By: Charles A. Dale III, David A. Mawhinney
Bankruptcy Courts in the United States are now well-recognized as a marketplace for the purchase and sale of distressed businesses. “Section 363 sales” in particular, named for the Bankruptcy Code section that authorizes such transactions, enable purchasers to acquire a financially troubled business “free and clear” of a wide range of fixed and contingent debts, including potential claims based on successor and product liability theories. In a noteworthy decision on December 1, 2014, the United States District Court for the Southern District of New York reinforced the authority of a bankruptcy court to interpret the scope of its prior sale orders under Section 363, and to enforce those orders against creditors that violate them, even against governmental agencies that may otherwise be protected from scrutiny under non-bankruptcy law. This decision sends a reassuring message to strategic and financial investors who are considering the acquisition of a troubled company through a bankruptcy court process.
To read the full alert, click here.
By: Irene C. Freidel, Ryan M. Tosi, Matthew N. Lowe
On December 15, 2014, the United States Supreme Court held in Dart Cherokee Basin Operating Co., LLC v. Owens that a class action defendant need only allege the requisite amount of controversy “plausibly” in the notice of removal and need not provide evidence supporting the amount in controversy unless challenged by the plaintiff or questioned by the court.The Court’s holding is consistent with the requirement that a notice of removal contain only a “short and plain” statement setting forth the bases for removal. The decision resolves a significant circuit split regarding the pleading requirements imposed on removing defendants under the Class Action Fairness Act (“CAFA”).
Prior to Dart Cherokee, the majority of the circuits had either expressly held that a defendant need not present evidence of the amount in controversy with its notice of removal or that evidence of the amount in controversy submitted in opposition to a motion to remand would be considered even if it had been not presented in the notice of removal. The Tenth Circuit, however, declined Dart Cherokee’s petition for review of the district court’s decision, which had refused to consider evidence Dart Cherokee offered in response to a motion to remand based upon its holding that a defendant is required to submit evidence in support of removal at the time a notice of removal is filed.
To read the full alert, click here.
By: András P. Teleki, Andrew L. Caplan
On December 10, 2014, Superintendent Benjamin Lawsky of the New York Department of Financial Services (the “DFS”) announced a “New Cyber Security Examination Process” (the “New Examination Process”) for New York-chartered and licensed banking institutions (“Regulated Entities”). Pursuant to the New Examination Process, the DFS will expand its information technology (“IT”) examination procedures to focus more attention to cybersecurity, and will schedule these IT/cybersecurity examinations following each institution’s comprehensive risk assessment. Even if you are not a financial institution regulated by the DFS, the key takeaways discussed below provide insight into the types of questions regulators are asking with respect to cybersecurity practices and offer practical guidance for assessing the framework of a cybersecurity compliance regime.
The New Examination Process includes both sample examination topics and information requests that the DFS will use in future examinations. A review of these topics and information requests provides understanding of the DFS’ cybersecurity expectations for Regulated Entities, as well as practical cybersecurity considerations for financial institutions not regulated by DFS. Below we discuss five key takeaways related to the New Examination Process.
To read the full alert, click here.
By: Nicholas Ranjan and James P. Angelo
In the last two years, there has been a proliferation of class action lawsuits filed in response to high-profile data breaches compromising the personally identifiable information of customers of various companies. Major corporations including Target, Coca-Cola, and Michaels have all fallen victim to such suits. In many cases, a single data breach event has spawned dozens of class action lawsuits (for example, Target, at one point, faced over 100 such suits in a number of jurisdictions, which have since been consolidated in an MDL).
Although a number of class actions in the data-breach context have been filed, there have been relatively few class certification decisions at this point. However, as the pending cases make their way to the class certification stage, two recent decisions may prove useful for defendants in attempting to defeat class certification—principally, on the basis of Federal Rule of Civil Procedure 23(b)(3)’s “predominance” requirement. That is, In re Hannaford Bros. Co. Customer Data Sec. Breach Litig., 293 F.R.D. 21 (D. Me. 2013) and Comcast v. Behrend, 133 S.Ct. 1426 (2013), suggest that class certification may be difficult in certain types of data breach cases due to the existence of individualized damages issues, which may undercut the predominance of common questions necessary to pursue a class action.
To read the full alert, click here.
By: Phillip L. Schulman and Christa Bieker
Earlier this week, Fannie Mae and Freddie Mac announced guidelines for a new mortgage program that will allow down payments as low as three percent for some first-time and low-income home buyers. Melvin Watt, director of the Federal Housing Finance Agency which regulates Fannie and Freddie, explained that the new guidelines will “enable credit worthy borrowers who can afford a mortgage, but lack the resources to pay a substantial down payment plus closing costs, to get a mortgage with 3 percent down.”
Fannie Mae and Freddie Mac do not make loans, but instead buy loans from mortgage lenders and bundle them into securities to sell to investors. Fannie and Freddie’s loan guidelines have broad influence in the mortgage-lending market. The program, first announced in October, is designed to expand access to mortgages with low down payments, which Watt has stated is a “much needed piece to the broader access to credit puzzle.”
15 January 2015
3:00 – 4:30 pm EST
Please join us for a complimentary program on defending cyber related class action litigation. The program will include an in-depth discussion, followed by a Q&A session, on recent developments involving cybersecurity class actions. Our knowledgeable panel will cover a range of issues including:
• Coordinating with data breach response team
• Theories of injury raised by consumers and credit institutions in response to data breaches
• Statutory and common law causes of action typically pleaded
• Approaches to defending claims and opposing class certification
• Lessons learned from past data breach class actions
• Insurance coverage considerations
• Other emerging issues
Firm makes third consecutive appearance on Client Service 30 ranking
Boston – Global law firm K&L Gates LLP has been identified among the top 10 law firms for client service, ranking eighth out of nearly 650 firms noted by general counsel in the “2015 BTI Client Service 30” survey. The survey is part of BTI Consulting Group’s larger Client Service A-Team report released today, which rates firms in nearly 20 unique activities that drive client relationships based on direct, unprompted feedback from more than 300 Global 500 and Fortune 1000 corporate counsel.
This is the third consecutive year — and fifth time overall — that K&L Gates has been included on the “Client Service 30”. In addition, this marks K&L Gates’ 14th straight year on the Client Service A-Team, which evaluates firms in such client-defined activities as breadth of services, innovative approach, value for dollar, and anticipating client needs.
By: Paul F. Hancock, Andrew C. Glass, Roger L. Smerage, and Olivia Kelman
On November 24, 2014, K&L Gates filed a brief with the United States Supreme Court on behalf of the American Financial Services Association, the Consumer Mortgage Coalition, the Independent Community Bankers of America, and the Mortgage Bankers Association as amici curiae in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc., No. 13-1371. The case presents the question left unresolved by settlements in Magner v. Gallagher, No. 10-1032, and Township of Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc., No. 11-1507, namely whether the Fair Housing Act recognizes a disparate-impact theory of liability. The brief supports the petitioners’ argument that the Act is properly read as being limited to cases of intentional discrimination and explains the negative impact of the disparate-impact theory on the residential mortgage lending industry. A copy of the brief is available here. The Court will hear oral argument in the case on January 21, 2015.
4 December 2014
2:00 p.m. – 3:30 p.m. ET
The payments industry is only starting to digest the potential consequences of the CFPB’s sweeping proposed rule on prepaid accounts.
On December 4, 2014, at 2:00 p.m. ET, K&L Gates and Paybefore will present a complimentary webinar for the Paybefore community and clients and friends of K&L Gates on the proposed rules. The focus will be on the practical impact the rules will have on prepaid accounts, and what they may mean to prepaid issuers, program managers and processors. The goal will be to give listeners information and tools to evaluate how the rule will impact their business—and provide practical advice on how to address concerns about the rule with the CFPB. Continue Reading
By: Melanie Brody, Stephanie C. Robinson, Jay M. Willis
On Tuesday, the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) issued a compliance bulletin, CFPB Bulletin 2014-03, to help lenders avoid discrimination against recipients of Social Security Administration (“SSA”) disability income in violation of the Equal Credit Opportunity Act and its implementing regulation, Regulation B.
Creditors may occasionally feel stuck between a rock and a hard place when underwriting mortgage loans for disability income recipients. On the one hand, creditors have a legal obligation to ensure that applicants are able to repay any credit extended. When an applicant receives public assistance, Regulation B expressly allows creditors to consider the length of time that such assistance is likely to continue. On the other hand, while SSA provides recipients with disability benefits documentation, that documentation generally does not detail how long benefits will last. Creditors seeking to responsibly underwrite mortgage loans must somehow make that determination on their own. Continue Reading