Alerts & Newsletters

In mid-May, Treasury Secretary Mnuchin told the Subcommittee on Financial Services and General Government of the Senate Appropriations Committee that cannabis businesses would not be eligible for Opportunity Zone (“OZ”) tax benefits. According to news reports of his testimony, Secretary Mnuchin said that the business of growing and dispensing cannabis is misaligned with the intent of the OZ program, which he appears to believe is designed to directly uplift low-income residents of distressed communities through OZ investment dollars. Secretary Mnuchin apparently believes that the business of growing and dispensing cannabis has less tangible impact on the residents of distressed communities than the building of new upscale rental units or luxury hotels.

The Illinois legislature has approved and Governor Pritzker has signed into law significant revisions to the Illinois Tax Delinquency Amnesty Act (35 ILCS 745/10). The new amnesty program is the first in Illinois since 2010 and is an important opportunity for noncompliant taxpayers to resolve both known and previously unknown Illinois tax obligations.

When the Supreme Court accepted the cert petition to resolve a Circuit split regarding the False Claims Act’s statute of limitations when the government does not intervene, it created the potential that the Court would extend the limitations period for private relators’ FCA actions. That is exactly what happened. The Supreme Court unanimously ruled that a relator can bring suit within three years after a government official knows, or should know, about a potential FCA violation—up to 10 years after the underlying event—and the relator does not count as a government official.

On the heels of the DOJ Criminal Division’s revisions to its Corporate Enforcement Policy to encourage cooperation, the Civil Division’s Commercial Litigation Branch has issued its own cooperation guidelines that identify a non-exhaustive list of types of cooperation that may entitle entities or individuals to cooperation credit. The guidelines also discuss how a potential cooperation credit should be calculated, including the size of the credit and the impact of remedial measures.

The U.S. Department of Labor on Monday unveiled its first guidance under the current Administration on the hotly contested issue of employee-versus-independent contractor classification, saying workers for an unnamed technology platform that connects service providers with clients are independent contractors. The guidance was provided through an Administrator’s Opinion Letter, and as such it provides unique defenses to employers with similar situations and who rely on the letter.

The Criminal Division of the U.S. Department of Justice recently issued an updated guidance document on the Evaluation of Corporate Compliance Programs. The new document, which significantly expands on the prior version issued in early 2017, largely follows the structure of its predecessor but provides much more detail than ever before. Indeed the new version is more than double the length of the prior version.

The results of Dykema’s 2018 M&A Survey indicated greater optimism among our survey respondents—principally M&A dealmakers and service providers in the middle market—than ever reported in the 14 years we have conducted it. And Dykema’s first quarter M&A activity seems to support that optimism. During the quarter just ended, we closed 21 transactions, which annualizes to a 78% increase over 2018. Average deal size remained just under $24M, virtually flat with 2018. 

The Granston Memo raised concerns that the U.S. Department of Justice (DOJ) would employ its authority under 31 U.S.C. § 3730 to undermine qui tam relator actions. Since the Memo was issued, the DOJ moved to dismiss 11 Anti-Kickback Statute cases brought by a professional relator, the National Health Care Analysis Group (“NHCAG”). In those cases, the Government asserted its position that it had absolute discretion to dismiss actions. A federal court in Illinois recently challenged this position.

Earlier this month, the DOL published a Notice of Proposed Rulemaking (“NPRM”) to increase the minimum salary level most exempt employees must be paid in order for them to be deemed exempt from the FLSA’s overtime pay requirements. The comment period for the proposed changes will close in late May, and it is anticipated that the salary level rules will be finalized and implemented in early 2020. This NPRM was “big news,” particularly in light of the 2016 national injunction barring the implementation of the Obama Administration’s attempted changes to the regulations.

The new Michigan Paid Medical Leave Act soon becomes effective—on March 29, 2019. By then, employers employing 50 or more employees must have policies in place allowing employees to use up to 40 hours of paid time for various specified reasons.

The much awaited revised new regulations governing who qualifies for the FLSA white collar exemption has finally been revealed by the Department of Labor. It did so on March 8 by publishing an NPRM (“Notice of Proposed Rule Making”).

The fallout from the Illinois Supreme Court’s January 25, 2019, opinion in Rosenbach v. Six Flags Entertainment Corp., 19 IL 12316, continues. Rosenbach settled the dispute of who qualifies as an “aggrieved person” under the Illinois Biometric Information Privacy Act (“BIPA”), and in doing so opened the floodgates for this litigation to proliferate.

On January 19, 2019, federal Magistrate Judge Kandis Westmore of the Northern District of California denied the Government’s application for a search warrant that sought: (1) “all digital devices” present at a California residence; (Order at 3), and (2) that “any individual present at the time of the search to press a finger (including thumb) or utilize other biometric features… for the purposes of unlocking the digital devices found in order to permit a search of the contents,” (Order at 1).

On February 14, 2019, the United States Patent and Trademark Office (PTO) issued a Notice of Proposed Rulemaking (“NPRM”) to require foreign domiciled trademark applicants and registrants to be represented by a licensed U.S. attorney at the PTO. The comment period on the NPRM is open until March 18, 2019.

The U.S. Department of Homeland Security (DHS) has announced it will issue a new Final Rule on January 31, 2019, reversing the order by which the USCIS will select H-1B applications submitted under the statutory/numerical cap and introducing an electronic registration requirement for employers filing H-1B cap-subject petitions. The reverse-selection provisions of the rule will go into effect on April 1, 2019.

On January 23, 2019, the Chicago City Council approved a significant amendment to the transit-oriented development provisions of the Zoning Ordinance. Prior to the change, the Chicago Zoning Ordinance, through increases and reductions of certain development standards, allowed for larger, more dense buildings on properties in close proximity to CTA or Metra train stations. Under the amendment, these development enhancements are now available for properties that are on or near high traffic CTA bus lines. The change promises to open up greater development opportunities across the City. 

The fourth quarter was a busy one for Dykema’s M&A practice. In total, we closed 14 transactions, representing the buyers in eight deals and the sellers in six. The industries covered included liquor distribution, healthcare, automotive, technology, transportation logistics, dental service organizations and death care, and the average deal size was $21M.