75 Search Results

October 1, 2019 |
Anne Champion and Randy Mastro Named Litigators of the Week

The Am Law Litigation Daily named New York partners Anne Champion and Randy Mastro as its Litigators of the Week for successfully persuading a district judge that a foreign arbitration award against Chevron was a sham.  The profile was published on September 27, 2019. Anne Champion is a member of Gibson Dunn’s Transnational Litigation, Environmental Litigation, and Intellectual Property Practice Groups.  She has played a lead role in a wide range of high-stakes litigation matters, including trials. Randy Mastro, Co-Chair of the Firm’s Litigation Practice Group, routinely ranks among the nation’s leading litigators and trial lawyers in surveys of corporate counsel and other practitioners.  He has tried dozens of cases in private practice and as a federal prosecutor, and he has also argued more than 100 appeals in federal and state appellate courts throughout the country.

August 15, 2019 |
Five Partners Named Among Top Women in Litigation

Benchmark Litigation named Perlette Jura, Andrea Neuman, Elizabeth Papez, Deborah Stein and Meryl Young to its 2019 list of the Top 250 Women in Litigation, which recognizes America’s leading female trial lawyers.  The list was published on August 15, 2019. Perlette Jura co-chairs the firm’s Transnational Litigation Group and co-founded the firm’s Aerospace and Related Technologies Group.  She practices complex trial and appellate litigation and has played a key role in a number of the firm’s most high-profile transnational, environmental and technology-driven matters. She also has extensive experience working with the food and beverage, agricultural, aerospace, automotive, emerging technology and energy industries. Deborah Stein routinely represents clients in high-stakes matters, including cybersecurity and trade secrets litigation, securities and consumer class actions, and insurance coverage and business practices disputes.  She devotes a significant part of her practice to representing clients in cases involving the False Claims Act and whistleblower allegations of fraud. Andrea Neuman co-chairs Gibson Dunn’s Transnational Litigation Practice Group.  She is a high-stakes trial lawyer whose victories include billion dollar matters in both international and domestic forums.  Her international work spans Central, South and North America at both the trial and appellate levels.  Domestically, she represents clients in an array of industries nationwide, including oil and gas, food and agriculture, aerospace, technology, accounting, real estate and financial services. Meryl Young is Co-Chair of Gibson, Dunn & Crutcher’s Securities Litigation Practice Group.  She practices complex business and commercial litigation, with an emphasis on securities and merger and acquisition litigation and related government investigations.  She represents companies, directors and officers, and accounting firms in class actions, and professional liability actions in both state and federal courts.  She has also handled a wide variety of other types of business litigation, including cases involving contract disputes, unfair business practices, misappropriation of trade secrets and other business torts, trademark and patent infringement, antitrust, real estate, employment and insurance issues. Elizabeth Papez focuses on high-stakes class actions, complex commercial litigation, and related government investigations and appeals.  As a seasoned litigator and former U.S. Deputy Assistant Attorney General, she has substantial experience representing clients in the financial services, pharmaceutical, consumer, and product sectors.  She regularly handles federal class actions, multidistrict litigation and other complex commercial disputes under federal and state antitrust statutes, banking and securities laws, and false claims acts, as well as parallel regulatory investigations with the U.S. Department of Justice, the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Food and Drug Administration.

September 24, 2018 |
U.S. Court of Appeals Allows Specific Personal Jurisdiction Over German Web-Services Firm With No Physical U.S. Presence

Click for PDF On September 13, 2018, the U.S. Court of Appeals for the First Circuit handed down an important personal-jurisdiction ruling in the age of e-commerce.  In Plixer International, Inc. v. Scrutinizer GmbH, the First Circuit interpreted Federal Rule of Civil Procedure 4(k)(2) to affirm a district court's exercise of personal jurisdiction over a German company whose only ties to the United States were the provision of web-based services to businesses all over the world, including in the United States.[1]  This is still a developing area of personal jurisdiction law without clear guidance from the U.S. Supreme Court, and non-U.S. companies should carefully consider whether and how their online commerce might subject them to U.S. litigation. The decision arose out of a trademark dispute between two companies—U.S.-based Plixer International, Inc. and the German firm Scrutinizer GMBH—over whether Scrutinizer's use of its corporate name in the U.S. caused confusion with Plixer's registered "Scrutinizer" mark.[2]  Scrutinizer offers web-based services to software companies, principally in helping customers build better software.  These offerings are all cloud-based, and Scrutinizer's activities occur exclusively outside the United States.  In particular, Scrutinizer does not have any office, phone number, or agent for service of process in the United States; its employees do not travel to the United States for business; and it does not advertise in the United States.  Scrutinizer accepts payment only in euros, and its contracts provide that only German law governs disputes, which would be adjudicated only in German courts.  Notwithstanding these non-U.S. ties, Scrutinizer does have business dealings in the United States: its website is published in English, and although its business is "global," 156 of its customers were based in the United States over a three year period, with revenues amounting to just under $200,000.00 (€165,212.07).  The only U.S.-based conduct highlighted in the opinion was an unexplained trademark application for the term "Scrutinizer " in January 2017, three years after the case was filed.[3] Plixer sued Scrutinizer in the U.S. District Court for the District of Maine and Scrutinizer contested personal jurisdiction.[4]  (The dispute was not based on Scrutinizer's contracts and thus did not trigger the forum selection clause.)  The district court rejected Plixer's initial effort to base personal jurisdiction solely on Scrutinizer's Maine-based contacts, which consisted only of two sales worth approximately €3,100.[5]  But, after allowing for jurisdictional discovery, the district court ultimately found jurisdiction based on Scrutinizer's contacts with the United States as a whole, finding that Scrutinizer "operated a highly interactive website that sold its cloud-based services directly through the website, that it was open to business throughout the world, that it accepted recurrent business from the United States in a substantial amount, and that it did so knowingly."[6]  According to the district court, this sufficed to exercise personal jurisdiction over Scrutinizer under Federal Rule of Civil Procedure 4(k)(2), which provides:

(2) Federal Claim Outside State-Court Jurisdiction. For a claim that arises under federal law, serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant if:
(A) the defendant is not subject to jurisdiction in any state's courts of general jurisdiction; and (B) exercising jurisdiction is consistent with the United States Constitution and laws.
The district court denied Scrutinizer's motion to dismiss on these grounds, but granted Scrutinizer's motion to file an interlocutory appeal under 28 U.S.C. § 1292(b). On appeal, the First Circuit affirmed.  The court explained at the outset that the only contested aspect of the case was Rule 4(k)(2)(B), which invokes the requirement that personal jurisdiction comport with due process, a test requiring Plixer to show that
(1) its claim directly arises out of or relates to the defendant's forum activities; (2) the defendant's forum contacts represent a purposeful availment of the privilege of conducting activities in that forum, thus invoking the benefits and protections of the forum's laws and rendering the defendant's involuntary presence in the forum's courts foreseeable; and (3) the exercise of jurisdiction is reasonable.[7]
As Plixer's trademark claim necessarily related to Scrutinizer's U.S. sales, the First Circuit analyzed only elements (2) and (3), and held that Plixer had satisfied both. The court first found that Scrutinizer had purposely availed itself of the United States—such that Scrutinizer had the necessary "minimum contacts" with the United States for personal jurisdiction—despite the fact that it had no physical contacts with the United States.  The court recognized that a prior personal-jurisdiction decision from the Supreme Court, Walden Fiore, expressly "le[ft] questions about virtual contacts for another day," and the First Circuit therefore based its ruling solely on Scrutinizer's "sizeable and continuing commerce with United States customers," but was otherwise "extremely reluctant to fashion any general guidelines beyond those that exist in law [and] emphasize[d] that [its] ruling [was] specific to the facts of this case."[8] The court also rejected each of Scrutinizer's arguments against the finding of minimum contacts.  According to the court, Scrutinizer had not simply "enter[ed] its products into the stream of commerce" and thus had no control where those products ended; "Scrutinizer's service [went] only to the customers that Scrutinizer has accepted."[9]  Scrutinizer did not attempt to limit access to its website to block U.S. users, nor did it "take the low-tech step of posting a disclaimer that its service is not intended for U.S. users."[10]  The court similarly rejected Scrutinizer's argument that its U.S. contacts were solely "the product of its customers' unilateral actions," because Scrutinizer "knew that it was serving U.S. customers" through its "globally accessible website."[11] But the key minimum-contacts analysis arose in the Court's rejection of Scrutinizer's final argument that it did not "specifically target" the United States.[12]  That test came from a four-justice plurality opinion in the 2011 Supreme court Decision, J. McIntyre Machinery, Ltd. v. Nicastro, where the plurality would have allowed jurisdiction only "where the defendant can be said to have targeted the forum."[13]  The First Circuit instead relied on Justice Breyer's more narrow concurrence in Nicastro, which relied on findings that the defendant in Nicastro had not made any regular course of sales in the jurisdiction to support a finding of purposeful availment or minimum contacts.[14]  According to the First Circuit, Nicastro thus did not concern itself with companies that, like Scrutinizer, "'target[] the world' by making its website globally available."[15]  Ultimately, the Court held that "the German company could have 'reasonably anticipated' the exercise of specific personal jurisdiction based on its U.S. contacts," including Scrutinizers regular sales to the U.S. and its use of a website "to obtain U.S. customer contracts."[16]  The First Circuit defended this conclusion as consistent prior decisions from the Supreme Court and other courts emphasizing the importance of forum sales in minimum-contacts analysis.[17] Having found that Scrutinizer had sufficient minimum contacts, the First Circuit concluded that exercising personal jurisdiction was reasonable.[18]  The First Circuit recognized that litigating in the United States would burden Scrutinizer given its location in Germany, but discounted that burden in light of Scrutinizer's U.S. business and the fact that "modern travel 'creates no especially ponderous burden for business travelers.'"[19] But no other factor weighed against exercising jurisdiction.  The court concluded that "'[w]hen minimum contacts have been established, often the interests of the plaintiff and the forum in the exercise of jurisdiction will justify even the serious burdens placed on the alien defendant.'"[20] The First Circuit's decision is drafted in narrow terms, but non-U.S. companies should take note of Plixer's potentially sweeping conclusion:  A company with no physical ties to the U.S. whatsoever could be hauled into a U.S. court based solely on rather modest web-based sales.  The Internet and e-commerce have revolutionized the ways in which companies can do business all over the world, opening up markets in ways that were unthinkable in the analog past.  But the flip-side of this openness is the risk of litigation in foreign fora.  In light of decisions such as Plixer, non-U.S. companies should carefully assess the costs and benefits of selling their products to identifiable U.S. individuals and companies.

[1]   --- F.3d ----, 2018 WL 4357137 (1st Cir. Sept. 13, 2018).
[2]   Id. at *2.
[3]   Id. at *1-2.
[4]   Id. at *2.
[5]   Id. at *2 n.4.
[6]   Id. at *2.
[7]   Id.at *3.
[8]   Id. at *4 (citing Walden v. Fiore, 571 U.S. 227, 290 n.9 (2014)).
[9]   Id.  at *5.
[10]   Id. at *5.
[11]   Id. at *5.
[12]   See id. at *6-7.
[13]   564 U.S. 873, 882 (2011) (plurality).
[14]   Id. at 889 (Breyer, J., concurring).
[15]   Plixer, 2018 WL 4357137, at *6 (quoting Nicastro, 564 U.S. at 890 (Breyer, J. concurring)).
[16]   Id. at *6.
[17]   Id. at *7 (citing Keeton v. Hustler Magazine, 465 U.S. 770 (1984); Oticon, Inc. v. Sebotek Hearing Sys., LLC, 865 F. Supp. 2d 501 (D.N.J. 2011); Willemsen v. Invacare Corp., 282 P.3d 867 (Or. 2012); Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218 (9th Cir. 2011); Bird v. Parsons, 289 F.3d 865 (6th Cir. 2002); Advanced Tactical Ordnance Sys., LLC v. Real Action Paintball, Inc., 751 F.3d 796 (7th Cir. 2014); Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390 (4th Cir. 2003)).
[18]   Id. at *8.
[19]   Id. at *8.
[20]   Id. at *9 (quoting Asahi Metal Indus. Co. v. Super. Ct. of Cal., Solano, Cnty., 480 U.S. 102, 114 (1987)).

The following Gibson Dunn lawyers assisted in the preparation of this client update: Perlette Jura, Andrea Neuman, William Thomson and Christopher Leach. Gibson Dunn's lawyers are available to assist in addressing any questions you may have regarding these developments.  Please contact the Gibson Dunn lawyer with whom you usually work or any of the following members of the firm's Transnational Litigation Group: United States: Randy M. Mastro - New York (+1 212-351-3825, rmastro@gibsondunn.com) Theodore J. Boutrous, Jr. - Los Angeles (+1 213-229-7000, tboutrous@gibsondunn.com) Scott A. Edelman - Los Angeles (+1 310-557-8061, sedelman@gibsondunn.com) Andrea E. Neuman - New York (+1 212-351-3883, aneuman@gibsondunn.com) William E. Thomson - Los Angeles (+1 213-229-7891, wthomson@gibsondunn.com) Perlette Michèle Jura - Los Angeles (+1 213-229-7121, pjura@gibsondunn.com) Kahn A. Scolnick - Los Angeles (+1 213-229-7656, kscolnick@gibsondunn.com) Anne M. Champion - New York (+1 212-351-5361, achampion@gibsondunn.com) Europe: Philip Rocher - London (+44 20 7071 4202, procher@gibsondunn.com) Charlie Falconer - London (+44 20 7071 4270, cfalconer@gibsondunn.com) Patrick Doris - London (+44 20 7071 4276, pdoris@gibsondunn.com) Michael Walther - Munich (+49 89 189 33 180, mwalther@gibsondunn.com) © 2018 Gibson, Dunn & Crutcher LLP Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

September 11, 2018 |
SFO Successfully Defends Challenge over the Territorial Scope of Compulsory Document Requests

Click for PDF Last week the High Court in London handed down its decision following a challenge by KBR, Inc. against the issuing of compulsory document requests that required the production of documents held by the company outside of the UK. KBR, Inc. is a U.S. engineering and construction company and ultimate parent company of the KBR Group. It does not have a physical presence in the UK, but has a subsidiary, KBR Ltd, that does. KBR Ltd is under investigation by the SFO for suspected bribery. At the heart of the proceedings was a notice issued to KBR, Inc. by the Serious Fraud Office ("SFO") under section 2(3) of the Criminal Justice Act 1987 ("CJA") (the "July Section 2 Notice") compelling the production of documents held outside the UK.  The SFO issued the July Section 2 Notice to a representative of KBR, Inc. who had attended a meeting with the SFO in the UK to discuss its investigation into KBR Ltd.

The Challenge

KBR, Inc. challenged the July Section 2 Notice on three grounds:
  1. Jurisdiction:  the July Section 2 Notice was ultra vires the CJA, as it requested material held outside of the UK from a company incorporated outside of the UK.
  2. Discretion:  the Director of the SFO made an error of law in issuing the July Section 2 Notice instead of using its power to seek Mutual Legal Assistance ("MLA") from the US authorities under the UK's 1994 bilateral MLA Treaty with the US.
  3. Service:  the July Section 2 Notice was not properly served on KBR, Inc. under the CJA.
Jurisdiction The Court held that in relation to UK companies with documents outside of the UK, that section 2(3) of the CJA must have "an element of extraterritorial application" otherwise "a UK company could resist an otherwise lawful s.2(3) notice on the ground that the documents in question were held on a server out of the jurisdiction". The extraterritorial reach would minimize the risk of the SFO's investigations being frustrated by companies moving their documents out of the jurisdiction. As regards documents held by foreign companies outside of the UK, the court held that section 2(3) will extend to some foreign companies in respect of documents held abroad, when there is a "sufficient connection" between the foreign company and the jurisdiction (the UK). This test is fact specific in order to allow for "practical justice in the individual case". In KBR, Inc.'s case, the Court found that certain following factors were not sufficient on their own to satisfy the "sufficient connection" test, including:
  • the fact that KBR, Inc. was the parent company of KBR Ltd, as it would ensnare parent companies of multinational groups without justification.
  • the fact that KBR, Inc. cooperated to a degree with the SFO's request for documents and remained willing to do so voluntarily, on terms that it would apply SFO search terms across data held in the US.  Cooperation is to be encouraged but it should not give rise to a risk of being held to imply acceptance of jurisdiction.
  • the fact that a KBR, Inc. representative agreed to, and did, attend a meeting with the SFO.  This is for similar reasons as those set out above.
However, the Court went on to find that there was a sufficient connection between KBR, Inc. and the UK in this case, based on the fact that some suspected corrupt payments made by KBR to Unaoil required the express approval of KBR, Inc. and were processed by KBR, Inc.'s treasury function, and for a period approval was also required from KBR, Inc.'s compliance function before payment could be released.  The Court also observed that a corporate officer of KBR, Inc. was based in the Group's UK office.

Discretion

KBR, Inc. argued that even if the CJA did confer jurisdiction on the SFO to compel the production of materials abroad, the Director of the SFO should not have exercised his power under section 2(3) of the CJA, which is discretionary, and should have first considered using the MLA route.  KBR, Inc.'s position was that in failing to do this amounted to an error of law. This argument was rejected. The High Court held that the MLA option was an additional power available to the SFO:
"The availability of MLA gives the Director additional options; it does not curtail his discretion to use the separate power of issuing s.2(3) notices… It follows that KBR [Inc] has failed to demonstrate any error of law on the part of the Director in the exercise of his discretion to issue the July Notice."
The High Court noted additionally in the SFO's favour that there are "good practical reasons" for the Director to use a section 2 notice instead of MLA. Such reasons included delays, the risk that a request is ignored, and the burden on the requested state of having to deal with a request when it would be simpler to obtain the materially directly. KBR, Inc. had neither shown nor suggested that compliance with the July Section 2 Notice would have raised any complexities or issues of local U.S. law, or conflict with duties owed by KBR, Inc. to third parties.

Service

KBR, Inc. argued that simply giving the July Notice to KBR, Inc.'s representative during an SFO meeting was not enough to "serve" KBR, Inc. with the July Section 2 Notice, and that the fact that KBR, Inc. 's representative was in the UK did not signify that KBR, Inc. was present in the UK. The court rejected this challenge, noting in particular that section 2(3) required no additional formality beyond the giving of the notice. The Court held that KBR, Inc. was "plainly present" in the jurisdiction when the SFO gave the July Section 2 Notice to its representative. The SFO made the meeting in question conditional on the attendance of "the clients" (i.e., KBR, Inc.). As such, it was clear that KRB Inc's representatives were in the jurisdiction in their capacity as representatives and not "coincidentally or on some personal frolic". The High Court, however, noted that the SFO's plan to give the July Notice to KBR, Inc.'s representative during the course of the meeting had "unappealing features". However, those features did not invalidate the July Notice; rather they serve as a warning to others who may attend similar meetings with the SFO in the future.

Implications

The decision has helped to clarify the scope of the SFO's section 2 notice power, which to-date has not been considered comprehensively by the courts. The SFO will no doubt be satisfied with the result. Foreign companies that hold documents outside of the UK will not be immune from the SFO's section 2 power, provided that the SFO can illustrate a "sufficient connection" between the company in question and the UK.  A parent / subsidiary relationship alone will not suffice, but where there are links between a UK subsidiary and its foreign parent, for example if they share accounting or compliance functions, this will likely suffice.  In this case, another connection was the presence of a KBR, Inc. employee in KBR Ltd's office. This seems a rather tenuous connection. Whether that factor alone would have been enough is difficult to assess. The High Court, however, obviously thought it was sufficiently material to identify and take into account. This decision is likely to embolden the SFO in serving section 2 notices on foreign companies involved in their investigations. The Crime (Overseas Production Orders) Bill, which is currently before Parliament, may soon render the decision less relevant, at least as far as documents are stored electronically and in states where reciprocal arrangements are made for recognition of production orders.  The Bill has received little press attention to date but it may have significant implications.  If enacted, the SFO (amongst other authorities) will be able to make an application to the Crown Court for an order requiring an overseas person to produce electronic data in connection with an investigation, where there is an international cooperation agreement in place with the jurisdiction in question.  We note that the U.S. has passed the CLOUD Act (Clarifying Lawful Use of Overseas Data Act), which the UK Government has stated was passed "in anticipation and preparation" for a bilateral UK-US data access agreement.  If the Bill becomes law and agreements are put in place, it may become much easier for the SFO to obtain electronic data from overseas to aid its investigations.

This client alert was prepared by Patrick Doris, Sacha Harber-Kelly, Steve Melrose and Rose Naing.

Gibson Dunn lawyers are available to assist in addressing any questions you may have regarding these developments.  If you would like to discuss this alert in greater detail, please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any of the following members of the firm's disputes practice:

Philip Rocher (+44 (0)20 7071 4202, procher@gibsondunn.com) Patrick Doris (+44 (0)20 7071 4276, pdoris@gibsondunn.com) Sacha Harber-Kelly (+44 20 7071 4205, sharber-kelly@gibsondunn.com) Charles Falconer (+44 (0)20 7071 4270, cfalconer@gibsondunn.com) Allan Neil (+44 (0)20 7071 4296, aneil@gibsondunn.com) Steve Melrose (+44 (0)20 7071 4219, smelrose@gibsondunn.com) Sunita Patel (+44 (0)20 7071 4289, spatel2@gibsondunn.com)

© 2018 Gibson, Dunn & Crutcher LLP Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

June 22, 2018 |
Supreme Court Says That Patent Holders May Recover Lost Foreign Profits Resulting From Patent Infringement In The United States

Click for PDF WesternGeco LLC v. ION Geophysical Corp., No. 16-1011  Decided June 22, 2018 Today, the Supreme Court held 7-2 that federal law permits a patent holder to recover damages for overseas losses from a defendant that infringes its patent by shipping components of a patented invention from the United States to be assembled abroad. Background: 35 U.S.C. § 271(f)(2) imposes liability for patent infringement when a company ships components of a patented invention overseas to be assembled in a way that would constitute patent infringement in the United States.  35 U.S.C. § 284 permits patent owners who prove infringement under § 271(f)(2) to recover damages, but the statute is silent on whether damages are available for losses incurred outside of the United States as a result of the infringement.  WesternGeco, which owns patents related to ocean-floor surveying technology, proved patent infringement under § 271(f)(2) and was awarded damages pursuant to § 284 for lost profits incurred abroad. Issue: Whether awarding damages for lost foreign profits to a patent owner who proves patent infringement under 35 U.S.C. § 271(f)(2) comports with the presumption that federal statutes apply only within the territorial jurisdiction of the United States. Court’s Holding: Yes.  Awarding damages for lost foreign profits to a patent owner who proves patent infringement under § 271(f)(2) does not violate the presumption against extraterritoriality.

“[T]he focus . . . , in a case involving infringement under [35 U.S.C.] § 271(f)(2), is on the act of exporting components from the United States.”

Justice Thomas, writing for the 7-2 majority What It Means:
  • The Court’s holding means that a patent holder who proves infringement under 35 U.S.C. § 271(f)(2) can recover damages for lost foreign profits.  The Court expressly declined to decide whether a patent holder can recover lost foreign profits for infringement under other provisions of the Patent Act.
  • The Court did not reach the question of whether the damages provision of the Patent Act, 35 U.S.C. § 284, applies extraterritorially.  Instead, the Court concluded that WesternGeco’s claim for lost foreign profits involved a domestic application of § 284 because it sought a remedy for conduct that occurred in the United States—the export by domestic entities of component parts from the United States.
  • Whether the decision will have broader implications in other areas of U.S. law remains to be seen, since the language of the decision strongly suggests that its holding will be cabined to the context of patent infringement.
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Supreme Court.  Please feel free to contact the following practice leaders: Appellate and Constitutional Law Practice
Caitlin J. Halligan +1 212.351.3909 challigan@gibsondunn.com Mark A. Perry +1 202.887.3667 mperry@gibsondunn.com Nicole A. Saharsky +1 202.887.3669 nsaharsky@gibsondunn.com
  Related Practice: Intellectual Property
Wayne Barsky +1 310.552.8500 wbarsky@gibsondunn.com Josh Krevitt +1 212.351.4000 jkrevitt@gibsondunn.com Mark Reiter +1 214.698.3100 mreiter@gibsondunn.com
  © 2018 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice

April 24, 2018 |
Supreme Court Holds That Foreign Corporations Cannot Be Sued Under The Alien Tort Statute

Click for PDF Jesner v. Arab Bank, PLC, No. 16-499 Decided April 24, 2018 Today, the Supreme Court held 5-4 that a foreign corporation may not be sued under the Alien Tort Statute. Background: The Alien Tort Statute of 1789 (ATS) provides that foreign nationals may sue in federal court “for a tort only, committed in violation of the law of nations or a treaty of the United States.” 28 U.S.C. § 1350. In recent years, plaintiffs increasingly have relied on the ATS to sue multinational corporations and banks in federal courts for alleged terrorist activities and human rights violations abroad. In this case, the plaintiffs sued Arab Bank, PLC—a Jordanian financial institution with a branch in New York—alleging that the bank helped finance terrorist attacks in the Middle East. Issue: Whether foreign corporations can be sued in federal court in the United States under the ATS. Court's Holding: No. Neither the language of the ATS nor the Court’s precedents interpreting it supports extending the statute to reach suits against foreign corporations. The political branches, rather than the courts, are responsible for weighing foreign-policy concerns and deciding whether foreign corporations should face liability for acts like those at issue in this case. The Judiciary is “not well suited to make the required policy judgments that are implicated by corporate liability in cases like this one.”

“[A]bsent further action from Congress it would be inappropriate for courts to extend ATS liability to foreign corporations.”
Justice Kennedy, writing for the majority What It Means:
  • Although the decision does not resolve whether plaintiffs may sue U.S. corporations under the ATS, it does stop the recent trend of plaintiffs using the ATS to sue foreign corporations and foreign financial institutions in the United States.
  • Jesner joins a line of recent precedents refusing to create new private rights of action and reiterating that the decision to attach liability to certain conduct is best left to Congress.
  • By clearly prohibiting ATS liability against foreign corporations, the decision may strengthen the arguments of U.S. corporations seeking to dismiss an ATS suit when the underlying claim is based on the conduct of a foreign affiliate.
  • The decision may place greater pressure on Congress to legislate in this area.

Gibson Dunn's lawyers are available to assist in addressing any questions you may have regarding developments at the Supreme Court.  Please feel free to contact the following practice leaders:

Appellate and Constitutional Law Practice

Caitlin J. Halligan +1 212.351.3909 challigan@gibsondunn.com Mark A. Perry +1 202.887.3667 mperry@gibsondunn.com Nicole A. Saharsky +1 202.887.3669 nsaharsky@gibsondunn.com

Related Practice: Transnational Litigation

William E. Thomson +1 213.229.7891 wthomson@gibsondunn.com Andrea E. Neuman +1 212.351.3883 aneuman@gibsondunn.com Perlette Michèle Jura +1 213.229.7121 pjura@gibsondunn.com
  © 2018 Gibson, Dunn & Crutcher LLP Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

March 22, 2018 |
Delaware Supreme Court Holds That Forum Non Conveniens Dismissals Do Not Require An Alternative Available Forum

Click for PDF On March 22, 2018, in a 4-1 opinion, the Delaware Supreme Court held that where defendants have demonstrated that litigating in Delaware would result in an overwhelming hardship to defendants, Delaware courts may dismiss suits under the doctrine of forum non conveniens even if no alternative forum is available.[1]  Given the significant number of multinational corporations subject to suit in Delaware, and the challenges those defendants face presenting a meaningful defense where the key documents, witnesses and evidence reside overseas, this ruling will go a significant way toward enabling defendants to better protect their rights to a full and fair trial. The underlying litigation was filed in Delaware state court by Argentine citizens alleging exposure to pesticides used on Argentine tobacco farms and seeking compensatory and punitive damages against several defendants, including Monsanto Company, Philip Morris Global Brands, Inc., and Philip Morris USA Inc. (“Philip Morris USA”). Rejecting the rules governing forum non conveniens in federal court, and adopting reasoning consistent with the forum non conveniens approach in New York’s courts, the Delaware Supreme Court held that the existence of an alternative forum is not a pre-requisite to dismissal, but rather only one of many factors to be considered in making the determination whether “‘litigating in Delaware would result in an overwhelming hardship to [the defendant].’”[2] The Delaware Supreme Court explained that the doctrine of forum non conveniens has changed dramatically since it was first recognized by the U.S. Supreme Court in 1947.  Citing one study showing that federal courts granted “roughly half of motions to dismiss for forum non conveniens,” the Court wrote that “state courts now shoulder more of the transnational litigation.”[3]   But these “cases are complex and strain judicial resources,” as demonstrated by the present litigation, in which all conduct occurred in Argentina, all documents and witnesses would be located in Argentina, and the Delaware courts would need to apply Argentine law to a dispute that “has no real connection [to Delaware].”[4] International comity also informed the Court’s decision not to require an alternative forum prior to dismissal.  The Court recognized that “some countries have erected barriers preventing plaintiffs from pursuing litigation in their home country once a case has been filed in the United States” and that “plaintiffs can take steps to render the foreign jurisdiction unavailable.”[5]  The Court reasoned that rejecting the available-forum requirement “might encourage foreign jurisdictions to rethink laws and rules shifting to the U.S. courts disputes that are more closely connected to their own countries and citizens.”[6] In announcing the rule, the Delaware Supreme Court did not totally foreclose foreign plaintiffs from bringing suit against Delaware companies in Delaware courts because “[t]he degree of the Delaware corporate defendant’s connection to the alleged wrong will still be considered” in the forum non conveniens analysis.[7]  But the Court emphasized that “trial court[s] will … have the discretion to dismiss a transnational dispute when the defendant has demonstrated overwhelming hardship if the case is litigated in the Delaware courts, even if an alternative forum is not available.”[8] The Delaware Supreme Court’s decision is a significant development in transnational case law.  Given the sheer number of businesses incorporated in Delaware, Delaware state court is an obvious target for foreign plaintiffs seeking to avail themselves of American courts, which are widely viewed as plaintiff-friendly.  But this decision gives U.S. businesses sued in connection with foreign conduct another arrow in their quivers as they defend against costly transnational litigation.

Gibson Dunn represented Philip Morris USA in the Delaware litigation.  Patrick Dennis, Miguel Estrada, Perlette Jura, and Amir Tayrani led the Gibson Dunn team.


   [1]   Aranda v. Philip Morris USA, Inc., No. 525, 2016 (Del. Mar. 22, 2018).    [2]   Id. at 13-14 (quoting Mar–Land Indus. Contractors, Inc. v. Caribbean Petroleum Refining, L.P., 777 A.2d 774, 779 (Del. 2001)).    [3]   Id. at 14-15 (citing Maggie Gardner, Retiring Forum Non Conveniens, 92 N.Y.U. L. Rev. 390, 396 (2017)).    [4]   Id. at 15-16.    [5]   Id. at 16.    [6]   Id. at 17-18.    [7]   Id. at 18.    [8]   Id.
The following Gibson Dunn lawyers assisted in the preparation of this client update: Patrick Dennis, Perlette Jura, Amir Tayrani, Chris Leach, and Miguel Loza Gibson Dunn's lawyers are available to assist in addressing any questions you may have regarding these developments.  Please contact the Gibson Dunn lawyer with whom you usually work or any of the following members of the firm's Transnational Litigation Group: Randy M. Mastro - New York (+1 212-351-3825, rmastro@gibsondunn.com) Theodore J. Boutrous, Jr. - Los Angeles (+1 213-229-7000, tboutrous@gibsondunn.com) Scott A. Edelman - Los Angeles (+1 310-557-8061, sedelman@gibsondunn.com) Andrea E. Neuman - New York (+1 212-351-3883, aneuman@gibsondunn.com) William E. Thomson - Los Angeles (+1 213-229-7891, wthomson@gibsondunn.com) Perlette Michèle Jura - Los Angeles (+1 213-229-7121, pjura@gibsondunn.com) Kahn A. Scolnick - Los Angeles (+1 213-229-7656, kscolnick@gibsondunn.com) Anne M. Champion - New York (+1 212-351-5361, achampion@gibsondunn.com) Please also feel free to contact the following  members of the Environmental Litigation and Mass Tort practice group: Washington, D.C. Stacie B. Fletcher (+1 202-887-3627, sfletcher@gibsondunn.com) Avi S. Garbow - Co-Chair (+1 202-955-8558, agarbow@gibsondunn.com) Raymond B. Ludwiszewski (+1 202-955-8665, rludwiszewski@gibsondunn.com) Michael K. Murphy (+1 202-955-8238, mmurphy@gibsondunn.com) Daniel W. Nelson - Co-Chair (+1 202-887-3687, dnelson@gibsondunn.com) Peter E. Seley - Co-Chair (+1 202-887-3689, pseley@gibsondunn.com) Los Angeles Patrick W. Dennis (+1 213-229-7568, pdennis@gibsondunn.com) Matthew Hoffman (+1 213-229-7584, mhoffman@gibsondunn.com) Thomas Manakides (+1 949-451-4060, tmanakides@gibsondunn.com) New York Anne M. Champion (+1 212-351-5361, achampion@gibsondunn.com) Andrea E. Neuman (+1 212-351-3883, aneuman@gibsondunn.com) San Francisco Peter S. Modlin (+1 415-393-8392, pmodlin@gibsondunn.com) © 2018 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

March 7, 2018 |
Intra-EU Investment Treaties: Is It Time to Restructure Your Investment?

Click for PDF Yesterday, the Court of Justice of the European Union (CJEU) issued its much awaited ruling on the compatibility of intra-EU bilateral investment treaties (BITs) with EU law, in Achmea B.V. (formerly known as Eureko B.V.) v. Slovakia.[1] The CJEU determined that arbitration provisions found in BITs concluded between EU Member States are incompatible with EU law.  Adopting the policy views expressed by the European Commission in recent years, the CJEU's decision goes against the Advisory Opinion of the Attorney General Wathelet issued in September 2017[2], who had advised that there is no incompatibility with EU law.  The decision also goes against a long line of decisions from international arbitration tribunals rejecting the suggestion that EU law precludes the jurisdiction of such arbitral tribunals. The decision itself is surprisingly light in terms of its reasoning and leaves many questions unanswered.  For example, it is not clear how the CJEU ruling will impact pending disputes against EU Member States under intra-EU BITs.  It also appears to suggest that arbitration under the Energy Charter Treaty may be unaffected. However, the ruling no doubt will have consequences for the protection of foreign investments within the EU going forward.  Investors will not be able to commence arbitration proceedings under BITs between EU Member States.  Thus, in order to maximize protection from potential adverse government actions, investors from EU Member States with investments in other EU Member States should seriously consider restructuring their investments in order to ensure that they can take advantage of investment treaty protections.

Background to the Dispute

The question of compatibility of intra-EU BITs with EU law was brought before the CJEU following a request for preliminary ruling by the German Federal Court of Justice (Bundesgerichtshof) (BGH) in 2016.[3]  The BGH referred the issue to the CJEU in the context of a challenge to an arbitral award rendered under the Netherlands and Slovakia BIT of 1991 in Achmea B.V. (formerly known as Eureko B.V.) v. Slovakia in December 2012.  The Slovak Republic was seeking to set aside the UNCITRAL award before the Frankfurt courts (Frankfurt was the seat of arbitration).  The arbitral tribunal had awarded the claimant, Achmea, EUR 22.1 million plus interest and costs. The Slovakia argued inter alia that the BIT was incompatible with EU law based on certain provisions of the Treaty of the Functioning of the European Union (TFEU) and that the EU courts had exclusive jurisdiction over Achmea's claims.  The first instance court in Frankfurt initially dismissed Slovakia's application to have the award set aside.  Slovakia subsequently appealed to the BGH, following which BGH referred the questions on incompatibility to the CJEU, while enunciating its view that the BIT was in fact compatible with EU law. Although not binding on the CJEU, the EU Advocate General (AG) also weighed in the discussion with an Advisory Opinion in September 2017 in which he opined that intra-EU BITs are indeed compatible with EU law.  The AG expressly disagreed with the European Commission's position (which had intervened and filed written submissions in a number of intra-EU BIT arbitrations[4]) that intra-EU BITs are incompatible with EU law.[5]

CJEU's Decision

The BGH's opinion and the AG's Advisory Opinion, however, did not sway the CJEU.  In fact, the CJEU ruled that the arbitration clause featured in the Netherlands and Slovakia BIT of 1991 has an adverse effect on the autonomy of EU law and was therefore incompatible.  The Court opined that the BIT established a mechanism for settling disputes between an investor and a Member State by an arbitral tribunal which falls outside the judicial system of the EU and thus did not ensure the full effectiveness of EU law should the dispute in question require the interpretation or application of EU law.

Implications of the CJEU Decision

Currently, there are more than 190 BITs between EU Member States still in force and the CJEU's ruling today will therefore have ramifications for the future of investment protection within the EU.  Although it remains to be seen how future investment treaty tribunals will interpret the CJEU's ruling, they may consider that they lack jurisdiction when asked to hear disputes brought by European investors against EU Member States under intra-EU BITs in light of this ruling.  At the very least, any EU national court that is asked to assist in arbitration proceedings seated in EU Member States or hear recognition/enforcement applications for investment treaty awards under intra-EU BITs would need to consider the CJEU's ruling.  What this decision means for arbitrations taking place outside the EU or under the self-contained regime of the ICSID Convention rules, however, is unclear. From the face of the decision, it appears that the CJEU left open the question as to whether its findings would apply to the provisions of multilateral treaties, such as the Energy Charter Treaty (ECT), to which the EU itself is a Party.   In particular, the CJEU appeared to distinguish between agreements only signed between two EU Member States and those signed by the EU itself (such as the ECT).  To date, all ECT tribunals that have considered jurisdictional objections based on EU law have rejected such arguments.[6]

What Should Investors Consider Doing in Light of the Decision?

In light of today's ruling, it would be wise for EU based investors with investments in other EU Member States to consider restructuring their investments to ensure that their corporate structure includes at least one entity outside the EU in a country that has a BIT with the relevant EU Member State.  As has been consistently confirmed by investment treaty tribunals, re-structuring of investments before a dispute arises with a view to maximizing investment treaty protections is a legitimate business goal.  By undertaking such a restructuring, investors will ensure that they have additional remedies should they face adverse government actions against their investments.
   [1]   The ruling can be accessed at curia.europa.eu.    [2]   Opinion of Advocate General Wathelet, Case C-284/16, Slowakische Republik v Achmea BV, 19 September 2017, available at: <http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:62016CC0284&from=EN>.    [3]   See the press release No. 81/2016 dated 10 May 2016, in which the BGH announced that it requested a preliminary ruling from the CJEU, available at <http://juris.bundesgerichtshof.de/cgi-bin/rechtsprechung/document.py?Gericht=bgh&Art=pm&Datum=2016&Sort=3&nr=74606&pos=2&anz=83>.    [4]   For example, in Eastern Sugar v. Czech Republic, SCC Case No. 088/2004; AES v. Hungary, ICSID Case No. ARB/07/22; Electrabel S.A. v. Hungary, ICSID Case No. ARB/07/19; Charanne v. Spain, SCC Case No. V062/2012; Isolux v. Spain, SCC Case V2013/153; Blusun v. Italy, ICSID Case No. ARB/14/3; Novenergia v Spain, SCC Case No. 2015/063; in enforcement proceedings in Micula v Romania No. 15-3109-cv (2d Cir.).    [5]   In the recent years, the Commission has been increasing pressure on arbitral tribunals hearing disputes under intra-EU BITs to decline jurisdiction and also on EU Member States.  In 2015, for example, it initiated infringement proceedings against five EU Member States (Austria, the Netherlands, Romania, Slovakia and Sweden) and requested them to terminate their intra-EU BITs, see press release dated 18 June 2015 available at: <http://europa.eu/rapid/press-release_IP-15-5198_en.htm>.  In late November 2017, the European Commission's Competition Office has indicated that any compensation to be paid by EU Member States to foreign investors following successful investment treaty claims would constitute state aid requiring approval from the Commission: see report dated 10 November 2017 available at: <http://ec.europa.eu/competition/state_aid/cases/258770/258770_1945237_333_2.pdf>.    [6]   See for example Charanne B.V. and Construction Investments S.A.R.L. v. Spain, SCC No. 062/2012; RREEF v. Spain, ICSID Case No. ARB/13/30; Eiser Infrastructure v. Spain, ICSID Case No. ARB/13/36; Blusun v. Italy, ICSID Case No. ARB/14/3; Electrabel S.A. v. Hungary, ICSID Case No. ARB/07/19.
Gibson, Dunn & Crutcher's lawyers are available to assist in addressing any questions you may have regarding these issues. Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm's International Arbitration practice group, or the following: Cyrus Benson - London (+44 (0) 20 7071 4239, cbenson@gibsondunn.com) Penny Madden - London (+44 (0) 20 7071 4226, pmadden@gibsondunn.com) Jeffrey Sullivan - London (+44 (0) 20 7071 4231, jeffrey.sullivan@gibsondunn.com) Rahim Moloo - New York (+1 212-351-2413, rmoloo@gibsondunn.com) Ceyda Knoebel - London (+44 (0)20 7071 4243, cknoebel@gibsondunn.com) © 2018 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

October 3, 2017 |
The DIFC Court’s First Ever Judgment on State Immunity Is a Welcome Sign for Investors

The DIFC Court recently issued its first ever decision on sovereign immunity.  Neither the UAE nor the DIFC has any legislation expressly conferring sovereign immunity upon foreign states. In a decision welcomed by the investment community, Justice Sir Jeremy Cooke dismissed arguments by the Kurdistan Regional Government of Iraq (the KRG) that it was entitled to state immunity. The KRG had sought to avoid the recognition and enforcement in the DIFC of arbitral awards exceeding US$ 2 billion rendered against it in favour of Pearl Petroleum (a consortium majority owned by UAE's Crescent Petroleum and Dana Gas). The action was part of a global enforcement campaign against the KRG, led by Gibson Dunn's London, New York, Dubai and Frankfurt offices, to recover more than US$ 2 billion that remained unpaid under the awards. Justice Cooke found that the KRG had comprehensively waived any available defence of immunity by contractually agreeing to: "waive[] on its own behalf and that of the KRG any claim to immunity for itself and its assets".  The Judge also found that the KRG was estopped from arguing otherwise.  This would render it far more difficult for the KRG to press similar immunity defences in other jurisdictions. The judgment underlines the importance of incorporating a sufficiently robust waiver of immunity—both from suit and from execution—when contracting with States or their related entities.  The judgment also reflects the DIFC Court's continued pro-arbitration stance. The KRG has since settled its liabilities under the awards.  The settlement emphasizes the importance of a coordinated and robust global enforcement strategy. The Proceedings Before the DIFC Court The DIFC Court had granted an ex parte order recognising two awards issued in favour of Pearl in ongoing LCIA arbitration proceedings. The awards were issued in London by a Tribunal comprising Lord Hoffmann (as President), Lord Collins of Mapesbury and Mr John Beechey. The KRG applied to set aside the ex parte order.  The KRG claimed that, as a self-governing region of a State, it was entitled to invoke sovereign immunity from the Court's jurisdiction and from enforcement against its assets.  The underlying contract granted Pearl exclusive rights to develop and produce petroleum within two fields in the Kurdistan Region of Iraq.  The KRG claimed that the contract related to acts undertaken in the exercise of sovereign authority. Pearl responded that there is no concept of foreign state immunity within the UAE or the DIFC—that being the received view of the legal community.  To the extent that such immunity existed, Pearl argued that the KRG was not entitled to invoke it since the KRG is not, in itself, a "State" and nor was it exercising Iraq's sovereign authority.  In the alternative, Pearl argued that the KRG had contractually waived any defence of sovereign immunity. The KRG also argued that the DIFC Court had no jurisdiction to determine the existence, extent or waiver of sovereign immunity and that such matters must be determined by the UAE's Union Supreme Court—a process that could take many months. The Court's Decision Justice Sir Jeremy Cooke held that it was plainly within the Court's jurisdiction to decide issues of immunity—both as to the existence and scope of the doctrine in the UAE and DIFC and as to waiver.  Accordingly, the KRG's plea for the question to be referred to the UAE Union Supreme Court was rejected. Justice Cooke accepted Pearl's waiver arguments (as the English Court had in earlier, related proceedings), having come to the "clear conclusion that the KRG has waived any right to such immunity".  He therefore held that it was unnecessary to decide on the existence or ambit of any doctrine of state immunity in the DIFC or the UAE, or whether the KRG acted in exercise of sovereign authority. Justice Cooke commented that "the whole purpose of the waiver provisions was to avoid any such arguments and in my judgment, the provisions relied on by the Claimants succeed in doing so". Significantly, Justice Cooke held that it was "inherent" in the KRG's submission to the underlying arbitration agreement that it submitted itself to any process necessary to render the arbitration effective.  The result is that, in the DIFC (as in many other jurisdictions), an agreement to arbitrate constitutes a waiver of immunity against suit.  As a matter of contractual construction, the KRG had also waived immunity from execution over its assets. Justice Cooke dismissed the KRG's arguments that sovereign immunity could not be waived via a prior written agreement.  He found this to be out of step with current international thinking, having examined the position taken by the UN Convention on Jurisdictional Immunities of States and their Property (to which neither the UAE nor Iraq are party). The Message for Parties and Practitioners The thrust of the Court's judgment is that, where a clear and unequivocal waiver from suit and enforcement is given in a contract, there is no good reason why effect should not be given to the words used.  The judgment underlines the importance of incorporating a comprehensive waiver of immunity—both from suit and from execution—when contracting with States or their subsidiary entities.  This is so even when contracting in the UAE or the DIFC, where no doctrine of state immunity is understood to exist The judgment also reflects the DIFC Court's continued pro-arbitration stance.  Investors can take comfort that the DIFC Court will take a modern and pragmatic approach to the issue of sovereign immunity, as it has to other issues arising in the enforcement process. The judgment also underscores the challenges presented in seeking to enforce significant arbitral awards, particularly against sovereigns and their related entities whose assets are difficult to locate or reach.  Successful enforcement will require creative thinking, multi-jurisdictional expertise and a robust and coordinated global strategy—ideally one developed and pursued in parallel with the underlying arbitration. Representation in the DIFC Court proceedings For Pearl Petroleum, Crescent Petroleum and Dana Gas: Tom Montagu-Smith QC at XXIV Old Buildings in London instructed by Gibson Dunn & Crutcher (Cyrus Benson, Nooree Moola and Emily Beirne). For the KRG: Michael Black QC and Arshad Ghaffar at XXIV Old Buildings instructed by Addleshaw Goddard (Paul Hughes and Charlotte Bhania).


Gibson Dunn has considerable experience in achieving successful outcomes in high-value, multi-jurisdictional enforcement campaigns.  To discuss our expertise further, please contact: Cyrus Benson - London (+44 (0) 20 7071 4239, cbenson@gibsondunn.com) Robert Weigel - New York (+1 212 351 3845, rweigel@gibsondunn.com) Penny Madden - London (+44 (0) 20 7071 4226, pmadden@gibsondunn.com) Jeffrey Sullivan - London (+44 (0) 20 7071 4231, jeffrey.sullivan@gibsondunn.com) Doug Watson - London (+44 (0 ) 20 7071 4217, dwatson@gibsondunn.com)

For further information regarding the above update, please contact the Gibson Dunn lawyer with whom you usually work, or the authors:

Cyrus Benson - London (+44 (0) 20 7071 4239, cbenson@gibsondunn.com) Nooree Moola - Dubai (+971 (0) 4 318 4643, nmoola@gibsondunn.com) Emily Beirne - Dubai (+971 (0) 4 318 4626, ebeirne@gibsondunn.com)

© 2017 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

September 5, 2017 |
Trump Administration Rescinds Deferred Action for Childhood Arrivals (DACA) Program

On September 5, 2017, the Trump Administration announced the termination of the Deferred Action for Childhood Arrivals program ("DACA").  Attorney General Jeff Sessions announced the Administration's decision in remarks delivered on Tuesday morning.[1]  Acting Secretary of Homeland Security Elaine Duke subsequently issued a memorandum formally rescinding the program,[2] after which the White House issued a separate statement explaining President Trump's decision.[3]

Under DACA, certain individuals brought to the United States as children who met specific criteria could apply for a two-year, renewable period of deferred action from immigration enforcement.  Those granted deferred action were considered by the Department of Homeland Security ("DHS") to be "lawfully present" in the United States, and eligible for work authorization.  Since 2012, nearly 800,000 young people have been granted DACA status, with the majority of these individuals located in California, Texas, Illinois, New York, and Florida.[4]

This alert addresses the implications of the implementation of the rescission memorandum by DHS.  Most notably for our clients, DHS will continue to accept renewal applications from individuals who have DACA status that will expire between now and March 5, 2018, so long as the renewal applications are filed and accepted by October 5, 2017.

I.  Background

On June 15, 2012, then-Secretary of Homeland Security Janet Napolitano issued a memorandum establishing the DACA program.[5]  Individuals qualified for DACA if they: (1) came to the United States under the age of sixteen; (2) had five years of continuous residence in the United States; (3) met certain education or military service requirements; (4) had not been convicted of a felony or certain other crimes, and weren't otherwise a threat to national security; and (5) were not above the age of 30.[6]

On November 20, 2014, DHS issued a new memorandum expanding the eligibility for DACA and also creating a new program called Deferred Action for Parents of Americans and Lawful Permanent Residents ("DAPA").[7]  However, shortly thereafter, a group of 26 states successfully challenged DAPA in federal court, obtaining a nationwide injunction against its implementation that was affirmed by the Fifth Circuit on the basis that the DAPA program was not authorized by the Immigration and Nationality Act and was therefore unlawful executive action.[8]  The Fifth Circuit's decision was subsequently affirmed by an equally divided Supreme Court.

On June 29, 2017, officials from ten of the states that had challenged the DAPA program sent a letter to Attorney General Sessions, asserting that the DACA program was unconstitutional for the same reasons that the court found the DAPA program to be unconstitutional.  The states wrote that they would amend their DAPA lawsuit to include a challenge to DACA unless the federal government rescinded the DACA program by September 5, 2017.[9]

On July 21, 2017, attorneys general from twenty other states sent a letter to the President urging him to maintain DACA and defend the program in court.[10]  On August 31, 2017, hundreds of America's leading business executives sent a letter to President Trump urging him to preserve the DACA program.[11]

On September 4, 2017, Attorney General Sessions wrote to Acting Secretary of Homeland Security Duke, describing his assessment that "DACA was effectuated by the previous administration through executive action, without proper statutory authority;" that DACA "was an unconstitutional exercise of authority by the Executive Branch;" and that "it is likely that potentially imminent litigation would yield similar results [as the DAPA litigation] with respect to DACA."[12]

On September 5, 2017, Attorney General Sessions announced the Administration's decision to end DACA, and Acting Secretary of Homeland Security Duke issued the memorandum formally rescinding the DACA program.

II.  Effect of Today's Rescission Memorandum

The DHS memorandum does not immediately terminate the lawful presence or work authorizations of current DACA recipients, nor does it immediately terminate the DACA program itself.  Rather, DHS has chosen to wind down the program over the coming years.  The details of this phase-out are as follows:

  • DHS will continue to process and approve initial DACA applications that it received as of September 5, 2017, although it will not accept any new applications.
  • DHS will continue to process and approve DACA renewal applications from current beneficiaries, including: (a) applications that DHS received as of September 5, 2017; and (b) applications that DHS receives between now and October 5, 2017, for individuals whose benefits will expire between now and March 5, 2018.
  • DHS will not terminate any individual's DACA status or work authorization solely on the basis of the rescission memorandum.  Rather, these benefits will be allowed to continue until their previously-established expiration dates, subject to the limited renewal period discussed above.
  • DHS will "generally honor" the validity period for previously-granted foreign-travel requests submitted by DACA beneficiaries, called applications for "advance parole."  However, DHS will not approve any currently-pending requests for advance parole relying on DACA; these requests will be administratively closed, and DHS will refund the associated fees.
  • DHS will reject all initial and renewal DACA applications and requests for advance parole, with the exceptions of those already outlined above that fall within the prescribed time periods.
  • DHS will not "proactively" provide the information submitted in DACA requests to other law enforcement entities for the purpose of immigration enforcement proceedings, except in limited circumstances, such as those involving risks to national security or public safety.[13]
  • DHS will continue to terminate or deny deferred action under DACA on an individual basis when immigration officials consider it appropriate to do so.[14]

Although the extended nature of the rescission will delay the effect of terminating DACA somewhat, the end of the program is nonetheless expected to be disruptive to American businesses.  Researchers have estimated that terminating DACA would cause 30,000 people per month to lose their jobs, and will impose costs of approximately $3.4 billion on employers nationwide.[15]

III.  Related Developments

In a statement issued on September 5, 2017, President Trump called on Congress to pass comprehensive immigration reform, including a program similar to DACA.  President Trump wrote, "Congress now has the opportunity to advance responsible immigration reform that puts American jobs and American security first. . . . I look forward to working with Republicans and Democrats in Congress to finally address all of these issues in a manner that puts the hardworking citizens of our country first. . . . It is now time for Congress to act!"[16]

At least one court challenge has already been initiated in reaction to today's rescission memorandum.  The National Immigration Law Center, joined by the Jerome N. Frank Legal Services Organization at Yale Law School and Make The Road – New York, are requesting leave to amend a complaint in the Eastern District of New York, to allege that the rescission of DACA violates the Administrative Procedure Act and the constitutional rights of DACA beneficiaries.[17]  And at least three Democratic state attorneys general have threatened to challenge the Administration's decision in court.[18]

Additionally, following the Administration's announcement, the states that successfully challenged the DAPA program voluntarily dismissed their lawsuit.[19]

IV.  Guidance For Clients

Employers may consider actions to address the developments described above, and minimize the effect on employees.  In particular, employers may want to consider:

  • Identifying employees who are DACA recipients, in order to aid those employees with renewing their status if appropriate;
  • Broadly distributing an informational email to employees regarding these developments and the limited opportunity for renewal (keeping in mind that some employees may not want to self-identify as DACA recipients); and
  • Reviewing the potential impact on travel and work authorization of employees, being careful to comply with I-9 and non-discrimination requirements.

Finally, employers may consider the impact that these developments are likely to cause for DACA beneficiaries and their families.  Employers may consider providing counseling or other support for employees affected by this change in policy.

* * *

Gibson Dunn will continue to closely monitor these rapidly developing issues.


   [1]   See Attorney General Sessions Delivers Remarks on DACA (Sept. 5, 2017), https://www.justice.gov/opa/speech/attorney-general-sessions-delivers-remarks-daca.

   [2]   See Memorandum from Acting Secretary Elaine C. Duke, Rescission of the June 15, 2012 Memorandum Entitled "Exercising Prosecutorial Discretion with Respect to Individuals Who Came to the United States as Children" (Sept. 5, 2017), https://www.dhs.gov/news/2017/09/05/memorandum-rescission-daca (hereinafter "Rescission Memorandum").

   [3]   See Statement from President Donald J. Trump (Sept. 5, 2017), https://www.whitehouse.gov/the-press-office/2017/09/05/statement-president-donald-j-trump.

   [4]   See United States Citizenship and Immigration Services, Number of Form 1-821D, Consideration of Deferred Action for Childhood Arrivals, by Fiscal Year, Quarter, Intake, Biometrics and Case Status Fiscal Year 2012-2017 (June 8, 2017).

   [5]   Memorandum from Secretary Janet Napolitano, Exercising Prosecutorial Discretion with Respect to Individuals Who Came to the United States as Children (June 15, 2012), https://www.dhs.gov/xlibrary/assets/s1-exercising-prosecutorial-discretion-individuals-who-came-to-us-as-children.pdf.

   [6]   Id.

   [7]   Memorandum from Secretary Jeh Charles Johnson, Exercising Prosecutorial Discretion with Respect to Individuals Who Came to the United States as Children and with Respect to Certain Individuals Who Are the Parents of U.S. Citizens or Permanent Residents (Nov. 20, 2014), https://www.dhs.gov/sites/default/files/publications/14_1120_memo_deferred_action.pdf.

   [8]   Texas v. United States, 86 F. Supp. 3d 591 (S.D. Tex. 2015); see also Texas v. United States, 809 F.3d 134 (5th Cir. 2015), aff’d by an equally divided Court, 136 S. Ct. 2271 (2016).

[9]   Letter from Texas Attorney General Ken Paxton, et al., to U.S. Attorney General Jeff Sessions (June 29, 2017),  https://www.texasattorneygeneral.gov/files/epress/DACA_letter_6_29_2017.pdf.

[10]   Letter from California Attorney General Xavier Becerra, et al., to President Donald J. Trump (July 21, 2017), https://oag.ca.gov/system/files/attachments/press_releases/7-21-17%20%20Letter%20from%20State%20AGs%20to%20President%20Trump%20re%20DACA.final_.pdf.

[11]   Letter to Donald J. Trump, Paul Ryan, Nancy Pelosi, Mitch McConnell, and Charles Schumer (Aug. 31, 2017), https://dreamers.fwd.us/business-leaders.

[12]   See Mahita Gajanan, Read Jeff Sessions' Letter Calling for the End of DACA, TIME (Sept. 5, 2017), http://time.com/4927250/jeff-sessions-daca-rescind-letter; see also Rescission Memorandum, supra note 2.

[13]   Department of Homeland Security, Frequently Asked Questions: Rescission Of Deferred Action For Childhood Arrivals (DACA) (Sept. 5, 2017), https://www.dhs.gov/news/2017/09/05/frequently-asked-questions-rescission-deferred-action-childhood-arrivals-daca.

[14]   See Rescission Memorandum, supra note 2.

[15]   See Immigration Legal Resource Center, Money on the Table: The Economic Cost of Ending DACA, at 4 (Dec. 2016), https://www.ilrc.org/sites/default/files/resources/2016-12-13_ilrc_report_-_money_on_the_table_economic_costs_of_ending_daca.pdf.

[16]   Statement from President Donald J. Trump, supra note 3.

[17]   See Batalla Vidal, et al. v. Baran, et al., No. 1:16-cv-04756-NGG-JO, Dkt. #46 (E.D.N.Y. Sept. 5, 2017).

[18]   Reid Wilson, Dems Threaten to Sue Trump Over DACA, The Hill (Sept. 5, 2017), http://thehill.com/homenews/state-watch/349302-dems-threaten-to-sue-trump-over-daca.

[19]   Texas v. United States, No. 1:14-cv-00254, Dkt. #469 (S.D. Tex. Sept. 5, 2017).


Gibson Dunn's lawyers are available to assist in addressing any questions you may have regarding these developments.  Please contact the Gibson Dunn lawyer with whom you usually work or the following:

Theodore J. Boutrous, Jr. - Los Angeles (+1 213-229-7000, tboutrous@gibsondunn.com)
Ethan Dettmer - San Francisco (+1 415-393-8292, edettmer@gibsondunn.com)
Stuart F. Delery - Washington, D.C. (+1 202-887-3650, sdelery@gibsondunn.com)


© 2017 Gibson, Dunn & Crutcher LLP

Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

June 29, 2017 |
Update on Immigration Executive Order

Gibson Dunn previously issued several client alerts regarding President Trump's January 27, 2017 and March 6, 2017 Executive Orders restricting entry into the United States for individuals from certain nations and making other immigration-related policy changes.[1] This alert addresses implementation of the Supreme Court's June 26, 2017 ruling allowing the travel ban to go partially into effect.  The executive branch has indicated it will begin enforcing the order as of 8 pm ET, June 29, 2017.  The most current information indicates this will primarily impact those applying for visas, not those travelling on existing visas. Experience suggests that individuals attempting to board U.S.-bound aircraft, or arriving in the United States, may nonetheless encounter some difficulties.

I.    Background

On January 27, 2017, President Trump issued the first Executive Order restricting entry into the country for individuals from seven specified nations, as well as related changes to visa and refugee programs.  Multiple courts enjoined implementation of most major aspects of that order, including the entry ban. On March 6, 2017, the President issued a new Executive Order, rescinding in full the January Order, but providing for a ban on entry of individuals from six specified nations, and suspension of the refugee program, among other changes.  The revised order was narrower in certain respects, notably in removing Iraq from the list of impacted countries, and more clearly defining certain exceptions to the Order, such as the exception of dual citizens from the ban. Courts again blocked implementation of the major provisions, this time before it went into effect.  Ultimately both the Fourth Circuit (sitting en banc) and the Ninth Circuit upheld injunctions issued by the District of Maryland and the District of Hawaii, respectively.[2] The government asked the Supreme Court to reverse the lower courts' order blocking implementation, as well as to grant certiorari to hear the merits of the case.

II.    Supreme Court Action

On June 26, 2017, the Supreme Court issued an order allowing certain aspects of the the March Executive Order to be implemented.[3]  Separately, the Court granted certiorari and added the case to its calendar for the term beginning in October.[4] The Court's order stayed implementation of the lower court injunctions in part, allowing the government to enforce the ban "with respect to foreign nationals who lack any bona fide relationship with a person or entity in the United States," but continued to block enforcement against individuals who do have such ties. The Court provided some guidance on what it means to have a "bona fide relationship with a person or entity in the United States":
For individuals, a close familial relationship is required. A foreign national who wishes to enter the United States to live with or visit a family member, like Doe's wife or Dr. Elshikh's mother-in-law, clearly has such a relationship. As for entities, the relationship must be formal, documented, and formed in the ordinary course, rather than for the purpose of evading [the Executive Order.] The students from the designated countries who have been admitted to the University of Hawaii have such a relationship with an American entity. So too would a worker who accepted an offer of employment from an American company or a lecturer invited to address an American audience.  Not so someone who enters into a relationship simply to avoid § 2(c): For example, a nonprofit group devoted to immigration issues may not contact foreign nationals from the designated countries, add them to client lists, and then secure their entry by claiming injury from their exclusion.[5]

III.    Practical Implications

It appears that the most immediate impact will be in connection with the issuance of new visas, rather than the use of a visa that was issued prior to 8 pm ET on June 29, 2017.  Certain categories of individuals are exempt from the ban based either on the terms of the March Executive Order itself or the State Department guidance implementing the Supreme Court's decision.  Those are outlined below. Notwithstanding the clear language of the Executive Order, it is difficult to predict whether those travelling on existing visas will run into difficulties in trying to board U.S.-bound flights or upon attempting to enter upon arrival.

A.    Who Is Covered By The Ban And Who Is Not?

As a reminder, the March Executive Order barred entry to the United States by nationals of Iran, Libya, Somalia, Sudan, Syria, and Yemen.  (Iraq was not included in the second Executive Order.)  On its face, the March Executive Order already excluded from the ban:
  • Nationals from those countries who are travelling on a passport from a country not included on the list;
  • U.S. Legal Permanent Residents, regardless of nationality;
  • Those travelling on already issued and currently valid visas; and
  • Those travelling on certain diplomatic and related visas.[6]
Now the Court has created another exception for those with a "bona fide relationship with a person or entity in the United States."  The primary question at this point is what qualifies as, and what is needed to prove, such a relationship. The State Department issued a cable on June 28, providing guidance about handling visa applications, and has also posted a similar FAQ.[7]  This cable gives some indications of how the government will interpret the March Executive Order, as narrowed by the recent Supreme Court order. The following additional categories of people are now exempt from the ban:
  • Anyone who qualifies for a non-immigrant visa in a "classification other than B, C-1, D, I or K" because that eligibility inherently establishes the required relationship. "Derivative" applicants are also exempt (i.e., certain immediate family members of the main applicant).
  • Individuals who have been granted asylum, refugees already admitted to the United States, and individuals already granted withholding of removal, advance parole, or protection under the Convention Against Torture.
Otherwise, eligibility has to be established according to the following criteria:
  • For family-based eligibility, the only relationships that qualify are "close family," which the State Department is defining as parents, parents-in-law, spouses, children (including adults), sons- and daughters-in law, and siblings (including half-siblings).  No other relationships qualify.
    • UPDATE (6/30/17): As the ban was going into effect, the Departments of State and Homeland Security added fiancés to the list of qualifying categories.
  • For entity-based eligibility, the standards are less clear, and largely parrot those in the Supreme Court's order.  The following are specifically exempt from the Executive Order:
  • Media ("I") visa applicants employed by an organization with a U.S. news office;
  • Students admitted to a U.S. educational institution;
  • Workers who have "accepted an offer of employment from a company in the United States;" and
  • "Lecturer[s] invited to address an audience in the United States."
  • The State Department specifically noted that "a hotel reservation, whether or not paid, would not constitute a bona fide relationship with an entity in the United States."
In the event an applicant is not exempt, he or she may still be eligible for a waiver.  The State Department indicated that travelers in the following categories may be eligible for a waiver:
  • Individuals who "previously established significant contacts with the United States but [are] outside the United States on the effective date of the" Order;
  • Travel for "significant business or professional obligations," which would be "impair[ed]" by the denial of entry;
  • Small children, adoptees, and those needing medical care; and
  • Those travelling for certain international organizations.

B.    Practical Tips

Without further clear guidance about how travelers (as opposed to visa applicants) will be treated under this system, those who may be affected and are travelling in the near future should collect and carry clear documentation of the purpose of the trip if that documentation might help to show a "bona fide relationship" with people or entities in the United States.  For example, for work-related travel, employment offer letters, conference agendas listening the traveler as a speaker, invitations to a business meeting, and the like may be helpful in the event of questions from immigration officials.  However, the Court made clear that the supporting documentation must show "ordinary course" relationships, and not relationships that appear to have been created for the purposes of fitting within the narrowed scope of the injunction. As suggested in Gibson Dunn's earlier alerts on these topics, companies will want to consider effective planning and communication with employees and partners who may be affected by implementation of the Executive Order.

*      *      *

Gibson Dunn will continue to monitor these rapidly developing issues closely.
   [1]    See, Court Orders Block Implementation of New Immigration Executive Order (March 16, 2017), https://www.gibsondunn.com/court-orders-block-implementation-of-new-immigration-executive-order/; Analysis of March 6, 2017 Executive Order on Immigration (Mar. 7, 2017), https://www.gibsondunn.com/analysis-of-march-6-2017-executive-order-on-immigration/;  Ninth Circuit Court of Appeals Issues Opinion Upholding Nationwide TRO of January 27 Immigration-Related Executive Order (Feb. 10, 2017), https://www.gibsondunn.com/ninth-circuit-court-of-appeals-issues-opinion-upholding-nationwide-tro-of-january-27-immigration-related-executive-order/; Recent Developments Regarding Executive Order on Immigration (Feb. 1, 2017), https://www.gibsondunn.com/recent-developments-regarding-executive-order-on-immigration/; President Trump Issues Executive Order on Immigration (Jan. 30, 2017), https://www.gibsondunn.com/president-trump-issues-executive-order-on-immigration/     [2]   See Hawaii v. Trump, 2017 WL 2529640 (9th Cir. June 12, 2017) https://cdn.ca9.uscourts.gov/datastore/opinions/2017/06/12/17-15589.pdf; Int'l Refugee Assistance Project v. Trump, 857 F.3d 554 (4th Cir. 2017).    [3]   https://www.supremecourt.gov/opinions/16pdf/16-1436_l6hc.pdf.    [4]   Slip op at 12, https://www.supremecourt.gov/orders/courtorders/062717zr_6537.pdf.    [5]   https://www.supremecourt.gov/opinions/16pdf/16-1436_l6hc.pdf.    [6]   See Analysis of March 6, 2017 Executive Order on Immigration (Mar. 7, 2017), https://www.gibsondunn.com/publications/Pages/Analysis-of-March-6-2017-Executive-Order-on-Immigration.aspx.    [7]   See Dep't of State, Implementing Executive Order 13780 Following Supreme Court Ruling – Guidance to Visa-Adjudicating Posts (June 28, 2017), http://live.reuters.com/Event/Live_US_Politics/989297085; Dep't of State, Executive Order on Visas (June 29, 2017), https://travel.state.gov/content/travel/en/news/important-announcement.html.

Gibson Dunn's lawyers are available to assist in addressing any questions you may have regarding these developments.  Please contact the Gibson Dunn lawyer with whom you usually work or any of the following:

Theodore J. Boutrous, Jr. - Los Angeles (+1 213-229-7000, tboutrous@gibsondunn.com) Rachel S. Brass - San Francisco (+1 415-393-8293, rbrass@gibsondunn.com) Anne M. Champion - New York (+1 212-351-5361, achampion@gibsondunn.com) Ethan Dettmer - San Francisco (+1 415-393-8292, edettmer@gibsondunn.com) Theane Evangelis - Los Angeles (+1 213-229-7726, tevangelis@gibsondunn.com) Kirsten Galler - Los Angeles (+1 213-229-7681, kgaller@gibsondunn.com) Ronald Kirk - Dallas (+1 214-698-3295, rkirk@gibsondunn.com) Joshua S. Lipshutz - Washington D.C. (+1 202-955-8217, jlipshutz@gibsondunn.com) Katie Marquart, Pro Bono Counsel & Director - New York (+1 212-351-5261, kmarquart@gibsondunn.com) Samuel A. Newman - Los Angeles (+1 213-229-7644, snewman@gibsondunn.com) Jason C. Schwartz - Washington D.C. (+1 202-955-8242, jschwartz@gibsondunn.com) Kahn A. Scolnick - Los Angeles (+1 213-229-7656, kscolnick@gibsondunn.com) © 2017 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

June 19, 2017 |
United States Supreme Court Limits Power of State Courts to Exercise Specific Personal Jurisdiction over Defendants

On June 19, 2017, the Supreme Court of the United States further clarified the scope of state courts' power to exercise personal jurisdiction over defendants, holding that state courts do not have specific personal jurisdiction unless there is "an 'affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place in the forum State.'" Bristol-Myers Squibb Co. v. Superior Court of Cal., S.F. Cty., No. 16-466, Slip op. 7 (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)).  Without a connection between the defendant's activity in the forum state and the specific claims in the litigation, a state court lacks specific personal jurisdiction even if the defendant has expansive activities in the state that are unrelated to the litigation. Bristol-Myers involved claims brought in California state court against Bristol-Myers Squibb, a pharmaceutical company incorporated in Delaware and headquartered in New York.  Slip op. 1.  The plaintiffs were 86 California residents and 592 non-California residents from 33 other states.  Id. at 2.  All of the plaintiffs alleged that they were injured by a prescription drug called Plavix, which was manufactured and sold nationwide by Bristol-Myers.  Id.  Bristol-Myers moved to quash the service of summons in part, arguing that the California court lacked personal jurisdiction over Bristol-Myers on the non-California residents' claims.  Id.  Bristol-Myers argued that those claims had no meaningful connection to California because the non-residents had purchased, used, and allegedly been injured by Plavix outside of California and because Bristol-Myers developed, marketed, and packaged Plavix in New York, not California.  Id. The California Supreme Court concluded that the California courts could exercise specific personal jurisdiction over Bristol-Myers on the out-of-state residents' claims.  Slip op. 3.  The court applied a "sliding scale approach to specific jurisdiction" under which "the more wide ranging the defendant's forum contacts, the more readily is shown a connection between the forum contacts and the claim."  Id. at 3 (internal citations omitted).  According to the California Supreme Court, "the strength of the requisite connection between the forum and the specific claims at issue is relaxed if the defendant has extensive forum contacts that are unrelated to those claims."  Id. at 7.  The court concluded that the required connection existed here because Bristol-Myers' California activities unrelated to Plavix were wide-ranging:  It had research facilities, laboratories, employees, sales representatives, and a government advocacy office located there.  Id. at 1−2. The Supreme Court of the United States firmly rejected the "sliding-scale approach," which it called "loose and spurious" with "no support" in the Supreme Court's cases.  Slip op. 7.  Instead, the Supreme Court held, "for a court to exercise specific jurisdiction over a claim, there must be an "an 'affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place in the forum State.'"  Id. (quoting Goodyear, 564 U.S. at 919).  And in terms of whether a sufficient connection exists between the defendant's activity in the forum state and the plaintiffs' claims, Bristol-Myers' California activities unrelated to the litigation were not "sufficient—or even relevant."  Id. at 8.  The fact that other plaintiffs from California with similar claims were permitted to sue in California "does not allow the State to assert specific jurisdiction over the nonresidents' claims" because "[w]hat is needed … is a connection between the forum and the specific claims at issue."  Id.  Nor was the fact that Bristol-Myers "contracted with a California distributor … enough to establish personal jurisdiction in the State," because the plaintiffs did not allege that Bristol-Myers "engaged in relevant acts together with [the distributor] in California" or that Bristol-Myers "is derivatively liable for [the distributor's] conduct in California."  Id. at 11−12. At bottom, because the non-resident plaintiffs "d[id] not claim to have suffered harm in [California]," and "all of the conduct giving rise to the nonresidents' claim occurred elsewhere," California courts "[could not] claim specific jurisdiction."  Slip op. 9.

Practical Implications

Bristol-Myers limits the forums that can exercise specific, or case-linked, jurisdiction over a defendant to only those places with a connection between the defendant's actions and the plaintiff's particular claims.  Slip op. 8.  If specific jurisdiction is missing, then the plaintiff must rely on the other category of personal jurisdiction that is recognized by the Supreme Court's cases: general, all-purpose jurisdiction.  Id. at 5.  The scope of general jurisdiction is also limited; as the Supreme Court recently reiterated in BNSF Railway Co. v. Tyrrell, 137 S. Ct. 1549 (2017) (handled by Gibson Dunn), general jurisdiction is limited to the places where the defendant is "at home."  For a corporation, "home" is limited in all but an "exceptional case" to the defendant's place of incorporation and principal place of business; a defendant is not at home in other states even if it has very substantial business operations there.  See id. at 1559. Taken together, the Supreme Court's opinions in BNSF and Bristol-Myers suggest that personal jurisdiction is available in very few forums: in the defendant's place of incorporation; in the defendant's principal place of business; or where the defendant engaged in the conduct that gave rise to the plaintiff's claims.
Gibson Dunn's lawyers are available to assist in addressing any questions you may have regarding these developments.  Please contact the Gibson Dunn lawyer with whom you usually work, or the authors of this alert: Blaine H. Evanson - Orange County (+1 949-451-3805, bevanson@gibsondunn.com) Michael R. Huston - Washington, D.C. (+1 202-887-3793, mhuston@gibsondunn.com) Christian S. Briggs - Orange County (+1 949-451-3836, cbriggs@gibsondunn.com) Please also feel free to contact the following leaders of the firm's Appellate and Constitutional Law or Transnational Litigation practice groups: Appellate and Constitutional Law Group: Mark A. Perry - Washington, D.C. (+1 202-887-3667, mperry@gibsondunn.com) James C. Ho - Dallas (+1 214-698-3264, jho@gibsondunn.com) Caitlin J. Halligan - New York (+1 212-351-4000, challigan@gibsondunn.com) Transnational Litigation Group: Andrea E. Neuman - New York (+1 212-351-3883, aneuman@gibsondunn.com) William E. Thomson - Los Angeles (+1 213-229-7891, wthomson@gibsondunn.com) Perlette Michèle Jura - Los Angeles (+1 213-229-7121, pjura@gibsondunn.com) © 2017 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

May 16, 2017 |
Webcast: Are We Speaking the Same Language? Privilege Issues in Cross-Border Litigation, Investigations and International Arbitration

​For multinational companies, navigating the attorney-client privilege and work product protections in the cross-border context can be tricky. This webcast will attempt to bring clarity to how courts and arbitral tribunals address issues of attorney-client privilege and work product in the transnational context. Topics will include:

  • Determining and Proving the Applicable Law
  • Illustrative Cases
  • Best Practices
Please join us for an informative presentation. View Slides
[embed]https://player.vimeo.com/video/217862521[/embed]
PANELISTS:  William E. Thomson is a litigation partner in the Los Angeles office of Gibson, Dunn & Crutcher, Co-Chair of Gibson Dunn's Transnational Litigation Practice Group and a member of its Appellate and Constitutional Law and Securities Litigation Practice Groups. Mr. Thomson's practice focuses on federal and state appellate and Supreme Court litigation, and on strategic analysis and briefing in high-stakes cases in trial courts around the country. His representations include high-profile transnational cases emanating from Latin America, Asia, and Africa. He focuses on civil RICO litigation and has broad experience in foreign judgment recognition actions, product liability, mass tort, and securities and consumer class actions. Anne Champion is a litigation partner in the New York office of Gibson, Dunn & Crutcher and a member of Gibson Dunn's Transnational Litigation, Environmental Litigation, Class Actions, and Intellectual Property Practice Groups. She earned her Juris Doctor, summa cum laude, from George Washington University School of Law, where she served as an articles editor for The George Washington Law Review, and received the Willard Waddington-Gatchell prize for academic excellence and the John F. Evans prize for outstanding achievement in the clinical law program, D.C. Law Students in Court. She was part of the trial team in Chevron Corporation's successful racketeering suit in connection with a $9 billion Ecuadorian judgment procured by fraud. She also represented Dole Food Company, Inc. in its successful defense of a wrongful death case brought by dozens of Colombian plaintiffs who alleged Dole had provided support for the Colombian paramilitary organization, the AUC, which plaintiffs voluntarily dismissed after Gibson Dunn uncovered explosive evidence that plaintiffs' counsel had attempted to bribe a jailed paramilitary witness. Joel Cohen is a litigation partner in the New York office of Gibson, Dunn & Crutcher, Co-Chair of Gibson Dunn's White Collar Defense and Investigations Practice Group, and a member of its Securities Litigation, Class Actions and Antitrust Practice Groups.  As a trial lawyer and former prosecutor, Mr. Cohen has been lead or co-lead counsel in 24 civil and criminal trials in federal and state courts.  He is equally comfortable in leading confidential investigations, managing crises or advocating in court proceedings.  His experience includes all aspects of FCPA/anticorruption issues, insider trading, securities and financial institution litigation, class actions, sanctions, money laundering and asset recovery, with a particular focus on international disputes and discovery.  Mr. Cohen was an advisor to the OECD in connection with the effort to prohibit corruption in international transactions, and was the first Department of Justice legal liaison advisor to the French Ministry of Justice.  In addition, he was the prosecutor of Jordan Belfort and Stratton Oakmont, which is the focus of "The Wolf of Wall Street" film by Martin Scorsese; and was featured in The American Lawyer's 2016 award of "White Collar/Regulatory Law Firm of the Year" to Gibson Dunn for his Obus trial victory.  Noting that his client was "in awe" of his trial and cross examination skills, The American Lawyer linked the trial victory with the SEC's decision days after the defense verdict to avoid jury trials and seek administrative actions in the future. Rahim Moloo is an of counsel in the New York office of Gibson, Dunn & Crutcher and a member of Gibson Dunn's International Arbitration, Energy and Infrastructure, and Transnational Litigation Practice Groups. He is recognized as a leader in the field of international arbitration. Law360 recently named Mr. Moloo as one of ten International Arbitration Rising Stars (under the age of 40) globally. Mr. Moloo's practice focuses on assisting clients in resolving complex international disputes in the most effective and efficient way possible. He has extensive experience in international commercial arbitration, investor-state arbitration and arbitration-related litigation. He also advises clients on the structuring of foreign investments and matters of international law and sits as arbitrator in complex international cases. Mr. Moloo has experience across a number of industries, but especially in energy, mining, telecommunications, financial services, infrastructure, construction and consumer products. Delyan Dimitrov is a senior associate in the New York office of Gibson, Dunn & Crutcher and a member of Gibson Dunn's Transnational Litigation and International Arbitration Practice Groups. His practice focuses on transnational litigation, international arbitrations, and complex commercial disputes. Mr. Dimitrov has played a leading role in representing clients before the ICC and JAMS, in U.S. enforcement proceedings of international arbitral awards and confirmation of foreign judgments in New York. He was also part of the Gibson Dunn team that secured an attachment order worth hundreds of millions of dollars from a U.S. federal court in a dispute regarding the enforcement of four Russian arbitral awards that had been annulled at the seat of the arbitration. Mr. Dimitrov is a Lecturer in Law at Columbia Law School, where he teaches a legal practice workshop for international moot courts. He regularly publishes in international arbitration treatises and journals. His recent article on electronic discovery in international arbitration will be published in 2017 in Kluwer Law's treatise International Arbitration in the United States.

March 16, 2017 |
Court Orders Block Implementation of New Immigration Executive Order

Gibson Dunn previously issued several client alerts regarding President Trump's January 27, 2017 and March 6, 2017 Executive Orders restricting entry into the United States for individuals from certain nations and making other immigration-related policy changes.[1] This alert addresses the impact of two federal district court rulings temporarily blocking the federal government from implementing the Executive Order's travel ban and changes to the refugee program, both scheduled to go into effect at 12:01 AM ET on March 16.

I.          Court Orders Blocking Travel Ban and Refugee Program Changes.

A.        District of Hawaii: TRO in State of Hawaii v. Trump

Judge Derrick K. Watson of the District of Hawaii entered a nationwide temporary restraining order (TRO) on the evening of March 15, hours before the Executive Order was scheduled to take effect.[2]  The court concluded that both the travel ban (Section 2), and the modifications to the refugee program (Section 6) likely violated the Establishment Clause.  Accordingly it blocked the federal government from enforcing or implementing either provision.  The ruling came after a hearing earlier in the day in a case brought by the state of Hawaii and a private plaintiff. Standing for Establishment Clause Claim.  The court found that the state of Hawaii had standing stemming from the Order's effects on the state university system and the state's tourism economy.  First, the court that students and faculty would be deterred from studying or teaching at the state institutions, that the state will lose tuition from students no longer able to enter the country, and that the state will suffer damage to the "collaborative exchange of ideas among people of different religions and national backgrounds."  Slip op. 17-19.  These injuries were "nearly indistinguishable" from those found sufficient by the Ninth Circuit in the States of Washington and Minnesota's challenge to the January Order.  Slip op. 19.  Second, it found sufficient evidence that the travel ban would negatively impact tourism, the state's "main economic driver."  Slip op. 20.  The court also found that the individual plaintiff, an American citizen of Egyptian descent, had standing based on the likelihood that his mother-in-law would be unable to enter the country and the discriminatory impact of the travel ban.  Slip op. 23-25. Likelihood of Success on Establishment Clause Claim.  Next, the court concluded that the plaintiffs were likely to succeed on the merits of their Establishment Clause claim because the Executive Order did not have a "primary secular purpose."  Slip op. 29.  The court rejected the federal government's contentions that the order was not religiously motivated because it only targeted Muslims in six majority-Muslim countries, and that it could not consider material outside the four corners of the Order itself to assess motive.  Slip op. 30-32.  Focusing on a series of statements by President Trump and his advisors during the presidential campaign and since taking office, the court found a "unique record" of "significant and unrebutted evidence of a religious animus driving the promulgation" of both the January order and the new March Order.  Slip op. 33; see id. at 33-36.  The court acknowledged it was generally inappropriate to undertake what the federal government called a  "judicial psychoanalysis of a drafter's heart of hearts," but explained that the "remarkable facts at issue here require no such impermissible inquiry" because there was nothing "veiled" or "secret" about the statements it considered.  Slip op. 34-35.  On that basis, it enjoined both the travel ban and the refugee program provisions. Other Claims Not Reached.  The district court did not reach the plaintiffs' arguments that the March Order also violated the Due Process Clause and the Immigration and Nationality Act's prohibition on nationality-based discrimination.

B.        District of Maryland: Preliminary Injunction in International Refugee Assistance Project v. Trump

Hours after the Hawaii ruling, Judge Theodore R. Chuang of the District of Maryland issued a separate nationwide preliminary injunction in International Refugee Assistance Project v. Trump, a class action brought by several non-profit organizations on behalf of themselves and several individual plaintiffs.[3]  This order enjoined the travel ban (Section 3), but declined to enjoin the refugee provisions (Section 6), or the Order as a whole. Standing for Establishment Clause and Statutory Claims.  Like the Hawaii court, the Maryland court found the individual plaintiffs had sufficient standing to bring an Establishment Clause due to the "fear, anxiety, and insecurity" they claimed was caused by the Executive Order.  Slip op. 17.  It also found standing for the individual plaintiffs' claim that the Order violated the Immigration and Nationality Act, relying on a series of decisions that have "reviewed the merits of cases brought by U.S. residents with a specific interest in the entry of a foreigner challenging the application of the immigration laws to that foreign individual."  Slip op. 13.  It did not reach the question of the organizations' standing. Likelihood of Success on Challenges to Travel Ban.  The Maryland court found the plaintiffs had a likelihood of succeeding in their claim that the Order violated the Establishment Clause and the Immigration and Nationality Act.  In an analysis similar to that of the Hawaii court, the Maryland court rejected the argument that officials' public statements and the context of the Order should not be considered.  Slip op. 32-33.  It proceeded with an analysis of the President and other officials' past statements, including those specifically addressing the new Executive Order, as well as the process by which both Executive Orders were promulgated.  Slip op. 26-31, 35.  The court concluded that "[i]n this highly unique case, the record provides strong indications that the national security purpose is not the primarily purpose for the travel ban."  Slip op. 35. The court also found a likelihood of success on the statutory (INA) claim, but only as to immigrant visas.  Slip op. 24-25. Other Claims.  The district court found that the challenge to the refugee provisions was "not sufficiently develop[ed]" to justify relief, and relatedly that there was no basis for enjoining the Order in its entirety.  Slip op. 41.  Like the Hawaii court, it specifically declined to reach the argument that the Order also violated the Due Process clause.  Id.

II.        Potential Further Judicial Action

Immediate Appellate Review.  The federal government has said it will review of the district court orders by the relevant courts of appeal--the Fourth Circuit for the Maryland order, and the Ninth Circuit for the Hawaii order.  That was the route pursued (unsuccessfully) with the Western District of Washington TRO blocking implementation of parts of the January Executive Order.  Such requests would initially be heard by a three-judge panel, with potential further review by the en banc courts of appeals, and ultimately by the Supreme Court. Shortly after the Hawaii ruling, President Trump told attendees at a rally in Nashville, Tennessee that "[w]e're going to fight this terrible ruling.  We're going to take our case as far as it needs to go, including all the way up to the Supreme Court."[4]  At the press briefing on March 16, White House Press Secretary Sean Spicer said that the federal government "intend[s] to appeal the flawed rulings," and "expect[s] action to [be] taken soon to appeal the ruling in the Fourth Circuit and to seek clarification of the order prior to appeal in the Ninth Circuit."[5] As a practical matter, in order for the travel ban to go into effect, the federal government would need a higher court to reverse or stay both district court orders, as they both are nationwide in scope. Further District Court Proceedings.  Absent to, or in parallel with, appellate action, both district courts will conduct further proceedings to determine whether to provide longer-term relief.  Initially, the Hawaii court can be expected to consider whether to issue a longer-term preliminary injunction to replace the TRO.  (The Maryland court's order was itself a preliminary injunction.)  That decision would utilize similar standards as those governing the TROs, but with the benefit of more expansive briefing and argument. Ultimately, the district courts could reach a final merits decision on the case, and order (or deny) permanent injunctive relief.  However, because the travel ban is only slated to be in effect for 90 days, the courts may not reach a final determination, with the TRO and/or PI effectively being their last words on that issue.  The refugee program changes are slated to be in effect through the end of the federal fiscal year (September 30), so there is a larger chance a court would reach the merits stage on that issue. Proceedings in Other Courts.  There are also challenges to the Executive Order proceeding in other district courts around the country, which could result in orders blocking parts of the order on the same or different grounds as the Hawaii and Maryland orders.  For example, the Eastern District of Virginia will hold a hearing on Tuesday, March 21 to consider a TRO motion in Sarsour v. Trump.[6]  Additionally, the Western District of Washington is considering a TRO motion in Ali v. Trump, a class action brought by several advocacy groups pending before Judge Robart, who issued the nationwide TRO against the January Order.[7]

III.       Executive Order Provisions Unaffected By the Court Orders.

The only enjoined parts of the Executive Order are the travel ban (enjoined by both the Hawaii and Maryland courts), and the refugee program changes (enjoined only by the Hawaii court). Other less-publicized sections of the Executive Order remain in effect, several of which have the potential to impede business travel to the United States.
  • The indefinite suspension of the Visa Interview Waiver Program (sec. 9) which had previously benefited regular visitors whose country of origin and visit type required a visa, by allowing them to avoid repetitive consular interviews under certain circumstances.
  • Review of visa reciprocity programs, under which the United States offers foreign nationals visas of similar lengths and types (e.g. multi-visit vs. single-visit), and at similar fees to those offered U.S. nationals.  Sec. 10.
  • Requirements for enhanced screening of Iraqi nationals seeking a visa or admission (Sec. 4), and for implementation of more rigorous and uniform screening and vetting standards across-the-board (Sec. 5).

*       *      *

Gibson Dunn will continue to monitor these rapidly developing issues closely.
   [1]   See, e.g., Analysis of March 6, 2017 Executive Order on Immigration (Mar. 7, 2017), https://www.gibsondunn.com/publications/Pages/Analysis-of-March-6-2017-Executive-Order-on-Immigration.aspx;  Ninth Circuit Court of Appeals Issues Opinion Upholding Nationwide TRO of January 27 Immigration-Related Executive Order (Feb. 10, 2017), https://www.gibsondunn.com/publications/Pages/Ninth-Circuit-Issues-Opinion-Upholding-Nationwide-TRO-of-Jan27-Immigration-Executive-Order.aspx    [2]   Order, Hawai'i v. Trump, No. 1:17-cv-50 (D. Haw. Mar. 15, 2017), ECF No. 219, https://www.clearinghouse.net/chDocs/public/IM-HI-0004-0032.pdf    [3]   Opinion, Int'l Refugee Assistance Project v. Trump, No. 8:17-cv-361 (D. Md. Mar. 16, 2017), ECF No. 149, https://www.clearinghouse.net/chDocs/public/IM-MD-0004-0032.pdf    [4]   Remarks by the President at Make America Great Again Rally (Mar. 15, 2017), https://www.whitehouse.gov/the-press-office/2017/03/15/remarks-president-make-america-great-again-rally    [5]   See White House Daily Briefing at 8:00 (Mar. 16, 2017), http://cs.pn/2mUXKNh    [6]   Order, Sarsour v. Trump, No. 1:17-cv-120 (E.D. Va. Mar. 13, 2017), ECF No. 17, https://www.clearinghouse.net/chDocs/public/IM-VA-0005-0009.pdf    [7]   Emergency Motion for Temporary Restraining Order and Preliminary Injunction, Ali v. Trump, No. 2:17-cv-135 (W.D. Wash. Mar. 10, 2017), ECF No. 53, https://www.clearinghouse.net/chDocs/public/IM-WA-0028-0008.pdf
Gibson Dunn's lawyers are available to assist in addressing any questions you may have regarding these developments.  Please contact the Gibson Dunn lawyer with whom you usually work or any of the following: Theodore J. Boutrous, Jr. - Los Angeles (+1 213-229-7000, tboutrous@gibsondunn.com) Rachel S. Brass - San Francisco (+1 415-393-8293, rbrass@gibsondunn.com) Anne M. Champion - New York (+1 212-351-5361, achampion@gibsondunn.com) Ethan Dettmer - San Francisco (+1 415-393-8292, edettmer@gibsondunn.com) Theane Evangelis - Los Angeles (+1 213-229-7726, tevangelis@gibsondunn.com) Kirsten Galler - Los Angeles (+1 213-229-7681, kgaller@gibsondunn.com) Ronald Kirk - Dallas (+1 214-698-3295, rkirk@gibsondunn.com) Joshua S. Lipshutz - Washington D.C. (+1 202-955-8217, jlipshutz@gibsondunn.com) Katie Marquart, Pro Bono Counsel & Director - New York (+1 212-351-5261, kmarquart@gibsondunn.com) Samuel A. Newman - Los Angeles (+1 213-229-7644, snewman@gibsondunn.com) Jason C. Schwartz - Washington D.C. (+1 202-955-8242, jschwartz@gibsondunn.com) Kahn A. Scolnick - Los Angeles (+1 213-229-7656, kscolnick@gibsondunn.com) © 2017 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

March 9, 2017 |
Corporate Social Responsibility Statements – Recent Litigation and Avoiding Pitfalls

Over the past few years, interest in corporate social responsibility ("CSR")[1] has increased significantly.  The spotlight on CSR has led companies to expand and strengthen their CSR efforts.  Many companies in turn have published sustainability reports, posted materials on their websites and made other statements about their past CSR efforts and future CSR goals.  Certain website CSR disclosures are also required by statutes such as the California Transparency in Supply Chains Act of 2010 and the U.K. Modern Slavery Act 2015.[2]  Some organizations are also encouraging companies to include more CSR statements in their filings with the Securities and Exchange Commission ("SEC").[3]

While CSR statements may foster public goodwill and inform customers and investors about positive company initiatives, they can also create real litigation and liability risks.  This alert discusses a recent wave of litigation taking aim at CSR statements and steps companies can take to minimize these risks.

Background

Over the last two years, a significant number of lawsuits were filed challenging companies' CSR-related statements as false and misleading under various state consumer protection laws.  These include more than ten cases against major consumer products manufacturers and retailers alleging that the companies made misstatements and omissions regarding various aspects of their supply chains, including the use of forced and child labor, factory safety, and working conditions. Several securities fraud lawsuits challenging CSR-related statements were also filed during the past few years, including a case against a leading restaurant company challenging CSR statements about supply chain food safety initiatives and audit processes, and a case against a leading oil and gas company challenging CSR statements about safety reform efforts and environmental cleanup capabilities.  In addition, leading consumer products manufacturers have received "books and records" complaints demanding access to company records and seeking details about whether companies knew their CSR statements were false or misleading. The majority of these cases were brought as class actions on behalf of consumers and shareholders.  Most challenge disclosures on corporate websites, including statements in sustainability reports, human rights documents, employee codes of conduct, third-party supplier codes, statements of ethics and integrity, and audit protocol descriptions.  They assert that consumers and investors relied on and were deceived by the statements and suffered damages by either paying an unwarranted price premium for a product or security or making a purchase they otherwise would not have made.  The plaintiffs in these cases have sought injunctive relief in the form of modifications to the challenged disclosures, damages (including punitive damages), restitution (including refunds for products) and attorneys' fees and costs. To support assertions that the challenged statements are material to consumers and investors (a required element of many consumer protection and securities claims), a number of the suits point to studies by major consumer data collection and securities consulting firms purportedly reflecting that:  (1) consumers may be willing to pay a premium for products provided by companies committed to sustainability efforts and positive environmental impact; (2) consumers may consider companies' social responsibility efforts when deciding whether to buy those companies' products; (3) CSR statements may impact purchase decisions when included on product labels or advertising; and (4) institutional investors may consider corporate sustainability efforts in their investment strategies. Some examples of CSR statements challenged in recent cases include:
  • Company and supplier workers "are treated with respect and in compliance with the law."
  • The company "is committed to fair treatment of all employees wherever it operates."
  • The company requires its suppliers and their employees to "demonstrate honesty, integrity, and fairness."
  • The company "expects its suppliers to comply with all applicable laws and regulations."
  • Suppliers "must under no circumstances use, or in any other way benefit, from forced labor."
  • The company "has the right to audit third-party suppliers."
  • The company follows a "rigorous quality assurance program to ensure . . . safety and the highest quality products for our customers."
Most of the suits claim the statements are false or misleading based on public reports regarding instances of:  (1) mistreatment of employees; (2) forced labor in supply chains; (3) child labor in supply chains; (4) unsafe working conditions in supply chains; and (5) failures of audit protocols and practices to eradicate these and other problems in supply chains.  Some of the suits also assert that CSR statements are rendered false or misleading by major industrial accidents, which the plaintiffs claim would have been avoided if the statements regarding CSR initiatives and efforts were truthful.

Recent Decisions in CSR Statement Litigation

Thus far, the majority of these claims have been unsuccessful and dismissed at the pleading stage.  Most courts find that statements in employee codes of conduct, guidelines for third-party suppliers, and ethics and integrity statements are aspirational in nature and not guarantees that companies, and their employees and suppliers, will in all circumstances follow the codes' requirements.
  • For example, one federal district court in California recently dismissed a suit against a leading food manufacturer with prejudice, holding that proof that some of the company's suppliers actually used forced or child labor did not render statements in the company's supplier code false, because the company's statements "were aspirational, and when read in context, were actually a nuanced and correct summary of its efforts to combat forced labor."  The court noted that the company "asks its suppliers and their sub-tier suppliers to comply with its requirements and that the standards of the Code set forth expectations for suppliers."  It concluded that the statements would "not mislead" reasonable consumers "into thinking that [the company's] suppliers abide by those rules and meet those expectations in every instance."
  • Similarly, in Ruiz v. Darigold, Inc./Northwest Dairy Association, another federal district court dismissed challenges to CSR statements, noting that "in order to construe the [company's] CSR [report] as a guarantee of perfection . . ., plaintiffs ignore[d] the vast majority of the report, its purpose, and its structure to focus on a handful of sentences or, in some cases, phrases.  Such an interpretive practice is, itself, unreasonable."  No. 14-cv-1283, 2014 WL 5599989, at *3 (W.D. Wash. Nov. 3, 2014).  The court examined each of the challenged statements, and found that they were, when read in context, "aspirational statements," or were not shown to be "false in any material respect."  Id. at *4.
  • In Bondali v. Yum! Brands, Inc., a federal appellate court affirmed the dismissal of claims challenging CSR statements in a company's supplier code of conduct, noting that the plaintiffs failed to allege any facts suggesting the company did not require its suppliers to abide by its standards.  620 Fed. Appx. 483, 489 (6th Cir. 2015).  The court said that the fact "that a few suppliers did not adhere to the standards does not mean [the company] did not have the standards in place, and it is not reasonable to interpret [the company's] statements as a guarantee that its suppliers would, in all instances, abide by the corporate standards and protocols."  Id.  The court held that "a code of conduct is not a guarantee that a corporation will adhere to everything set forth [therein]," but rather "a declaration of corporate aspirations." Id. at 490.  It also stated that "to treat a code of conduct as a statement of what a corporation will do, rather than what it aspires to do, would turn the purpose of a code of conduct on its head."  Id.
Courts have also rejected challenges to CSR statements where plaintiffs fail to allege that they viewed and relied on the challenged statements before making their purchase decisions.  Most consumer protection and securities laws require plaintiffs to show reliance as an element of a misstatement claim.
  • For example, in Sud v. Costco Wholesale Corporation, a federal district court recently dismissed claims challenging website statements in a "Disclosure Regarding Human Trafficking and Anti-Slavery" and supplier "Code of Conduct" regarding the prohibition of forced labor, based on purported violations by third-party suppliers in Thailand, Indonesia, Vietnam and Malaysia.  No. 4:15-cv-03783, 2017 WL 345994, at *5 (N.D. Cal. Jan. 24, 2017).  The court held that the claims failed for lack of standing and reliance because the plaintiffs did not allege they read and relied on the website statements prior to purchasing the products at issue.  Id.
A number of federal district courts have also rejected CSR claims based on alleged disclosure omissions, where plaintiffs asserted that companies had an affirmative duty to disclose the existence of problems like forced or child labor in their supply chains on their websites or product packaging.
  • For example, in one case, the plaintiff sought additional disclosures regarding forced labor in a company's supply chain, but the court held that such disclosures would be inconsistent with California's Transparency in Supply Chains Act (the "California Act").  According to the court, this statute requires retailers doing business in California to make disclosures on their website about their efforts to eradicate slavery and human trafficking, but nothing more.  The court held that the California Act's provisions created a safe harbor against the proposed additional disclosures.
  • Another district court also held, with respect to challenged omissions pertaining to child labor in a company's supply chain, that while such disclosures are not protected by the California Act (it drew a distinction between child labor and slave labor), the company had no affirmative duty to disclose "situations . . . where information may persuade a consumer to make different purchasing decisions."  Hodson v. Mars, Inc./Mars Chocolate North America, LLC, No. 15-cv-04450, 2016 WL 627383, at *6 (N.D. Cal. Feb. 17, 2016).  It noted that while child labor was a terrible humanitarian tragedy and that consumers may very well care about the use of child labor in a manufacturer's supply chain, absent any false or misleading statements regarding child labor, there was no duty to disclose.  Id.  Other district courts have subsequently come to the same conclusion.  See, e.g., Dana v. Hershey Co., No. 15-cv-04453, 2016 WL 1213915, at *9 (N.D. Cal. Mar. 29, 2016) ("the weight of authority limits a duty to disclose . . . to issues of product safety, unless disclosure is necessary to counter an affirmative representation."); Sud v. Costco, 2017 WL 345994, at *7-8 (same).
In a few instances, however, claims challenging CSR statements have survived motions to dismiss, where companies made more concrete and measurable factual statements or promises to meet CSR goals by dates certain.
  • In one securities fraud case, for example, a federal district court found that a major oil and gas company's statements about its safety reform efforts and environmental protection measures, including statements in sustainability reports and sustainability reviews on its corporate website, were sufficiently concrete to form the basis of a misstatement claim.  The court held that the safe harbor for forward-looking statements did not apply to a number of the statements because they were not predictions of future events or aspirations, but rather "statements of existing fact."  The court also found that the plaintiffs adequately pled that the website statements were actionable because the plaintiffs alleged that the statements "were intended to reach shareholders and the investing public."
  • Similarly, in a relatively recent books and records case, a Delaware Chancery court permitted a complaint to proceed past the motion to dismiss stage.  It found that plaintiffs' allegations pointing to the company's public promises and stated goals over the past two decades to eradicate the problem of child labor in its supply chain by 2020, adequately supported an inference that the company's board of directors knew of at least some instances of exploitation of child labor in its supply chain "that would have triggered a duty to inform."  The court allowed discovery to proceed against the company and its directors regarding a number of topics, including:  (1) procedures the company used to monitor child labor in its supply chain; (2) reports, investigations and documents presented to the board; (3) reports from the company's suppliers; (4) discussions regarding the public promises the company made; and (5) reporting or compliance requirements the company imposed on its suppliers.

Minimizing Litigation and Liability Risks

These cases highlight the importance of taking steps to minimize the risk that CSR statements will result in a lawsuit.  While the majority of the recent civil suits challenging CSR statements and omissions have failed, many of those cases are now on appeal.  Claims challenging CSR statements have also survived the pleading stage in at least a few instances, subjecting companies to costly discovery.  CSR statement lawsuits are also increasing in popularity, and may start gaining traction given the increasing prevalence of CSR statements and the growing number of studies reflecting that CSR issues may be important to consumers and investors.  Companies need to be aware that there are real litigation risks relating to CSR statements.  There are, however, a number of steps companies can take to minimize litigation and liability risks.
  1. Add disclaimer language.  Generally, companies should consider having disclaimer language accompany CSR statements.  The disclaimers should note that the standards are not guarantees or promises.  It also may be appropriate to note that the standards of measurement and performance are developing or are based on assumptions.  In addition, it is particularly important for companies to consider such disclaimers on the website postings of CSR statements if they include a cross-reference or link to the website in their proxy statement or other SEC filings.
  2. Check the facts.  As with other types of public statements, companies should confirm the accuracy of CSR statements before they are made public.  This includes reviewing CSR statements for overstatements, misstatements, or concrete statements about initiatives that might be rendered misleading or untrue by an adverse supplier or other event.  For example, companies that publish commitments to achieve specific CSR goals/targets by certain dates may face litigation alleging misrepresentations to consumers if the goals/targets are not met.  Companies should also confirm they have adequate diligence procedures in place for information in sustainability and other reports about progress on CSR goals, and consider whether to involve internal or external auditors to help verify or attest to the concrete facts and numbers included in CSR documents.
  3. Use aspirational language and estimates.  Companies should also endeavor to keep CSR statements aspirational.  For example, when discussing CSR initiatives or codes of conduct, companies should favor words like "should," "expect," or "strive," as opposed to making broad and generalized assertions that the company, its employees, or its suppliers "are" in compliance or "do" comply with applicable laws and standards.  Companies can also minimize litigation risk when measuring progress on CSR goals by talking about "estimates" or "approximations"--as opposed to stating concrete measurements.  Companies should also consider process-based or soft goals, rather than setting objective targets.
  4. Location matters.  Detailed CSR statements in SEC filings or on product packaging may increase the risk of litigation, as courts may presume that the statements are material or that investors and consumers relied on them.  Statements on websites can also present heightened risks, particularly if products are sold through websites, as courts might presume that consumers have seen the statements before making purchases.  Statements suggesting that CSR initiatives and statements are material to the company, investors, or consumers also could be problematic in litigation.
  5. Educate internally on litigation trends.  Companies should educate employees responsible for updating and preparing CSR documents about the growing risk of lawsuits based on alleged misstatements.  Employees should also understand that CSR statements need to be consistent with descriptions of the company's business and material trends and risks in SEC filings.  Even if CSR materials are not required in SEC filings, companies may face pressure in the future to incorporate them.
  6. Consider internal and external processes carefully.  Companies should carefully consider who signs off on CSR statements, and what role directors and senior management have in their review, if any.  Companies should also carefully evaluate the role of outside CSR consultants, understanding that communications with these consultants may not be privileged, and that consultants often benchmark against other companies' CSR reports and are not always sensitized to litigation risks.
 
  [1]   The phrase "corporate social responsibility" often encompasses a broad variety of corporate goals and initiatives, including efforts regarding environmental sustainability (such as combating climate change and resource scarcity), human rights (including protecting human health and labor rights), responsible sourcing and audit procedures, compliance with laws in places where companies do business, and ethics and integrity.   [2]   California Civil Code § 1714.43; U.K. 2015 c. 30.   [3]   For example, the Sustainability Accounting Standards Board (SASB) has developed a voluntary reporting approach for U.S. publicly traded companies that encourages companies to identify sustainability issues material to their business and discuss their performance on those issues in their SEC filings.
The following Gibson Dunn lawyers assisted in the preparation of this client alert:  Jason Meltzer, Elizabeth Ising, Andrew Tulumello, David Debold, Perlette Jura, Lori Zyskowski and Bryson Smith. Gibson Dunn's lawyers are available to assist in addressing any questions you may have regarding these developments.  If you have any questions or would like to discuss these issues further, please feel free to contact the Gibson Dunn lawyer with whom you usually work or one of our subject matter lawyers: Class Actions, Consumer Products and Securities Litigation Groups: Andrew S. Tulumello - Washington, D.C. (+1 202-955-8657, atulumello@gibsondunn.com) David Debold - Washington, D.C. (+1 202-955-8551, ddebold@gibsondunn.com) Jason R. Meltzer - Washington, D.C. (+1 202-955-8676, jmeltzer@gibsondunn.com) Securities Regulation and Corporate Governance Group: Elizabeth Ising - Washington, D.C. (+1 202-955-8287, eising@gibsondunn.com) Lori Zyskowski - New York (+1 212-351-2309, lzyskowski@gibsondunn.com) Transnational Litigation Group: Andrea E. Neuman - New York (+1 212-351-3883, aneuman@gibsondunn.com) William E. Thomson - Los Angeles (+1 213-229-7891, wthomson@gibsondunn.com) Perlette Michèle Jura- Los Angeles (+1 213-229-7121, pjura@gibsondunn.com)   © 2017 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

March 7, 2017 |
Analysis of March 6, 2017 Executive Order on Immigration

Gibson Dunn previously issued several client alerts regarding President Trump's January 27, 2017, Executive Order restricting entry into the United States for individuals from certain nations and making other immigration-related policy changes. This client alert addresses the replacement Executive Order entitled "Protecting the Nation from Foreign Terrorist Entry into the United States," signed on March 6, 2017.[1]  It also addresses a recent announcement suspending expedited processing of H-1B visas.

I.          Overview of March 6, 2017 Replacement Executive Order

The new order is in some regards narrower than the prior order, and its scope appears to be more clearly defined.  However, there is still some ambiguity as to the process for obtaining waivers, and the order continues to provide for the possible extension or expansion of the travel ban.  The order and the accompanying official statements also include considerably more material seeking to justify the provisions than contained in the prior order.[2] The Department of Homeland Security has released detailed Q&As[3] and a fact sheet regarding the new order;[4] additional guidance from the Department of State is expected.[5] Key features of the new order include:
  • Effective Date.  The effective date of the order is deferred for 10 days; the order goes into effect at 12:01 am ET on March 16, 2017.  Sec. 14.
  • Status of Prior Order.  The new order fully rescinds and replaces the January 27 order.  Sec. 13.
  • Travel Ban For 6 Countries.  Like the prior order, the new order suspends for 90 days entry for nationals of a number of Muslim-majority countries: Iran, Libya, Somalia, Sudan, Syria, and Yemen.  Sec. 1(e).
  • Exclusions and Exceptions to Travel Ban.  The travel ban and related provisions have been narrowed and clarified in various respects:
    • Iraq.  Iraq is no longer identified among the affected countries.  The other six nations designated in the original order are still covered.  However, the order specifically calls for additional review when an Iraqi national who holds a visa applies for "admission," meaning upon arrival to the U.S.  Secs. 1(g), 4.
    • Lawful Permanent Residents.  Lawful permanent residents (green-card holders) are explicitly excluded from the order.  Sec. 3(b)(i).
    • Current Visa Holders.  Existing visas are not revoked by the order, and they can be used during the 90-day period otherwise covered by the order by the visa-holders under their existing terms, regardless of whether the visa-holder has previously been to the United States or is arriving for the first time.  Those who had a visa physically marked as cancelled as result of the January order are also entitled to admission.  Secs. 3(a), 12(c)-(d); Q&As 3, 5, 7.
    • Dual-Citizens.  Dual citizens of one of the designated nations are also explicitly excluded from the order provided that they are travelling on a passport of a country other than the six designated.  For example, a dual-citizen of Somalia and the United Kingdom would still be eligible for admission to the United States if travelling on his U.K. passport.  Sec. 3(b)(iv).
    • Refugees, Asylees, and Convention Against Torture.  Foreign nationals who are granted asylum status prior to the March 16 effective date, refugees already admitted, and those granted withholding of removal, advance parole, or protection under the Convention Against Torture are not barred from entry into the U.S. Sec. 3(b)(vi).  Note, however, that under existing law, individuals with those statuses may need certain advance permission or authorization if they wish to leave and return to the United States without jeopardizing that status.
    • Certain Diplomatic and Related Visas.  As in the January order, diplomatic and diplomatic-type visas, NATO visas, C-2 (United Nations) visas, and G-1 through G-4 visas are excluded from the order.  Sec. 3(b)(v)
  • Travel Ban Waivers.  The new order provides authority to certain Department of State and Homeland Security officials to grant waivers to the travel ban's limitations on a case-by-case basis.  The new order identifies nine scenarios in which such treatment "could be appropriate."  These include a variety of hardship scenarios which arose under the January order, such as those needing urgent medical care or those who can document that they have "provided faithful and valuable service" to the United States government (e.g. foreign translators).  Sec. 3(c).  Importantly, these are still case-by-case waivers, not automatic exemptions.  It is also not yet clear if individuals seeking waivers will be allowed to board flights to the U.S.
  • Suspension of Visa Interview Waiver Program.  As before, the Visa Interview Waiver program (often used by repeat business travelers from certain nations) is suspended.  Sec. 9.
  • Suspension of Refugee Admission Program.  As in the January order, the Refugee Admission Program is suspended for 120 days, with a cap of 50,000 entrants for the current fiscal year upon resumption.  Sec. 6.  Unlike the January order, the new order does not indefinitely halt refugee admissions from Syria or prioritize religious minorities upon resumption.  The treatment of those already granted refugee status but not yet in the United States is somewhat unclear.  The DHS Q&A says such individuals "whose travel was already formally scheduled by the Department of State … are permitted to travel to the United States and seek admission," and they are covered by the text of the carve-out in Section 3(b)(vi). See Q&A 10.  But the Q&A also says those individuals "are exempt from the Executive Order."  Q&A 27.  Admission thus may require a case-by-case waiver.
  • Possible Expansion and Extension.  Like the prior order, this order requires a global review to identify categories of individuals appropriate for further limitations.  Secs. 2(e)-(f).  Another provision requires re-alignment of any visa reciprocity programs, under which the United States offers visas of similar validity period and type (e.g. multiple-entry) on the basis of those offered to U.S. citizens.  Sec. 10.

II.        Impact on Current Litigation

There are approximately 20 active lawsuits challenging aspects of the January order.  Additional, key parts of that Order are currently subject to a preliminary injunction issued by the United States District Court for the Western District of Washington.  The Ninth Circuit declined to temporarily stay that injunction pending a fuller appeal.[6]  The Eastern District of Virginia has also issued a preliminary injunction against certain parts of the January order as it applies to Virginia residents and institutions. There are hearings and briefing deadlines scheduled in both the Washington and Ninth Circuit proceedings, as well as in many of the other cases.  Because the new order rescinds the old order, effective March 16, those challenges may become moot, and the Department of Justice has said it will be seeking dismissal.[7]  However, it is highly likely that some of the existing complaints and requests for relief will be amended to challenge the new ban.  New challenges to the newly announced Executive Order are also anticipated. It is difficult to predict how the courts will approach litigation, either substantively or procedurally.  Given that the new order does not go into effect until March 16, there will be opportunity for more substantive (although expedited) proceedings than was the case with the original order.  Gibson Dunn will continue to monitor challenges for possible impacts on the new order.

III.       Issues for Companies to Consider

As with the January order, there is no "one size fits all" approach for companies addressing employee and business issues related to the new Executive Order. Accordingly, companies should again evaluate whether they will need to develop strategies to deal with the impact of the replacement Executive Order, both internally and as it relates to potential shareholder and business relations. In the immediate term, companies should consider outreach to their employees, particularly those who are or may be affected by the Executive Order.  Companies should also consider whether plans or policies are needed for travel by executives, employees, or other stakeholders.  In many ways, the new order is clearer than the January order, but as we describe in more detail below it not clear how all aspects of the order will be implemented.  Accordingly, employers may want to consider the following:
  • Outreach to employees who may be affected.  Companies should consider proactively identifying and reaching out to all employees who may be affected.  As noted above, the Executive Order, on its face, applies to both immigrants and non-immigrants from the six covered countries.  Thus, employees traveling for business or leisure may be equally affected.  Note that different employees' immigration statuses may compel differing guidance on how to approach any issues that arise in the enforcement of the Order.
  • Outreach to employees who may have family members affected.  It is important to remember that some of your employees, even if not directly impacted by the Executive Order, will have family and loved ones who are or may be impacted.  Companies may consider providing counseling and support for employees with these concerns.
  • Communicating with employees.  Companies should consider identifying employees who frequently travel to and from the affected countries or who are visa holders from affected countries, to explain company plans with respect to the Executive Order.  Given issues that arose for travelers in connection with the implementation of the original Executive Order in January, employees from affected countries who are currently outside the United States, but have a legal right to enter, should be advised to stay in communication with individuals in the United States about their travel plans, in the event they have difficulty re-entering the country, and have a plan to obtain appropriate assistance in that event.
  • Identifying a point of contact.  Consider identifying a contact point for any employee questions or concerns regarding the Executive Order.  Furthermore, ensure that this contact is prepared to field questions from affected or potentially affected employees, to discuss visa renewal or travel to and from the affected countries, and to refer employees with specific issues to the appropriate resources.
  • Communicating with shareholders, business partners and other stakeholders.  Companies should consider whether communications with shareholders, business partners or other stakeholders regarding potential impacts on business as a result of enforcement of the Executive Order are appropriate.
  • Modifying travel and meeting obligations.  Companies should consider modifying (or allowing for employee choice regarding) employee travel obligations, as appropriate to the company's business needs, to avoid potential difficulties with travel to and from the United States.  Likewise, if companies have board members or executives affected by the Executive Order, or business stakeholders who will not be able to enter the United States due to the Executive Order, consider whether meetings can be conducted remotely or outside the United States.  Companies involved in pending litigation that may require employee travel to the United States should consider seeking the advice of litigation counsel to determine what, if any, notice to the relevant court or parties may be advisable at this stage.
  • Reviewing non-discrimination policies.  Companies may wish to send reminders of applicable equal employment policies.  Many employers included such statements in communications regarding the original Order.  Companies may also wish to consider how their policies apply to employment and hiring decisions in light of travel restrictions.
This list addresses just some of the issues that companies will face in light of the Executive Order.  Gibson, Dunn & Crutcher's lawyers, including its employment, securities, administrative law, constitutional law, and sanctions teams, are available to assist clients with navigating these and other issues that arise with respect to enforcement of the March 6 Order.

IV.       Suspension of Expedited Processing for H-1B Visas

On March 3, U.S. Citizen and Immigration Services (USCIS) announced it will suspend "premium processing" of applications for H-1B visas.[8]  This change is effective April 3, 2017, the first date for filing FY18 applications.  The agency says that this is necessary to process back-logged petitions.  It also says that "expedited" processing is still available for applications meeting certain criteria, and subject to "the discretion of office leadership."  Applications that remain eligible for premium processing include those involving:  Severe financial loss to company or ​person​;​ Emergency situation;​ Humanitarian reasons;​ Nonprofit organization whose request is in furtherance of the cultural and social interests of the United States​;​ Department of Defense or ​national ​interest ​​situation; USCIS error; or​ compelling interest of USCIS.​[9]

*      *      *

Gibson Dunn will continue to monitor these rapidly developing issues closely.
   [1]   "Executive Order Protecting The Nation From Foreign Terrorist Entry Into The United States," Mar. 6, 2017, https://www.whitehouse.gov/the-press-office/2017/03/06/executive-order-protecting-nation-foreign-terrorist-entry-united-states.    [2]   See, e.g., Letter from Attorney General and Sec'y of Homeland Security, Mar. 6, 2017, https://www.dhs.gov/sites/default/files/publications/17_0306_S1_DHS-DOJ-POTUS-letter.pdf    [3]   U.S. Dep't of Homeland Security, "Q&A: Protecting the Nation From Foreign Terrorist Entry To The United States," Mar. 6, 2017, https://www.dhs.gov/news/2017/03/06/qa-protecting-nation-foreign-terrorist-entry-united-states.    [4]   U.S. Dep't of Homeland Security, "Fact Sheet: Protecting the Nation From Foreign Terrorist Entry To The United States," Mar. 6, 2017, https://www.dhs.gov/news/2017/03/06/fact-sheet-protecting-nation-foreign-terrorist-entry-united-states.    [5]   U.S. Dep't of State, "Executive Order on Visas," Mar. 6, 2017, https://travel.state.gov/content/travel/en/news/important-announcement.html.    [6]   http://cdn.ca9.uscourts.gov/datastore/general/2017/02/27/17-35105%20-%20Motion%20Denied.pdf; https://cdn.ca9.uscourts.gov/datastore/opinions/2017/02/09/17-35105.pdf.    [7]   http://www.politico.com/story/2017/03/trump-releases-new-travel-ban-executive-order-235720.    [8]   U.S. Citizenship and Immigration Services, "USCIS Will Temporarily Suspend Premium Processing for All H-1B Petitions," Mar. 3, 2017 https://www.uscis.gov/news/alerts/uscis-will-temporarily-suspend-premium-processing-all-h-1b-petitions.    [9]   U.S. Citizenship and Immigration Services, "Expedite Criteria," https://www.uscis.gov/forms/expedite-criteria.
Gibson Dunn's lawyers are available to assist in addressing any questions you may have regarding these developments.  Please contact the Gibson Dunn lawyer with whom you usually work or any of the following: Theodore J. Boutrous, Jr. - Los Angeles (+1 213-229-7000, tboutrous@gibsondunn.com) Rachel S. Brass - San Francisco (+1 415-393-8293, rbrass@gibsondunn.com) Anne M. Champion - New York (+1 212-351-5361, achampion@gibsondunn.com) Ethan Dettmer - San Francisco (+1 415-393-8292, edettmer@gibsondunn.com) Theane Evangelis - Los Angeles (+1 213-229-7726, tevangelis@gibsondunn.com) Kirsten Galler - Los Angeles (+1 213-229-7681, kgaller@gibsondunn.com) Ronald Kirk - Dallas (+1 214-698-3295, rkirk@gibsondunn.com) Joshua S. Lipshutz - Washington D.C. (+1 202-955-8217, jlipshutz@gibsondunn.com) Katie Marquart, Pro Bono Counsel & Director - New York (+1 212-351-5261, kmarquart@gibsondunn.com) Samuel A. Newman - Los Angeles (+1 213-229-7644, snewman@gibsondunn.com) Jason C. Schwartz - Washington D.C. (+1 202-955-8242, jschwartz@gibsondunn.com) Kahn A. Scolnick - Los Angeles (+1 213-229-7656, kscolnick@gibsondunn.com) © 2017 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

February 10, 2017 |
Ninth Circuit Court of Appeals Issues Opinion Upholding Nationwide TRO of January 27 Immigration-Related Executive Order

On Monday, January 30, 2017, Gibson Dunn issued a client alert regarding President Trump's January 27 Executive Order restricting entry into the United States for individuals from certain nations, and making other immigration-related policy changes.  On February 1, Gibson Dunn issued an updated client alert, covering subsequent developments relating to the Executive Order including: (1) coverage of dual citizens; (2) provisional revocation of certain visas; and (3) reciprocal policy changes abroad. This update describes yesterday's Ninth Circuit decision in State of Washington v. Trump, which denied the Government's request to stay the nationwide temporary restraining order, as well as other recent developments relating to the various legal challenges to the Executive Order.  On February 10, the Ninth Circuit issued a sua sponte request that the parties brief whether en banc review by the Ninth Circuit is appropriate.  At the same time, news reports indicate that the Trump administration may issue a revised executive order, rather than appeal the decision.[1]  This update also provides considerations for companies and others as they continue to deal with the aftereffects of the Executive Order and the various court challenges to it.  This alert is informational only, and you should, of course, seek legal advice specific to any particular situation.

I.      Ninth Circuit Decision in State of Washington v. Trump, No. 2:17-cv-141

On February 3, in an action brought by the State of Washington and the State of Minnesota, the United States District Court for the Western District of Washington (Hon. James L. Robart) issued a nationwide temporary restraining order against enforcement of the Executive Order.  The next day the federal defendants filed an emergency motion for an immediate administrative stay and for a stay pending appeal.  The Ninth Circuit denied an immediate stay and held telephonic oral argument on Tuesday, February 7. On Thursday, February 9, the three-judge panel issued its unanimous opinion holding that, "the Government has not shown a likelihood of success on the merits of its appeal, nor has it shown that failure to enter a stay would cause irreparable injury, and we therefore deny its emergency motion for a stay."  Opinion at 3.[2]

            A.      Jurisdiction and Standing 

The Court determined it had appellate jurisdiction due to the extraordinary circumstances of the case, even though it generally does not review temporary restraining orders.  The Court rejected the Government's argument that the plaintiff States lack Article III standing, finding that, for purposes of this stage of the proceedings, the States adequately alleged that the Executive Order caused concrete harm to their state universities, faculty and students.  Opinion at 12.

            B.      Reviewability of the Executive Order

While recognizing the deference owed to the executive branch on matters of immigration and national security, the Court rejected the Government's argument that the Executive Order was not subject to judicial review, stating that such a claim "runs contrary to the fundamental structure of our constitutional democracy."  Opinion at 14.  The Court went on to cite a number of instances in which federal courts have reviewed and, in some instances invalidated, executive actions taken in the name of national security.  Opinion at 14-18.

            C.      Legal Reasoning and Opinion

In deciding whether to stay the temporary restraining order, the Court examined four factors:  (1) whether the federal government was likely to succeed on the merits; (2) whether the federal government would be irreparably harmed absent a stay; (3) whether the stay would irreparably injure the plaintiff States; and (4) what is in the public interest. As to success on the merits, the Court concluded that the federal government had not demonstrated that it was likely to succeed on the merits, at least with respect to the States' due process claims.  With respect to the due process claims, the federal government failed to show that the Executive Order provided notice and a hearing prior to restricting an individual's ability to travel.  The Court rejected the federal government's assertion that the Executive Order no longer applies to lawful permanent residents, as that clarification came from the White House counsel, who is "not known to be in the chain of command for any of the Executive Departments."  Opinion at 22.  With respect to those without legal status, the court found potential claims of due process violations existed as well.  The Court also noted that the States' religious discrimination claims raised "serious allegations and present significant constitutional questions," but reserved consideration of those claims until the merits are fully briefed.  Opinion at 26. With respect to the likelihood of irreparable harm, the Court found that the federal government failed to show that a stay was necessary to avoid unnecessary injury stating, "the Government submitted no evidence to rebut the States' argument that the district court's order merely returned the nation temporarily to the position it has occupied for many previous years."  Opinion at 26.  The Court found that the States had offered ample evidence of irreparable harm, including separating families and stranding individuals traveling abroad.  Opinion at 28.  Finally, the court found that there were competing public interests at play here such that irreparable harm alone could not justify a stay.  Opinion at 28-29. The Court also declined the federal government's proposed alternative relief, including modification or narrowing of the existing temporary restraining order either in geographic scope or as to what categories of covered individuals.  Opinion at 23-24. On the day after the Ninth Circuit issued its ruling, it issued an order that the parties submit simultaneous briefs setting forth their positions on whether en banc review by an 11-judge panel of the Ninth Circuit is appropriate.  At the same time, as stated above, recent news reports indicate that the White House may not seek to appeal the decision and will instead draft and issue a revised executive order.[3]

II.      Status of Other Legal Challenges

Since the January 27 Executive Order was issued, dozens of legal challenges have been brought in an effort to stay or invalidate the Executive Order.  Many of these suits have resulted in orders staying or limiting the Executive Order itself, including by judges in Massachusetts, Brooklyn, and Virginia.  See, e.g., Louhghalam v. Trump, No. 1:17-cv-10154-NMG (D. Mass. Feb 3, 2017); Darweesh v. Trump, 17 Civ. 480 (AMD) (E.D.N.Y. Jan. 28, 2017); Aziz v. Trump, No. 1:17-cv-116 (E.D.Va. Jan. 28, 2017).   One decision refused to offer temporary injunctive relief against the effectiveness of the Executive Order.  Louhghalam, 2017 WL 479779 (D. Mass. Feb. 3, 2017).  At least one case seeking to enjoin enforcement of the Executive Order has been stayed pending today's decision by the Ninth Circuit.  State of Hawaii v. Donald J. Trump et al., No. 1:17-cv-50 (D. Haw. February 3, 2017). Other lawsuits filed over the course of the last week have sought to challenge the Executive Order as whole, as well as its impact on specific populations.  See, e.g., Pars Equality Ctr. v. Trump, No. 1:17-cv-255 (D.D.C. Feb. 9, 2017) (suit by several Iranian-American groups seeking a broad permanent injunction and alleging that the Executive Order reflects "invidious discrimination"); Int'l Refugee Assistance Project v. Trump, No. 8:17-cv-00361 (D. Md. Feb. 7, 2017) (seeking declaration that "the entire Executive Order is unlawful and invalid").

III.      Issues for Consideration

Despite the temporary clarity provided by the Ninth Circuit's ruling, there are, as described above, multiple legal challenges still outstanding and the likelihood of further appeals of the Ninth Circuit decision issued on Thursday, February 9.  As such, companies and others should still consider the guidance provided in our earlier client alerts on this topic, until the courts or the administration provide more certainty on this issue.  For example, companies should still consider modifying (or allowing for employee choice regarding) employee travel obligations, as appropriate to the company's business needs, to avoid potential difficulties with travel to and from the United States.  Likewise, if companies have officers, employees, contractors, or others affected by the Executive Order, or business stakeholders who will not be able to enter the United States due to the Executive Order, consider whether meetings can be conducted remotely or outside the United States.
   [1]   http://www.cnn.com/2017/02/10/politics/immigration-executive-order-white-house/index.html    [2]   In addition to the filings by the parties, 20 amicus briefs were filed by a variety of entities and individuals.  Sixteen of the briefs supported the States, and were submitted by various nonprofit organizations, several other states, labor organizations, a group of law professors, and a group of over 120 technology companies.  Three briefs filed by a variety of nonprofit organizations support the government.  These briefs are available on the Ninth Circuit's website, at https://www.ca9.uscourts.gov/content/view.php?pk_id=0000000860.    [3]   http://www.cnn.com/2017/02/10/politics/immigration-executive-order-white-house/index.html
Gibson Dunn's lawyers are available to assist in addressing any questions you may have regarding these developments.  Please contact the Gibson Dunn lawyer with whom you usually work or any of the following: Theodore J. Boutrous, Jr. - Los Angeles (+1 213-229-7000, tboutrous@gibsondunn.com) Rachel S. Brass - San Francisco (+1 415-393-8293, rbrass@gibsondunn.com) Anne M. Champion - New York (+1 212-351-5361, achampion@gibsondunn.com) Ethan Dettmer - San Francisco (+1 415-393-8292, edettmer@gibsondunn.com) Theane Evangelis - Los Angeles (+1 213-229-7726, tevangelis@gibsondunn.com) Kirsten Galler - Los Angeles (+1 213-229-7681, kgaller@gibsondunn.com) Ronald Kirk - Dallas (+1 214-698-3295, rkirk@gibsondunn.com) Joshua S. Lipshutz - Washington D.C. (+1 202-955-8217, jlipshutz@gibsondunn.com) Katie Marquart, Pro Bono Counsel & Director - New York (+1 212-351-5261, kmarquart@gibsondunn.com) Samuel A. Newman - Los Angeles (+1 213-229-7644, snewman@gibsondunn.com) Jason C. Schwartz - Washington D.C. (+1 202-955-8242, jschwartz@gibsondunn.com) Kahn A. Scolnick - Los Angeles (+1 213-229-7656, kscolnick@gibsondunn.com) © 2017 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

February 9, 2017 |
2016 Year-End Aerospace and Related Technologies Update

This February 2017 edition of Gibson Dunn's Aerospace and Related Technologies Update discusses newsworthy developments, trends, and key decisions from 2016 that are of interest to aerospace and defense, satellite, and drone companies, and new market entrants in the commercial space and related technology sectors, including the private equity and other financial institutions that support and enable their growth. Specifically, this update covers the following areas:  (1) commercial unmanned aircraft systems ("UAS"), or drones; (2) government contracts litigation involving companies in the aerospace and defense industry; and (3) the commercial space sector.  We discuss each of these areas in turn below.

I.  COMMERCIAL UNMANNED AIRCRAFT SYSTEMS

Unmanned aircraft systems ("UAS") technology has improved rapidly while becoming reasonably affordable for most organizations.  The commercial applications of UAS, more commonly referred to as "drones," include sensory data collection, building inspections, utility inspections, agriculture monitoring and treatment, railway inspections, pipeline inspections, mapping of mines, and photography.  New applications are being created on a regular basis. For years, the law prohibited commercial drone operations absent a special exemption.  However, in 2016, a comprehensive set of regulations governing non-recreational drone operations was finalized, thus creating sweeping opportunities to implement commercial drone operations. In 2016, many organizations incorporated drones into their operations and tested future concepts.  The drone delivery concept was validated through multiple corporate deliveries:  Amazon Prime Air made its first delivery in the United Kingdom; DHL delivered packages to a mountain plateau in Germany; Google and Chipotle tested burrito deliveries at Virginia Tech; and 7-Eleven and Flirtey delivered products in Reno, Nevada.  Disney World, in collaboration with Intel, revealed a new holiday show consisting of drones performing in the night sky, rather than traditional fireworks.  Walmart announced it would use drones to better track inventory at distribution centers.  And CNN became the first U.S. broadcaster to launch a drone division. Overall, 2016 was an historic year that officially ushered in a new industry.  We expect that the industry will continue to develop in the coming year, and that key topics such as rules governing flights over non-participating people, litigation concerning property owners' rights to airspace, privacy, and operations beyond visual line of sight will be addressed.  Related jurisdictional disputes are likewise on the horizon. Expanded drone operations also created controversy.  Citizens and police shot down drones on several occasions, news organizations reported collisions between drones and commercial aircraft (all stories were proven false after investigations), and concerns about privacy continued to build. To get you caught up on 2016's groundbreaking drone developments, below we have briefly summarized:  (A) Part 107 drone regulations; (B) the likely Proposed Rule for Operations Over Non-Participating People; (C) Privacy; and (D) the Intersection of Federal and State/Local Drone Laws.

A.  Part 107 – Drone Regulations

On August 29, 2016, the long-awaited comprehensive regulations for Small Unmanned Aircraft Systems ("sUAS"), drones weighing 55 pounds or less, became law under Part 107 of Title 14 of the Code of Federal Regulations ("Part 107").[1]  These regulations are monumental for commercial drone operations because they provide the regulatory foundation for the burgeoning industry.  Prior to Part 107, the law prohibited commercial drone operations unless an operator obtained a Section 333 exemption from the Federal Aviation Administration ("FAA").  Part 107 permits commercial operations within certain parameters and eliminates the need for an exemption, unless one wants to operate outside of those parameters. Significantly, Part 107 removed the time-consuming and expensive Section 333 requirement that commercial drone operators obtain a recreational or sport pilot license.  Under the new regulations, commercial drone pilots must obtain the newly created remote pilot certificate with a sUAS rating or be under the direct supervision of a person with a certificate.  To obtain the certificate, a person must pass an aeronautical knowledge test at an FAA-approved center, be vetted by the Transportation Security Administration, be able to speak English, and be at least 16 years old.  Individuals with an existing pilot license need only take an online sUAS training course to obtain a remote pilot certificate.[2]  In 2016, the FAA issued over 14,000 remote pilot certificates. In addition, Part 107 set forth several key operational limits for commercial drones[3]:
  1. maximum weight is 55 pounds;
  2. maximum groundspeed is 100 mph (87 knots);
  3. maximum altitude is 400 feet above ground level or within 400 feet of a structure;
  4. flights must be within daylight hours or civil twilight if the drone utilizes anti-collision lighting;
  5. drones must remain within visual line of sight of the remote pilot or an optional visual observer;
  6. minimum flight visibility must be no less than three statute miles;
  7. minimum distance from clouds must be no less than 500 feet below the cloud and 2000 feet horizontally from the cloud;
  8. drones may not operate over persons not directly participating in the operation;
  9. drones must yield the right of way to other aircraft;
  10. remote pilots cannot operate drones from a moving vehicle unless the flight is over a sparsely populated area; and
  11. remote pilots cannot operate more than one drone at a time (i.e., no swarming).

              1.  Part 107 Waivers

The FAA's willingness to provide waivers is one of the most promising aspects of Part 107 and will allow regulations to expand as technology progresses.  The waivers permit remote pilots to deviate from the following operational limits:[4]
  • operations from a moving vehicle;
  • daylight operations;
  • operations beyond a pilot's visual line of sight;
  • visual observer requirements;
  • operations of multiple drones;
  • yielding the right of way;
  • operations over people;
  • operating limitations; and
  • operations in certain airspace.
Applications for a Certificate of Waiver are completed online and granted on a case-by-case basis.  In 2016, the FAA granted 239 waivers.[5]  The majority of these waivers were for nighttime operations.  Notably, the following organizations received waivers:
  • CNN received a waiver for operations over people;
  • Precision Hawk and BNSF Railway Company received waivers allowing operations beyond visual line of sight; and
  • Project Wing, Intel Corporation, and Walt Disney Parks and Resorts received waivers for the operation of multiple drones.
If an organization needs an exemption from a particular section in Part 107 that is not subject to a waiver, it can request a Section 333 exemption or apply for a type certification.  This will be particularly relevant for operators wishing to fly drones greater than 55 pounds because Part 107 only applies to drones weighing 55 pounds or less.

              2.  Airspace Authorization 

In addition to applying for waivers, operators can now seek airspace authorization for operations in restricted airspace.  However, obtaining airspace authorization has been a source of frustration for many operators.  Part 107 allows operations "in Class B, Class C, or Class D airspace or within the lateral boundaries of the surface area of Class E airspace" if the remote pilot obtains "prior authorization from Air Traffic Control."[6]  But an FAA guidance letter from October 3, 2016, restricted Air Traffic Control from granting such authorization, stating that FAA headquarters will approve airspace waivers and coordinate with the relevant air traffic facility.[7]  The FAA UAS website's authorization portal requires that applications be submitted at least 90 days prior to the operation, which can seriously hinder timely operations.

*      *      *

Although the waiver and airspace authorization process is far from perfect, the mere existence of an institutionalized waiver and airspace authorization program is promising.  We expect that the FAA will streamline the process in 2017, making waivers and airspace authorization more accessible to remote pilots. We also expect that Part 107 is the beginning, and not the end, of drone regulations.  For example, in the next few years, the FAA will likely propose rules for drones heavier than 55 pounds, and within the next few months, the FAA will likely publish a Notice of Proposed Rule Making for operating drones over non-participating people.

B.  Proposed Rule for Operations Over Non-Participating People is Expected in 2017

In February 2016, the FAA assembled an aviation rulemaking committee ("ARC") to recommend standards that would allow certain drones to be operated over people.  The ARC submitted its recommendations on April 1, 2016, dividing drones into four categories based on the level of risk correlated to a weight or impact energy equivalent.[8] The FAA's Notice of Proposed Rulemaking ("NPRM") is expected to significantly vary from the ARC's recommendations.  The FAA sent the proposed rule to the White House Office of Information and Regulatory Affairs ("OIRA") in November 2016.  Once OIRA approves the proposed rule, the NPRM will be published in the Federal Register and a public comment period will begin.  As with the NPRM for Part 107, there likely will be thousands of public comments concerning the proposed rule.  Timing for publishing the NPRM is uncertain.  On January 20, 2017, President Trump issued a memorandum to all executive departments and agencies freezing new or pending regulations for 60 days. The proposed rules have the potential to remove a tremendous obstacle for certain drone operators.  Under Part 107, drones are prohibited from flying over unsheltered people unless they are "[d]irectly participating in the operation."[9]  Individuals "[d]irectly participating" include the remote pilot, the person on the controls, a visual observer, and anyone else essential to the operation.  Those who have merely given consent for the operations are excluded.[10] Therefore, under Part 107, implementing certain commercial drone operations may be a challenge, or impossible, due to the presence of non-participating people in the operational area.  For example, drone operations cannot take place over active construction or mining sites without first clearing the area of people, and news organizations may be prohibited from flying directly over a newsworthy event.  Part 107 does provide waivers for flights over non-participants on a case-by-case basis, but the waiver process is not always a practical option for addressing time-sensitive commercial needs.  The upcoming proposed rule will create standards for safe flights over non-participating people and should be a catalyst for many commercial operations.  Flights over non-participating people will likely increase privacy concerns.

C.  Privacy--Voluntary Best Practices

As the popularity of both commercial and hobbyist drones increases, concerns over privacy and personal data collection continue to swell.  In February 2015, President Obama issued a Presidential Memorandum directing that privacy, civil rights, and civil liberties concerns be taken into account as drones are integrated into the national airspace.[11]  Obama ordered the National Telecommunications and Information Administration ("NTIA") of the U.S. Department of Commerce to create a private-sector engagement process to help develop voluntary best practices for privacy, accountability, and transparency issues regarding commercial and private drone use.  That process took place over the past year, with the participation of multiple private-sector groups.  On May 19, 2016, the NTIA released voluntary best privacy practices for drones.[12]  The voluntary best practices received agreement from technology companies, insurance companies, media organizations, drone industry associations, and privacy groups.  Although these best practices do not create any legal standards, they set useful guidelines for any organization conducting drone operations. Many of the recommended best practices take into account the size and complexity of the operator (e.g., a large public company is expected to have a more comprehensive privacy policy with respect to its use of drones than an individual real estate photographer).  Moreover, newsgathering organizations, to which strong First Amendment protections apply, are expressly excluded.  The following summarizes the recommended best practices:

Covered Data:  The best practices focus heavily on the collection and storage of "covered data."  Covered data is information collected by drones that identifies a particular person.  If the data is unlikely to be linked to a particular person, or if it is altered so that a particular person is not recognizable, it is not considered covered data.

Privacy Policy:  Organizations collecting covered data should make reasonable efforts to inform individuals directly impacted by those organizations' use of drones, and they should maintain a publicly available privacy policy appropriate to their size.  The policy should identify:

  • the kind of covered data the drone operations will collect;
  • the purpose for which the data is collected;
  • retention and de-identification practices;
  • the types of entities with whom the data will be shared;
  • information on how to submit a privacy or security complaint; and
  • the organization's practices with respect to responding to law enforcement requests for data.

Reasonable Expectation of Privacy:  Absent a compelling need, drone operators should avoid collecting covered data when the subject has a reasonable expectation of privacy.  Operators should avoid intentional, persistent, and continuous collection of covered data about individuals.  Further, operators should make reasonable efforts to minimize flights over private property without consent of the owner or without appropriate legal authority.

Data Sharing and Use Limits:  Drone operators should only use covered data for those purposes identified in their privacy policy.  Without consent, the data should not be shared for marketing purposes or publicly disclosed without reasonable efforts to obfuscate (e.g., blur) the data.  Further, without consent, operators should not use covered data for employment eligibility, promotion or retention, credit eligibility, or healthcare treatment eligibility, unless expressly permitted by a sector-specific regulatory framework.

Data Storage:  Covered data should not be stored longer than necessary for the purposes for which it was collected (as disclosed to the public in a privacy policy).  Further, organizations should develop easily accessible processes to receive privacy or security complaints about the organization's use of drones.  These processes should include mechanisms by which individuals can request that an organization delete, de-identify, or otherwise obfuscate a person's covered data.

Data Security:  Organizations storing covered data should implement a program to address and manage cybersecurity risks.  The program should have reasonable administrative, technical, and physical safeguards appropriate to the organization's size and the nature of the covered data.  Appropriate safeguards include those described in guidance from the Federal Trade Commission, the National Institute of Standards and Technology Cybersecurity Framework, and the International Organization for Standardization's 27001 standard for information security management.  Corporations should consider the below practices to secure covered data:

  • establish a written security policy detailing the collection, use, storage, and dissemination of covered data;
  • regularly monitor systems for breach and data security risks;
  • provide security training to employees with access to covered data; and
  • limit access to covered data.
Part 107 does not address privacy.  In the NPRM for Part 107, the FAA stated that privacy issues were "beyond the scope" of the rule, and "that state law and other legal protections for individual privacy may provide recourse for a person whose privacy may be affected through another person's use of a UAS."[13]  During the comment period for the NPRM, the FAA received around 180 comments regarding privacy concerns, but declined to include privacy regulations within Part 107.[14]

            1.  Litigation Regarding Whether the FAA Needs to Address Privacy

The Electronic Privacy Information Center ("EPIC") challenged the FAA's decision to exclude privacy regulations from Part 107 by filing a petition for review in August 2016.[15]  EPIC had previously sought review of the NPRM because it excluded privacy regulations, but in May 2016, the D.C. Circuit held that EPIC's challenge was premature because the proposed rule was not final.[16]  After the rule became final, EPIC filed a new petition of review asking the court to vacate Part 107 and remand it to the FAA for further proceedings.[17]  EPIC contends that the FAA Modernization and Reform Act of 2012 requires the FAA to address privacy concerns related to drones, while the FAA asserts that privacy is beyond its charge to regulate aviation safety in the national airspace.  All eyes will be on the D.C. Circuit to determine if the FAA will be required to issue rules related to privacy. Regardless of whether or not there are federal rules directed towards drone privacy, corporations should make their best efforts to comply with the NTIA Voluntary Best Practices, as well as state and local privacy laws.

D.  Uncertainty Clouds the Intersection of Federal and State/Local Drone Laws

Although Part 107 created a federal regulatory framework for commercial drone operations, there is still significant confusion as to what constitutes a legal flight under evolving state and local laws.  Laws regulating the drone industry exist in 32 states, and five states have adopted resolutions regarding drones.[18]  In 2016, at least 38 state legislatures considered legislation to regulate the drone industry, and 17 states (Alaska, Arizona, California, Delaware, Idaho, Illinois, Indiana, Kansas, Louisiana, Oklahoma, Oregon, Rhode Island, Tennessee, Utah, Vermont, Virginia and Wisconsin) passed 31 pieces of legislation.[19]  In addition, countless local governments proposed and passed ordinances impacting the drone industry at the local level.  Thus, it will be critical for companies launching commercial drone enterprises to work closely with counsel to determine which, if any, state and local laws apply to each commercial operation.  They will also need to evaluate preemption issues. In the developing drone community, confusion stems from the FAA's position that it controls the airspace "from the ground up," and that the notion that it does not control airspace below 400 feet is a "myth."[20]  However, many state and local governments do not agree with the FAA's interpretation.  There are major implications for where navigable airspace begins, and the question ultimately will be settled by federal courts over the next several years.  This is one of the most important legal issues for the industry because, without clarification, legal compliance and enforcement may be impossible within some localities. While the FAA governs the "navigable airspace" of the United States,[21]  navigable airspace is defined as the "airspace above the minimum altitudes of flight prescribed by regulations . . . including airspace needed to ensure safety in the takeoff and landing of aircraft."[22]  The FAA regulations list the minimum safe altitude as 500 feet above the surface in non-congested areas (lower in sparsely populated areas) and 1,000 feet above the highest obstacle in congested areas.[23]  Although aircraft can fly below these minimum safe altitudes for takeoff or landing, when these laws and regulations were created, the very concept of low-flying, low-price drones--which can take off and land on anyone's property--only existed in science fiction.  The proliferation of drones requires clarification of where private property rights end and navigable airspace begins. The Supreme Court provided some guidance on property rights and navigable airspace in 1946 in United States v. Causby.[24]  In Causby, a chicken farm was located near an airport, and the glide path for one of the runways was 83 feet above the property.  The Court examined whether military aircraft flying 83 feet above the property was a taking.  The Court held that it was a taking and stated:  "[I]t is obvious that if the landowner is to have full enjoyment of the land, he must have exclusive control of the immediate reaches of the enveloping atmosphere.  Otherwise buildings could not be erected, trees could not be planted, and even fences could not be run."[25]  The court also acknowledged that an invasion of air above one's property can be in the "same category as invasions of the surface."[26]  The Court declined to determine the exact boundary between one's property and public airspace:  "We need not determine at this time what those precise limits are."[27]  Even if the Court did determine precise limits, a military aircraft landing at an airport in 1946 is fundamentally different from today's low-flying, low-price, consumer and commercial drones. In 2016, two pending lawsuits began to address the key question of defining navigable airspace in the context of drones.                    Boggs v. Merideth, No. 3:16-cv-00006 (W.D. Ky. Jan. 4, 2016) In Boggs v. Merideth (also known as the "Drone Slayer" case), a drone operator in the Western District of Kentucky filed a lawsuit against a landowner (the self-proclaimed "Drone Slayer") who downed the plaintiff's drone with a shotgun.[28]  The drone was flying around 200 feet above the Defendant's property, and the defendant claimed it was trespassing and invading his privacy.  After a state judge found the defendant was "within his rights," the plaintiff filed a complaint in federal court for declaratory judgement to "define clearly the rights of aircraft operators and property owners."[29]  The district court has not yet ruled on the issue.                    Huerta v. Haughwout, No. 3:16-cv-358, Dkt. No. 30 (D. Conn. Jul. 18, 2016) The most notable case of 2016 regarding the FAA's authority over low-level airspace was Huerta v. Haughwout (also known as the "flamethrower drone" case).  The Haughwouts posted YouTube videos of a drone flying a few feet above their property.  In one video, a drone fired an attached handgun, and in another video, a drone roasted a turkey with an attached flamethrower.  The FAA sent the Haughwouts an administrative subpoena to acquire more information about these activities.  The Haughwouts declined to comply with the subpoenas and claimed their activities were not subject to investigation by the FAA.  The FAA sought enforcement of the subpoenas.  The District Court for the District of Connecticut found the administrative subpoenas to be valid and ordered the Haughwouts to comply.[30] In his order, Judge Jeffrey Meyer included dicta that casts doubt on the FAA's claim to controlling airspace from the ground up:  "the FAA believes it has regulatory sovereignty over every cubic inch of outdoor air in the United States . . . [T]hat ambition may be difficult to reconcile with the terms of the FAA's statute that refer to 'navigable airspace.'"  The dicta addressed the question of where the FAA's authority begins, but noted that the "case does not yet require an answer to that question."[31]  Notably, the Judge stated:

Congress surely understands that state and local authorities are (usually) well positioned to regulate what people do in their own backyards.  The Constitution creates a limited national government in recognition of the traditional police power of state and local government.  No clause in the Constitution vests the federal government with a general police power over all of the air or all objects that leave the ground.  Although the Commerce Clause allows for broad federal authority over interstate and foreign commerce, it is far from clear that Congress intends--or could constitutionally intend--to regulate all that is airborne on one's own property and that poses no plausible threat to or substantial effect on air transport or interstate commerce in general.[32]

The dicta in Huerta may indicate how federal courts will address this vital issue.  As drone operations continue to expand, the importance of the question will continue to grow.

E.  Looking Ahead

2017 will be an important year for the development of the commercial drone industry.  We can expect to see more organizations adopting drone operations; the FAA streamlining Part 107 waivers and airspace authorization; a proposed rule governing flights over non-participating people; litigation regarding property owners' rights to airspace; more dialogue regarding privacy issues; and significant progress in operations beyond-the-visual-line-of-sight ("BVLOS"), given the approval obtained by the Northern Plains UAS Test Site for conducting BVLOS flights in 2017.  This approval will allow companies to develop, test, and evaluate BVLOS concepts and platforms without the need for a Part 107 waiver.  Progress in BVLOS operations combined with the upcoming proposed rule for flights over non-participating people will greatly expand commercial applications. In addition, the Trump administration's approach to commercial drones, and any judicial decisions regarding federal preemption and privacy, will shape the future of this burgeoning industry.

II.  GOVERNMENT CONTRACTS LITIGATION IN THE AEROSPACE AND DEFENSE INDUSTRY

Gibson Dunn's 2016 Year-End Government Contracts Litigation Update and 2016 Mid-Year Government Contracts Litigation Update cover the waterfront of the most important opinions issued by the U.S. Court of Appeals for the Federal Circuit, U.S. Court of Federal Claims, Armed Services Board of Contract Appeals ("ASBCA"), and Civilian Board of Contract Appeals ("CBCA"), among other tribunals.  We invite you to review those publications for a full report on case law developments in the government contracts arena. In this update, we summarize key court decisions related to government contracting from 2016 that involve players in the aerospace and defense industry.  The cases discussed herein, and in the Government Contracts Litigation Updates referenced above, address a wide range of issues with which government contractors in the aerospace and defense industry are likely familiar, including issues of contract interpretation, jurisdictional requirements, limitations on the remedies available to contractors, and the various topics of federal common law that have developed in the government contracts tribunals.  In addition, we highlight the uncertainty surrounding the direction federal contracting policy will take under the new Trump administration.

A.  Select Decisions of Interest to Government Contractors in the Aerospace and Defense Industry

            1.  Jurisdictional Issues (Defining the Claim)

Whether the courts and boards of contract appeals have jurisdiction over a matter turns on whether there is a valid "claim" and, relatedly, how that claim is defined.  Because the Contract Disputes Act, 41 U.S.C. §§ 7101‒7109 ("CDA") does not define the term "claim," the courts and boards of contract appeals look to the definition set forth in the Federal Acquisition Regulation ("FAR").  FAR 33.201 defines a "claim" as "a written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to this contract." In 2016, two decisions from the ASBCA that involved the aerospace and defense industry touched on jurisdictional issues.  In Military Aircraft Parts, ASBCA No. 60290 (Feb. 4, 2016), the ASBCA addressed whether a contractor's claims could "merge" into or be precluded by related claims that would otherwise not be within the board's jurisdiction.  In Alaska Aerospace Corp., ASBCA No. 59794 (Sept. 13, 2016), the ASBCA considered whether the contractor had submitted a claim as required by the CDA.                    Military Aircraft Parts, ASBCA No. 60290 (Feb. 4, 2016) Between 2009 and 2011, the Government issued three orders for parts for the C-130 aircraft from Military Aircraft Parts ("MAP").  MAP shipped two units under the first order for first-article testing, but the Government asserted that the parts had failed the "form, fit, and function" test, and subsequently issued a unilateral modification canceling the order.  The Government thereafter unilaterally canceled the second order, and the parties bilaterally canceled the third.  MAP submitted a claim for breach of contract, which was denied by the contracting officer.  The contracting officer admitted that the unilateral cancellation of the first order was improper, but converted the cancellation to a termination for convenience and denied relief for all three orders.  After MAP appealed, the Government moved to dismiss, arguing that MAP could not appeal before responding to the Government's termination for convenience with a termination settlement proposal pursuant to FAR part 49. The board (O'Sullivan, A.J.) found that MAP was not required to make a termination settlement proposal prior to appealing the denial of its breach claim.  Relying upon the Federal Circuit's decision in James M. Ellett Construction Co. v. United States, 93 F.3d 1537 (1996), Judge O'Sullivan held that "a contractor is not precluded by a pending termination settlement proposal from pursuing contract claims independent of that proposal."  Because the Government's termination for convenience came later than its unilateral cancellation, the board reasoned, the relief available to MAP for a breach claim could be considerably different from the relief available for a claim arising from the termination for convenience.  (At the very least, MAP could have been eligible for interest on its breach claim.)  Therefore, MAP's breach claim did not "merge" into the government's termination for convenience, and the board denied the Government's motion to dismiss for lack of jurisdiction.                    Alaska Aerospace Corp., ASBCA No. 59794 (Sept. 13, 2016) In 2003, the Missile Defense Agency awarded a contract to Alaska Aerospace for the use of a launch complex and support services.  The contract incorporated, by reference, FAR 52.216-7, Allowable Cost And Payment (Dec. 2002), which allows reimbursement of contributions to employee pension plans.  In 2014, the Government partially disallowed costs for employee pension plans and sought to recover the disallowed costs. The Board (Melnick, A.J.) first noted that because the Government was seeking to recoup money, the case was a Government claim for which the Government bore the burden of proof.  In finding that the Government failed to meet its burden, the Board explained that the Government's reliance on the contracting officer's final decision as evidence of overpayment was improper.  The contracting officer's final decision attempted to impose a penalty, not establish recoupment as a basis for the demand for payment.  Further, findings of fact in the contracting officer's final decision are not binding upon the parties and are not entitled to any deference.

            2.  Jurisdictional Issues (Timeliness of Appeals at the Board of Contract Appeals)

A host of recent cases addressed the CDA's jurisdictional requirement to timely file an appeal after receipt of a contracting officer's final decision.  Two such cases involve aerospace and defense companies and are discussed below.  Under the CDA, a board has jurisdiction over appeals taken within 90 days of receiving the contracting officer's final decision; whereas, there is a one-year statutory clock applicable to appeals filed in the Court of Federal Claims. In a pair of appeals before the ASCBA, Military Aircraft Parts attempted--unsuccessfully--to argue that the Federal Circuit's ruling that the CDA's six-year statute of limitations period is not jurisdictional, Sikorsky Aircraft Corp. v. United States, 773 F.3d 1315 (Fed. Cir. 2014), should give the board discretion to waive the 90-day appeal period.  Although the two cases were decided differently on the merits, the ASBCA made clear, in both instances, that it would not interpret Sikorsky to allow a waiver of the appeal period.                    Military Aircraft Parts, ASBCA No. 60336 (Apr. 25, 2016); and Military Aircraft Parts, ASBCA No. 60139 (June 3, 2016) In the first case, Military Aircraft Parts appealed the termination for default of its contract to provide aircraft frames to the Defense Logistics Agency and the cancellation of two purchase orders for more frames, claiming that the termination and cancellation were breaches of the contract.  The board (McIlmail, A.J.) held that it could not review the appeal from the termination of the original contract because it was not brought within 90 days after the termination decision.  Although the contractor urged the board to adopt a "good cause" exception to the 90-day deadline in light of the Federal Circuit's ruling that the CDA's statute of limitations is not jurisdictional, Judge McIlmail reiterated that the 90-day appeals period cannot be waived. In the second case, Military Aircraft Parts appealed the contracting officer's final decisions that denied a number claims for breach of contract arising out of a contract that the Government terminated for default.  The Government argued that Military Aircraft Parts did not timely appeal the default terminations and was using its breach of contract claims on appeal to the board in an attempt to skirt the CDA's 90-day jurisdictional deadline for appeal of the contracting officer's final decision on the default termination.  Military Aircraft Parts denied the assertion that its complaint was merely a challenge to default terminations "clothed in breach of contract language" and, in the alternative, argued again that the reasoning in Sikorsky should allow the board to find that the 90-day appeal period is not jurisdictional.  The board (O'Sullivan, A.J.) agreed with the Government, finding that the board lacked jurisdiction over the claims because they were implicit challenges to the default termination.  In doing so, Judge O'Sullivan cited pre-Sikorsky precedent to reaffirm its long line of precedent holding that the 90-day deadline is "jurisdictional, absolute, and may not be waived."

            3.  Contract Interpretation

The following decision from the second half of 2016 articulates broadly applicable contract interpretation principles that government contractors should consider.                    King Aerospace, Inc., ASBCA No. 57057 (July 26, 2016) In 2005, the Government awarded a contract to King for the maintenance of a fleet of aircraft.  In 2009, King presented a certified claim incorporating a Request for an Equitable Adjustment ("REA") based on additional maintenance required as a result of aircraft conditions inferior to those represented in the contract.  The contracting officer denied the claim and King appealed. The Board (McImail, A.J.) concluded that King was entitled to additional compensation, noting that in order to prevail on a claim of misrepresentation, the contractor needed to show that there was a false representation of material fact that the contractor reasonably relied on to the contractor's detriment.  The Board determined that the contract represented that aircraft would be maintained in accordance with industry practices, and that the aircraft were not maintained in such a fashion.  Further, this misrepresentation was material because the condition of the aircraft was likely to affect the inducement of King in assenting to maintaining the aircraft.  Moreover, King honestly relied on the misrepresentation to its detriment because King would have bid higher had it known of the substandard condition of the aircraft.  The Board also found that King's reliance was reasonable as there was no contrary representation of the aircrafts' conditions. 

            4.  Cost Issues

                   Raytheon Co., Space & Airborne Sys., ASBCA No. 58068 (Aug. 9, 2016) In 2007, Raytheon SAS revised its cost accounting practices, one of which the Defense Contract Audit Agency ("DCAA") determined to result in a $142,000 increase to the Government across all contracts with the business.  DCAA did not consider decreased costs to the Government from one of the related changes, which more than offset the modest increase from the first change, due to a revision to FAR 30.606 in 2005, that prohibits such offsets, as discussed in an earlier decision in this case covered in the 2015 Mid-Year Government Contracts Litigation Update .  The contracting officer subsequently issued a final decision on the alleged increased costs and Raytheon SAS appealed. The Board (O'Connell, A.J.) sustained the appeal, ruling for Raytheon SAS, because it found that the contracting officer improperly determined the amount at issue was "material" based solely upon the dollar value of the increased cost, without considering other required factors, such as the magnitude of the dollar value in relation to Raytheon SAS's total contracting relationship with the Government (here, less than 0.005%), the cost impact per contract (here, $36 per contract, per year), or the benefit of reduced administrative processing costs by the Government.  The Board concluded that the contracting officer's failure to consider these factors was an "abuse of discretion," which is significant because there was no evidence of bad faith by the contracting officer.                    Exelis, Inc., ASBCA No. 60131 (Aug. 29, 2016) Exelis appealed from a contracting officer's final decision finding that Exelis improperly accounted for the costs of a building lease pursuant to Cost Accounting Standard ("CAS") 404, which governs Capitalization of Tangible Assets.  Exelis moved to dismiss and asserted that there was no CAS 404 violation, and that while the CAS 404 claim asserted a sum certain, it did not assert a sum certain with regard to a FAR violation, which the Government was also asserting. The Board (D'Alessandris, A.J.) determined that there was no CAS 404 violation.  First, the Board found the plain language of CAS 404 to be clear, that it applied to "tangible" assets, and that a building lease is an "intangible" asset since it does not have "physical substance."  Second, even if the language was not clear, the preamble to CAS 404 showed that the CAS Board did not intend that all leases should be "tangible capital assets."  Third, in considering other interpretive aids, the Board continued to find that the Government could not establish a CAS 404 violation. Regarding the alleged FAR violation, the Board first noted that new theories or new damages that arise from the same operative facts do not constitute new claims, and that the sum certain requirement simply requires a specified dollar amount for a claim.  The Board also explained that estimated or approximate costs in determining the value of a claim is sufficient, as long as the overall demand is for a sum certain.  In light of this, the Board found that the relevant facts in the appeal included the lease in question, and that the FAR and CAS claims involved the same operative facts and were the same claim for CDA purposes.  Thus, despite the Government's sum certain being calculated based on a purported CAS violation rather than a FAR violation, the claim was still proper because the two purported violations were the same for CDA purposes.

B.  Uncertainty in the Direction that Federal Contracting Policy Will Take Under the New Trump Administration

The direction that federal contracting policy will take under the new Trump administration remains somewhat vague, and we will continue to keep you informed as the administration's policy develops.  But we note that President Trump's willingness to use Twitter to address the price of federal contracts will likely have implications in the industry.  Although prior administrations have been critical about allegedly wasteful spending, President Trump's Twitter activity suggests that the President is willing to directly intervene in the negotiation and execution of government contracts, which is something federal contractors will have to take into account.

III.  COMMERCIAL SPACE SECTOR

A.  Developments in the Commercial Crew Program

The National Aeronautics and Space Administration ("NASA") has lacked the domestic capability to transport astronauts to space since the expiration of the Space Shuttle Program in July 2011.  Since then, NASA has relied upon the Russian Federal Space Agency ("Roscosmos") to ferry astronauts to the International Space Station ("ISS"), at prices ranging from $21 million to $82 million per roundtrip.  To remedy this situation, NASA instituted the Commercial Crew Program to work with commercial companies to develop manned spaceflight systems.  In September 2014, NASA selected two companies to participate in this program:  The Boeing Company ("Boeing") and Space Exploration Technologies Corporation ("SpaceX"). On September 1, 2016, NASA announced that both companies were facing technical challenges that would delay the first flights carrying NASA astronauts to the ISS until late 2018--more than three years after NASA's original 2015 goal.[33]  Boeing was experiencing issues related to vehicle mass and the effects of vibrations generated during launch.  SpaceX was experiencing delays from its decision to change its capsule design to enable water-based landings.  In light of these developments, NASA extended its contract with Roscosmos for astronaut transportation through 2018, at an additional cost of $490 million for six more seats. On January 4, 2017, NASA announced that it awarded additional space missions to Boeing and SpaceX.[34]  Originally, each firm was offered two roundtrip missions to the ISS.  Now each firm will launch six missions.  Boeing has scheduled an unmanned flight test for June 2018 and a crewed flight test for August 2018.  It has even released new spacesuit designs.[35]  SpaceX has scheduled an unmanned flight test for November 2017 and a crewed flight test for May 2018.

B.  NOAA Policies on Commercial Activity

The National Oceanic and Atmospheric Administration ("NOAA") released a commercial space policy on January 8, 2016.[36]  Among other things, it designated the Office of Space Commerce as a point of contact for commercial providers to promote more efficient commercial engagement.  The policy was part of NOAA's efforts to understand better how partnerships with private firms in the rapidly changing commercial space sector could help the agency perform its functions.[37] NOAA's National Environmental Satellite, Data, and Information Service ("NESDIS") published a Commercial Space Activities Assessment Process on January 6, 2017.[38]  This report indicated NOAA's interest in commercially provided data satisfying its technical requirements at a lower cost than government alternatives.  It then set out a four-part process for future government contracts.  First, NESDIS will release one or more Requests for Information to convey its interest in new data sets and gather information about new, emerging, and existing commercial observation capabilities.  Based on these responses, NESDIS will then release one or more solicitations to acquire and evaluate commercial data satisfying the requisite specifications.  NOAA may then purchase data from one or more vendors for analysis and evaluations through a demonstration project.  Following these demonstrations, NESDIS may issue one or more solicitations to purchase on-orbit observations from commercial sources for operational use by NOAA. On September 15, 2016, NOAA announced that it awarded contracts to GeoOptics, Inc. ($695,000), and Spire Global, Inc. ($370,000), as part of its Commercial Weather Data Pilot.[39]  The firms will provide space-based GNSS radio occultation data to NOAA for the agency to evaluate.  They have until April 30, 2017, to complete the delivery of their data.  NESDIS will conduct an assessment of the data through the end of FY 2017 and produce a final report in early FY 2018.

C.  For the First Time, Federal Agencies Authorize Private Company to Land on Moon

On July 20, 2016, the Federal Aviation Administration approved a private company's plans to land a robotic lander on the Moon, capping a series of unprecedented regulatory approvals from NASA and the State Department that blaze a trail for commercial lunar expeditions.[40]  The company, Moon Express, is an early-stage startup founded for the purpose of establishing commercial travel to, and gathering resources and metals from, the Moon.[41] As previously there was "no existing regulatory framework for private missions beyond Earth orbit," Moon Express CEO Bob Richards says that "Moon Express created a proposed framework" for the necessary approvals.[42]  While more details have yet to emerge about Moon Express's framework, it purportedly focused on "the safety of its payload as well as outlining [how] the United Nation's Outer Space Treaty would not be violated."[43]  The framework uses "existing payload review and launch license processes under authorities of the Secretary of Transportation, and adds to them a series of voluntary disclosures intended to provide the Federal Government with sufficient information to help fulfill its supervisory obligations under the Outer Space Treaty."[44] The approval is for a lunar mission in 2017, but Moon Express is still assembling its lander and coordinating for its rocket with Los Angeles-based "Rocket Lab."[45]  If Moon Express reaches the Moon by December 31, 2017, it may win the "Google Lunar X Prize competition for the first private organization to reach the moon" and also reap a $20 million reward.[46]  Four others teams from around the world purportedly have obtained 2017 launch contracts from their respective governments.[47]  Moon Express recently announced it has raised an additional $20M in series B-1 funding, which it claims "fully finance[s]" its 2017 launch.[48]

D.  Congress Passes Law Expanding Federal Aviation Administration and Secretary of Transportation Authority to Consider Proposed Construction's Impacts on Space Operations

On November 28, 2016, President Obama signed into law H.R. 6007,[49] a bill "[t]o amend title 49, United States Code, to include consideration of certain impacts on commercial space launch and reentry activities in a navigable airspace analysis, and for other purposes."  The bill amended 49 U.S.C. § 44718, which has long permitted the Secretary of Transportation to conduct studies and issue reports on any adverse impact on navigable airspace resulting from proposed construction.  H.R. 6007 required the Secretary of Transportation to conduct an aeronautical study if the Secretary determines that any proposed construction or alteration would interfere with "air or space navigation facilities."[50]  And in conducting such a study, the bill required the Secretary to consider "the impact on launch and reentry for launch and reentry vehicles arriving or departing from a launch site or reentry site licensed by the Secretary."[51]  The bill's purview included "space ports established at existing airports," as airports are considered "General Aviation" facilities.[52]  By May 28, 2018, the FAA Administrator must "initiate a rulemaking to implement" the aforementioned amendments.[53] H.R. 6007 came on the heels of "officials at California's Mojave Air and Space Port criticiz[ing an] FAA decision to allow the construction of taller electric transmission lines near the airport."[54]  The bill's sponsor, California Representative Kevin McCarthy, said on the House floor that the bill gave "the FAA the authority they now lack to examine whether structures being built near spaceports will obstruct spaceflight."[55]  McCarthy's explicit intent was that the bill "ensures [] government policies keep up with the progress" of "commercial space flight."[56]  Both the House and Senate unanimously approved H.R. 6007.[57]

E.  FAA Rule on Reciprocal Waivers

In August 2016, the Federal Aviation Administration (FAA) revised its rule on reciprocal waivers of claims for commercial launches and reentries.  The new rule simplifies the procedure for customers who contract with a first-tier customer, as opposed to the licensee or permittee.  Under the rule, these customers enter into a waiver agreement with the first-tier customer, not the licensee or permittee.  The rule also mandates that all customers waive claims against every other customer regardless of whether those customers sign a different set of reciprocal waivers.[58]

F.  President Trump's Commercial Space Policy

The Trump administration has the potential to be the most supportive ever for the commercial space industry.  During the campaign, two of President Trump's advisors wrote in an op-ed that "government must recognize that space is no longer the province of governments alone."  The advisors mentioned the work of Boeing/ULA, Orbital ATK, Virgin Galactic, Blue Origin, Paragon, Sierra Nevada, and Xcor, and they praised SpaceX for its "Made in America policy."  They also promised to resurrect the National Space Council under Vice President Mike Pence to coordinate space policy.[59] Since winning the election, Trump has consulted several advocates of commercial spaceflight.  Elon Musk of SpaceX and Jeff Bezos of Blue Origin both attended a meeting with Trump in December, and Peter Thiel, an investor in SpaceX, has been named to the President's Strategic and Policy Forum.[60] But Senator Jeff Sessions, Trump's nominee for attorney general, supports a more traditional space policy.  Sessions, whose state is home to NASA's Marshall Space Flight Center, reportedly has been involved in choosing Trump's NASA landing team and a nominee for NASA administrator.[61] This division is reflected in the composition of Trump's NASA landing team.  After initially appointing a head of the team who appears to support a more traditional policy, the transition added several members who support commercial space exploration.[62] Trump has yet to nominate an administrator for NASA, but the early favorite is Congressman Jim Bridenstine, who has advocated for commercial space interests in Congress.  Other candidates reportedly include former NASA deputy administrator Shana Dale, former NASA administrator Mike Griffin, former NASA astronaut Eileen Collins, and Scott Pace of George Washington University.[63]

IV.  CONCLUSION

We will continue to keep you informed on these and other related issues as they develop.
   [1]   Operation and Certification of Small Unmanned Aircraft Systems, 81 Fed. Reg. 42064 (June 28, 2016).    [2]   14 C.F.R §§ 107.12, 107.53–107.79 (2016).    [3]   Id. §§ 107.3, 107.25, 107.35, 107.51, 107.37, 107.39, 107.41 (2016).    [4]   Id. § 107.205 (2016).    [5]   See FAA, Part 107 Waivers Granted (Dec. 31, 2016), available at https://www.faa.gov/uas/ request_waiver/waivers_granted/.    [6]   14 C.F.R. § 107.41 (2016).    [7]   FAA Order JO 7200.23, Air Traffic Organization Policy (Oct. 3, 2016), available at https://www.faa.gov/documentLibrary/media/Order/FAA_JO_7200_23_2.pdf.    [8]   See FAA, Micro Unmanned Aircraft Systems ARC Recommendations Final Report (April 1, 2016), available at https://www.faa.gov/uas/resources/policy_library/media/Micro-UAS-ARC-FINAL-Report.pdf.    [9]   14 C.F.R. § 107.39 (2016). [10]   See 81 Fed. Reg. at 42128. [11]   The White House, Office of the Press Secretary, Presidential Memorandum:  Promoting Economic Competitiveness While Safeguarding Privacy, Civil Rights, and Civil Liberties in Domestic Use of Unmanned Aircraft Systems (Feb. 15, 2015), available at https://obamawhitehouse.archives.gov/the-press-office/2015/02/15/presidential-memorandum-promoting-economic-competitiveness-while-safegua. [12]   Voluntary Best Practices for UAS Privacy, Transparency, and Accountability, NTIA-Convened Multistakeholder Process (May 18, 2016), available at https://www.ntia.doc.gov/files/ntia/publications/uas_privacy_best_practices_6-21-16.pdf. [13]   Notice of Proposed Rule Making, Operation and Certification of Small Unmanned Aircraft Systems, 80 Fed. Reg. 9544, 9552 (Feb. 23, 2015). [14]   81 Fed. Reg. at 42190. [15]   EPIC v. FAA, No. 16-1297 (D.C. Cir. 2016). [16]   EPIC v. FAA, 821 F.3d 39, 43 (D.C. Cir. 2016). [17]   See EPIC v. FAA, No. 16-1297 (D.C. Cir. 2016). [18]   Id. [19]   Current Unmanned Aircraft State Law Landscape, National Conference of State Legislatures (Dec. 16, 2016), available at http://www.ncsl.org/research/transportation/current-unmanned-aircraft-state-law-landscape.aspx. [20]   FAA, Busting Myths About the FAA and Unmanned Aircraft (Mar. 7, 2014), available at https://www.faa.gov/news/updates/?newsId=76240. [21]   See 49 U.S.C. § 40103. [22]   Id. § 40102(32). [23]   14 C.F.R. § 91.119(b)(c). [24]   328 U.S. 256, 266 (1946). [25]   Id. at 264. [26]   Id. at 265. [27]   Id. at 266. [28]   See Boggs, No. 3:16-cv-00006, Dkt. No. 1 (W.D. Ky. Jan. 4, 2016). [29]   See id. [30]   See Huerta, No. 3:16-cv-358, Dkt. No. 30. [31]   Id. [32]   Id. [33]   NASA's Commercial Crew Program:  Update on Development and Certification Efforts, NASA, Office of Inspector General, Office of Audits (Sept. 1, 2016), available at https://oig.nasa.gov/docs/IG-16-028.pdf. [34]   Steven Siceloff, Mission Awards Secure Commercial Crew Transportation for Coming Years, NASA (Jan. 3, 2017), available at https://www.nasa.gov/feature/mission-awards-secure-commercial-crew-transportation-for-coming-years. [35]   Steven Siceloff, New Spacesuit Unveiled for Starliner Astronauts, NASA (Jan. 25, 2017), available at https://www.nasa.gov/feature/new-spacesuit-unveiled-for-starliner-astronauts. [36]   NOAA Commercial Space Policy, NOAA (Jan. 8, 2016), available at https://www.corporateservices.noaa.gov/ames/administrative_orders/chapter_217/Commercial%20Space%20Policy.pdf. [37]   NOAA Issues Commercial Space Policy, NOAA (Jan. 8, 2016), available at https://www.noaa.gov/media-release/noaa-issues-commercial-space-policyl. [38]   Commercial Space Activities Assessment Process, NOAA/NESDIS (Jan. 6, 2017), available at https://www.nesdis.noaa.gov/sites/default/files/asset/document/nesdis_commercial_space_activities_assessment_process_final%201.6.17%20readable.pdfSee also NESDIS Commercial Space Activities Assessment Process, Office of Space Commerce (Jan. 6, 2017), available at http://www.space.commerce.gov/business-with-noaa/nesdis-commercial-space-activities-assessment-process/. [39]   NOAA Awards Commercial Weather Data Pilot Contracts, Office of Space Commerce (Sept. 15, 2016), available at http://www.space.commerce.gov/noaa-awards-commercial-weather-data-pilot-contracts/. [40]   Jordan Rice, The First Private Spaceflight Company Is Cleared for a Moon Landing, Astronomy Magazine (Aug. 4, 2016), http://www.astronomy.com/news/2016/08/next-stop-the-moon.  Up until this point, private companies have flown only 22,236 miles above the Earth--Moon Express intends to send its lander ten times that distance.  See Kenneth Chang, Florida Company Gets Approval to Put Robotic Lander on Moon, The New York Times (Aug. 3, 2016), available at https://www.nytimes.com/2016/08/04/science/moon-express-faa.html?_r=0. [41]   Saki Knago and AJ Barbosa, The New Space Biz:  Companies Seek Cash in the Cosmos, The Huffington Post (July 22, 2011), http://www.huffingtonpost.com/2011/07/22/new-space-business_n_907358.html. [42]   Rice, supra note 40. [43]   Rice, supra note 40. [44]   US Government Approves Plan for Moon Express to Become First Private Company to Venture Beyond Earth's Orbit, Moon Express, http://www.moonexpress.com/news/us-government-approves-plan-moon-express-become-first-private-company-venture-beyond-earths-orbit/ (last visited Jan. 27, 2016). [45]   Chang, supra note 40. [46]   Chang, supra note 40. [47]   Homepage, Google Lunar XPrize, http://lunar.xprize.org/ (last visited Jan. 27, 2016). [48]   Sam Levin, Moon Express Raises $20m for 2017 Voyage to the Moon, The Guardian (Jan. 17, 2017, https://www.theguardian.com/science/2017/jan/17/moon-express-raises-20m-for-2017-voyage-to-moon; see also Emily Calandrelli, Moon Express Raises $20M in Series B-1, Fully Funds Trip to the Moon, TechCrunch (Jan. 13, 2017), https://techcrunch.com/2017/01/13/moon-express-raises-20-million-in-series-b-1-fully-funds-trip-to-the-moon/. [49]   H.R. Rep No. 6007 (2016), available at https://www.congress.gov/bill/114th-congress/house-bill/6007/text. [50]   49 U.S.C. § 44718(b)(1) (emphasis added). [51]   49 U.S.C. § 44718(b)(1)(F). [52]   Steven Mayer, Obama Signs McCarthy Bill to Protect Space Ports, Bakersfield.com (Nov. 29, 2016), http://www.bakersfield.com/news/obama-signs-mccarthy-bill-to-protect-space-ports/article_317b54d7-dffc-590d-b121-c7a8e6b3b32e.html. [53]   H.R. Rep No. 6007 (2016), available at https://www.congress.gov/bill/114th-congress/house-bill/6007/text. [54]   Id. [55]   Jeff Foust, House Advances Commercial Space and Astronaut Health Bills, SpaceNews (Sep. 22, 2016), http://spacenews.com/house-advances-commercial-space-and-astronaut-health-bills/#sthash.pqkTLvBT.dpuf. [56]   Mayer, supra note 52. [57]   Foust, supra note 55. [58]   Reciprocal Waivers of Claims for Licensed or Permitted Launch and Reentry Activities, 81 Fed. Reg. 55115 (2016) (codified at 14 C.F.R. § 440). [59]   Robert S. Walker & Peter Navarro, Op-ed:  Trump's Space Policy Reaches for Mars and the Stars, SpaceNews (Oct. 19, 2016), http://spacenews.com/trumps-space-policy-reaches-for-mars-and-the-stars/. [60]   Eric Berger, Peter Thiel Now Leading the Fight for Commercial Space in Trump's NASA, Ars Technica (Dec. 20, 2016, 6:31 PM), https://arstechnica.com/science/2016/12/peter-thiel-now-leading-the-fight-for-commercial-space-in-trumps-nasa/. [61]   Andy Pasztor, Sen. Jeff Sessions Exerts Wide Influence Over Trump Space Plans, Wall St. J. (Dec. 13, 2016, 6:56 PM), http://www.wsj.com/articles/sen-jeff-sessions-exerts-wide-influence-over-trump-space-plans-1481673405. [62]   Andy Pasztor, Thiel Pushes to Add Commercial-Space Backers to Trump NASA Team, Wall St. J. (Dec. 21, 2016, 11:22 AM), http://www.wsj.com/articles/thiel-others-push-for-trump-nasa-team-expansion-1482263645. [63]   Eric Berger, Will Trump Pick an "Agent of Change" or an Insider to Lead NASA, Ars Technica (Nov. 17, 2016, 9:58 AM), https://arstechnica.com/science/2016/11/will-trump-pick-an-agent-of-change-or-an-insider-to-lead-nasa/.
Gibson Dunn lawyers are available to assist in addressing any questions you may have regarding the issues discussed above.  Please contact the Aerospace and Related Technologies practice group co-chairs, Karen L. Manos, David Wilf, Perlette M. Jura, and William J. Peters; the additional authors of this update, Dhananjay S. Manthripragada, Jared Greenberg, and David M. Wolber; the Gibson Dunn lawyer with whom you usually work; or any of the following: Los Angeles David A. Battaglia (+1 213-229-7380, dbattaglia@gibsondunn.com) Perlette Michèle Jura (+1 213-229-7121, pjura@gibsondunn.com) William J. Peters (+1 213-229-7515, wpeters@gibsondunn.com) Eric D. Vandevelde (+1 213-229-7186, evandevelde@gibsondunn.com) Matthew B. Dubeck (+1 213-229-7622, mdubeck@gibsondunn.com) Dhananjay S. Manthripragada (+1 213-229-7366, dmanthripragada@gibsondunn.com) London Mitri J. Najjar (+44 (0)20 7071 4262, mnajjar@gibsondunn.com) Orange County Jared Greenberg (+1 949-451-3819, jgreenberg@gibsondunn.com) Casper J. Yen (+1 949-451-4105, cyen@gibsondunn.com) Rustin K. Mangum (+1 949-451-4069, rmangum@gibsondunn.com) New York David M. Wilf (+1 212-351-4027, dwilf@gibsondunn.com) Eric D. Vandevelde (+1 213-229-7186, evandevelde@gibsondunn.com) Nicolas H.R. Dumont (+1 212-351-3837, ndumont@gibsondunn.com) Eun Sung Lim (+1 212-351-2483, elim@gibsondunn.com) San Francisco Matthew Reagan (+1 415-393-8314, mreagan@gibsondunn.com) Washington, D.C. Karen L. Manos (+1 202-955-8536, kmanos@gibsondunn.com) David A. Wolber (+1 202-887-3727, dwolber@gibsondunn.com) Lindsay M. Paulin (+1 202-887-3701, lpaulin@gibsondunn.com) Erin N. Rankin (+1 202-955-8246, erankin@gibsondunn.com) Justin P. Accomando (+1 202-887-3796, jaccomando@gibsondunn.com) Brian M. Lipshutz (+1 202-887-3514, blipshutz@gibsondunn.com) © 2017 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

January 30, 2017 |
President Trump Issues Executive Order on Immigration

Click for PDF On Friday January 27, 2017, President Trump issued an Executive Order entitled "Protecting the Nation from Foreign Terrorist Entry into the United States Executive Order."  (Available here.) The Executive Order imposes, among other things, a 90-day ban on entry into the United States for any purpose by non-U.S. citizens from Iran, Iraq, Libya, Somalia, Sudan, Syria, and Yemen.  The State Department has advised individuals from the affected countries seeking visas to enter the United States not to schedule or attend interviews, or pay fees for such visas, until further notice.[i]  Over the weekend, three federal courts blocked implementation of various parts of the Executive Order.  Additionally, the Administration has announced that implementation of the Executive Order will be somewhat relaxed for U.S. lawful permanent residents.  However, confusion persists at airports both here and abroad.  For example, it has been reported that some individuals have not been permitted to board U.S.-bound flights, and that upon arrival in the United States, other individuals have been subjected to inconsistent treatment, including detention by Customs and Border Protection ("CBP") officers or often lengthy screenings.  Additionally, in some cases, individuals are reportedly unable to communicate with their family members or legal counsel. Although the legal landscape is continuing to evolve, as we describe below, this Client Alert provides an overview of the Executive Order, the district court decisions enjoining portions of the Executive Order, and guidance that may assist companies and others impacted by the Executive Order.  As we understand that responding to inquiries involving the Order may be our clients' most pressing concern, we start with a brief background of the Executive Order and provide guidance companies may want to consider.  We then provide an overview of the legal landscape that exists as of Monday, January 30, 2017.  This alert is informational only, and you should, of course, seek legal advice specific to any particular situation.  Please note that we have published a supplement to this Client Alert regarding later relevant events, which is available here.

I.     Overview of the Executive Order

The Executive Order has the stated purpose of "protect[ing] the American people from terrorist attacks by foreign nationals admitted to the United States."  Among its provisions are the restriction of "immigrant and nonimmigrant" entry of non-citizens from seven countries for 90 days, suspension of all refugee admission for 120 days, and indefinite prohibition of refugees from Syria.

     A.     Individuals Covered and Not Covered by the 90-day Ban

Section 3(c) of the Executive Order "suspend[s] entry into the United States, as immigrants and nonimmigrants" for 90 days of "aliens" from Iran, Iraq, Libya, Somalia, Sudan, Syria, and Yemen.  Subject to certain exceptions, this suspension applies regardless of travel origin, type of visa, or U.S. immigration status. The Executive Order provides that the "the Secretaries of State and Homeland Security may, on a case-by-case basis, and when in the national interest, issue visas or other immigration benefits to nationals of countries for which visas and benefits are otherwise blocked."  Sec. 3(g).  The Executive Order also explicitly exempts only certain categories of visas for diplomats, NATO business, United Nations business (C-2), and international organization staff (G-1, G-2, G-3, G-4)).  Sec. 3(c). The Executive Order is drafted broadly enough to cover lawful permanent residents (i.e., green-card holders), and there are reports that in the first 36 hours of implementation, the CBP officers denied re-entry to such individuals.  However, on Sunday, January 29, the Department of Homeland Security ("DHS") announced that "absent significant derogatory information indicating a serious threat to public safety and welfare, lawful permanent resident status will be a dispositive factor in our case-by-case determinations" under Section 3(g) of the Order.[ii]  Since that announcement, reports from across the country suggest that such individuals are now being admitted under this discretionary authority, after extended screening upon arrival. The Executive Order also implicates dual citizens who are not U.S. citizens.  However, exactly how such individuals will be addressed by CBP is uncertain.  There are some indications that such individuals will be treated similarly to green-card holders--subject to increased scrutiny, but generally admitted.  However, admission appears to be discretionary, and, as of now, there is no clearly announced policy.  The United Kingdom Foreign Office announced on Sunday, January 29 that the United States is not applying the ban to individuals who are dual citizens of the United Kingdom and one of the banned countries, if such individuals are travelling from the United Kingdom.[iii]  On Monday, January 30, the U.S. Embassy & Consulates in the United Kingdom made a similar announcement, confirming that "[d]ual nationals of the United Kingdom and one of [the seven covered] countries are exempt from the Executive Order when travelling on a valid United Kingdom passport and U.S. visa."[iv]  In addition, various news outlets have reported--quoting Canadian government officials--that the United States is not applying the ban to individuals who are dual citizens of Canada and one of the banned countries.[v]  U.S. officials, however, have yet to make a similar announcement. U.S. citizens are not covered by the language of the Executive Order.  As described below, however, non-U.S. citizens from countries other than the seven covered countries may still be affected by the Executive Order's suspension of the Visa Interview Waiver Program.  Suspension of this program is likely to increase the time necessary for issuance of U.S. visas.

     B.     Other Provisions

A few other provisions of the Executive Order should also be noted, as they may hinder travel to the United States by those not directly affected by the country-specific ban.
  • The Executive Order suspends the Visa Interview Waiver Program, which allows those renewing certain types of visas to skip a consular interview under certain circumstances.  See Sec. 8(a).  This program is commonly used by low-risk travelers, including many employment-based visa applicants, in order to expedite the time in which visas are obtained for travel to the United States.  Suspension of this program is likely to slow, perhaps significantly, the process of renewing a visa, as it appears to impose a requirement that all visa applicants be interviewed in person.
  • The Executive Order requires the Secretary of State to review "all non-immigrant visa reciprocity agreements."  Sec. 9.  This raises the prospect that certain visas will be scaled back in the future, such as by reducing the number of allowed visits in a period or the length of an allowed stay under a visa.
  • The Executive Order suspends the U.S. Refugee Admissions Program for 120 days (Sec. 5), and indicates certain priority for religious minorities upon its limited resumption.  This is generally understood to apply to Christian refugees from Muslim-majority nations.
Finally, it is possible that the list of affected countries will expand after the 90-day ban period.  The Executive Order directs the DHS to submit for inclusion a list of any other countries that "do not provide adequate information" regarding admission of their citizens.  Sec. 3(b).  At the end of the 90-day period, DHS or the State Department may also "submit to the President the names of any additional countries recommended for similar treatment."  Sec. 3(f).

II.     Issues for Companies to Consider

There is no "one size fits all" approach for companies addressing employee and business issues related to the Executive Order.  In the immediate term, companies should consider preparing a uniform communications plan for their employees, particularly those who are or may be affected by the Executive Order.  Companies should also consider whether plans or policies are needed for travel by executives, employees, or other stakeholders.  Although this situation is fluid and continues to develop, as further described below, we believe companies should also be mindful of whether they will need to develop strategies to deal with the impact of the Executive Order, both internally and as it relates to potential shareholder and business relations. Specific questions that companies may want to consider with respect to the Executive Order include:
  • Outreach to employees who may be affected.  Although the administrative and judicial interpretation of the Executive Order continues to evolve, meaning that the full scope of individuals who may be affected is in flux, companies should consider proactively identifying and reaching out to all employees who may be affected.  As noted above, the Executive Order, on its face, applies to both immigrants and non-immigrants from the seven covered countries.  Thus, employees traveling for business or leisure may be equally affected.  In addition, as discussed above, there have been indications that lawful permanent residents may be subject to additional questioning when entering the United States from one of the seven covered countries, even if those individuals are not subject to detention.  Note that different employees' immigration statuses may compel differing guidance on how to approach any issues that arise in the enforcement of the Order.
  • Outreach to employees who may have family members affected.  It is important to remember that for some of your employees, even if they are not directly impacted by the Executive Order, they will have family and loved ones who are directly impacted.  We have received reports of many family members detained and separated from other family members upon arrival at an airport.  We have heard reports about family members traveling abroad who are now fearful of not being able to return home to reunite with a family member.  Companies may consider providing counseling and support for your employees who are facing these concerns.
  • Communicating with employees.  Companies should consider identifying employees who frequently travel to and from the affected countries or who are visa holders from affected countries, to explain company plans with respect to the Executive Order.  In particular, employees from affected countries who are currently outside the United States, but have a legal right to re-enter, should be advised to stay in communication with individuals in the United States about their travel plans, in the event they have difficulty re-entering the country, and have a plan to obtain appropriate assistance in that event.  For employees currently in the United States but who are from the affected countries or frequently travel to the affected countries, consider whether travel abroad is necessary before the full scope of enforcement of the Executive Order is known and understood.
  • Identifying a point of contact.  Consider identifying a contact point for any employee questions or concerns regarding the Executive Order.  Furthermore, ensure that this contact is prepared to field questions from affected or potentially affected employees, to discuss visa renewal or travel to and from the affected countries, and to refer employees with specific issues to the appropriate resources.
  • Communicating with shareholders, business partners and other stakeholders.  Companies should consider whether communications with shareholders, business partners or other stakeholders regarding potential impacts on business as a result of enforcement of the Executive Order are appropriate.
  • Modifying travel and meeting obligations.  Companies should consider modifying (or allowing for employee choice regarding) employee travel obligations, as appropriate to the company's business needs, to avoid potential difficulties with travel to and from the United States.  Likewise, if companies have board members or executives affected by the Executive Order, or business stakeholders who will not be able to enter the United States due to the Executive Order, consider whether meetings can be conducted remotely or outside the United States.  Companies involved in pending litigations that may require employee travel to the United States, should consider seeking the advice of litigation counsel to determine what, if any, notice to the relevant court or parties may be advisable at this stage.
  • Reviewing non-discrimination policies.  Companies may wish to send reminders of applicable equal employment policies.  Many employers have included such statements in communications regarding the Order.  Companies may also wish to consider how their policies apply to employment and hiring decisions in light of travel restrictions.
This list addresses just some of the issues that companies will face in light of the Executive Order.  Gibson, Dunn & Crutcher's lawyers, including its employment, securities, administrative law, constitutional law, and sanctions teams, are available to assist clients with navigating these and other issues that arise with respect to enforcement of the Order.

III.     District Court Orders Blocking Implementation of the Executive Order

As of the morning of January 30, three district courts--in New York, Massachusetts, and Virginia--have issued orders of varying general applicability temporarily (a) halting deportations resulting from the Executive Order and (b) providing certain other relief.  Other federal courts, including those in the Central District of California and the Western District of Washington have issued relief specific to individual applicants.

     A.     Nationwide Stay of Removal--Darweesh v. Trump, No. 17 Civ. 480 (AMD) (E.D.N.Y. Jan. 28, 2017).

On Saturday, January 28, two visa holders of Iraqi origin detained at JFK Airport in New York filed suit relief on behalf of themselves and others similarly situated, along with a petition for writ of habeas corpus.  They also asked the court for an emergency stay of removal of similarly situated people nationwide. Judge Ann Donnelly of the Eastern District of New York granted relief that evening, enjoining the President, DHS, CBP, and other respondents from removing (i) refugees, (ii) visa-holders, and (iii) individuals from the nations affected by the Executive Order. The court found that the petitioners--two individuals who were detained at JFK, along with all others similarly situated--"have a strong likelihood of success" with respect to their Due Process and Equal Protection challenges to the Executive Order.  The court also found that, absent the stay, there was an "imminent danger that . . . there will be substantial and irreparable injury" to those subject to the Executive Order. On Sunday, January 29, petitioners filed a motion for clarification and enforcement of the order.  The motion cited reports that similarly situated people "have been placed on planes, possibly deported, and subject to intimidation to sign removal orders after the issuance of the Court's Order."  Among other things, petitioners seek confirmation that the court's order applies to all similarly situated people nationwide. On Monday, January 30, the case was assigned to Judge Carol Bagley Amon.

     B.     Nationwide Stay of Removal and Detention --Tootkaboni v. Trump, No. 17-cv-10154 (D. Mass. Jan. 29, 2017). 

On Saturday, January 28, two lawful permanent residents of Iranian origin who were detained at Logan Airport in Boston filed a similar action for relief, and also applied for an emergency stay on a nationwide basis. Early Sunday, Judge Allison D. Burroughs and Magistrate Judge Judith Dein of the District of Massachusetts issued a temporary restraining order ("TRO") prohibiting removal and detention of those subject to the Executive Order (i.e., refugees, visa-holders, and individuals from the affected nations).  The court made the same findings as the Darweesh Court, described above.  The TRO is in effect for seven days, with the court to set a further hearing date prior to its expiration. The court also directed respondents to limit secondary screening--an airport security measure that some critics have associated with profiling--to comply with the regulations and statutes in effect prior to the Executive Order, including 8 U.S.C. § 1101(a)(13)(C), the statute providing the standards by which a lawful permanent resident may be regarded as "seeking admission" into the United States.  The court also issued instructions to CBP, apparently intended to address the issue of airlines turning away passengers on international flights destined for Logan Airport, stating that CBP "shall notify airlines that have flights arriving at Logan Airport of this Order and the fact that individuals on these flights will not be detained or returned based solely on the basis of the Executive Order."

     C.     Stay of Removal of Lawful Permanent Residents at Dulles--Mohammed Aziz v. Trump, No. 1:17-cv-116 (E.D. Va. Jan. 28, 2017)

On Saturday, January 28, two brothers of Yemeni origin detained at Dulles International Airport filed an emergency application seeking a stay of removal on behalf of themselves as lawful permanent residents and others similarly situated at that same airport, as well as seeking access to counsel. Judge Leonie M. Brinkema of the Eastern District of Virginia issued a TRO forbidding removal of any lawful permanent residents from Dulles for seven days.  The court also directed that respondents "shall permit lawyers access to all legal permanent residents being detained at Dulles International Airport." On January 30, petitioners filed a First Amended Complaint, adding new allegations that they were coerced into surrendering their green cards and then flown to Addis Ababa airport in Ethiopia.[vi]

     D.     Other Court Actions and Orders

Individuals seeking relief on an individual basis only, and not on behalf of others similarly situated, have sought habeas corpus and/or other relief in a number of other district courts with jurisdiction over relevant international airports. For instance, on Saturday, January 28, a visa holder of Iranian origin detained at LAX in Los Angeles filed suit in the Central District of California, seeking habeas corpus, declaratory, and injunctive relief.  See Vayeghan v. Kelly, No. CV 17-0702 (C.D. Cal. Jan. 28, 2016).  Before the court could consider the emergency application for a TRO, however, "he was placed on a flight to Dubai to be removed to Iran."  But Judge Dolly M. Gee issued a TRO on January 29, directing respondents to "transport Petitioner back to the United States and admit him under the terms of his previously approved visa."  The court found, among other things, "a strong likelihood of success" on the petitioner's claims under the Equal Protection Clause, Establishment Clause, and Immigration and Nationality Act, and also pointed to "the public interest in upholding constitutional rights."  The court set a hearing to show cause regarding preliminary injunctive relief for Friday, February 10. On Saturday, January 28, Judge Thomas S. Zilly of the Western District of Washington granted an emergency stay of removal with respect to two petitioners being detained at Seattle-Tacoma International Airport.  A full hearing on the stay is set for Friday, February 3.  The matter is Doe v. Trump, No. C17-126 (W.D. Wash. Jan. 28, 2017). In addition, there are at least two broad-based suits being filed today.  First the Council on American-Islamic Relations ("CAIR") has filed suit in the Eastern District of Virginia, focusing on the Executive Order's "apparent purpose and underlying motive . . . to ban people of the Islamic faith from Muslim-majority countries from entering the United States."[vii]  The case  raises challenges under the Establishment, Free Exercise, and Due Process Clauses, and seeks broad injunctive relief against most aspects of the Executive Order restricting travel to the United States.  See Sarsour v. Trump, No. 1:17-cv-00120 (E.D. Va. Jan. 30, 2017).  Second, the attorney general of Washington State has announced he will file a suit in the Western District of Washington, also seeking to have key provisions declared unconstitutional and requesting injunctive relief.[viii] Finally, we are aware of other actions being filed in the Northern District of Illinois (Chicago O'Hare International Airport); the Northern District of California (San Francisco International Airport); the Central District of California (LAX); and the Northern District of Texas (Dallas-Fort Worth International Airport).  Additionally, there are at least fifteen actions pending in the Eastern District of New York, including the Darweesh matter discussed above.

IV.     On-the-Ground Observations at Airports Nationwide

Although deportations appear to have stopped and DHS has indicated it will comply with the court orders described above, reports from airport observers indicate that confusion continues regarding the implementation of the Executive Order and compliance with these court orders.  The Administration, however, has contradicted these reports, but has acknowledged that some individuals were affected and slowed down in their travel.[ix] Attorneys at various airports around the country have reported denial of access to detainees.  Despite court orders mandating attorney access to potential clients, CBP has reportedly refused to allow some detainees to speak in person with counsel.[x]  Other lawyers have reported that CBP has been averse to inquiries for information.  In Los Angeles, for example, CBP closed its airport office, making it difficult to determine the number, identity, and legal status of potential detainees. Detainees have reported extensive examinations and confiscations of luggage and personal belongings.[xi]  Multiple reports circulated detailing investigations into detainees' social media accounts and corresponding questioning regarding personal religious beliefs and political views, particularly related to President Trump and his administration.  Some detainees stated that individuals wearing headscarves were targeted for additional vetting.  Wait times varied widely, from half a day or longer to an hour or less.  There have also been reports that some detainees have been pressured into renouncing their lawful status under threat of being banned from re-entry for up to five years.[xii] Finally, many individuals have reported undergoing more rigorous screening at the point of embarkment.  As part of that process, individuals may be denied permission to board if there is an expectation they will not be admitted to the United States upon arrival.[xiii]

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The issues described in this Client Alert are rapidly changing.  Gibson Dunn is dedicated to staying at the forefront of these issues for the benefit of our friends and clients, and will update you with significant developments.
[i] U.S. State Dept., "Urgent Notice: Executive Order on Protecting the Nation from Terrorist Attacks by Foreign Nationals," Jan. 27, 2017 (https://uy.usembassy.gov/urgent-notice-executive-order-protecting-nation-terrorist-attacks-foreign-nationals/). [ii] U.S. Dept. of Homeland Security, "DHS Statement On Compliance With Court Orders And The President's Executive Order," Jan. 29, 2017 (https://www.dhs.gov/news/2017/01/29/dhs-statement-compliance-court-orders-and-president%E2%80%99s-executive-orders). [iii] U.K. Foreign & Commonwealth Office, "Press Release, Presidential Executive Order on Inbound Migration to United States," Jan. 29, 2017 (https://www.gov.uk/government/news/presidential-executive-order-on-inbound-migration-to-us). [iv] U.S. Embassy in Norway, "Updated Guidance on Executive Order on Protecting the Nation from Terrorist Attacks by Foreign Nationals," Jan. 30, 2017 (https://no.usembassy.gov/updated-guidance-executive-order-protecting-nation-terrorist-attacks-foreign-nationals/). [v] See, e.g., Daniel Dale & Emily Mathieu, "Canadian dual citizens exempted from Trump's travel ban," Toronto Star, Jan. 28, 2017 (https://www.thestar.com/news/world/2017/01/28/passport-holders-of-7-muslim-majority-countries-cant-board-air-canada-flights-to-us.html). [vi] As of Sunday night, it is unclear how the matters in Massachusetts and Virginia, brought by lawful permanent residents, are affected by DHS's statement on January 29 that "the entry of lawful permanent residents is in the national interest." [vii] Council on American-Islamic Relations, "CAIR to Announce Constitutional Challenge to Trump's 'Muslim Ban' Executive Order," Jan. 27, 2017 (https://www.cair.com/cair_to_announce_constitutional_challenge_to_trump_s_muslim_ban_executive_order). [viii] KOMO Staff, "State attorney general to file lawsuit against Trump immigration order," KOMO News, Jan. 30, 2017 (http://komonews.com/news/local/state-attorney-general-plans-major-announcement-on-trump-immigration-plan). [ix] E.g., Berkeley Lovelace Jr, "White House spokesman Sean Spicer says immigration ban 'small price to pay' for safety," CNBC, Jan. 30, 2017 (http://www.cnbc.com/2017/01/30/white-house-spokesman-sean-spicer-immigration-ban.html). [x] See, e.g., Edward Helmore, et al., "Border agents defy courts on Trump travel ban, congressmen and lawyers say," Guardian, Jan. 29, 2017 (https://www.theguardian.com/us-news/2017/jan/29/customs-border-protection-agents-trump-muslim-country-travel-ban). [xi] See, e.g., Nadel Issa, et al., "As hundreds protest, attorneys seek info on how many are detained," Chicago Sun-Times, Jan. 29, 2017 (https://chicago.suntimes.com/2017/1/30/18478614/as-hundreds-protest-attorneys-seek-info-on-how-many-are-detained). [xii] See, e.g., Joseph Goldstein, et al., "Lives Rewritten With the Stroke of a Pen," New York Times, Jan. 29, 2017 (https://www.nytimes.com/interactive/2017/01/29/nyregion/detainees-trump-travel-ban.html?_r=0). [xiii] See, e.g., Evan Perez, et al., "Inside the confusion of the Trump executive order and travel ban," CNN, Jan. 30, 2017 (http://www.cnn.com/2017/01/28/politics/donald-trump-travel-ban/).
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