blockchain - tucker ellis llp in-house... · 2018-10-26 · • fraud detection and risk prevention...

BLOCKCHAINChanging the game and going beyond Cryptocurrency

By: Elisa Arko, Paul Malie, & Paul Hugenberg

What Blockchain is not:

• It is not meant for storage of large data sets

• It is not an analytics platform

• It is not a magic solution

• It is not fail-proof

Blockchain: What is it?

• A blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.

It is that great big spreadsheet in the sky...

In the beginning:• Blockchain is a shared, public ledger of records or

transactions that is open to inspection by every participant but not subject to any form of central control.

• Consensus (51%) of participants validated each transaction and placed them into blocks, and mathematical proofs of work were required to enter each block into the ledger.

• Cryptographically “chaining” each block to the preceding block provided immutability.

Every heard of Bitcoin? We can send and receive money

anywhere, to anyone, for anything, without

government or banks.

Physical money is really just a digital entry on some software application. If we keep our own ledgers, who needs the banks anymore?

How?

So anything physical with a central ledger, could be

digitized and shared without 3rd Parties? What about real

estate records?

We have evolved:

• Blockchain may or may not be shared; could be a public or private ledger of records or transactions that may or may not be open to inspection by every participant and may or may not be free from central control.

• Proofs have evolved due to risks and commercial requirements and now include proofs of stake, proofs of authority.

• We are no longer bound to currency as the only digital asset that can be stored on the blockchain.

• Is real estate a digital asset?

• Is a marriage license?

• Insurance?

We have evolved:

• Where requirements extend beyond transactions, and include several steps that can be automated in code, each step can be digitized and recorded on a blockchain. These various steps are captured in “smart contracts”.

• Several blockchains have evolved to support far more complex transactions on the platforms.

• The most popular is Ethereum and its ability to leverage custom developed “apps”. On the blockchain, these are DApps.

• Immutability remains the keystone characteristic.

The Blockchain in action:Blockchain Ledger (Ethereum)

The Blockchain in action:Account Holder History (Ethereum)

The ledger of all holders, their transactions and balances, is publicly

available, and distributed to each Ethereum wallet holder.

The Blockchain in action:This is the Blockchain (Ethereum)

The Blockchain in action:Contents of a Block

Unique Block Cryptographic Hash

Chained to prior block

The Blockchain in action:

Each block is available for inspection, and distributed to each Ethereum

wallet holder once added to the chain.

Blockchain Technology Applied:It’s more than a solution without a problem

Blockchain: Disrupting industry

Smart Contracts:• Also called self-executing contracts, blockchain

contracts, or digital contracts • A smart contract is a software program that

adds layers of information onto digital transactions being executed on a blockchain and is automatically executed when predetermined conditions are met

• Benefits• Speed and accuracy• Trust• Security• Savings

• Real world examples:

• Real estate transactions

• Sharing economy

• Automatic payment in supply chain

Supply Chain• The supply chain is no longer local – which causes it to be broken

• Provides consensus – everyone on the blockchain can see the chain of ownership and those records cannot be erased

• Gets rid of an incredible amount of paperwork and each person along the chain saving that information

• Does not mean the end of all bad transactions but allows better traceability

Insurance• Fraud detection and risk prevention in

claims and in issuing insurance or reinsurance

• Claims prevention and management –sensors can trigger an alert of an accident and all information before the accident gets uploaded into a chain


• AIA Group

• Bancainsurance platform using Hyperledger fabric

• Metlife

Intellectual Property• Evidence of creatorship

• Registering and clearing IP rights

• Authentication and detection of counterfeit or stolen goods

• Music Industry

Healthcare• Medical Records: Ensures the integrity of the

medical records.

• Consent Management: Can be used to record patient consent to procedures. The requirements and rules can be built into the blockchain.

• Autonomy of Patient Records: Allows the individual to own the medical records– allowing patients to take back control.


• UnitedHealth Group, Humana, and Quest Diagnostics, and MultiPlan– created an alliance for a blockchain.

• Pfizer & Medi-ledger

Blockchain: Do you need it?

Processes where Blockchain has the ability to optimize

Verification

Trust

Removing intermediaries

Internal processes

Large sets of data

Need for increase security

Reframing Immigration Reform:

Is It Legally Possible to

Let the “Good People” In and

Keep the “Bad People” Out?

Our PanelModerator: Daniel L. Messeloff, Partner, Tucker Ellis LLP

Panelists:

• Joe Cimperman, President, Global Cleveland

• Molly Watkins, Executive Director for International Affairs, Case Western Reserve University

• Heather Drabek Prendergast, Immigration Attorney, Aljijakli & Kosseff, LLC

Is there an immigration problem?

If so, what is it,

and how do we fix it?

For people who view the immigration problem as being something else, what are they

getting wrong, and what, if anything, are they getting right?

Are there any issues within immigration reform where people

can agree, or at least where we should be able to make some

progress?

What do you see happening in immigration within the next 5-10 years, whether or not there is a

change in the balance of power in Congress or the presidential

administration?

Questions?

Is Your Corporate Compliance Program Up to Par?

Strategies for 2018 and Beyond

Today’s Speakers

Gene Cahill

Partner

Grant Thornton LLP

Steven Eisenberg

General Counsel

US Acute Care Solutions

Jillian Elizabeth Charles

Senior Attorney

Eaton Corporation

Jayne E. Juvan

Partner

Tucker Ellis LLP

Presentation Roadmap

• Benefits of Corporate Compliance Programs

• Risk Assessment

• Components & Design

• Implementation

• Monitoring & Enforcement

• Key Takeaways

Benefits of Adopting a Corporate Compliance Program

Organizational Integrity

Lawful Conduct

Internal Reporting System

Minimizes Financial Loss

Enhances Quality of Services

Improves Reputation

Risk Assessment

Crafting a Risk Assessment Plan for Your Organization

• Strive to be proactive

• Get an honest view of your company’s operations

• Identify areas of potential risk

• Conduct a gap analysis to assess current controls

• Prioritize the identified gaps based on your organization’s acceptable level of risk

Sources of Information

Internal Information

• Management

• Audits

• Reporting mechanisms

External Information

• Consultants

• Regulatory guidance

• Professional organization publications

• Industry trends

• Recent headlines

Emerging Risk Areas Data Privacy & Protection

Cyber Security

Foreign Corrupt Practices Act – Whistleblower Provisions

Sexual Harassment & Misconduct

Social Media

Industry-Specific Risks

Common Risk Areas Accounting Practices

Conflicts of Interest

Inappropriate Payments or Gifts

Intellectual Property

Product Safety

Government Contracts

Insider Trading

International Business Practices

Mergers and Acquisitions

Components & Design

There is No “One-Size-Fits-All” Approach

• In the absence of a “standardized” compliance program, companies today look to general principles contained in the U.S. Sentencing Commission’s Federal Sentencing Guidelines

• §8B2 discusses “Effective Compliance and Ethics Programs” for organizations

The Seven Basic Elements

1. Establish standards and procedures to prevent and detect criminal conduct

2. Governing authority shall be knowledgeable and exercise oversight

3. Use reasonable efforts to refrain from hiring bad actors

4. Communicate periodically through training programs

5. Monitor and audit to detect criminal conduct and include a reporting system for employees

6. Promote and enforce the program consistently throughout the organization

7. Respond appropriately to detected criminal conduct

Why Your Program Should Adhere to the Federal Sentencing Guidelines

• If a company is convicted of a federal offense, it may be eligible for a reduced sentence

• If a company is under investigation by a regulatory agency, it may be able to avoid potential claims against it

• If an employee engages in criminal or unethical conduct, a company may be able to show that it was not also culpable

Additional Authorities

Depending on your company’s profile, also consider:

Federal Sarbanes-Oxley Act of 2002 (publicly traded companies)

Department of Health & Human Services, Office of Inspector General (health care companies)

Other industry practices and standards

Implementation

Creating a Culture of Compliance

Tone at the Top

Tone at the Middle

Best Practices for the Board

• Adopt the corporate compliance program by passing a formal resolution

• Compliance officer should oversee the program and periodically report to the board

• Form a risk committee responsible for overseeing implementation of the program

Training and Education

• Conduct training and education programs at regularly scheduled intervals for all individuals within your organization

• Motivate others that compliance is a top priority

Monitoring & Enforcement

Measuring Employees’ Compliance Competency • There is no “one-size-fits-

all” approach

• Consider the best fit for your organization, including:

• Interviews

• Emails

• Hotline

• Surveys

• Other feedback channels

Internal Audits• Establish an audit

program to assess the effectiveness of the compliance program

• Audits should be conducted at regularly scheduled intervals and strive to be proactive

Reporting System

• An anonymous reporting mechanism is beneficial because individuals are encouraged to report potential misconduct without fear of retaliation

• Establish a process and follow-up to reassure that concerns are responded to appropriately (including documentation) by the organization

• Be aware of potential whistleblowers

Conducting Investigations• When you identify potential misconduct, an

investigation should commence swiftly

• Documentation is key

• Additional considerations:

• Who from the organization should conduct the investigation?

• When should an attorney be involved?

Attorneys Conducting Investigations

• Be mindful of ethics rules located in the Ohio Rules of Professional Conduct, particularly Rule 1.13

• The organization is the client

• Maintain confidentiality

• Properly deal with adverse interests and navigate conflicts of interests

Panelists’ Take-Away Points from Today

Questions?

The Jury’s In:Insight From Those Who Matter Most

Moderators: Knight S. Anderson, Partner, Tucker Ellis

Jill Leibold, Ph.D., Director of Jury Research at Litigation Insights

Jury Selection

I agree that if we follow the instructions, we would have to

decide for the Defendant

“But, somebody’s got to pay”

Panelists:

Chesley Cheatham

Debbie Matusek

Catherine Miller

Dan Pruitt

When Your Car Is Smarter than You

Audience Participation

From phone, tablet, or computer:

• Go to PollEV.com/jonathanfecz025

• Enter your name

• When prompted, please respond!

Poll 1:

Given what you know about autonomous vehicles right now, would you ride in one today?

• Yes

• Not a chance

• I don’t know enough about autonomous vehicles

PollEV.com/jonathanfecz025

Poll 2:

What does a neural network do?

• Provides an answer based on a series of rules written by a programmer

• Makes a guess based on its training

• No one really knows


Neural Networks

How Should We Train?

Moral Dilemmas

The Hardware

The Landscape

Poll 3:

How much safer than the average human driver should autonomous vehicles be before we permit manufacturers to offer them to the public?

• 25% fewer accidents




The Need for Autonomous Vehicles

Since 1966, there have been 2.2 million MV-related fatalities in U.S.

In 2015, MV fatalities increased by > 7.2%, largest single year increase since 1966

>90% = HUMAN ERROR•Drunk driving

•Distractions

•Drowsy

•Speeding

Poll 4:

• Level 3 vehicle with self-driving engaged• Operator is watching a movie• Self-driving system recognizes problem/signals for

operator to take control• Operator rear ends another vehicle 5 seconds later

Who’s to blame?

• Operator

• Manufacturer


Poll 5:

• Level 4 vehicle with self-driving engaged• Operator has not had to drive in six months• Self-driving system recognizes snowy conditions/

signals for operator to take control• Operator fails to maintain control and hits a tree

five minutes later while trying to get home

Who’s to blame?

• Operator

• Manufacturer


Tod Northman216.696.5469

[email protected]

Jon Feczko216.696.3161

[email protected]

Please watch for Driverless, a podcast addressing all things AV and AI coming in November 2018. Find it at:• www.tuckerellis.com• Apple Podcasts app• SoundCloud

Jay Campbell216.696.5639

[email protected]

ERISA Hot TopicsKey Risks, and Some Opportunities

Speakers

• Deborah K. Bracy, Director/Officer of Corporate Counsel, Charles Schwab & Co., Inc.

• Nancy Farnam, Area Assistant Vice President, Compliance Counsel, Gallagher

• Ann M. Caresani, Partner, Tucker Ellis LLP

Trending Retirement Plan TopicsWhat should a plan sponsor know now?

October 25, 2018

Trending Retirement Plan TopicsWhat should a plan sponsor know now?

Missing participantsHardship distribution developments Student Loans and 401(k) plans Upcoming Potential Developments

Informational purposes only/Not legal advice 100

Missing Participant Update What is required of Plan Sponsors now? Internal Revenue Service (IRS), Department of Labor (DOL), and

Pension Benefit Guaranty Corp. (PBGC) have provided guidance at various times, but open questions remain− DOL FAB No. 2014-01− TE/GE Memorandum For EP Examinations Employees issued Oct. 19, 2017− PBGC Final Rule published Dec. 22, 2017, program opened to terminated 401(k) plans

Remarks of Preston Rutledge, Ass’t Sec’y of Labor and head of EBSA on July 19, 2018

Recent industry input to the EBSA/DOL− ERIC, letter dated July 25, 2018; Industry letter dated June 25, 2018; American Benefits

Council, letter dated Oct. 2, 2017− Common themes: coordinated guidance, enforcement efforts (consistent, transparent)

Legislative Efforts− Proposed Retirement Savings Lost and Found Act (re-introduced

by Sens. Warren D-MA and Steve Daines R-MT on Feb. 2., 2018)


Hardship Distribution DevelopmentsWhat may a Plan Sponsor do now?

Important to note: Optional plan feature Two developments will ease accessibility and operation

1. Bipartisan Budget Act of 2018 modifies certain safe harbor hardship distribution requirements Participants are no longer required to first exhaust all plan loans 401(k) regulations are to be amended by Dept. of Treasury to eliminate the

requirement of a 6‐month suspension period on employee contributions following a hardship distribution

Sources of funds available for hardship distribution are expanded

2. IRS memorandum (TE/GE-04-0217-0008) issued on February 23, 2017 permits summary substantiation for safe harbor hardship distributions Exception: unless a participant receives more than 2 hardship distributions in

a year


Student Loans and 401(k) PlansWhat could a Plan Sponsor be thinking about now?

IRS issued PLR 201833012 (Aug. 17, 2018)Basic structure:

Voluntary program where employee making a student loan payment of at least 2% per pay period will receive a 5% contribution from the employer to the employee’s 401(k) account OR employee may make an elective deferral of at least 2% and receive an employer match of 5% (not both).

Caution: PLR was issued to one specific companyPros and cons exist


Upcoming Potential DevelopmentsWhat might a Plan Sponsor expect ?

Trump Executive Order Guidance involving multiple employer plans (“MEPs”)

(proposed regulations issued Monday, Oct. 23, 2018)Changes to required minimum distribution rulesEmphasis on electronic delivery

Tax Reform 2.0 items


Disclaimer

Any and all statements, views and opinions expressed herein are strictly those of the author/presenter. Certain information contained within may be subject to change. The material contained herein is for informational purposes only. The information is not intended to provide tax, legal or investment advice. See your tax, legal or investment advisor for advice specific to your situation.


Thank you


©2018 ARTHUR J. GALLAGHER & CO. | AJG.COM

2018 In-House Counsel CLE Summit – Health Plan UpdateNancy L. Farnam, GallagherOctober 25, 2018


PPACA Current State

109©2018 ARTHUR J. GALLAGHER & CO. | AJG.COM

Employer Mandate – Still Here

• Applicable Large Employers (50+ FTEs in Controlled Group) – Still must offer coverage meeting certain requirements or pay a tax penalty

• Also still here: All of the tracking, counting hours, and reporting requirements

• Some talk in Congress of “zeroing out” Employer Mandate penalties, retroactively to 2015 – but unlikely legislation will proceed before midterm elections (HR 4616 – Employer Relief Act of 2018)


• For months beginning after December 31, 2018:– Technically, mandate still exists, but penalty reduced to zero– No direct impact on employer plans (but will premiums eventually go

up because healthy don’t enroll?)

• No impact on employer reporting this year– Much of the current reporting involves compliance with the individual

mandate and eligibility for a premium tax credit– Will reporting be simplified for 2019?

Individual Mandate –Effectively Repealed


• Potential penalty assessment notices for 2015 began in December 2017 (Letter 226J)‐ Enforcing employer mandate‐ Uses information from filed Forms 1094 and 1095 to calculate

penalty‐ Opportunity to respond/object to penalty‐ Time limits on response – 30 days from date of letter (not receipt)‐ Seem to have been triggered by incomplete or incorrect filings

• Demand/Payment notices in Spring 2018 (Form CP 220J) • Letter 226J and failure to file notices (IRS Letter 5699) for 2016

calendar year being issued now

IRS Penalty Notices

Important! If receive, act immediately!


Sample Penalty Notice – Letter 226J


• The IRS takes the information reported on Form 1094-C and calculates the proposed assessment

Sample Penalty Notice


• Keep copies of forms• Keep records of offers of coverage, waivers and employee data

– You have an opportunity to respond and demonstrate that proper offers were made

• Carefully review forms before they are filed– Many penalty letters were result of failure to check correct box (offer of

coverage to at least 95% of full-time employees)• Review vendor contracts to determine obligations

– Many employers will need to contact vendors – or former vendors – for information to respond to IRS Letter 226J Is vendor obligated to assist? Will an additional charge apply?

• If you identified errors on the 2015 returns, consider review of, and corrections to, 2016 and 2017 forms before IRS issues notices

Lessons Learned


Looking Forward


November 6, 2018 - Midterm Elections

Health care is top issue

Republicans losing some power might make legislation in remaining months of 2018 MORE LIKELY

Reconciliation 2019 becomes available October 1, 2018 (remember, only one time per fiscal year* and only for budgetary items)

• 2017 attempted Reconciliation use on PPACA• 2018 use on Tax Reform • 2019 - ?????


• Complaint filed in US District Court Northern District of Texas on 02/26/2018, amended 04/23/2018

• State of Texas and 17 other states (plus two governors and two individuals) seek injunction against the federal government from implementing, regulating or otherwise enforcing any part of the PPACA in response to repeal of tax on individual mandate

• Trump administration filed a memorandum in response requesting the court to declare the provisions that guarantee coverage to be invalid when the individual mandate goes away

• Stay tuned…

Texas v US


• Proposed regulations issued October 23, 2018 that would allow employers to reimburse employees for individual health insurance policies– If finalized, effective for plan years beginning on or after 01/01/2020– Employer may not offer other health insurance to same employee

group– Must be offered on same terms to employee group– Notice requirement

Expanded HRAs


Some Ideas Percolating

Eliminate Employer Mandate Penalty (retro to

2015) Postpone Cadillac Tax 1 year (from

2022 to 2023)

Combating opioid use

Health savings account

expansion


Wellness Program Incentives


HIPAA/PPACA – Congress said 30% Incentives are fine for these laws• Requirements to meet a health standard (incentives, alternatives, notice, reasonable design)

ADA – Congress didn’t define incentive level• ADA – No disability related inquiries or require medical examinations

• Exception for voluntary wellness programs• Before 2015, EEOC’s position was that ANY incentive made a program involuntary• But, May 2016 EEOC regulations defined “voluntary” – incentive may not exceed 30% of

cost of self-only coverage

GINA – Congress didn’t define incentive level• GINA – Don’t request, require or purchase genetic information concerning an employee or

family members• Exception for voluntary wellness programs• Before 2015, EEOC’s position was that ANY incentive made a program involuntary• But, May 2016 EEOC regulations defined “voluntary” – incentive may not exceed 30% of

cost of self-only coverage for the employee with an additional 30% of self-only coverage for spouse

Wellness Programs - Background


The Issue: What is “voluntary?”

Wellness Programs - 2018versus

• August 2017: D.C. District Court said EEOC rules were “arbitrary and capricious” in defining a 30% incentive as “voluntary” for ADA and GINA

• December 2017: Court vacated related rules, effective January 1, 2019, and told EEOC to issue new rules by August 2018 (in January, removes August deadline, but tells EEOC to state timetable by April)

Did EEOC overstep when it said 30% incentive for HRAs and biometric screening is ok?Courts decide whether Agencies overstep power


What’s Next?

• EEOC has slated June of 2019 to issue regulation• “Voluntary” remains undefined for ADA and GINA

(look to facts and circumstances)• 30% safe harbor for HRAs and biometric screening

will be gone 1/1/2019• Employers must have compliant programs

by January 1, 2019

Wellness Programs - 2018

What This Means for You: Undefined. Possible Design Changes for 2019. Most conservative approach is no incentive/penalty for HRAs and biometric screenings

versus


Mental Health and Substance Use Disorder Parity


• Three mandates− Parity with respect to lifetime and annual dollar limits

• PPACA generally prohibits lifetime and annual limits on EHB

− Parity as to financial requirements and quantitative treatment limitations

• May not impose greater financial requirements (deductibles, co-pays, co-insurance, OOP expenses) or quantitative treatment limitations (e.g., limits on frequency of treatment, number of visits, days of coverage) on MH/SUD benefits than the predominant limitation imposed on substantially all M/S benefits

Mental Health Parity and Addiction Equity Act (MHPAEA)

MHPAEA enforcement is one of DOL’s primary enforcement priorities


• Three mandates, con’t– Parity as to non-quantitative treatment limitations Processes, strategies and evidentiary standards or other factors used in applying NQTL to MH/SUD

benefits are comparable and no more stringently applied than those for M/S benefits

Illustrative list

– Medical management standards limiting or excluding benefits based on medical necessity or medical appropriateness, or based on whether the treatment is experimental or investigative

– Prescription drug formularies

– Network tier design

– Plan methods for determining usual, customary, and reasonable charges

– Fail first policies or step therapy protocols

– Provider admission standards for participation in a network

– Exclusions based upon failure to complete a course of treatment

– Restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope and duration of benefits for services

MHPAEA


• Self-compliance tool: https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/publications/compliance-assistance-guide-appendix-a-mhpaea.pdf

• Proposed Tri-Agency FAQs – Generally focus on NQTLs and disclosure requirements: https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-39-proposed.pdf

Increased Enforcement and New Guidance


Legal Notice

The intent of this presentation is to provide you with general information regarding the status of, and/or

potential concerns related to, your current employee benefits environment. It does not necessarily fully

address all of your specific issues. It should not be construed as, nor is it intended to provide, legal

advice. Questions regarding specific issues should be addressed by your general counsel or an attorney

who specializes in this practice area.


Thank you!

ERISA Enforcement and Developments

Department of Labor Employee Benefits Security Investigations• Response to participant phone calls – inquiry, and

investigation.• Retirement plan investigation with add-on health

care plan investigation.• IRS audit with referral to Department of Labor for

possible prohibited transactions and fiduciary breaches.

• Very lengthy, inflexible process with frequent changes in investigators.

• Aggressive interpretation of prohibited transaction rules.

Department of Labor Health Care Plan Investigation• Initial document request: 30+ items, including self-

compliance checklists.

• Requiring all “protected health information,” completely unredacted.

• Scrutiny of claims, including Mental Health Parity and Equity Addiction Act: autism treatment, eating disorder treatment, residential programs, wilderness programs.

Department of Labor Health Care Plan EnforcementSecretary of Labor v. Macy’s, Inc. – S.D. Ohio complaint filed 8/16/17• Out-of-network reimbursement rates lower than disclosed• Wellness program / smoker surcharge – failure to disclose

alternative standards to qualify for award – ERISA Section 702 discrimination. Demand: refund all smoker surcharges back to 2011.

• Employer should have contributed amounts equal to surcharges, therefore prohibited transactions. Potential substantial revenue raiser for IRS / Department of Labor?

• Allegations that third-party administrators are fiduciaries with respect to these matters.

Health Care Plan Litigation• Pharmacy benefit manager “secret clawbacks.”

• Fiduciary duty analysis turns on whether the defendants exercised any discretionary authority or control in creating and implementing the alleged clawbacks and acted in accordance with the terms of the plans.

• See Negron v. Cigna Health & Life Ins., No. 16-cv-1904, 2018 WL 1258837 (D. Conn. Mar. 12, 2018); In re UnitedHealth Grp. PBM Litig., No. 16-cv-3352, 2017 WL 6512222 (D. Minn. Dec. 19, 2017).

Chamber of Commerce v. Acosta

• Fifth Circuit decision killing the fiduciary rule, “the Supreme Court has been skeptical of federal regulations crafted from long-extant statutes that exert novel and extensive power over the American economy.”

Retirement Plan Fee Litigation Continues

• Tibble v. Edison International $7.5 million verdict.

• Example: Vanderbilt University 403(b) plan

• Participants claim that Vanderbilt allowed its retirement plan to pay excessive fees and did not use the plan's bargaining power to lower administrative costs.

• Targeting the university’s practices, rather than specific funds.

• (Duke University, the University of Pennsylvania, and Johns Hopkins University also sued.)

Retirement Plan Fee Considerations

• Procedures?

• Committee members?

• Active management versus index funds?

• Elimination of revenue sharing / ERISA accounts?

• Structure of fees and equity among participants: fixed amount, or percentage of assets?

• Higher fees for terminated employees?

• Fees for services, e.g., qualified domestic relations orders?

Department of Labor Regulations

Disability Claims Procedures

• DOL issued regulations effective April 2018• Disability denied notices must:

• Include complete discussion of why claim was denied

• Linguistically appropriate

• Make applicant aware of how to fix claim

But, for retirement plans – if decision is made by unrelated party, not subject to the rules (e.g., Social Security Administration)

IRS Employee Plans Compliance Resolution System Changes

• IRS revised how to file under EPCRS.

• Effective April 1, 2019, filing is all electronic.

• Establish account on Pay.gov.

• Changes – reflecting the IRS changes to determination letter program.

IRS Determination Letter Program• Starting in 2017, the IRS is only accepting requests

on:• Initial set up (or has never received a letter)

• Termination

• Special circumstances as determined by IRS • See Rev. Proc. 2016-37

• Issues • Significant amendments

• Form 5500 audits

• Transactions/lending

IRS Determination Letter Program (cont.)

• Use of pre-approved documents• IRS has program for preparing plan

• Prototype plans• Volume submitter plans

• Employers may rely on the letter issued to the sponsor of such plan

• Employee stock ownership plans have only recently been able to use such programs (no pre-approved documents yet)

IRS – Retirement PlansDefaulted Loan Rollover

• Tax Cut and Jobs Act created an extension to the 60-day rollover rule

• Effective January 1, 2018 – applies to loan offsets on participant termination or plan termination.

• New rule – participant has until personal tax filing deadline with extension to rollover the offset amounts.

Thank you!

Mission Impossible?Protecting Data and Mitigating Litigation

Risks in the World of Biometric Authentication Technology

Pradeep Walia, Artificial Learning Systems

Jennifer Mesko, Tucker Ellis LLP

Emily Knight, Tucker Ellis LLP

© Artificial Learning Systems

Biometrics-an overview

➢Biometrics refers to the

identification of humans by their characteristics or traits.

➢Biometric identifiers are the distinctive, measurable characteristics used to label and describe individuals.


➢Behavioral biometrics

➢are related to the behavior of a person,

including but not limited to: typing rhythm,

gait, and voice.

➢Physiological biometric

➢would identify by one's voice, DNA, hand print or

behavior.

➢Traditional Biometrics

➢More traditional means of access control include token-based

identification systems, such as a driver's license or passport, and

knowledge-based identification systems, such as a password or

personal identification number.


How Does Biometric Technology

work


Biometric systems can be operated

in two modes

▶Identification:

▶In this approach no identity is claimed from the user. The automatic system must determine who the user is.

▶Verification:

▶ In this approach the goal of the system is to determine whether the person is the one that claims to be. This implies that the user must provide an identity and the system just accepts or rejects the users according to a successful or

unsuccessful verification.


Biometric system performance

evaluated

▶System performance can be evaluated using:

➢False Acceptance Rate (FAR, those

situations where an impostor is accepted)

➢False Rejection Rate (FRR, those

situations where a user is incorrectly

rejected), also known in detection theory

as False Alarm and Miss, respectively.


Concerns of Biometric Technology

➢Biometrics aren’t private:

▶Biometrics seem secure on the surface. After all, you’re the only one with your ears, eyes, and fingerprint. But that doesn’t necessarily make it more secure than passwords. A password is inherently private because you are the only one who knows it. Of course hackers can acquire it by brute force attacks or phishing, but generally, people can’t access it. On the other hand, biometrics are inherently public.

➢your ears, eyes, and face are exposed. You reveal your eyes whenever you look at things. With fingerprint recognition you leave fingerprints everywhere you go. With voice recognition, someone is recording your voice. Essentially, there’s easy access to all these identifiers.

➢Biometrics Are Hackable:

▶Once a hacker has a picture of someone’s ear, eye, or finger, they can easily gain access to their accounts. While Apple’s TouchID was widely accepted as a biometric advancement, famous hacker Jan Krissler was able to beat the technology just a day after the iPhone was released.

➢Biometrics Hacks May Have Greater Consequences

▶Since a biometric reveals part of a user’s identity, if stolen, it can be used to falsify legal documents, passports, or criminal records, which can do more damage than a stolen credit card number.

The Office of Personnel Management breach in 2015 compromised 5.6 million people’s fingerprints. And unlike passwords, credit cards, or other records, you can’t replace physical

identifiers. If someone has photos of your iris, you can’t get another eye.

https://www.wired.com/2015/09/opm-now-admits-5-6m-feds-fingerprints-stolen-hackers/


Biometric authentication using block

chain:

➢user sensitive data will be stored in a decentralized

blockchain. Each user data will be block in the

ledger.

➢the user can give access to his/her data by doing

a blockchain-based transaction, which will create a

private network. It will help to reduce unauthorized

access.

➢hacking a decentralized blockchain system is

extremely difficult, and could be hacked using

Quantum machines, which are probably a decade

away..


What is Blockchain

Block Chain Technology:

permits transactions to be gathered into blocks and recorded;

allows the resulting ledger to be accessed by different servers

cryptographically chains blocks in chronological order; and


Blockchain Immutable

Data Immutability

●Reduced risk that biometric data will be forged or

tampered with.●It ensures security and immutability.


Blockchain Decentralised

Decentralised

●No single or centralized entity controls the platform●Biometric data are stored in decentralised servers●Mitigate failures of authentication system●High availability of authentication system


Blockchain Easy Data

Sharing

Data Sharing

●Anonymous activities data sharing●User can choose the data to share and with whom to

share.●No unauthorised data access●Authentication with trusted services.


AI for biometric authentication:

➢Biometric data such as fingerprint, iris scans, facial scans are image

data. AI-based algorithms have proven to be successful for biometric

authentication.

➢AI can be used to reduce fraud in the biometric authentication system

using AI-based liveliness detection system.

➢AI based on device authentication system, as now a simple mobile

device can support AI application.


➢A computer system able to perform tasks that

normally require human intelligence, such as

visual perception, speech recognition, decision-

making, and translation between languages.

➢AI encompasses many branches of statistical

and machine learning, pattern recognition,

clustering, similarity-based methods, logics and

probability theory, as well as biologically

motivated approaches, such as neural networks,

evolutionary computing or fuzzy modelling,

collectively described as “computational

intelligence”.

What is AI?


➢Machine learning is a subset of AI. That is, all machine learning counts as AI, but not all AI counts as machine learning.

➢Machine Learning is a field of study that gives computers the ability to learn without being explicitly programmed.

➢Machine-learning programs, itself to adjust themselves in response to the data they’re exposed to.

Machine

Learning:

➢Three broad category of Learning exists – supervised, unsupervised, and reinforcement learning

➢Supervised: All data is labeled and the algorithms learn to predict the output from the input data.

➢Unsupervised: All data is unlabeled and the algorithms learn to inherent structure from the input data.

➢Reinforcement Learning: Type of Machine Learning, and thereby also a branch of Artificial Intelligence. It allows machines and software agents to automatically determine the ideal behaviour within a specific context, in order to maximize its performance. Simple reward feedback is required for the agent to learn its behaviour; this is known as the reinforcement signal


Components of DL

Computing Data

Algorithms


▶Generative adversarial networks

(GANs) are a class of artificial

intelligence algorithms used in

unsupervised machine learning,

implemented by a system of two

neural networks contesting with each

other in a zero-sum game framework.

GANs:

https://en.wikipedia.org/wiki/Artificial_intelligence

https://en.wikipedia.org/wiki/Unsupervised_machine_learning

https://en.wikipedia.org/wiki/Neural_network

https://en.wikipedia.org/wiki/Zero-sum_game

Biometric Data Legislation & Regulation

Benefits of Using Biometric Data• Security

• Increased reliability and efficiency • Examples in the workplace: time clocks

• Reduces manipulative practices

• i.e., buddy punching

• Information assists in defense of FLSA wage and hour claims

• Other examples: access (buildings, systems, amusement parks)• Reduces fraud/breach

• i.e., less risk of unauthorized entry as the result of lost or stolen access card

Risks of Using Biometric Data

• Increased security = increased risk • If compromised, this data cannot be changed

• Compliance • States are increasingly enacting onerous statutory

schemes regulating biometric data

• Businesses collecting biometric data across jurisdictional lines may have to comply with multiple state, federal, and international laws

• Failure to comply resulting in first wave of class-action litigation

The Current Regulatory Landscape • Illinois, Texas, and Washington were the first three

states to enact statutes protecting biometric data

• Illinois Biometric Information Privacy Act (BIPA) most burdensome

• Notable Requirements:• Notice and consent prior to collecting employee’s

biometric data • Prohibits profiting from data, unless an enumerated

exception applies • Limited rights to disclosing/sharing data with third

parties

The Current Regulatory Landscape • Notable Requirements:

• Must protect in at least the same manner it protects other sensitive and personal information

• Penalties • TX & WA

• Enforced by the state Attorney General

• BIPA• Provides a private cause of action with statutory damages

• Negligent: $1,000 or actual damages for each violation

• Intentional/reckless: $5,000 or actual for each violation

The Current Regulatory Landscape

• Colorado and California are the two states to most recently enact statutes regulating biometric data

• Colorado • Definition of “personal information” includes biometric data

• Requirements: • Must maintain a written policy

• Implement reasonable security measures for protecting data

• Follow specific breach notification procedures in instances of a breach


• California Consumer Privacy Act of 2018 • Does not come into effect until 2020

• Applies to companies physically in CA, but also companies doing business in CA and:

• Have $25 million or more in annual gross revenue

• Receive the personal data of more than 50,000 “consumers, households, or devices,” or

• Earn more than half of annual revenues from selling the personal data of CA residents

• Applies to an entity’s affiliates, even if the affiliates do not meet the criteria

• Protects all CA residents and consumers remaining in CA for extended periods of time

The Current Regulatory Landscape • Consumers’ Rights Under CCPA

• Right of access

• Request deletion

• Right to know whether it is sold, shared, or disclosed

• Right to opt-out

• Right to receive the same services at the same price, even if they exercise any of their privacy rights

• Private right of action in the event of breach or unauthorized access to personal information

• Damages in the amount of $100-$750 per incident; or

• Actual damages

• Injunctive, declaratory, and other relief deemed proper


• Vermont• Only applies to data brokers that aggregate and sell

consumer data

• Other States Considering Legislation• New York

• Alaska

• New Hampshire

• Michigan

• Montana

Federal Legislation & Regulations • Currently, no federal law exists

• BUT, may fall within the purview of the FTC

• In 2012, the FTC issued best practices for companies collecting facial scans

• Potential Federal Legislation• The Secure and Protect Americans’ Data Act

• The Data Accountability and Trust Act

• The Biometric Information Privacy Act

• These bills have been referred to subcommittees with no action to date

• International Regulations• GDPR

Common Law Claims

• In the absence of state statute, courts will default to a common law standard of reasonableness

• Example: Ohio • No statute exists regulating biometric data

• Standard of reasonableness—whether the company took reasonable steps to protect the data

• i.e., encryption, limited access, retention & disposal policies

Biometric Privacy Litigation

Key Issues

• Article III Standing• Concrete injury required even with statutory violations under Spokeo

• McCullough v. Smarte Carte. Inc., No. 1:16-cv-03777, 2016 WL 4077108 (N.D. Ill. Aug. 1, 2016) and Santana v. Take-Two Interactive Software, Inc., 717 Fed. Appx. 12 (2d Cir. 2017)

• But some cases have found that the statutory violation itself is enough

• Monroy v. Shutterfly, Inc., No. 16-cv-10984, 2017 WL 4099846 (N.D. Ill. Sept. 15, 2017)

• Others have found an invasion of privacy sufficient

• Dixon v. Washington & Jane Smith Community-Beverly, No. 17 C 8033, 2018 WL 2445292 (N.D. Ill. May 31, 2018); Patel v. Facebook Inc., 290 F. Supp. 3d 948 (N.D. Cal. 2018); In re Facebook Biometric Info. Privacy Litig., No. 3:15-cv-03747, 2018 WL 1794295 (N.D. Cal. Apr., 16, 2018), appeal pending

Key Issues (cont’d)

• Statutory Standing – “person aggrieved” • Rosenbach v. Six Flags Entm’t Corp., --- N.E.2d ----, 2017 IL App

(2d) 170317 (Ill. App. Ct.), appeal allowed• Alleging only a technical violation of BIPA is not sufficient to render a

party “aggrieved” as required to maintain an action

• Sekura v. Krishna Schaumburg Tan, Inc., --- N.E.2d ----, 2018 Ill App. (1st) 180175 (Sept. 28, 2018)

• “Aggrieved” language does not require proof of harm outside of statutory violation itself

• Even if it did, Plaintiff’s allegation of mental anguish was enough, following Dixon

Key Issues (cont’d)• Removal Issues

• Mocek v. Allsaints USA Ltd., 220 F. Supp. 3d 910 (N.D. Ill. 2016)

• Barnes v. Aryzta, LLC, No. 17-CV-7358, 2017 WL 455579 (N.D. Ill. Dec. 20, 2017)

• Goings v. UGN, Inc., No. 17-cv-9340, 2018 WL 2966970 (N.D. Ill. June 13, 2018)

• What constitutes biometric data under BIPA?• Partial scan or numeric representation of a fingerprint?

• Territorial reach of BIPA • Doesn’t have extraterritorial reach

• Application of territorial reach to the online conduct likely a fact issue

Key Issues (cont’d)• Constitutionality of BIPA

• Dormant Commerce Clause

• Statute of Limitations

• Preemption• See, e.g., Miller v. Southwest Airlines Co., No. 18 C 86,

2018 WL 4030590 (N.D. Ill. Aug. 23, 2018)

• Terms of Use• Possible implications on choice of law, forum selection,

class waiver, arbitration clause • In re Facebook Biometric Info. Privacy Litig., 185 F. Supp. 3d

1155 (2016)

• Personal Jurisdiction

Class Certification or Settlement

• Class Certification• Class certified in In re Facebook Biometric Info. Privacy

Litig., No. 3:15-cv-03747, 2018 1794295 (N.D. Cal. Apr. 16, 2018), appeal pending:

• All Illinois users of FB for whom FB created and stored a face template after June 7, 2011

• Case Settlements • Norberg v. Shutterfly – undisclosed confidential

settlement prior to class certification

• Sekura v. LA Tan Enters. No. 2015-cv-16694 (Cook Cty. Dec. 1, 2016) – $1.5 Million Settlement, $600,000 in attorney’s fees

Practical Takeaways• Perform a Privacy Audit

• Do you collect or possess biometric data?

• If so, talk with your insurance broker to determine if there are any options that can help minimize risk

• Understand the Technology• Work with information security personnel and vendors

• Update your Privacy Policy • Determine if a separate policy or consent/notification form is

required

• Consider the FTC Best Practices as guidance

• Monitor the Law• Identify applicable jurisdictions and monitor the status of pending

laws

Questions?

It Gets Better—Doesn’t It?

Recent Developments in LGBT Workplace & Public Accommodations Protections

Legal and Lived Equality for the LGBTQ Community in Ohio

BP September 17, 2018

Purpose of Today: • Understand the incomplete patchwork of legal

protections for LGBTQ people in Ohio

Key Takeaways: • Basic Federal case law landscape impacting Ohio• Basic State laws (and lack thereof)• Pending impact litigation for Ohio• Overview of “bad bills” (HB 36, HB 658)• Pending positive legislation (HB 160)

Sexual orientation: An inherent or immutable enduring emotional, romantic or sexual attraction to other people.

Gender identity: One's innermost concept of self as male, female, a blend of both or neither – how individuals perceive themselves and what they call themselves. One's gender identity can be the same or different from their sex assigned at birth.

Gender expression: External appearance of one's gender identity, usually expressed through behavior, clothing, haircut or voice, and which may or may not conform to socially defined behaviors and characteristics typically associated with being either masculine or feminine.

Definitions

Legal Equality: Equal protection of LGBTQ people in policies and laws

Lived Equality: Outcomes, community well being, and the lived experiences of LGBTQ people

Legal and Lived Equality

Obergefell v. Hodges (2015)

...and cake bakers

Masterpiece Cake (2018)• Narrow ruling

• Reversed the Colorado Commission’s decision in this case finding “religious hostility”

• Affirmed nondiscrimination protections for LGBTQ people

The work ahead: Birth Certificates

1 of 3 stateswhere trans people can’t correct their birth certificate

✓ Can change name on Ohio birth certificate

☒ Cannot change gender marker on Ohio birth certificate

• On March 29, 2018, ACLU, ACLU of Ohio, & Lambda Legal sued Ohio Dep’t of Health

“We’ll see you in Court!”

LGBTQ Nondiscrimination Laws

Nationally?No*

Statewide?No*

Locally?Some

www.equalityohio.org/city-map

AkronAthensBexleyBowling GreenCincinnatiClevelandCleveland HeightsColumbusCoshoctonDaytonEast Cleveland*KentLakewoodNewarkOlmsted FallsOxfordToledoSouth EuclidYellow SpringsYoungstown

http://www.equalityohio.org/city-map

Housing

EmploymentPublic Accommodations

Not really!

No explicit statewide protection for “sexual orientation”

No explicit statewide protection for “gender identity or expression”

Executive order for public employees protecting against “sexual orientation” discrimination

State LGBTQ protections

Locally? Some AkronAthensBexleyBowling GreenCincinnatiClevelandCleveland HeightsColumbusCoshoctonDaytonEast Cleveland*KentLakewoodNewarkOlmsted FallsOxfordToledoSouth EuclidYellow SpringsYoungstownwww.equalityohio.org/city-map

http://www.equalityohio.org/city-map

HB 160 The Ohio Fairness Act#OHFairnessAct● Adds “Sexual Orientation”

and “Gender Identity or Expression” to all areas of Ohio code where other characteristics or classes are protected

● HB 160 is sponsored by State Rep. Nickie Antonio

HB160 Received a Hearing!

Ohio Fairness Act first nondiscrimination bill to get proponent testimony in 9 years

HB 160 The Ohio Fairness Act#OHFairnessAct

● Held proponent testimony for the first time in 9 years on January 31, 2018● Over 150 Ohioans prepared testimony in support● Ohio Chamber of Commerce and over 335 businesses support statewide protections for

LGBTQ Ohioans.

Anti-LGBTQ Bills in Ohio:

The Pastor Protection Act (HB 36)- Redundant First Amendment

Protections- Harms public accommodations by

allowing commercial property owned by “religious societies” to be withheldfrom weddings they disagree with

- “Rose from the dead” withnew Speaker appointment

- Passed 59-29- Heads over to the senate

Anti-LGBTQ Bills in Ohio:

The “Parents’ Protection Act”- HB 658- Puts barriers between kids

and gender affirming care- Forces teachers to “out” kids

or face felony charges- First hearing held in June- We are opposing and

watching this bill very carefully

“Bathroom” Bills

• Attempt to regulate who may use what restroom, usually stating one must use the restroom matching the gender on one’s birth certificate

Anti-LGBTQ Bills to watch for:

Toilet AnxietyRestrooms● Fear-based messages in Houston and elsewhere say that these

protections limit privacy and safety.

● Truth is: laws against voyeurism, assault, and indecent exposure still exist and transgender individuals are more likely to be victims of violence than perpetrators.

Preemption Bils

• Forbid local municipalities from protecting LGBTQ people (or any class of people inconsistent with state law)

• This is what North Carolina and Texas are really about


Religious Freedom Restoration Acts (RFRAs)

• Would allow a person to usetheir religion to justify denialof goods, services, or treatmentof another because of their beliefsin certain circumstances (if the lawsubstantially burdens religion)

(e.g., against LGBTQ people, singlemothers, interfaith couples, interreligious couples, etc.)


Broad Religious ExemptionsIn the name of “religious freedom,” some organizations want to be expressly exempt from serving, housing, or hiring LGBTQ people.

Anti-LGBTQ Amendments:

Stay connected.facebook.com/equalityohio@equalityohioGwen StembridgeNortheast Ohio Coordinator, Equality [email protected]

Alana JochumExecutive Director, Equality [email protected]

Marshall TroxellProject & Field Organizer, Equality [email protected]

First Amendment Religious Liberty &

LGBT Rights: They Can Marry, But No

Wedding Cake?

Masterpiece Cakeshop, Its Aftermath, and the Future of Public Accommodations Laws

First Amendment Compelled Speech, Free Exercise

Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights

Commission, No. 16-111

First Amendment Compelled Speech, Free ExerciseMasterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission, No. 16-111

- First Amendment Free Speech & Free Exercise vs. antidiscrimination public accommodations law

- states’ rights vs. individual liberty

- does making cakes for sale in the marketplace constitute protected symbolic speech? If so, what are limits of symbolic speech?

- importance of participation, impact on audience? Spence-Johnson analysis

- if First Amendment enables conscientious objector to discriminate against LGBT persons in the marketplace, what are the limiting principles? (workplace protections, medical care, other public accommodations, cf. Ohio House Bill 160, Ohio Nondiscrimination Act)

- Bakery conceded at argument that it had no 1st Am. Claim re: pre-made cakes


Masterpiece Cakeshop, Ltd. v. Colo. Civil Rights Comm’n, No. 16-111

Ruling: “7-2” Majority: Kennedy

Decision: Reversed Colorado Court of Appeals, CCRC administrative proceedings evidenced bias against Jack Phillips’s religious beliefs, First Amendment Free Exercise violation

• CCRC hearing statement: claiming “religious” objection to serving customers a “despicable piece of rhetoric,” has been used to harm minorities historically = bias

• Concern about CCRC’s disparate treatment of Christian customer that wanted Bible cakes with anti-LGBT messages

• BUT—stated that LGBT citizens “must be protected in the exercise of civil rights,” and protective laws “must be given great weight and respect by the courts”

• AND—reaffirmed rule of Newman v. Piggie Park (1968) that religious objections “do not allow business owners . . . to deny protected persons equal access to goods and services under a neutral and generally applicable public accommodations law”

• Notably, punted on whether cakes were protected speech and forced sale of wedding cake constitutes compelled speech (only Thomas and Gorsuch willing to endorse that view)

• Dissent (Ginsburg): agree with most of the majority opinion here, but there was sufficient evidence in record of discrimination, and no need to doubt appellate court’s ability to review administrative proceedings


Since Masterpiece Cakeshop . . .

- Brush & Nib Studio v. Phoenix (Ariz. Ct. App. June 2018)

* custom and pre-fabricated wedding décor, artwork, seek pre-enforcement decision that they need not provide

* cites key provision in Masterpiece about the need for public accommodations protections to ensure equal access to the marketplace for LGBT citizens

* so long as religious businesses and/or viewpoints not targeted, no religious discrimination

* follows Rumsfeld v. FAIR, neutral law regulating conductcan have incidental impact on speech

- Telescope Media Grp. v. Lindsey (8th Cir., heard 10/2018)

*pre-enforcement action, wedding films, new business that wants to make films w/o doing same-sex weddings

*standing/ripeness issues?

Progress on Other Fronts, Federal Cases in

the Sixth Circuit

Title VII Prohibition on “Sex Discrimination,” RFRA Defense &

Employment Protections

EEOC v. R.G. & G.R. Harris Fun. Homes (6th Cir. 2018)

Ruling: 3-0 (Moore, White, Donald, JJ.)

Assistant Funeral Director terminated upon informing employer that she would begin transition from male to female and present as female.

Decision: termination of Aimee Stephens = unlawful discrimination on basis of sex, contrary to Title VII; application of Title VII protections did not substantially burden religious exercise so as to trigger RFRA strict scrutiny; even if it did, workplace protections of Title VII survive strict scrutiny (compelling interest, least restrictive)

• Termination of long-term employee who began transition

• Relies on SCOTUS Price Waterhouse (1989) decision (sex/gender must be irrelevant to employment decisions, includes sex stereotypes, female Ee that did not present in feminine manner) and Circuit precedent Smith v. City of Salem (6th Cir. 2004) (Title VII, female trans employee) to conclude that Title VII ban on sex discrimination encompasses

• But-for test – but for victim’s sex, discrimination would not have occurred

• Employment policy not justified as equal-burden dress code (permissible under Title VII), because policy reflects employer’s different “notion” of Ms. Stephens “sex,” not a mere disagreement about dress code

Title VII Prohibition on “Sex Discrimination,” RFRA Defense & Employment Protections (cont.)EEOC v. R.G. & G.R. Harris Funeral Homes (6th Cir. 2018)Ruling: 3-0 (Moore, White, Donald, JJ.)

• “Discrimination on the basis of transgender and transitioning status violates Title VII.”

• Such discrimination “always based on gender-stereotypes”

• Relies on 7th Circuit’s Hively decision (7th Cir. 2017), but-for analysis (there, sexual orientation

discrimination): Stephens would not have been fired if she had simply been a woman trying to comply

with women’s dress code

• Title VII ministerial exception not applicable (not a religious institution, not a ministerial Ee)

• RFRA defense unavailing

• No Substantial burden on religious exercise

• Others’ presumed biases against trans people speculative, not a substantial burden on

religious exercise

• Er-funded dress code not legally required, so doesn’t put Funeral Home to “choice” of

either complying with policy against religious beliefs or going out of business

• Toleration of others’ “gender identity is not tantamount to supporting it”

Title VII Prohibition on “Sex Discrimination,” RFRA Defense & Employment Protections (cont.)EEOC v. R.G. & G.R. Harris Funeral Homes (6th Cir. 2018)Ruling: 3-0 (Moore, White, Donald, JJ.)

• Even if RFRA triggered, compelling government interest and least restrictive

means

• Compelling interest in combatting workplace discrimination (as EEOC

framed it)

• No lesser restrictive means without gutting purpose of Title VII

• Petition for Certiorari sought on Title VII issues only, abandoning RFRA, briefing

ongoing

• What will new Supreme Court, with Justice Kavanaugh replacing Justice

Kennedy, do?

Equal Protection & Trans Minors Access to Name-Change ProceedingsWhitaker v. Kirby (S.D. Ohio) (pending)

• State court judge pattern of denying trans youths’ applications

for name changes to reflect their gender identity

• Questioning suggested that minors were simply following

pop-culture developments, disregarding the expert opinions

of applicants’ psychologists, opinions of youths’ parents

who supported the applications

• Did not apply typical Ohio name-change considerations;

different procedure for trans youths’ name-change

applications; told them to come back when they were adults

• Chosen names of utmost importance to transition process

• TE’s LGBTE group partnered with The Trevor Project and filed

an amicus brief supporting declaratory relief

Federal Changes in LGBTQ Protections

Under Trump Administration

July 26, 2017 Tweets:

"After consultation with my Generals and

military experts, please be advised that the

United States Government will not accept or

allow Transgender individuals to serve in any

capacity in the U.S. Military."

"Our military must be focused on decisive and

overwhelming victory and cannot be burdened

with the tremendous medical costs and

disruption that transgender in the military would

entail.“

- Military officials not briefed in advance

LGBTQ Policies, Actions, and Omissions in the Current Administration

Eliminated references to LGBTQ persons and protections from the White House website

Rescinded guidance for schools on transgender youth

Rescinded requirements that federal contractors prove that they are complying with LGBT

workplace protections

Disbanded the Presidential Advisory Council on HIV/AIDS (in place since 1995)

Failed to issue proclamations recognizing Pride Month, and in declaring December 1, 2017 World

AIDS Day, failed to mention the LGBTQ community

Attempted to bar transgender individuals from military service

Argued before 2d Circuit Court of Appeals that Title VII does not apply to sexual orientation

Argued in Masterpiece Cakeshop case that a baker could hang a sign saying “We don’t bake cakes for

gay weddings.”

Denies visas to same-sex domestic partners of foreign diplomats

October 2018 – memos leaked, Trump administration planning

new definitions of “sex” and “gender” for federal laws, limiting

terms to unchangeable biological sex

- DHS seeking to change definition of “sex” under Title IX (educational

institutions)

- why “unchangeable”?

- move to eliminate all federal protections for approx. 1.4 million transgender

citizens (as if they didn’t exist)

- Administration has already switched position in multiple lawsuits and

withdrawn Obama era policies

Transgender Rights in Litigation Around the Country

Illinois

2013/2015 settlement between Palatine school district and a transgender student who sued the district bathroom/locker room access policy

• Parents and students sue to challenge settlement, claiming improper legal definition of “sex” and privacy interests (pending since 5/4/16)

• January 2018 Judge Alonso (7th Circuit) DENIED Plaintiffs’ request for injunction, finding lack of harm

• Amended complaint, motion to dismiss pending

Pennsylvania

• Boyertown school district’s policy of bathroom and locker room access challenged by students claiming constitutional right to privacy in such facilities

• 3d Circuit 2018 – unanimous panel ruled from bench, denying preliminary injunction

Progress Among Business Community

OFF THE RECORDConfidentiality in

Settlements is Not Dead!

Why Do We Care?

“A settlement agreement under which a lawyer is prohibited from disclosing information contained in a court record via the media or otherwise permissible advertising constitutes an impermissible restriction on the lawyer’s right to practice.”

Settlement Agreement Prohibiting a Lawyer’s Disclosure of Information Contained in a Court Record, Ohio Adv. Op. 2018-3 at p. 3 (June 8, 2018) at https://www.ohioadvop.org/wp-content/uploads/2018/06/Adv.Op_.2018-03.pdf

https://www.ohioadvop.org/wp-content/uploads/2018/06/Adv.Op_.2018-03.pdf

The Advisory Opinion Process• Advisory Opinions are requested in writing to the

Director of the Board of Professional Conduct;

• The request is researched by the staff and presented to the Advisory Opinion Committee;

• If a decision is made to issue an opinion, the staff will draft an opinion for review by the Committee;

• The Committee works with the staff to finalize a draft; and

• If a draft is approved by the Committee, it goes to the full board for approval.

Prof. Cond. Reg. 15(D)

The Criteria for Issuance

• The question shall be prospective or hypothetical;

• The question shall not involve completed conduct or questions pending before a court;

• The question shall be one of broad interest to the Ohio Bar or judiciary; and

• The question shall involve conduct of the person requesting the opinion.

Prof. Cond. Reg. 15(B)(1)

This Opinion relies on Prof. Cond. R. 5.6(b):

“A lawyer shall not participate in offering or making either of the following:

(b) an agreement in which a restriction on the lawyer’s right to practice is part of the settlement of a claim or controversy.”

How will this opinion be used?

• As a basis to object to confidentiality provisions;

• Confidentiality restricts the right to practice;

• Limits ability to market experience to prospective clients; and

• They have right to disclose any information in the court record or in any “case document.”

How do we respond?• This is not settled law;

• There are no cases in Ohio that interpret Prof. Cond. R. 5.6(b);

• Confidential agreements are still enforceable absent a binding decision;

• Ohio Courts are free to ignore the opinion –it’s not binding; and

• It’s just an advisory opinion.

It’s Just an Advisory Opinion

Even if the trial court does not agree with you, a lawyer still cannot do this:

The Buck Stops at the Supremes (1)

• CASE LAW: the Supreme Court of Ohio can decide the issue if an on point case comes before them; last month they almost caught one.

• Nestico v. Disciplinary Counsel, Board of Professional Conduct, Case No. 17-064, dismissed July 17, 2018, www.bpc.ohio.gov. Nestico involved lawyer advertising and the interpretation of Rule 7.1 but it would have also implicated Rule 5.6(b).

http://www.bpc.ohio.gov/

The Buck Stops at the Supremes (2)

• AMEND THE RULES: On August 5, 2016, Ohio Adv. Op. 2016-6 (Ethical Implications for Lawyers under Ohio’s Medical Marijuana Law) (prohibited lawyers from advising clients in the marijuana industry).

• On September 20, 2016, the Supreme Court amended Prof. Cond. R. 1.2 (to permit lawyers to advise clients under Ohio’s medical marijuana law).

Confidentiality Strategies:(1) Know Your Case Documents• A “case document” is anything submitted to the court or

filed with the clerk except for:

• Any document exempt from disclosure under law;

• Personal identifiers;

• Any document subject to a protective order (Sup.R. 45);

• Juvenile criminal records;

• Judicial officers and court staff notes and other papers;

• Forms containing personal identifiers;

• Information from the Ohio Court Network; and

• Certain documents in domestic relations or juvenile cases.

Sup.R. 44(C)(2)

Confidentiality Strategies:(2) Protect the Record• Settle the matter before a complaint is filed;

• Enter into a Protective Order;

• Use status conferences to resolve discovery issues, rather than filing a motion that discloses sensitive documents;

• File motions under seal if permitted;

• Keep settlement agreements off the record; and

• Prepare a dismissal entry for the Court if permitted.

Confidentiality Strategies:(3) Limit the use of Advertising under Prof. Cond. R. 7.1• Restricts the use of confidential settlement

amounts because they are misleading, self-laudatory, may be unfair – and are considered unverifiable. Ohio Adv. Op. 2002-7.

• Restrict client testimonials in an advertisement that states the amount of a settlement or verdict as inherently misleading even if a disclaimer is used. Ohio Adv. Op. 2016-8.

Protecting your Innovation from A to Z

Dr. Emmett Brown

Patents: Time barsUS, Canada & others: One year to file from public disclosure

Europe, China and other foreign countries: No grace period

What is a patent?

No Making

No Using

No Selling

No Offering for Sale

No Importing

Patentability

Utility

Novelty

Non-Obvious

Protection Timeline

10-25-2018 10-25-2020 10-25-2038

Filed Issued

10-25-2018 04-25-2020 10-25-2035

Filed Issued

UTILITY

DESIGN

TRADE SECRET

10-25-2018 ∞

ProtectionIdentify/Protect Secret

Patent or Trade Secret

Easily Reverse Engineered

Coca Cola®

Impossible to Reverse Engineer

Pop Bottle

What is a trademark?

COMMON LAW TRADEMARKS: RIGHTS LIMITED TO USE IN GEOGRAPHIC REGIONS

Federally Registered Trademarks:Rights Throughout the United States

WHAT HAPPENS WHEN COMMON LAW RIGHTS EXIST PRIOR TO THE ISSUANCE OF A FEDERAL REGISTRATION?

Avoid confusion!

1. Are the trademarks similar in commercial impression as to sight, sound, and meaning?

2. Are the goods and services related?

Different Levels of Distinctiveness

The more distinctive the mark, the greater its level

of legal protectability.

Aspirin

Escalator

CopyrightsReproduce

Distribute

Prepare Derivative Works

Publicly Perform

Publicly Display

Digitally Transmit

opyrights©

Takedown Procedures

Commercializing Your InventionSell Yourself License to a Third Party

Form a legal entity to protect against liability claims

Seek advise from corporate counsel about necessity to form a legal entity

Supply Chain Intellectual property rights can be split in a variety of ways to various licensees

Marketing Moves responsibility of day to day operations to third parties

Employees and Independent Contractors

Collect reasonable royalties

Office/Facility Less control

Legal

More expense but potentially more profit

Takeaways

• No Public Disclosure or Offer for Sale

• Build your Brand Wisely

• Avoid Infringement

• Make sure you know who owns or has rights to use your IP

QUESTIONS?