SEC Adopts Rule Changes to Shareholder Ownership Reporting

On October 10, 2023, the U. S. Securities and Exchange Commission (SEC) adopted amendments (Amendments) to the beneficial ownership reporting requirements for beneficial owners of more than 5% of a class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (Exchange Act). The Amendments adopt, modify or decline to adopt the rule amendments initially proposed in the SEC’s February 10, 2022, release (2022 Proposals).

The Impact of Artificial Intelligence on Vulnerable Populations in the Workforce

Charting Expectations for AI
The rapid pace of artificial intelligence (AI) development is exceeding expectations, making it difficult to predict the exact next wave of AI progress. Even with these challenges, several studies considering how AI impacts the workforce are finding consistent patterns in their forecasts. Studies find AI will affect a wide spectrum of jobs but emphasize the impact on lower-wage professionals. AI brings more opportunity but may not bring opportunity equally to all employment sectors. While the future workforce is uncertain, studies provide guidance on how companies working with AI can take precautionary measures now to help protect their workforce from AI-generated harms while also preparing their employees to benefit from AI’s potential for streamlining work and providing greater efficiencies in the office.

Not So Fast: Satisfaction of Default-Rate Interest Required before Loan Reinstatement

For distressed borrowers seeking to reorganize, the Bankruptcy Code provides multiple options, including reinstatement of prepetition defaulted and accelerated debt. Given recent staggering increases in interest rates, reinstatement can be an attractive option because it allows a debtor to de-accelerate a defaulted loan and reinstate the loan’s original terms, including the original interest rate, over a creditor’s objection by making the creditor’s claim “unimpaired.” Although reinstatement can be beneficial, courts are split on whether a debtor must pay a secured lender default-rate interest and fees as a condition to reinstating a loan under a chapter 11 plan.

Interim Rule Establishes New Supply Chain Diligence Requirements for Contractors

On October 5, 2023, the Federal Acquisition Regulatory (FAR) Council issued an interim rule that implements the requirements of the Federal Acquisition Supply Chain Security Act (FASCSA) and creates three new FAR clauses that prohibit contractors from delivering or using covered articles and sources subject to exclusion or removal orders issued under the FASCSA. The FASCSA, which was signed into law on December 21, 2018, aims to prevent foreign adversaries from creating and exploiting vulnerabilities in information and communications technology to commit malicious cyber-enabled actions against the U.S. government. The FASCSA established the Federal Acquisition Security Council (FASC), an executive branch interagency council authorized to perform a variety of functions to further these goals.

NCAA Rejects Theory That Apparel Company Sponsorship Agreement Converts Company and Employees into Boosters

In 2023, the name image and likeness (NIL) allowance, the transfer portal, conference realignment and the NCAA’s overall governance structure attracted a significant amount of media attention. But one of the most important issues in industry of collegiate athletics rules enforcement and collegiate sports law continues to be what, precisely, constitutes a “representative of [a university program’s] athletics interests,” colloquially known as a “booster.” That is, because, under long-standing NCAA legislation, member institutions are held responsible for the actions of their boosters under the very low evidentiary standard of “known or should have known.”

OFAC Issues New Sanctions Targeting Hamas’s Financing Networks

Following the October 7 attack on Israel by Hamas, the Treasury Department’s Office of Foreign Assets Control (OFAC) has undertaken several initial sanctions steps to counter terrorist financing and call attention to financing networks, ongoing proliferation and terrorist support by Iran and due diligence expectations.

President Biden Issues Long-Awaited Executive Order on Safe, Secure and Trustworthy Artificial Intelligence

On October 30, President Biden issued the long-awaited Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence (AI), the first order to navigate AI’s impact across sectors and to help agencies and consumers harness the benefits of AI while mitigating risks.

Federal Banking Regulators Issue Final Rule Overhauling Community Reinvestment Act Regulations

On October 24, 2023, the Federal Deposit Insurance Corporation (FDIC), Board of Governors of the Federal Reserve System (FRB), and Office of the Comptroller of the Currency (OCC) issued a joint final rule that makes extensive amendments to the regulations that implement the Community Reinvestment Act (CRA). The agencies’ stated goal in issuing the Final Rule is to “strengthen and modernize” the CRA regulations, which have not been significantly revised in nearly three decades. The Final Rule is the culmination of a lengthy process that ends years of uncertainty about the fate of the agencies’ CRA regulations.

Government Accountability Office Publishes Fiscal Year 2023 Bid Protest Statistics

On October 26, 2023, the Government Accountability Office (GAO) published its Bid Protest Annual Report to Congress for Fiscal Year 2023. The GAO’s report, which is mandated by the Competition in Contracting Act, lists its key statistics for FY 2023 bid protest activity. The report also includes a chart providing similar bid protest statistics for fiscal years 2019 – 2023. This five-year snapshot provides some valuable insight into current bid protest trends and developments at the GAO.

Expansion of Global Capability Centers Requires Anticorruption Compliance Planning

In its Vision 2030 report, EY India projects that the number of global capability centers (GCCs) in India will increase from approximately 1,600 GCCs in 2023 to 2,400 GCCs in 2030, with the market size of GCCs increasing from about $43 billion to over $100 billion during this period. This dramatic increase forecasted by EY India is not surprising. GCCs provide a number of attractive benefits, including access to a very large pool of highly skilled IT resources in India, the ability to leverage this talent to build internal teams that can deliver on strategic digital initiatives with speed and agility, the opportunity to tap into India’s robust startup ecosystem, and the potential savings associated with lower labor rates and other costs of doing business in India.

New OSHA Electronic Injury and Illness Reporting Requirements for 2024

In July 2023, the Occupational Safety and Health Administration (OSHA) finalized its “Improve Tracking of Workplace Injuries and Illnesses” rule, which requires establishments with 100 or more employees in certain designated high-hazard industries (including agricultural, food production, manufacturing, retail, wholesale, transportation, medical and entertainment) to electronically submit information from their OSHA Form 300 (Log of Work-Related Injuries and Illnesses) and Form 301 (Injury and Illness Incident Report) once a year. Specifically, employers must submit detailed information about each recordable injury and illness, including the date, physical location and severity of the injury or illness; details about the worker who was injured; and details about how the injury or illness occurred. The rule is effective on January 1, 2024, and annual reporting is due March 2, 2024, through OSHA’s Injury Tracking Application (ITA).

U.S. Education Department’s New Accountability and Transparency Rules for Postsecondary Institutions to Take Effect in July 2024

On September 27, 2023, after receiving over 7,500 public comments, the U.S. Department of Education (ED) announced final regulations concerning the Gainful Employment Rule and the financial value transparency (FVT) framework it had proposed in May. The final regulations were published in the Federal Register on October 10, 2023, and will take effect on July 1, 2024.

In Latest Net Neutrality Proceeding, the FCC Proposes Reclassifying Broadband Internet Access as a Telecommunications Service, Largely Reinstating 2015 Open Internet Rules

At its October 2023 Open Meeting, the Federal Communications Commission (FCC) proposed rules that, if adopted, would reclassify Broadband Internet Access Service (BIAS) as a telecommunications service and reinstate the Commission’s authority adopted in 2015 but discarded in 2018. The item was supported by the three Democrats on the Commission and opposed by the two Republican commissioners. Since 2005, when the FCC adopted its Internet Policy Statement, Commission leaders have sought to regulate or deregulate BIAS through policy statements, by placing conditions on internet access companies seeking to merge, and, most notably, by classifying internet access service as either an information service, which affords the FCC limited regulatory authority, or a telecommunications service, which gives the FCC more robust tools to regulate service provider conduct.

Biden Administration Continues Campaign to Crack Down on Junk Fees

Federal consumer protection agencies and the White House have escalated their efforts to target so-called “junk” or surprise, add-on fees in a wide range of industries. The Biden Administration’s focus on junk fees has been intensifying since the beginning of 2022, as the White House has realized the popularity of these consumer protection measures in the midst of rising inflation. The Administration’s junk fee initiative, driven by the White House Competition Council formed in July 2021, is yielding new regulatory requirements across a wide swath of consumer-facing industries, and is likely to lead to enforcement actions in the not-too-distant future.

The Legal Impact of AI on Associations

There has been a rush of news and debate around Artificial Intelligence (AI) since the launch of ChatGPT in late 2022. AI is nothing new; you likely interact with it every day via spellcheck, virtual assistants and email spam filters. Generative AI, however, and its mass adoption for both personal and professional use, is a more recent phenomenon, and you may not have considered the legal implications and potential impact on your association.

Estate and Tax Planning 2023 Update: Act While You Can

The 2023 taxation climate presents challenges—as well as opportunities—for wealthy individuals and families. This September, the Internal Revenue Service (IRS) announced its concentrated focus on high-income taxpayer compliance, while in June the IRS and Department of the Treasury released guidance that allows individuals, estates and trusts to benefit from certain new transfer opportunities of renewable energy credits. With the scheduled sunset of the all-time-high unified estate and gift tax exclusion amounts, as well as the IRS taking harsh positions against high-income earners, now is the time to consider opportunities for estate and tax planning. Very often, these opportunities to save tax will include making gifts to children, including in trust for them, and using the generation-skipping transfer (GST) exemption to make the potential transfer tax savings on that gift last through many generations.

California Bill Designed to Support Underrepresented Entrepreneurs Signed into Law

On October 8, 2023, California Governor Gavin Newsom signed Senate Bill (SB) 54 into law. SB 54 will become effective on March 1, 2025, and will require “covered entities” to report demographic information regarding the founding teams of all businesses in which such “covered entities” had invested in the prior year. This report would be required annually and would be made to the California Civil Rights Department (CRD).

The Corporate Transparency Act: What You Need to Do Now

As has been widely reported, the Corporate Transparency Act (CTA) will become effective January 1, 2024, creating new obligations for millions of public and even the smallest private companies to report beneficial ownership information (BOI reports) with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). Companies that are not exempt from CTA reporting (Reporting Companies), that are created or registered on or after the effective date, will have 30 days after they are formed, under current rules, to comply with the CTA reporting obligations. Non-exempt companies created before the effective date will have until December 31, 2024. For more information on the exemptions from the CTA, please refer to the Pillsbury Client Alert published on June 12, 2023.

Public Companies Required to Adopt Clawback Policies by December 1, 2023

In late 2022, the SEC adopted a new rule (Rule 10D-1) and rule amendments (collectively, the “Rules”) that, through listing standards promulgated by the national exchanges (primarily NYSE and Nasdaq), will require all issuers with securities listed in the United States to adopt an incentive-based compensation (IBC) recovery policy (hereinafter, a “clawback policy”). The Rules are sweeping and impact all domestic issuers, as well as foreign private issuers, including those whose only U.S.-listed securities are Level 2 and 3 ADRs. The NYSE and Nasdaq final listing rules implementing the Rules were approved by the SEC on June 9, 2023, and importantly, for NYSE and Nasdaq-listed companies, require the adoption of a compliant clawback policy by no later than December 1, 2023.

Department of Defense Designates Eight Technology Hubs to Create “Lab to Fab” Pathways for Microelectronics Researchers

On September 20, the Department of Defense (DoD) announced nearly $240 million dollars to eight regional innovation hubs that will accelerate U.S. microelectronics manufacturing industry through the Microelectronics Commons, the Department’s newest program to accelerate product deployment from research to end commercialization. Companies working in the semiconductor industry should consider opportunities to partner and team with the established hubs that will be funding prototype projects key to the U.S. defense.

Applying Environmental Justice to the Regulated Community: What to Expect and How to Plan Accordingly

Environmental justice (EJ) has been a central focus of the Biden Administration, which has encouraged a “whole-of-government” approach. Notably, this encouragement to address EJ issues, while backed by multiple executive orders (EOs), has lacked any federal law upon which agencies can enforce responsive action. Agencies, such as the Environmental Protection Agency (EPA) and Department of Justice (DOJ), have nevertheless sought creative avenues to enforce EJ problems. As EJ appears to be a continued focus of the Biden Administration, those that operate in the environmental space should be aware of recent developments and their impact on business operations and considerations.

Funding Application is Open for SMART Grant Program

The SMART Grant Program
The Bipartisan Infrastructure Law (BIL) established the Strengthening Mobility and Revolutionizing Transportation (SMART) Grants Program, a competitive funding program for demonstration projects that improve transportation efficiency and safety.

Recent Updates on Foreign Investment Restrictions and Export Controls Governing Semiconductors, Quantum Computing and Artificial Intelligence (AI)

From August 27 to August 30, U.S. Secretary of Commerce Gina Raimondo visited China, marking the first trip to China by a U.S. commerce chief in five years. The trip, which came amid growing tensions between China and the United States, sought to open dialogue on crucial matters, including export controls, investment restrictions and national security. One reported success from Raimondo’s trip was the creation of a commercial working group which will meet twice a year at the vice minister level. While Raimondo stressed that this group will not “solve everything overnight,” it has been hailed as a welcome step towards transparency between either country.

When Does an Alter Ego Suit Alleging Debtor and Non-Debtor Are “One and the Same” Violate the Discharge Injunction?

In RS AIR, LLC v. NetJets Aviation, Inc. (In re RS AIR, LLC), 2023 Bankr. LEXIS 1453, 2023 WL 3774652 (9th Cir. BAP June 2, 2023), the Ninth Circuit Bankruptcy Appellate Panel (BAP) concluded that a discharge injunction is not violated by an alter ego claim against a non-debtor that alleges that the debtor and non-debtor defendant are one and the same. The BAP reasoned that a discharge only protects a debtor from personal liability, not any other person or entity (such as a co-obligor or guarantor) that is liable with a debtor, and affirmed an order denying the debtor’s motion for contempt for violations of the discharge injunction.

The Looming Government Shutdown—What Contractors Can Do to Prepare

The federal government’s new fiscal year begins on October 1, 2023. Given the current political climate, Congress may not agree on a new budget by the September 30 deadline. This creates a significant risk that the government will soon shut down for days or even weeks. If this happens, all executive branch operations will cease except for those deemed “essential,” a result which will significantly impact government contractors.

New Digital Asset Regulations Provide Glimmers of Much-Needed Clarity

On August 25, 2023, the Internal Revenue Service (IRS) published proposed regulations [REG-122793-19] in the Federal Register, clarifying requirements under the Infrastructure Investment and Jobs Act (IIJA). The IIJA was enacted almost two years ago in November 2021, and established digital asset transaction reporting requirements addressing who is specifically responsible for furnishing information to the IRS and cryptocurrency customers for digital asset transactions. The act included definitions for digital assets and “digital asset brokers,” the latter of which was concerningly broad in scope. Clarifying follow-up regulations have been arguably slow in coming.

Treasury Department and IRS Issue Proposed Regulations on the Prevailing Wage and Apprenticeship Requirements under the Inflation Reduction Act of 2022

On August 30, 2023, the Internal Revenue Service (IRS) published proposed regulations [REG-100908-23] in the Federal Register providing further guidance on compliance with the prevailing wage and apprenticeship requirements under the Inflation Reduction Act of 2022 (IRA), which taxpayers must comply with in order to receive the increased credit amounts (i.e., base credit amount multiplied by five) for new and continuing energy credit provisions. The proposed regulations expand upon prior guidance, IRS Notice 2022-61, which was issued on November 30, 2022, in order to start the 60-day clock on the start-of-construction exception from compliance with the prevailing wage and apprenticeship requirements. For Pillsbury’s analysis on IRS Notice 2022-61, use this link.

Practical Implications of the DOL’s Proposed Increase to the Minimum Salary Level for Exempt Employees

On August 30, 2023, the U.S. Department of Labor (DOL) issued a Notice of Proposed Rulemaking (NPRM), proposing to update and revise regulations under section 13(a)(1) of the federal Fair Labor Standards Act (FLSA), which governs minimum salary thresholds for employees to be exempt from the FLSA’s minimum and overtime wage requirements.

New Opportunities to Transfer Renewable Energy Tax Credits under the IRA: What is Possible for Individuals and Pass-Through Entities

On June 14, 2023, the Department of the Treasury and the Internal Revenue Service (IRS) released guidance on Internal Revenue Code (IRC) Section 6418, added as part of the Inflation Reduction Act of 2022 (P.L. 117-169)(IRA), granting taxpayers a new way to monetize certain tax credits. The guidance included proposed regulations relating to the transferability of tax credits under IRC Section 6418 (Transferability Guidance), temporary regulations regarding information and registration requirements (Pre-Filing Registration Guidance) and a series of frequently asked questions. (For a more general summary of this guidance, refer to our prior alert.) Notably, despite the hopes of tax practitioners and industry groups to the contrary, the new proposed regulations apply the passive activity rules of IRC Section 469 to transferees of tax credits under IRC Section 6418, which impacts the ability of individuals (and estates, trusts and certain corporations) to benefit from the credits. Additionally, the proposed regulations provide that transferees will bear the risk of certain events that result in a recapture of previously claimed tax credits.

One Contractor Hurdle Defeated: Federal Circuit Holds That the “Sum Certain” Requirement for CDA Claims is Not Jurisdictional

On August 22, 2023, the Federal Circuit reversed and remanded an Armed Services Board of Contract Appeals (ASBCA or Board) decision on appeal by ECC International Constructors, LLC (ECCI). The Federal Circuit held that the requirement to state a sum certain amount in a Contract Disputes Act (CDA) claim is mandatory but not jurisdictional.

The SBA Makes Significant Changes to 8(a) Program

On July 19, 2023, the U.S. District Court for the Eastern District of Tennessee issued an injunction that prevents the Small Business Administration (SBA) from utilizing a “rebuttable presumption” of social disadvantage for specific minority groups when evaluating applicants’ eligibility for its 8(a) program. The opinion in Ultima Servs. Corp. v. U.S. Department of Agriculture declared the SBA’s rebuttable presumption unconstitutional under the Fifth Amendment of the U.S. Constitution. This ruling departs from the SBA’s longstanding practice of using this presumption to address discriminatory practices and promote equal opportunities.

Gatekeeping Provisions in Chapter 11 Plans May Provide an Alternative to Nonconsensual Nondebtor Releases

Background
A nondebtor release releases the claims of a nondebtor party against another nondebtor party related to a debtor, potentially for both pre-petition and post-petition conduct. A nondebtor exculpation is a limited release of claims against nondebtor parties who participated in a bankruptcy case, e.g., trustees and creditor committee members, and typically concerns post-petition conduct. A nondebtor release or exculpation is “nonconsensual” if imposed on a releasing party without its explicit or, in some cases, implicit consent.

Provisions Relating to Digital Assets under the Financial Services and Markets Act 2023 Come into Force

Effective August 29, 2023, the Financial Services and Markets Act 2023 (Commencement No. 1) Regulations (SI 2023/779) (FSMA 2023) explicitly brings digital assets within the regulatory perimeter, creates a new designated activities regime (DAR), introduces regulations for stablecoins used as a means of payment (Payment Stablecoins), and creates a framework to establish financial market infrastructure sandboxes.

Administration Poised to Act on “Internet of Things” Devices

The Federal Communications Commission (FCC or Commission) has issued a Notice of Proposed Rulemaking (NPRM) to create a labeling program for Internet of Things (IoT) devices with comments due September 25, 2023, and reply comments due October 10, 2023.

Biden Administration Issues Guidance to Universities on Implementing Supreme Court Affirmative Action Ruling

On Monday, August 14, the Department of Justice’s Civil Rights Division and the Department of Education’s Office for Civil Rights (together, the “Departments”) issued a letter (the “Letter”) to colleges and universities advising compliance with the Supreme Court’s June 29, 2023, decisions, Students for Fair Admissions v. Harvard and Students for Fair Admission v. University of North Carolina (together, SFFA). The guidance urges colleges and universities to “redoubl[e] efforts to recruit and retain talented students from underserved communities, including those with large numbers of students of color” and to adopt “a greater focus on fostering a sense of belonging.”

OMB Finalizes “Build America, Buy America” Domestic Content Guidance

On August 14, the White House Office of Management and Budget (OMB) published its final guidance (Final Guidance) on the implementation of the Bipartisan Infrastructure Law (BIL), which includes domestic content requirements reflected in the Build America, Buy America Act (BABA). The pre-publication version is currently available here.

California Courts Continue Allowing Employees and Consumers to Return to Court Following Late Payment of Arbitration Fees

Sections 1281.97 through 1281.99 of the California Code of Civil Procedure set strict penalties for nonpayment of arbitration fees in employee and consumer arbitrations. Under those sections, the drafter of an employee or consumer arbitration agreement is in material breach of the agreement if it does not pay arbitration fees within 30 days. Following such a breach, employees and consumers may withdraw their claim from arbitration and proceed in court, and are also entitled to their attorneys’ fees and costs incurred both during the abandoned arbitration and in withdrawing from arbitration.

Pointers for Employers on the Proposed Regulations Interpreting the PWFA

The Pregnant Workers Fairness Act (PWFA), which went into effect in June 2023, requires employers, absent undue hardship, to provide reasonable accommodations to a qualified employee or applicant for employment for any known limitations related to, affected by or arising out of pregnancy, childbirth or related medical conditions.

Unleashing the AI Imagination: A Global Overview of Generative AI Regulations

This article discusses the latest developments of legislations on Generative AI in the United States (U.S.), Europe (EU), the United Kingdom (UK) and the People’s Republic of China (China or the PRC).

Exploring R&D Opportunities under the CHIPS Act

The CHIPS and Science Act (CHIPS Act), enacted in August of 2022, appropriated $52 billion to grow the semiconductor market—of which $11 billion will accelerate the next generation of semiconductor design and secure the domestic supply chain through the CHIPS Research and Development Office.

Leading Generative AI Companies Commit to Voluntary White House Guidelines

On July 21, 2023, the White House announced the voluntary commitment of seven companies to high-level principles concerning safety, security and public trust with respect to their generative artificial intelligence (AI) technologies. These voluntary principles will serve as a guidepost for the industry until Congress develops and passes legislation for AI development.

Voluntary Self-Disclosure: Is the Value Self-Evident?

On July 26, 2023, the U.S. Justice Department (DOJ), the Department of Commerce's Bureau of Industry and Security (BIS) and the Department of the Treasury's Office of Foreign Assets Control (OFAC) issued their second-ever joint compliance note. This second "Tri-Seal" note followed a March 2, 2023, note on the use of third-party intermediaries or transshipment points to evade Russian- and Belarussian-related sanctions and export controls.

AAM: Getting Cleared for Take-Off

Following years of unprecedented disruption resulting from the COVID-19 pandemic, the aviation industry is experiencing a doubling down of efforts to bring next-generation transportation technologies to market. The world’s sense of climate urgency is also pushing the industry to demonstrate leadership in greening the world’s transportation networks. For many, Advanced Air Mobility (AAM) represents an exciting new frontier and sustainable path forward for the aviation industry, which still has its fair share of challenges ahead.

Federal Communications Commission Acts to Prevent Unwanted and Illegal Phone Calls and Text Messages

With an estimated four billion robocalls per month, it’s not surprising that unwanted and illegal robocalls are the Federal Communications Commission’s (FCC) top consumer-protection priority, generating about 119,000 complaints in 2022 alone. Unwanted and illegal text messages—estimated at 225 billion in 2022—are increasingly prevalent and uniquely harmful to consumers by including legitimate-looking links designed to fool the recipient into providing personal and financial information. All of us experience on a daily basis the awkwardness of receiving a phone call or text message from an unknown telephone number and deciding whether to answer or reply. Unfortunately, some of these calls and texts are from bad actors and will result in fraud costing consumers billions of dollars.

Virtual Examination of I-9 Documentation Now Permitted for Employers Enrolled in E-Verify

Federal immigration law requires that, within three days after an employee’s first day of employment, an employer must confirm an employee’s identity and work authorization by physically examining the employee’s proof of identity and employment authorization documents. Employers must then complete Section 2, “Employer Review and Verification,” of Form I-9. Since March 2020, due to the COVID-19 pandemic, the Department of Homeland Security (DHS) and the U.S. Citizenship and Immigration Services (USCIS) had temporarily authorized employers to conduct virtual inspections of the documentation required to complete new employees’ Forms I-9. In May 2023, however, the DHS announced that the virtual inspection option would end on July 31, 2023, and in-person, physical examination requirements would resume on August 1, 2023. In addition, employers would be required to re-inspect any remotely inspected I-9 documents by August 30, 2023.

SEC Finalizes Long-Awaited Public Company Cybersecurity Disclosure Rules

On July 26, the U.S. Securities and Exchange Commission (SEC) adopted Final Rules that require public companies (registrants) and foreign private issuers to disclose material cybersecurity incidents promptly and to make periodic disclosures of their cybersecurity risk management, strategy and governance in annual reports. As we previously noted, the Final Rules add powerful arrows in the quivers of SEC Chair Gary Gensler and the SEC’s Enforcement Division to regulate cybersecurity as part of its mission of maintaining orderly markets. With their adoption, the Final Rules further bolster the SEC’s attempts to serve as the “cyber cop” on the Wall Street beat.

China Finalizes Its First Administrative Measures Governing Generative AI

On July 13, 2023, the Cyberspace Administration of China (CAC), China’s main regulator for cybersecurity and data privacy, issued its final version of the Interim Administrative Measures for Generative Artificial Intelligence Service (Generative AI Measures), which will come into effect on August 15, 2023. Compared to the draft regulations (Draft Regulations) published by the CAC in April for public comments, the Generative AI Measures have relaxed several requirements on the providers offering generative AI services and placed more emphasis on encouraging technological development and innovation.

 

Adolph v. Uber Technologies, Inc.: Plaintiffs Compelled to Arbitrate Their Individual PAGA Claims May Still Litigate Representative PAGA Claims

In Adolph v. Uber Technologies, Inc., the California Supreme Court ruled that plaintiffs who have been compelled to arbitrate their own individual Labor Code violations under the Private Attorneys General Act of 2004 (PAGA), Lab. Code, § 2698 et seq., continue to have standing to pursue other employees’ PAGA claims as their representative.

The EU-U.S. “Data Privacy Framework”: A New Solution for the Free Flow of Personal Data

Under the General Data Protection Regulation (GDPR), personal data can only be transferred to a “third country” outside of the European Economic Area (EEA) (e.g., the United States) if: (i) there has been an “adequacy decision” issued by the European Commission (Commission) in respect of that country; (ii) “appropriate safeguards” are in place (such as standard contractual clauses (SCCs) or binding corporate rules (BCRs)); or (iii) a derogation applies. Similar rules apply in relation to transfers of personal data from the UK or Switzerland.

One to Watch: Has the Ninth Circuit Turned on Section 230?

On June 21, 2023, the Ninth Circuit decided in a class action suit, Vargas, et al., v. Facebook, Inc., that Section 230 of the Communications Decency Act (Section 230) did not immunize Facebook from claims arising from allegedly discriminatory conduct by housing advertisers using the defendant’s Ad Platform. Ad Platform provides advertising users with the ability to select from among thousands of user attributes, including protected characteristics like sex, disability and familial status (e.g., whether a person has children), to target ads to advertisers’ preferred audiences on Facebook. Facebook is not alleged either to have contributed actual content to the housing ads or to have directed, induced or required advertisers to select particular audience attributes, whether or not protected under federal housing law. Nevertheless, the Ninth Circuit denied Facebook’s motion to dismiss, holding that Section 230 immunity did not apply.