News

Tennessee Companies Seek to Join Lawsuit Over Affordable Care Act

Two Tennessee companies have asked to join a lawsuit challenging the constitutionality of the Affordable Care Act, the Nashville Post reports. W.G. Hall, a staffing firm from Knoxville, and Quickway Distribution Services, a transportation company from Nashville, filed a motion to intervene in the case, which is already underway in a Texas federal court. The suit argues that the clause of the ACA requiring companies with 50 or more full-time employees to provide qualified health insurance plans has irreparably harmed them.
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Hamilton County Deputy Sues Restaurant After Finding Cocaine in His Drink

Hamilton County Deputy Ricky E. Wolfe filed a lawsuit yesterday claiming that a Steak n; Shake waitress slipped a bag of cocaine into his drink, the Times Free Press reports. A responding officer reported that the server was caught on security footage planting the drugs. Wolfe is seeking $150,000 from Debo’s Diners, the corporation that operates several Steak n’ Shake locations in Tennessee.
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Judge Tosses Suit Over Zillow ‘Zestimates’

A federal judge has dismissed a lawsuit that claims the real estate website Zillow engages in deceptive business practices by using its “Zestimates” of property values as a marketing tool, the ABA Journal reports. The class action suit filed in Illinois on behalf of state property owners claimed Zillow draws home sellers to its website by posting home value information without permission in effort to connect sellers with real estate agents who pay for Zillow advertising. The judge however found that any marketing purpose behind the Zestimate tool doesn’t qualify under the Illinois deceptive practices law.
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Investment Trust to Buy HCR ManorCare Real Estate

Welltower Inc, a real estate investment trust, is purchasing the real estate of recently bankrupt nursing home giant HCR ManorCare for $2.7 billion, Reuters reports. Welltower will team up with non-profit hospital operator, ProMedica, which purchased ManorCare’s operations for $1.3 billion, to create a 30-state health care system. The partnership plans to capitalize on the trend of more health care taking place outside of hospitals.

If the U.S. Bankruptcy Court approves the deal, the merger stands to boost the group into the 25 largest U.S. health systems by revenue alongside names like Mayo Clinic, Geisinger and Johns Hopkins. ManorCare, which was the second-largest U.S. nursing home operator, filed for Chapter 11 protection in March, with $7.1 billion of debt, as part of a prearranged deal to transfer ownership to its landlord Quality Care Properties Inc.

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White County Man Ordered to Pay $10 Million for Investment Scheme

A White County businessman was sentenced today to three years in prison and ordered to pay more than $10 million in restitution for an investment scheme he ran from 2012 to 2016, the Nashville Post reports. Jeffrey Lynn Gentry pleaded guilty to wire fraud and money laundering charges last year. He convinced more than 50 people to invest $43 million into two businesses he owned.
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Share Your Thoughts on Proposed Amendments to Tennessee Supreme Court Rule 6

The Supreme Court recently requested comment on proposed amendments to TSC Rule 6 that would require new attorneys to complete a Tennessee Law Course within one year of admission to the Tennessee bar. The Tennessee Bar Association has a working group on this issue and will be drafting comments in response to the court's Order for Comment. To ensure this comment best reflects members’ views and positions, the groups is looking for your feedback. Share your thoughts about the proposed amendments through this form by June 8.
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    Business Court Project Wins Grant to Create Nationwide Curriculum

    The State Justice Institute has awarded the Tennessee Administrative Office of the Courts a Curriculum Adaptation and Training Grant to work with the National Center for State Courts to develop and implement a training curriculum to assist in expanding business court dockets to other areas of the state and to assist other states in creating their own business court dockets. The Tennessee Supreme Court’s Business Court Docket Pilot Project is a specialized court docket that addresses only complex corporate and commercial matters. Since its inception in 2015, the project has been highly successful in Nashville, handling more than 130 cases ranging from breach of contract to copyright infringement to e-discovery in business settings. In December 2017, the Business Court Docket Advisory Commission recommended that the Tennessee Supreme Court formally extend and expand the pilot project throughout the state. In response, the court issued an order that expands the docket by allowing cases to be heard outside of Davidson County.

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    Business Law CLE Looks at Cryptocurrencies

    The Business Law Forum will be held May 3 at the Tennessee Bar Center in Nashville. Topics include an introduction to distributed ledger technology, cryptocurrencies and virtual currencies. Sessions will also address the public policy and regulatory implications of distributed ledger technology and virtual currencies, including ethical considerations. 
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    Memphis Securities Broker Indicted for Embezzling Millions from Pension Fund

    A Memphis-area securities broker-dealer has been indicted on federal charges of embezzling $5.7 million from a Pennsylvania company’s employee pension fund, The Commercial Appeal reports. John Sherman Jumper, the Eads resident listed as CEO of Alluvion Securities, was accused by federal authorities of stealing from the Snow Shoe Refractories Employee Pension Plan for Hourly Employees, which included about 129 active and retired employees of a Pennsylvania company. He was indicted on four counts of wire fraud, three counts of embezzlement from an employee pension benefit plan and five counts of false statements and concealment of fact in pension benefit plan records.
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    FirstEnergy Strikes Creditor Deal in Subsidiary Bankruptcies

    FirstEnergy Corp. has reached a settlement with creditors of its bankrupt power-generation businesses that would simplify its restructuring while extricating the parent company from the chapter 11 case, The Wall Street Journal reports. If approved, the agreement covers potential claims surrounding FirstEnergy’s obligations toward money-losing coal and nuclear power plants in Ohio and Pennsylvania. FirstEnergy said it would try to bring the court-appointed committee of unsecured creditors on board with the settlement terms.
     
    The company filed for Chapter 11 recently, asking the United States Department of Energy for a bailout to keep dozens of coal and nuclear power plants in the large PJM Interconnection LLC (PJM) grid region operational, arguing the closure of these plants constitutes a national grid emergency. PJM coordinates the movement of wholesale electricity in Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.
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    Wells Fargo to Pay $1 Billion for Consumer Finance Violations

    Wells Fargo has agreed to pay a $1 billion penalty for alleged violations of the Consumer Financial Protection Act, The Wall Street Journal reports. The settlement came from the bank's failures to catch and prevent problems like improper charges to consumers in its mortgage and auto-lending business. The bank also agreed to offer restitution to customers and improve internal practices to prevent future mishaps.
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    Supreme Court Case to Determine Constitutionality of Administrative Law Judge Appointments

    The U.S. Supreme Court on April 23 will hear arguments in Lucia v. Securities and Exchange Commission (SEC), a case that could potentially have a big impact on administrative agencies, The National Law Review reports. In this case, the court will consider arguments – including those from the U.S. Solicitor General – that the way that the SEC’s administrative law judges (ALJs) are appointed violates the U.S. Constitution’s Appointments Clause
     
    SEC ALJs are hired through the government’s civil service process and are not treated as “inferior officers” who are appointed pursuant to the Appointments Clause. Lucia asks whether hiring ALJs this way violates the Appointments Clause, because they have all the hallmarks of an “inferior officer” under Supreme Court precedent, an argument that failed to convince the D.C. Circuit Court. There the SEC argued successfully that its ALJs were not “inferior officers” because they did not issue “final” decisions and did not exercise “significant authority” under federal law.
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    City in China Intends to Replicate the Magic of Music City

    The city of Chengdu, China, is investing hundreds of millions of dollars to build a music-fueled entertainment district in hopes to replicate the magic of Music City, reports The Tennessean. Music Row executives have been hosted on trips where Chengdu officials have unveiled their vision for their own music corridor called the Chengdu Musical Fun District, which includes several new music venues, recording studios, office space to host publishing companies and instrument makers. They were also given presentations of the incentive and rent-reduction programs that the district will offer an array of music businesses that set up shop there.

    The investment will include incentives for music businesses to set up shop in Chengdu, the capital of the Sichuan Province. It is also part of a broader effort in China to invest in copyright and open the nation up to creative commerce that has been undermined by rampant piracy. The two cities have discussed joining through the international Sister Cities program as well.

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    China Warns of Retribution on Possible Tariffs Involving Intellectual Property Violations

    China’s ambassador to the U.S Cui Tiankai has warned his government is ready to hit back just as hard on trade when President Donald Trump announces the details of further action on intellectual property violations, reports Newsweek. Tiankai said if another round of tariffs or similar action is taken by Trump on intellectual property, then China “will certainly take countermeasures of the same proportion and the same scale, same intensity." “For the protection of intellectual property rights, China has been strengthening its efforts, strengthening our legal system, on this particular issue,” Tiankai told Chinese state-run television channel CGTN. “And we are making good progress. We are ready to look at the specific cases if there is any violation of the intellectual property rights ... by whoever. We are ready to deal with these issues in accordance with our own laws. And we are ready for international co-operation in this area.”
     
    The comments come after China responded to the first set of tariffs on Chinese steel and aluminum with its own levies on American food imports. More trade measures against China are likely, as the U.S. responds to an investigation into the impact of intellectual property violations involving the nation. The emerging trade war between the U.S. and China has destabilized stock markets, with investors fearing a battle that harms both economies – the two largest in the world. Trump has used his national security powers to push through tariffs without the need for new legislation.
     
    Consumer technology goods from China are some of the products in the cross-hairs of a $60 billion package of tariffs approved by Trump on March 22. A list of all affected products is due in the coming days. 
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    Judge Rules Emoluments Lawsuit Against Trump Can Proceed

    A federal judge has ruled that Maryland and Washington, D.C., have standing to pursue a lawsuit contending that President Donald Trump violated the Constitution’s emoluments clauses, The Washington Post reports. U.S. District Judge Peter J. Messitte’s ruling narrows the case to Trump’s financial stake in his Washington hotel property, citing examples of government clients from foreign countries patronizing the hotel, possibly to the detriment of taxpayers. The District and Maryland have the standing to sue because they could plausibly claim to have been injured by Trump’s receipt of payments from foreign and state governments, Messitte found.
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    Tennessee Establishes Legal Authority Of Blockchain Technology

    Governor Hallam signed SB 1662 on March 22, Matthew DeSilva of ETHNews reports. It will recognize "a blockchain-based signature is legally considered an electronic signature." For more information and to read the entire article click here.

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    Bill Could Define How Tennessee Addresses 'Gig Economy Workers'

    The House Consumer and Human Resources Committee advanced legislation that is drawing criticism from national workers' rights advocates reports The Nashville Post. HB 1978 proposes amendment to Tennessee Code Annotated, Title 50; Title 56 and Title 62, relative to employment relationships and has already passed the Senate and is likely to pass the House, given the Republican supermajority.
     
    This would further most gig workers, ‘marketplace contractors,’  as independent contractors and not benefit eligible employees. Currently, the distinction between a contractor and an employee hinges on the idea of control. Telling a worker when and how to perform a job, providing training or supplies, monitoring their activity and determining the rate of pay are all factors that would support a finding that the worker is an employee, freeing them from having to pay workers' compensation premiums and unemployment taxes or obeying state anti-discrimination and minimum wage laws.
     
    The bills have provoked a response from the National Domestic Workers Alliance, a national nonprofit advocacy group. Palak Shah, the organization's director of social innovations, recently went to Tennessee to caution lawmakers that the bill would permanently carve many workers out of rights to which they would be entitled as employees. "It's just such a sorry excuse for a business model to make vulnerable workers more vulnerable just so you can tell your investors that one day you might be solvent," Shah said. "This legislation basically ensures that domestic workers online will never have protection."
     
    House sponsor Rep. Pat Marsh (R-Shelbyville) said most people working for gig economy platforms are doing so part-time and aren't expecting and don't need the protections offered to standard full-time employees. "We already have people who go out and do yard work on their own," said Marsh. "If they get on a platform it gives them access to more customers." Others point out that these platforms take a cut from their workers, along with possible additional fees, while the individual has to cover their own costs like equipment, transportation, insurance and self-employment taxes.
     
    Critics have said they fear the laxer regulations will drive down wages, ultimately forcing them to subcontract to compete. Rep. Dwayne Thompson (D-Cordova) voiced similar concerns, comparing some platforms to Walmart's effect on businesses in a small town. Thompson was the only vote against the legislation. One of the other platforms with an interest in the legislation passing is Brentwood-based Takl, which counts Senate Commerce Committee Chairman Jack Johnson (R-Franklin) as an executive. Johnson co-sponsored the bill in the Senate.
     
    Gov. Bill Haslam's administration was opposed to the version that passed the Senate, but a state Department of Labor official told the House committee that the amended version has addressed some of their concerns. Haslam spokesperson Jennifer Donnals said the governor "is deferring to the will of the legislature on this bill as amended." The main Senate sponsor, Sen. Bo Watson (R-Hixson), has not seen the amended wording, said his aide Tres Whittum, but is fine in "principle" with the changes.
     
    The house will vote on these amendments today. You can track the progress of this legislation using this link.
     
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    10 Essential Documents for Your Practice

    Instructions and rules for client file retention, list of current curse and copy of bank’s form for IOLTA access are three of the top 10 documents attorneys need for succession planning and practice management. Learn more in this 3-hour dual credit workshop with attorney Timothy Takacs.

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    Toys 'R' Us Founder Dies as Company is Set to Begin Liquidation

    In an unlikely sequence of events, the founder of Toys 'R’ Us has passed away just as the beleaguered retailer was set to begin its liquidation, The New York Times reports. Charles Lazarus opened the first Toys R’ Us in 1957 and led the company for several prosperous decades prior to stepping down as chief executive officer in 1994.

    Lazarus’s death comes one week after Toys 'R' Us announced that it would start liquidating its stores in the United States. The company filed for bankruptcy last September and announced last Thursday that the company planned to close or sell all of its stores in the United States. That could result in more than 30,000 employees losing their jobs.

    “There have been many sad moments for Toys 'R' Us in recent weeks, and none more heartbreaking than today’s news about the passing of our beloved founder, Charles Lazarus,” Toys “R’ Us said in its statement on Thursday afternoon. “We will forever be grateful for his positive energy, passion for the customer and love for children everywhere.” Lazarus was 94.

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    Former Pilot Flying J President Fighting ‘Most Guilty’ Label

    Defense attorneys for former Pilot Flying J president and convicted felon Mark Hazelwood are crying foul over a court-ordered list of the “most guilty” parties in the company’s fraud scheme, Knoxnews reports. The list, which included other convicted former executives and employees, ranks Hazelwood at the top. Attorneys filed motions in federal court last week challenging the government’s characterizations of their culpability in the scam.
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    ‘Pharma Bro’ Martin Shkreli Sentenced to 7 Years for Securities Fraud

    Martin Shkreli, the pharmaceutical executive known as “pharma bro” who became notorious for hiking up costs of a lifesaving drug, was sentenced to seven years in prison today for securities fraud, the Chicago Tribune reports. Shkreli cried in U.S. District Judge Kiyo Mastumoto’s courtroom as he apologized to investors for defrauding them in two failed hedge funds. In addition to his prison sentence, Shkreli was fined $75,000.
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    Crime, History and Humor Also in Special Issue on Evolving Legal Markets and Technology

    The March Tennessee Bar Journal includes columns on criminal law, history and humor. Knoxville lawyer Wade Davies asks if a defendant should testify, looking into any research about it. Chattanooga lawyer Russell Fowler takes us back in time to the 1800s when William B. Turley, "the most brilliant judge we ever had," was on the Tennessee Supreme Court. Memphis lawyer Bill Haltom writes about an interaction that Sen. Howard Baker had with his father-in-law, Sen. Everett Dirksen. It is a lesson that is even more applicable today. This issue, the Special Issue on Evolving Legal Markets and Technology, is also packed with information examining the present and future of technology and how it affects law practice. You're going to need to know about what's happening now and what's coming.

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    USA Today Wins Lawsuit to Unseal Racist Tapes in Pilot Flying J Case

    U.S. District Court Judge Curtis L. Collier yesterday ordered the unsealing and public release of recordings that captured Pilot Flying J’s former president using racial epithets, Knoxnews reports. Reporters from the USA Today network requested a hearing to release the recordings, made in October 2012 of former President Mark Hazelwood, in January. Hazelwood was convicted of conspiracy, wire fraud and witness tampering in a Chattanooga-based federal court in February.
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    Sunday Wine, Liquor Sales Bill Advances in Legislature

    A bill that would allow wine and liquor sales in stores on Sundays in Tennessee advanced in the legislature today, The Tennessean reported. The House State Government Committee and the Senate State and Local Government Committee passed the bill, which would allow grocery stores to sell wine on Sundays and liquor stores to remain open.
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