergers,stock and asset sales and acquisitions, restructurings,recapitalizations, reorganizations, spin‐offs, and split‐offs. He is also currently advising on structuring,forming, and investing in qualified opportunity fundsand the potential tax‐deferral and exclusion benefitsof reinvesting capital gains into qualified opportunityfunds.

Jeff has authored or co‐authored over 30 articles and frequently speaks on tax matters.

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Questions

40

DISCLAIMERPresentation Disclaimer: This presentation should not be considered as legal, tax, business, or financial advice. This presentation is intended for educational and informational purposes only. It is provided with the understanding that while the author is a practicing attorney, neither he nor Koley Jessen has been engaged by the attendee/reader to render legal advice or other professional services. If legal advice or other expert assistance is needed by the attendee/reader, the services of a competent professional should be sought.

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Consensual and Nonconsensual Liens on Intellectual Property

Tom Ashby

Baird Holm LLP


Webcast

1

© 2012 Baird Holm LLP


CONSENSUAL AND NONCONSENSUAL LIENS ON INTELLECTUAL PROPERTY

Nebraska State Bar AssociationBusiness Law Section

August 28, 2020

Tom Ashbyof Baird Holm LLP1700 Farnam Street, Suite 1500

Omaha, NE 68102Ph: (402) 636-8280

[email protected]


Introduction

Tom Ashby:State licenses: IA, NE, MO, SD. Federal licenses: All those jurisdictions, CO, and others.

Member: ISBA Commercial Law and Bankruptcy Section Council, SD Bar Debtor-Creditor Committee.

A Founding Member: NE Bar Bankruptcy Section.Bankruptcy track seminar co-chair and lecturer: 2014 8th

Circuit Judicial Conference.Co-Author: Ethics and Bankruptcy, The Nebraska Lawyer

(Neb. State Bar Assoc.), Feb., 2010.

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Introduction, ctd.

Views in this outline and any oral presentation by Tom Ashby do notnecessarily reflect the view of his law firm. Legal ethics suggestthat, among other duties, an attorney should be prepared tozealously advocate the position of the attorney's client. Tombelieves he and other advocates appropriately could advocatedifferent positions on some of the following topics from time to time,depending on the client being represented.


Consensual Liens

“Security interests” and “attachment.”Neb. UCC §9-203.

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Perfection of Security Interests

• Bankruptcy threats to unperfected liens.• Judgment creditors.• Bona fide purchasers.• Competing secured parties.


Competing Secured Parties

• For a “UCC search,” what state?• Documentary warranties.

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Trademarks

• Trademarks as general intangibles.• Perfection by UCC filing. Neb. UCC § 9-

310(a).


Trademarks, ctd.

• Search implications.• PTO filing as additional, to alert potential

buyers.

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Trademarks, ctd.

• Federal PTO registration of mark itself.• Who exactly owns mark?


Trademarks, ctd.

• Affidavit of use.• Good will and secured party rights.

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Patents

• Patent applications, too.• UCC filing to perfect, but …


Patent Statute

35 U.S.C. § 261 states in part:

“An assignment, grant or conveyance shall be voidas against any subsequent purchaser ormortgagee for a valuable consideration, withoutnotice, unless it is recorded in the Patent andTrademark Office within three months from its dateor prior to the date of such subsequent purchaseor mortgage.“

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Federal Preemption Debate

No preemption:e.g., In re Cybernetic Services, Inc., 252

F.3d 1039 (9th Cir. 2001); Haemmerli, 96 Columbia L. Rev. 1645, 1696-1700 (1996); In re Coldwave Systems, LLC, 368 B.R. 91 (Bankr. D. Mass. 2007)


Federal Preemption Debate, ctd.

Preemption:Brennan, 23 Hastings Comm. & Ent. L.J. 313, 360-

61 (2001); Gilmore, Security Interests inPersonal Property § 10.1, at 417 (1965).

“No preemption” wins, as to perfection of security interest. Gasser Chair Co. v. Infanti Chair Mfg. Corp., 2006 WL 616267, at n.8 (E.D.N.Y. 2006).

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Federal Preemption Debate, ctd.

Possible open issue, even in 9th Circuit:Bankruptcy trustee as b.f. purchaserCybernetic at footnote 7.


Patents: PTO Filing Additional

Also file with PTO.Benefits “include without limitation”• Versus bona fide purchaser.• To sue infringer for damages.

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Patents: PTO Filing Additional, ctd.

• To sue licensee for accounting of royalties.• Bankruptcy trustee as b. f. purchaser.


Patents: Description in Security Agreement

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Patents: Infringement Claims

• Are they “commercial tort” claims?• Significance of the issue.


Patents: Infringement Claims, ctd.

Does a security interest in only a “patent”and its “proceeds” or “products” includesuch claims?

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Copyrights

Basic concept until Revised Article 9: Perfection and priority governed by federal Copyright Act. Thus, file notice of security interests with Copyright Office of Library of Congress. In re Peregrine Entertainment, Ltd., 116 B.R. 194 (C.D. Cal. 1990).


Copyright royalties/receivables

In re Avalon Software, 209 B.R. 517, 519:Perfection and priority for copyrights and

their “natural” proceeds are governed byCopyright Act and not accomplished via aUCC filing.

But “accounts or receivables” from copyrightlicensing are perfected by UCC filing.

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Copyrights: unregistered

Split of authority over whether copyrights notfederally registered can be perfected byand only by registering them and thennoting security interest in Copyright Office.


Copyrights: unregistered, ctd.

In re World Auxiliary Power Co., 303 F.3d 1120, 1128:

Implies UCC Article 9 is preempted only asto federally registered copyrights. If notregistered, perfect via UCC filing.

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Copyrights: Peregrine criticized

Even as to registered copyrights, Peregrinehas been criticized significantly. 4 White, Summers & Hillman, Uniform Commercial Code § 30.30 (6th ed.); see generally Neb. UCC § 9-109 comment 8.Thus, for registered copyrights, wise to file security interest under UCC and with Copyright Office.


Copyrights: traps and advocacy ideas

• Federally copyrighting instruction manuals,computer software statements of operationand related documents, etc.

• Licensing to free a copyright’s value (i.e.,royalty stream) from being tied up with aCopyright Office-perfected lender?

• Guarantor of loan covenants that restrictlicensing.

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Domain Names

Issues:• License or otherwise unassignable?• Effective control after default.• State statutes on nonconsensual

remedies.


Domain Names, ctd.

Umbro International, 48 Va. Cir. 139 (1999), 259 Va. 759 (2000).

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Umbro and Dorer Applied to Security Interests?

• Scholarly support for security interest validity. E.g., 9 Norton Bankr. L. & Prac. 3d § 177.51.

• Kremen v. Cohen, 337 F.3d 1024 (9th Cir. 2003).• But see 23 No. 8 J. Internet L. 1, Prof. Jan

Biemans of Utrecht Univ. (Feb. 2020) (contending domain names are not property rights and more similar to licenses, which should not be transferable without the creditor also assuming obligations in the DN registrar’s contract).


Security Interests in Domain Names

• General intangibles.• Specific reference, too.• UCC filing.

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Registrar Views


UCC Limited Overrides of Contract Restrictions

Neb. UCC § 9-408.

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Registrar Views, ctd.

• POA form recognized by registrar.• Username and passcodes of DN owner.See generally In re Paige, 413 B.R. 882, 895 (Bankr. D. Utah 2009).• Proceeds.


Registrar Views, ctd.

Shop for registrar?

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Nonconsensual Creditor Rights

• Equitable proceedings for post judgment sale.

• Equitable lien and transfer.• Post judgment receiver?


Conclusion

• UCC search and file.• Other steps.• Expert counsel.

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CONSENSUAL AND NONCONSENSUAL LIENS ON INTELLECTUAL PROPERTY

Nebraska State Bar AssociationAugust 28, 2020

Tom Ashbyof Baird Holm LLP1700 Farnam Street, Suite 1500

Omaha, NE 68102Ph: (402) 636-8280

[email protected]

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Immigrants: Essential...and Banned?

Ryan Sevcik Koley Jessen P.C., L.L.O.

Brian J. Blackford Blackford Law LLC

Heidi Oligmueller Oligmueller Law Firm PC, LLO


Webcast

8/27/2020

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1

Presidential Proclamation 10052

By: Ryan Sevcik

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Presidential Proclamation 10052• What

‐ Suspension of entry of certain nonimmigrant visa (“NIV”) holders

‐ Extension of immigrant visa (“IV”) restrictions• When

‐ Effective = 06/24/2020‐ Expiration = 12/31/2020

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Presidential Proclamation 10052• Categories of NIVs Affected

‐ H‐1B‐ H‐2B‐ J‐ L

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Presidential Proclamation 10052• Requirements for Applicability

‐ Outside of the U.S. as of 06/24/2020

‐ No valid NIV as of 06/24/2020

‐ No other travel document valid as of 06/24/2020

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Presidential Proclamation 10052• Exemptions

‐ Lawful Permanent Residents of the U.S.‐ Spouse/child of a United States Citizen (“USC”)‐ Entering to perform temporary labor essential for food supply

‐ National Interest

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Presidential Proclamation 10052

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• National Interest Exception‐ Certain services related to defense‐ Provision of medical care (COVID)‐ Provision of medical research (COVID)‐ Necessary to facilitate economic recovery of the U.S.‐ “Age‐out” protections for children

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Presidential Proclamation 10052•Go Forward Considerations

‐ Expiration/Timing‐ Examples of practical impacts on employers‐ Options

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Form I‐9 Completion in the COVID‐19 Enviroment

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8/27/2020

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Form I-9 Completion• Overview of Rules for Remote I‐9 Completion (Generally)

• Timing• Physical review• Remote worker policies

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Form I-9 Completion• COVID Flexibility/Changes

‐ First initiated 03/20/2020‐ Most recently extended to 09/19/2020‐ Flexibility for fully remote employers

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Form I-9 Completion• Flexibility

‐ Employer can examine Section 2 documents remotely (e.g., video link, fax, email, etc.)

‐ Requirements at time of inspection / process‐ Future requirements / considerations

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Form I-9 Completion•Valid Documents

‐ Expansion of use of Approval Notices‐More to come…?

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Immigrant Visa and Refugee BansBRIAN BLACKFORD, ESQ.

Visas: Three Tracks and Two TypesTracks:

1) Employment (H1B, PERM)

2) Family (spouse, parent, child, sibling)

3) Humanitarian (Asylum/Refugee, U/T visa, VAWA, DACA, TPS, SIJS)

Types:

1) Immigrant (Family)

2) Nonimmigrant (Employment, Humanitarian)

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Family‐based immigrationImmediate relative vs. preference categories

1) Immediate relative (USC spouse, USC child over 21 for parent, USC parent for unmarried child under 21)

2) Preference categories (everyone else)

First: (F1) Unmarried Sons and Daughters of U.S. Citizens: 23,400 plus any numbers not required for fourth preference.Second: Spouses and Children, and Unmarried Sons and Daughters of Permanent Residents: 114,200, plus the number (if any) by which the worldwide family preference level exceeds 226,000, plus any unused first preference numbers:

A. (F2A) Spouses and Children of Permanent Residents: 77% of the overall second preference limitation, of which 75% are exempt from the per‐country limit;

B. (F2B) Unmarried Sons and Daughters (21 years of age or older) of Permanent Residents: 23% of the overall second preference limitation.

Third: (F3) Married Sons and Daughters of U.S. Citizens: 23,400, plus any numbers not required by first and second preferences.

Fourth: (F4) Brothers and Sisters of Adult U.S. Citizens: 65,000, plus any numbers not required by first three preferences.

Travel BanTRAVEL BAN 3.0 (IN EFFECT):Burma (Myanmar), Eritrea, Iran (limited exceptions for certain students), Kyrgyzstan, Libya, Nigeria, North Korea, Somalia, Sudan (DV only), Syria, Tanzania (DV only), Venezuela (government officials and family), and Yemen

EXCEPTIONS:Lawful permanent residents;

Those with preexisting valid visas;

Those admitted to or paroled into the U.S.;

Foreign nationals who have a document other than a visa (e.g., transportation letter, boarding foil, advance parole document);

Dual nationals of a designated country who are traveling on a passport issued by a non‐designated country;

Those traveling on a diplomatic visas, NATO visas, C‐2/U.N. visas, or G‐1, G‐2, G‐3, or G‐4 visa; and

Those who have been granted asylum in the U.S., refugees who have been admitted to the U.S.; or individuals who have been granted withholding of removal, advance parole, or protection under the Convention Against Torture.

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Travel Ban WaiversELIGIBILITY:Denying entry would cause the foreign national undue hardship;

Entry would not pose a threat to the national security or public safety of the U.S.; and

Entry would be in the national interest.

EXAMPLES:Previously been admitted to the U.S. for a continuous period of work, study, or other long‐term activity, is outside the U.S. on the applicable effective date, seeks to reenter the U.S. to resume that activity, and the denial of reentry would impair that activity; Previously established significant contacts with the U.S. but is outside the U.S. on the applicable effective date for work, study, or other lawful activity; Seeks to enter the U.S. for significant business or professional obligations and the denial of entry would impair those obligations; Seeks to enter the U.S. to visit or reside with a close family member (e.g., a spouse, child, or parent) who is a USC, LPR or lawful nonimmigrant, and the denial of entry would cause undue hardship; Infant, a young child or adoptee, an individual needing urgent medical care, or someone whose entry is otherwise justified by special circumstances; Provided faithful and valuable service to the U.S. Government; Traveling for purposes related to an international organization designated under the International Organizations Immunities Act (IOIA), traveling for purposes of conducting meetings or business with the U.S. Government, or traveling to conduct business on behalf of an international organization not designated under the IOIA; Canadian permanent resident who applies for a visa at a location within Canada; Traveling as a U.S. Government‐sponsored exchange visitor; or Traveling to the U.S. at the request of a U.S. Government department or agency, for legitimate law enforcement, foreign policy, or national security purposes.

Immigrant Visa BanWHO IS OUT:Those seeking "immigrant" or permanent visas to the U.S. who are outside of the U.S. as of April 23, 2020 are barred from entering through at least December 31

This applies ONLY to those currently outside the U.S. and who do not possess a valid immigrant visa or travel document (reentry permit, advance parole, refugee travel document) issued on or before April 23, 2020

It does NOT apply to those who are IN THE U.S. and eligible for adjustment of status (Form I‐485)

It does NOT apply to asylum seekers (although largely banned separately)

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Immigrant Visa BanEXCEPTIONS (although COVID-19 testing will be required):Lawful permanent residents ("green card" holders) Those seeking an immigrant visa as a doctor or nurse to perform research or work to combat the spread of COVID‐19 and their spouses and children under 21 years of age Those applying under the EB‐5 Immigrant Investor Program Those who are the spouse or child (under 21) of a U.S. citizen Those whose entry would help U.S. law enforcement agencies Those who are members of the U.S. Armed Forces and their spouses and children Those seeking to enter on a Special Immigrant Visa as Iraqi or Afghani interpreters or U.S. Government employees and their spouses and children Those who entry would be in the "national interest” (including children who would age out of eligibility for a visa by turning 21)

Immigrant Visa BanWHO THIS ADVERSELY AFFECTS (AMOUNTING TO OVER 315,000 IMMIGRANTS IN 2019): Those with immigrant visa petitions through their U.S. citizen childThose with immigrant visa petitions through their lawful permanent resident spouse Those with immigrant visa petitions through their lawful permanent resident parent (filed either when the immigrant was unmarried and under 21 years of age or unmarried and over 21 years of age) Those with immigrant visa petitions through their U.S. citizen parent who were over 21 years of age at the time the petition was filed Those with immigrant visa petitions through their U.S. citizen sibling Those with immigrant visa petitions through their employers (other than those in the EB‐5 Immigrant Investor Program) Those granted an immigrant visa through the Diversity Visa Lottery

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Asylum BanMetering (“turnbacks”) – wait in Mexico

Migrant Protection Protocols (MPP) – “Remain in Mexico” until border court hearing and then back again with few exceptions

Asylum Transit Ban – no third country transit

Communicable Disease Bar (proposed) – COVID‐19 response for “national security” reasons as public health emergency, blanket bar for ALL humanitarian protections if from certain country or shows symptoms

Problems: family separation, wait times, access to counsel, crime, resources

Additional restrictions for asylum‐seekers already in U.S. – expedited removal expansion, caselaw on eligibility categories and due process rights, EADs, criminal bars, discretion

Refugee AdmissionsCEILING V. ACTUALFY2016 (Obama): 85,000/84,995

FY2017: 50,000/53,716

FY2018: 45,000/22,491

FY2019: 30,000/30,000

FY2020: 18,000 (lowest level on record)/8,572 (through August 21 including 102 in NE)◦ Governors can refuse to accept refugees (Texas)◦ Enhanced “vetting”

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DACA Updates and Case Processing DelaysHEIDI L. OLIGMUELLER, ESQ.

Deferred Action for Childhood Arrivals (DACA) Overview

DACA policy allows certain undocumented immigrants who came to the U.S. as children to apply for and obtain a two‐year “Deferred Action or forbearance of removal” and work authorization

• Other benefits include obtaining social security numbers and driver’s licenses• September 4, 2017 AG Sessions concluded DACA had “legal defects” and program should be rescinded• Lawsuits ensued and January 2018 brought order enjoining termination; Government appealed; November 2018 SCOTUS heard oral argument

• June 18, 2020 SCOTUS ruled (5‐4) that rescission of DACA violated the Administrative Procedure Act because no reasoned explanation for termination of program

• Ruling meant USCIS could continue to accept and process renewal applications and required DHS to begin accepting first time DACA applications and requests for advance parole

BUT…

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USCIS Memo re: DACADespite SCOTUS ruling, USCIS issued a memo on July 28, 2020 advising the following:

•USCIS will reject all initial DACA applications from those who never previously received DACA

•Limit grants of deferred action and employment authorization to no more than one year

•Generally reject requests received more than 150 days before current grant of DACA expires

•Largely reject applications for advance parole unless an exceptional cases with “urgent humanitarian needs or significant public benefit” (Ie: travel to support U.S. National Security Interests or to obtain life‐sustaining medical treatment not available in the U.S.)

USCIS’ violation of SCOTUS RulingIsn’t USCIS in violation of the Supreme Court Ruling?

•U.S. District Court in Maryland mandated Trump Administration to start processing new applications and restore the DACA program to pre‐2017 termination status; HOWEVER,

•August 21, 2020 USCIS issued additional guidance indicating NO INITIAL DACA applications will be accepted, renewals can only be filed 150 days prior to expiration, limit the grant of deferred action and work authorization to one year, and reject all pending and future applications for advance parole absent exceptional circumstances

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DACA Figures•August 2018 estimates indicated there are 699,350 active DACA recipients residing in the U.S. (USCIS)

•DACA Eligible individuals pay on average 9.1% of their income in state and local taxes and 10.2 million in state and local taxes in Nebraska (Institute on Taxation and Policy)

•Estimated loss of 150.2 million from state GDP if work authorization taken away (Interfaith Justice Workers Report)

•Ending DACA would remove an estimated 685,000 workers from the nation’s workforce and result in a loss of approximately $460.3 billion from the National GDP over the next decade (Institute on Taxation and Policy)

DACA and Other Case Processing DelaysWill DACA Recipients and other applicants be able to provide proof of “status” or employment authorization given restrictions on renewal submissions vs. case processing times?

•DACA renewals only allowed 150 days prior to expiration vs. current processing times ranging between 2.5‐5.5 months

•Most other work permit renewals only allowed 120 days prior to expiration vs. current processing times ranging between 4‐6 months (some categories provide for automatic 180 day extension but many cases are processing at or longer than 6 months)

•Green Card renewals are only allowed 6 months prior to expiration vs. current processing times ranging between 8.5‐11.5 months• Biometrics and infopass appointments limited to make issuance of extensions while cases pending difficult if not next to impossible

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Questions?Ryan Sevcik [email protected]

Brian Blackford [email protected]

Heidi Oligmueller [email protected]

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