News

Shadow Banks Back in the Forefront of Lending

“Shadow” banks have made a comeback and now surpass regulated banks as the leading source of credit for businesses and consumers, The Washington Post reports. Considered the catalyst for the real estate market collapse in 2008, the shadow system uses money from investors in lieu of depositors and heavily relies on hedge funds, investment banks and private equity funds. Loans from these sources are popular with consumers because of lower credit stipulations, faster approval and more flexible terms than loans from a traditional bank; however, they make the general economy more susceptible to busts.

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CHS Faces Class Action Alleging Securities Exchange Act Violations

A class action lawsuit has been filed against Tennessee-based hospital operator Community Health Systems Inc. (CHS) alleging the company made materially false statements and failed to disclose unfavorable business dealings to investors. The suit, filed by New York-based law firm Bragar Eagel & Squire PC, maintains that by negating or misrepresenting certain facts, CHS inflated its net operating revenue to increase stock valuation. The complaint, filed in U.S. District Court for the Middle District of Tennessee, can be viewed here.

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Man Mauled by Emotional Support Dog Sues Owner, Airline

A Delta Air Lines passenger who was attacked by another traveler’s emotional support dog is now suing both the owner and the airline, the Atlanta Journal Constitution reports. In the complaint, Marlin Jackson alleges that the dog pinned him against the plane’s window and viciously mauled his face, necessitating 28 stitches and causing permanent injury and loss of sensation in his face. Following the attack, Delta changed its support animal policy and now requires a “confirmation of animal training” form and other documents. Jackson asks restitution for “severe physical pain and suffering,” emotional distress and mental anguish, loss of income or earning potential, and substantial medical bills. Delta did not comment on the lawsuit.

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IP Patent Litigation Update Webcast is June 27

Feeling a little out of the loop when it comes to patent litigation? Get caught up by registering to attend the Patent Litigation Update webcast by Registered Patent Attorney Seth Ogden!

Join us on June 27 at 11 a.m. CST to examine the implications of several recent decisions for businesses seeking to protect their key technologies through patents: Secret sales can now serve as invalidating prior art (Helsinn). Patentees can now recover lost foreign profits for certain instances of infringement (Western Geco). Attacking patent subject matter eligibility under Section 101 at the pleadings stage has become more difficult (Berkheimer). Choice of venue for patentees filing suit in district courts has become more limited (BigCommerce and HTC).

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Warren, AOC Send Letter and Release Video Questioning Mnuchin’s Role in Sears Bankruptcy

Presidential candidate Sen. Elizabeth Warren and Rep. Alexandria Ocasio-Cortez (AOC) wrote a letter to Treasury Secretary Steven Mnuchin and released a video last week detailing a series of questions for Mnuchin regarding his advisory role to former Sears CEO Eddie Lampert during the downfall and eventual bankruptcy of the company, The Washington Post reports. Mnuchin was college roommates with Lampert and served on the boards of both Sears and Lampert’s hedge fund, ESL Investments. Mnuchin, Lampert and other board members have been named in a lawsuit filed last month by Sears’ unsecured creditors on behalf of Sears. The suit accuses them of transferring billions of dollars from the company, as it closed stores and cut staff, in order to benefit Lampert, his hedge fund, his real estate investment firm and other insiders. After Sears filed for bankruptcy, its two pension plans were handed over to the Pension Benefit Guaranty Corp. (PBGC), overseen by Mnuchin and two other secretaries. Warren and AOC inquire into the ethical obligations and current status of Mnuchin’s recusal requirements from PBGC’s actions related to Sears. Watch the video and read the full story here.  

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TBA Recap: Business Law Forum 2019

The Tennessee Bar Association's Business Law Section recently held its annual forum in Nashville at the Tennessee Bar Center. Nearly 50 practitioners attended the forum and enjoyed exceptional programming focused on potential issues that may arise when drafting an LLC operating agreement. The TBA would like to thank program producer and Section Chair Matt Lyon as well as the members of the Executive Council for their time and assistance creating a unique and successful program.

Missed the forum? Online videos of some sessions will be available soon; look for an announcement in a future Connect. 

Matthew R. Lyon | Chair | East
Joan M. Heminway | Chair Elect | East
Mary Ann Jackson | Council Member | West
Lee Harkavy | Council Member | West
Justin Joy | Council Member | West
Beth Sims | Council Member | Middle
Van P. East, III | Council Member | Middle
Alex Davie | Council Member | Middle
Ward Nelson | Council Member | East 
Chris Trump | Council Member | East
 

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Lawsuit Against Apple Can Continue, SCOTUS Rules

The U.S. Supreme Court has ruled that consumers could forge ahead with a lawsuit against Apple over the way it manages its App Store, The Washington Post reports. The 5-4 decision allows device owners to proceed with a case that alleges Apple has acted as a monopoly by requiring iPhone and iPad users to download apps only from its portal while taking a cut of some sales made through the store. Justice Brett Kavanaugh, who sided with the court's liberal justices in the 5-4 decision, authored the opinion in the case.
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Is a Two-Sided Market Coming to Commercial Real Estate?

Forbes yesterday published a piece exploring a two-sided market approach to maintenance of commercial real and whether this may prove to soon be a reality. The essay expands on the practice of smart physical systems in buildings and predictive maintenance, detailing how this might be leveraged to create a new model for how vendors, overseers and the equipment itself intersect. You can view the article here

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Zillow Class-Action Suit Regarding RESPA Violations to Proceed

The class-action lawsuit filed against Zillow regarding its “co-marketing” program and whether it violated federal anti-kickback laws will proceed as planned, The Washington Post reports. The suit, filed in September 2017, alleges that the company ran afoul of the Real Estate Settlement Procedures Act (RESPA) by allowing lenders share advertising fees with real estate agents — up to 90 percent initially — effectually allowing the lenders to receive leads on active buyers. The Consumer Financial Protection Bureau (CFPB) in 2017 notified Zillow that it was being investigated regarding the alleged violations, to which the company attempted to negotiate with the bureau; however, the case was dropped when the Trump Administration appointed its new CFPB director. Judge John C. Coughenour of the U.S. District Court in Seattle denied Zillow’s motion to dismiss saying: “the court can draw a reasonable inference that Zillow designed the co-marketing program to allow agents to provide referrals to lenders in violation of RESPA.” A trial date has not been set.

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Metro Nashville Government Releases Report on Tax Incentive Funding

The Metro Government of Nashville & Davidson County released its Tax Increment Financing Study & Formulating Committee Report, which examines Metro’s Tax Incentive Funding (TIF) used to promote redevelopment in blighted areas. Mayor David Briley signed ordinance BL2018-1315 creating the committee to formulate recommendations on implementation of and ensure more transparency regarding the municipalities use of TIF. In its report, the committee compiled a number of observations and 17 recommendations, formally asking the Mayor’s Office to provide Metro Council with a description of agencies or departments that will address the recommendations, including cost estimates for implementation. The committee was scheduled to present its recommendations to the Metro Council last week. 

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Still Time to Register for May 9 Business Law Forum

The TBA Business Law Section’s Forum on May 9 will help business lawyers learn and refresh their knowledge about issues that may arise when drafting an LLC operating agreement. Topics at the Nashville program will include an overview of the two extant Tennessee LLC acts and a comparison of those acts with the Delaware LLC Act; other distinctions of Tennessee law that impact the operating agreement; drafting key provisions, including distribution and allocation, employee and member compensation and exit rights; and ethical considerations for lawyers drafting LLC operating agreements. Earn up to five hours of general CLE and one ethics hour.
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Major Music Labels Join Fight Against 'Slate of Hate'

Nashville-based record labels Warner Music Group and Curb Records are the latest additions to a growing opposition of the “Slate of Hate” legislation proffered by Tennessee lawmakers, Billboard reports. The labels signed onto a letter authored by a music industry leader, cautioning Tennessee's legislature of potential negative consequences that might arise if the laws are adopted. Almost 40 companies have voiced disproval of the legislation, along with another music industry powerhouse, Taylor Swift, who donated $113,000 to the cause.

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International Trade Supports 1 in 5 Tennessee Jobs

International trade in Tennessee is serious business, supporting one out of every five jobs in the state, the Chattanooga Times Free Press reports. A just-released study by Trade Partnership Worldwide LLC — a consulting firm that examines the economic impact of global enterprise — shows that international commerce provides Tennesseans with 806,100 jobs, with export of more than $20 billion in goods and services generating $3 billion in revenue for the state. NAFTA is credited as a large contributor to these numbers. Despite concerns that the policy would send American jobs to other countries and have a negative financial impact, the report shows that there has been an increase in goods sold to participating countries Mexico and Canada. Exports from Tennessee to NAFTA members climbed 470% since the plan’s inception and trade-related job growth outpaced the overall job market five times over.

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Sen. Dickerson, Other Clinic Owners Sued by Feds Over Forgery Allegations

Federal and state prosecutors are moving to file lawsuits accusing Sen. Steve Dickerson, R-Nashville, and other owners of a pain management company of defrauding the government, the Tennessean reports. Their company, Comprehensive Pain Specialists (CPS), allegedly profited so much from questionable drug tests that a corporate executive once said urine samples "smelled like money," according to newly unsealed federal court records. Prosecutors revealed in those court records they plan to sue CPS by incorporating allegations from whistleblowers who filed secret complaints against the company. They have not announced plans to pursue charges at this time.
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AT&T Sacrificing Subscribers to Focus on Debt

AT&T is losing wireless and TV subscribers as it focuses on shrinking the company’s debt after the Time Warner takeover, the Los Angeles Times reports. While the company lost 627,000 TV and 204,000 wireless customers, overall debt was reduced by six percent. It is yet to be seen if the risky strategy will pay off, with a drop in subscribers affecting the company’s dividends and buyback power, however, the company is also exploring other avenues such as selling investments and property to abate the debt.

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Business Law Forum will be May 9

The TBA Business Law Section’s Forum on May 9 will help business lawyers learn and refresh their knowledge about issues that may arise when drafting an LLC operating agreement. Topics at the Nashville program will include an overview of the two extant Tennessee LLC acts and a comparison of those acts with the Delaware LLC Act; other distinctions of Tennessee law that impact the operating agreement; drafting key provisions, including distribution and allocation, employee and member compensation and exit rights; and ethical considerations for lawyers drafting LLC operating agreements. Earn up to five hours of general CLE and one ethics hour.
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Study Credits Tennessee Tax Policies for Economic Growth

A new study by the American Legislative Exchange Council, a conservative think tank comprised of legislators and business leaders, puts Tennessee in its top ten list of states with a positive economic outlook, the Chattanooga Times Free Press reports. Between 2007 and 2017, Tennessee’s GDP rose 43.1 percent, with the state growing payroll employment by 8 percent. The study credits Tennessee’s relatively low tax rates, lack of personal income tax and plans to phase out inheritance and unearned income taxes, among other reasons, for the state’s economic standing.

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IKEA in Memphis will Opt Out of PILOT Tax Breaks

Swedish furniture retailer IKEA will opt out of its 11-year payment-in-lieu-of-taxes (PILOT) break because the company failed to meet program requirements, the Daily Memphian reports. IKEA initially agreed to hire 175 employees with an average wage of $41, 011, however, currently employs 147 people with an average wage of $36,944. The company may get another year of incentives if it follows through on environmental projects such as water conservation efforts and installing a solar powered roof.

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5 New Job Postings on TBA’s Joblink

See who is hiring in Tennessee. Recent job postings this month offer opportunities in litigation, real estate, health law and more. See full listings or post positions in your firm on TBA’s Joblink.
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TBA Convention Kicks Off TOMORROW!

The big week is finally upon us: The Tennessee Bar Association’s Annual Convention begins tomorrow, June 12. This year’s Convention is chock-full of even better programming, exhibits and fun than last year! Look forward to:

  • Free Access to 9 Hours of CLE, including the Bench Bar Program, co-sponsored by the Tennessee Judicial Conference
  • Opening welcome reception
  • Bench Bar Luncheon (featuring keynote speaker, Ken Starr)
  • Law School and General Breakfasts
  • Lawyers Luncheon (featuring special honor for Sen. Lamar Alexander)
  • Thursday night joint reception sponsored with TLAW and TABL
  • Thursday night Dinner/Dance Party featuring My So-Called Band
  • Friday night TBALL/YLD Party
  • Access to activities and programming designed for well-being including massages, contemplative space and more.
  • Access to TBA's sponsorship hall to meet with exhibitors, participate in our special TBA Wellness Corner and win prizes.
• QUESTIONS: Just email convention@tnbar.org to get help.
 
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Mediation Between Black Farmers Group and Seed Company Hits Impasse

After four months, mediation between the $3 billion-valued Stine Seed Company and a collaborative of five black farmers affiliated with the Memphis-based Black Farmers and Agriculturalists Association has ended without resolution, The Commercial Appeal reports. "No new court date has been set," Patricia Rogers, a spokeswoman for the Memphis farmers' group wrote in a media alert. "The black farmers could be headed for a trial with the billion-dollar seed giant." Filed in April 2018, the group's lawsuit alleges fraud and discrimination involving soybean seeds a Stine representative sold the farmers.
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Help4TNDay Kicks Off Saturday

Tennessee lawyers are invited to participate in Help4TNDay activities throughout the month of April. Events will bring attention to the ongoing need for free and low-cost legal services and highlight the groups that provide these services to disadvantaged Tennesseans. Opportunities include volunteering to help clients in need through Tennessee Free Legal Answers (TFLA) or at a local legal clinic. The events kick-off this Saturday with a statewide virtual legal clinic, where attorneys across the state will answer questions on TFLA from noon to 2 p.m. Simultaneously, the TBA will host an on-site TFLA Clinic and Luncheon in Nashville. To participate in the TBA event, contact Liz Todaro. Help4TNDay is a joint effort by the Tennessee Supreme Court Access to Justice Commission, the Administrative Office of the Courts, Tennessee Alliance for Legal Services and the Tennessee Bar Association. 
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Tennessee Gym Tax Repeal Passes Legislature

The Tennessee senate on Thursday passed Gov. Bill Lee’s proposal to repeal the state’s amusement tax on smaller-size gym memberships, the Times Free Press reports. Critics of the tax, including the National Federation of Independent Businesses, argue it is unfair and all businesses should be treated the same. The legislative fiscal note cites an estimated $2.5 million loss to local government and the Finance Committee estimated a $6 million loss of revenue.

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Bill Proposing State Historic Tax Credit Under Consideration

A bill that proposes adding a state historic tax credit in exchange for renovating qualified historic buildings is being considered in the Tennessee legislature, Johnson City Press reports. Tennessee is one of 15 states that do not offer a state historic tax credit. The bill proposes tiered economic incentives based on the location of the historical structure. Developers completing qualified rehabilitation work in Davidson and Williamson counties would be eligible to receive up to 10 percent in tax credits. Knox, Hamilton and Shelby counties can receive up to 20 percent, while counties in northeast Tennessee are eligible to receive up to 30 percent. For buildings to qualify for the credit, it must be listed on the National Register of Historic Places or located in a registered historic district and certified by the secretary of the Department of the Interior. Projects would be overseen by the Tennessee Historic Commission and have to meet the Department of Interior’s Standards for Rehabilitation.

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PG&E Creditors Propose $35 Billion Bankruptcy Exit Plan

Pacific Investment Management Co., Elliott Management Corp., and Davidson Kempner Capital Management have been in private discussions with California lawmakers and stakeholders over a $35 billion plan that would allow PG&E Corp. to emerge from bankruptcy within a year, Bloomberg reports. These creditors represent an ad hoc committee of PG&E’s senior unsecured noteholders. Included in their proposal is establishing a $14 billion cash trust to pay claims related to the 2017 and 2018 wildfires. Additionally, the creditors are recommending that California legislators establish a $13 billion statewide wildfire fund to be financed by California utilities, including PG&E, statewide bonds and other state funding sources. Contributions totaling $8 billion would allow the company to recapitalize and refinance its debtor-in-possession loans and other maturities. Creditors would provide around $18.5 billion in funds and the proposal claims to be neutral for consumers and their respective electricity rates. PG&E would be exiting bankruptcy by March 2020 under this proposal. 

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