Alerts & Newsletters

On Thursday, February 25, 2021, a Federal Court Judge in the Eastern District of Texas sided with a group of landlords by holding that the eviction moratorium instituted by the Centers for Disease Control and Prevention (CDC) is unconstitutional. Importantly, the Court declined to issue an injunction blocking the ban but noted that it expects that the CDC will respect the decision. As a result, the ban on evictions remains in place pending new developments. It is unclear whether the CDC will appeal the decision.

Is Wi-Fi sickness a disability? The California Court of Appeal just said it is in Brown v. Los Angeles Unified School District. In a case that tests the limits of California’s liberal pleading standard, the appellate court green-lighted a claim of a woman who asserted a disability of “electromagnetic hypersensitivity,” or, as the concurring justice put it, “Wi-Fi sickness.” Apart from the holding, California employers should take note of the facts alleged in the case about the failure to provide a reasonable accommodation. 

In January 2021, the U.S. Dept. of Justice (DOJ) announced $2.2 billion in False Claims Act (FCA) recoveries for fiscal year 2020. Although this amount is substantial, it nonetheless represents the smallest recovery figure in 10 years. These figures reflect the Trump administration’s unaggressive enforcement efforts and its restrictive view of the FCA. The years ahead will bring a significant increase in FCA investigations and settlements under the Biden administration. Find out what companies should do to address the upcoming surge in federal investigations and litigation.

The de novo medical device process is a little-used but potentially valuable means of securing approval for your medical device. The pathway was designed to employ a risk-based strategy for novel devices that have not yet been classified. Basically, it establishes a new device type including classification, regulation, appropriate controls and product code. The device then becomes eligible to act as a predicate for new medical devices. The following describes the origins of the de novo process, how the submission process works and its potential advantages.

The 2021 tax assessment of real and personal property will be determined by local Assessors in February, at which time a Notice of Assessment will be issued and mailed to property owners. Property owners should determine whether an appeal of their taxable value should be filed. Failure to receive a Notice of Assessment does not invalidate the assessment, so if one is not received, it is recommended that you contact the local Assessor’s office before March 1 to inquire.

The fourth quarter of 2020 was an extremely busy one for Dykema’s M&A practice. All told, we closed 66 transactions, including 49 in the Dental Service Organization (DSO) space alone. The 17 other Q-4 transactions included deals in the following industry segments: title insurance, plastics, senior living, healthcare, energy, industrial parts, childcare, engineering services, broadband services and insurance brokerage services, with the deal size for these non-DSO transactions averaging $17.3 million.

Leases often include language that gives a tenant the option to purchase the leased property during or at the end of the lease term. Michigan courts narrowly construe options, meaning that strict compliance with the language of the option is critical, and often the source of disputes subject to litigation. A recent opinion from the Michigan Court of Appeals could generate additional option disputes as it deviates from a long line of Michigan cases holding that options must contain a “fixed” purchase price. The case serves as a broader reminder that landlords and tenants need to fully understand how an option to purchase contained in a lease will operate. In this alert, we will discuss the specifics of this case and what can be done to help avoid disputes down the road.

A change in administrations from Republican to Democratic usually ushers in increased enforcement, regulation and strategic initiatives. Most of the Trump regulations and initiatives will likely be replaced by rules and guidance documents that have been held in abeyance during the previous administration, as well as numerous new initiatives. The following is a brief, top-line assessment of the changes we can expect over the next four years particularly in regard to enforcement activity, pandemic countermeasures, medical devices, pharmaceuticals and biologics, food and dietary supplements and cannabis.

On December 27, 2020, the Consolidated Appropriation Act of 2021 (the “CAA”) was enacted to provide additional coronavirus stimulus and relief for businesses challenged by the ongoing COVID-19 Pandemic. In doing so, the CAA includes several targeted, but temporary, changes to the Bankruptcy Code (the “Code”) designed to provide certain debtors with greater flexibility with respect to their leases (which may negatively affect landlords) while ensuring that creditors are not penalized under the preference law for renegotiating their lease terms (which should benefit landlords). Absent further legislation, these changes will sunset on December 27, 2022, but will continue thereafter to affect cases filed prior to that date. This alert explores the ways in which these changes impact debtors.

On January 1, 2020, Congress overrode President Trump’s veto to pass the National Defense Authorization Act, which includes the Anti-Money Laundering Act of 2020 (the “AML Act”). The AML Act revises the Bank Secrecy Act to bolster the government’s power to identify and regulate suspicious banking activity. The Act increases financial institutions’ responsibilities to detect and prevent money laundering, offers increased rewards and protections for whistleblowers, obligates companies to submit personal information of company owners to the Treasury Department, and expands the government’s ability to obtain financial account information beyond the borders of the United States. These provisions will affect a wide swath of businesses. Companies should make sure the protocols in place are sufficiently robust to meet the requirements of the “risk-based” approach to identifying suspicious financial transactions.

While 2020 was a different year, there were a few significant developments in intellectual property law and practice. In this summary, we provide an update on those developments and what you can expect to see in 2021.

On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act was enacted which, among other things, reauthorized lending under the Paycheck Protection Program (“PPP”) to first-time borrowers and for second draws by certain borrowers who have previously received PPP loans. This alert highlights key provisions for the revised PPP loan program and how it applies to borrowers, depending on their status under the program.

The Consolidated Appropriations Act, which was signed into law on December 27, 2020 (the “Act”), amended and significantly modified the Employee Retention Tax Credit (“ERC”) under the CARES Act. Pursuant to the Act, the ERC is now equal to 70% of qualified wages paid on or after January 1, 2021, through June 30, 2021. The limit on qualified wages has been significantly increased from $10,000 per employee for all quarters to $10,000 per employee for each quarter. Thus, the maximum credit available to employers is now equal to $7,000 per employee per quarter. In addition, the Act modified the rules related to the determination of qualified wages based on the size of the employer.

On January 13, the Illinois legislature unanimously passed the Predatory Loan Prevention Act (“PLPA”), which would prohibit lenders from charging more than 36% APR on consumer loans. Specifically, the PLPA would apply to any non-commercial loan made to a consumer in Illinois, including closed-end and open-end credit, retail installment sales contracts, and motor vehicle retail installment sales contracts. Banks, lenders, loan purchasers and other participants in bank partnership programs involving loans to consumers in Illinois should immediately review their lending criteria and contracts to determine what, if any, changes are required to comply with the PLPA. If signed into law, the PLPA will likely require many participants in the Illinois consumer lending market to modify their current practices.

The United States’ Centers for Disease Control and Prevention (CDC) has issued an order that will take effect on January 26, 2021, requiring all arriving international airline passengers to provide proof of a negative COVID test taken within three days of the flight’s foreign departure. For those who have had it, the CDC will require proof of recovery.

The Department of Homeland Security (DHS) has published a final rule substituting last year’s random selection registration process with one based on the wage offered to the worker. Under this new rule, cases with higher wages are more likely to be chosen.

With the ability of public bodies to meet remotely under “any circumstances” set to expire on December 31, 2020, the Michigan Legislature recently amended the Open Meetings Act to extend any reason remote meetings through March 31, 2021. These amendments also now mandate certain safety protocols for in-person meetings held before April 1, 2021. Public bodies should remember that, separate from these new amendments, they must also still adhere to gathering restrictions and requirements issued by the Michigan Department of Health and Human Services.

Effective February 23, 2021, the 2016 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys are being replaced with the new 2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys (“2021 Standards”). The 2021 Standards include a variety of changes that seek to further limit a surveyor’s liability and provide better clarity. This alert highlights some of the more notable changes.

The President recently signed into law the Criminal Antitrust Anti-Retaliation Act, which amends the Antitrust Criminal Penalty Enhancement and Reform Act of 2004, granting stronger protections to employees who come forward with claims of antitrust violations. As protections strengthen, employees are empowered to act unilaterally, exposing employers to unforeseen accusations and unintended consequences. Perceived retaliation could result in damages even if the antitrust allegations are unproven.

This alert explores the key developments impacting California employers including the expansion of the COVID-19 related laws, the expanded California Family Rights Act, Paid Sick Leave, Workplace Safety, and Workers’ Compensation.

Ever since the beginning of the COVID-19 pandemic, the promise of an effective vaccine has been held out as a key component to a return to normality. Now, with the Pfizer vaccine approved, and the Moderna vaccine on the path to approval shortly, employers have begun struggling to determine what their legal obligations are towards employees who refuse to be vaccinated. While we have addressed these issues recently in a Dec. 16 webinar, the EEOC issued guidance to employers in the form of a Technical Assistance Bulletin to clarify how employers should address employee objections to vaccination that arise under Title VII of the Civil Rights Act, the Americans With Disabilities Act, or the Genetic Information Nondiscrimination Act. While that guidance is not binding upon employers or the Courts, it is nonetheless useful to employers contemplating the legal restrictions that may exist in addressing vaccination in the workplace.

The Centers for Disease Control and Prevention has expanded the definition of close contact to now evaluate exposure cumulatively over a 24-hour period such that “15 cumulative minutes of exposure at a distance of 6 feet or less can be used as an operational definition for contact investigation.” Because the newly expanded definition is not limited, it impacts many different industries (including transportation and logistics, health care, automotive, manufacturing, and educational industries) and different persons (e.g., first responders, health care professionals, customer-facing employees, and others). As winter is coming and the holiday season is upon us, the CDC’s new “close contact” definition greatly impacts all workers, employers, and workplaces, as everyone now needs to evaluate physical distancing in smaller, repetitive increments of time.

On November 15, 2020, Michigan’s Department of Health and Human Services (“DHHS”) issued a new Gatherings and Face Mask Order that further limits in-person gatherings and employer operations, but does not meaningfully change requirements for most businesses. These gathering limits do not apply to workplace gatherings that occur consistent with the Emergency Rules issued by the Michigan Occupational Safety and Health Administration (“MIOSHA”) on October 14, 2020.

While public attention focused on the federal and state elections, Michigan voters made an important decision—they adopted Proposal 20-2, which amended Michigan’s Constitution to extend its protection from unreasonable searches and seizures to electronic data and communications. With the proliferation of personal electronic devices and storage of business information on computers used at home in the past few decades, federal and state courts, including the Supreme Court, have grappled with how to apply Fourth Amendment protections against unreasonable searches and seizures in a digital age. Although Proposal 20-2 might not change investigative practice, it clarifies that electronic data and communications are subject to the same protection against unreasonable search and seizure as other “traditional” information, such as paper records.

On June 5, 2020 the  Department of the Treasury and the Internal Revenue Service (“IRS”) issued Notice 2020-43 (the “Notice”) proposing two alternative methods to satisfy tax capital account reporting requirements as the only methods for reporting partner’s capital accounts under the tax basis method for taxable years that end on or after December 31, 2020. While some taxpayers may have concerns about these changes, the implementation of the new reporting requirement should not change or adversely affect the partners and should provide a better understanding of their tax capital accounts. With the year-end approaching, partners and partnerships should review the IRS guidance and begin conversations with their accountants about the use of tax capital reporting and conversion from other methods used in prior periods.

Governor Whitmer announced last week that MIOSHA is increasing enforcement of its October 14 Emergency COVID-19 Rules, with a focus on promoting more remote work for offices. Specifically, the Governor’s announcement indicated that the increased enforcement efforts will focus on ensuring compliance with Emergency Rule 5(8)’s “requirement that employer COVID-19 Preparedness and Response Plans contain policies prohibiting in-person work to the extent that work activities can feasibly be completed remotely.” Employers should anticipate increased, unannounced inspections to verify compliance with this requirement beginning immediately.

After months of predictions of a possible Democratic wave, Tuesday’s election delivered mixed results. Joe Biden appears poised to narrowly defeat President Trump after one of the most contentious election cycles in recent memory. Republicans are favored to retain their Senate majority despite having to defend twice as many seats as their Democratic counterparts. However, Democrats will have one last chance to wrestle back the Senate majority from Republicans if they are able to pull off upset wins in two Senate runoff elections in Georgia scheduled for January 5. In the biggest surprise of election night, House Republicans picked up seats, knocking off at least seven Democratic incumbents, with more races still too close to call. Despite Republican gains, Democrats did retain control of the House of Representatives, leaving Speaker Pelosi to preside over a razor-thin majority.

Dykema’s M&A transaction volume was up sharply in the third quarter with 25 deals closing during that three-month period. The transactions involved a wide variety of industries including Dental Service Organizations (DSOs) and Medical Service Organizations (MSOs), alcoholic beverages, precious metals, automotive, waste management, health & fitness and cloud services.

While some results are still being tabulated, we can now reasonably assess the outcome of the 2020 Election in Illinois. As expected, Democrats maintained their supermajority status in both the Illinois House of Representatives and Senate in this election cycle. What is unexpected, however, is the first challenge to Michael J. Madigan’s speakership in more than 40 years. Additionally, the defeat of the constitutional amendment to replace the state’s flat income tax with a progressive income tax deals a major blow to Governor Pritzker. Overall, the results could lead up to what may be a volatile and unpredictable legislative environment going forward. We’ll also take a look at legislation that is likely to be introduced.

Michigan’s Open Meetings Act (“OMA”) was officially amended this past Friday when Governor Whitmer signed SB 1108 (now Public Act 228 of 2020). The new law permits public bodies to conduct electronic meetings under certain circumstances and for a set period of time. With the new amendments in place, public bodies should be sure to conduct electronic meetings—when permitted—in full compliance with the amended OMA requirements. Failure to do so could result in challenges to decisions made by public bodies.

Recent rulings by the Michigan Supreme Court effectively terminated executive orders from Governor Whitmer that enabled municipalities to meet virtually by suspending certain requirements of Michigan’s Open Meetings Act (OMA). In response, the Michigan Legislature swiftly passed SB 1108 that amends the OMA to allow for public bodies to continue meeting electronically under certain circumstances, including statewide or local states of emergency or disaster, through December 31, 2021. The bill will now be enrolled and presented to Governor Whitmer for signature. As a result, while not yet law until signed, it seems that virtual meetings of municipalities may continue for the time being upon the adoption of these new amendments. However, conducting virtual meetings until the bill is signed by the Governor is not without risk.

The Michigan Supreme Court’s October 2, 2020, ruling in In re Certified Questions essentially removed the Governor’s authority to issue any executive orders related to COVID-19 after April 30, 2020. The Court made clear on October 12, 2020, that the orders are “of no continuing legal effect.” Now that the Safe Start orders and Workplace Safety requirements are no longer effective or enforceable, what should a business or public body consider as it moves forward? What restrictions are in place?

On Saturday, September 12, 2020, the Internal Revenue Service (“IRS”) updated a marijuana industry frequently asked questions (“FAQ”) page that provides relief to state-legal cannabis businesses. The FAQ announces that state-legal cannabis businesses can reduce their gross receipts by using an alternative accounting method under Section 471 of the Internal Revenue Code (the “Code”).