The Louisiana Legislature has directed the Department of Environmental Quality (“LDEQ”) to promulgate regulations allowing for “voluntary environmental self-audits.” [1]  The self-audit regulations are to include provisions protecting confidential information and providing incentives to facilities for conducting a self-audit.

Environmental self-audit programs are designed to allow a facility to identify compliance issues and address them before enforcement action by the agency. This type of program offers incentives for self-discovery such as reduced penalties, recommendation of non-criminal liability, and certain confidential information protections.

The LDEQ does not currently have an official Self-Audit Policy.[2]  In directing the LDEQ to create a regulatory program for environmental self-audits, the Louisiana legislature is aligning with other states (e.g., Texas, Arkansas, and Mississippi) and the U.S. Environmental Protection Agency, which have already implemented this type of program.[3]

The primary restriction in the new legislation is that violations eligible for reduced or no penalty under the program cannot be:

  1. Violations that result in serious actual harm to the environment.
  2. Violations that may present an imminent or substantial endangerment to public health or the environment.
  3. Violations discovered by the department prior to the written disclosure of the violation to the department.
  4. Violations detected through monitoring, sampling, or auditing procedures that are required by statute, regulation, permit, judicial or administrative order, or consent agreement.

The legislation must be signed by the Governor before it becomes effective, and there is always the possibility of a veto.  If the legislation becomes law, there is much work left to be done by LDEQ to formulate and adopt rules before facilities can start taking advantage of the confidentiality and other incentives of an environmental self-audit program in Louisiana. The regulatory team at Kean Miller will follow the progress closely.

The enrolled act can be found here:


[1] On June 8, 2008 the legislature adopted HB72, which amends La. R.S. 30:2018(C) and 2030(A)(2) and enacts new R.S. 30:2030(A)(3) and 30:2044.

[2] The Louisiana Environmental Quality Act (La. R.S. 30:2001, et seq.) (“LEQA”) provides support for a type of incentive program for self-audits currently. LDEQ has the ability to enter into Administrative Orders on Consent (“AOC”) with facilities to conduct environmental self-audits. However, this process has been nearly exclusively offered to “new owners” of facilities. As a Settlement Agreement component, third-party environmental audits have been approved by the LDEQ as Beneficial Environmental Projects. The current legislative direct is not so limited.


The practice of engineering is regulated through licensure in all states.  Whether and under what conditions a state will allow engineers to practice through limited liability entities (“LLEs”) (e.g., corporations, limited liability companies, and limited liability partnerships) varies from state to state:

  • Some states do not regulate engineering LLEs at all.
  • Some states do not allow engineering LLEs unless all of the owners are licensed in that state.
  • Some states require only that the person in charge of the local office be licensed in that state.
  • Some states require an engineer to be designated as a responsible person for the engineering LLEs.[1]

The following states, and potentially others, require an engineer to be designated as a responsible person for an LLE:

  • Alabama
  • Alaska
  • Arizona
  • Connecticut
  • Delaware
  • Idaho
  • Kansas
  • Kentucky
  • Louisiana
  • Maryland
  • Mississippi
  • Nevada
  • New Hampshire
  • New Jersey
  • North Carolina
  • Ohio
  • Oklahoma
  • Rhode Island
  • South Carolina
  • South Dakota
  • Tennessee
  • Virginia
  • Washington

The designated responsible engineer goes by different names depending on the state:

  • Most states refer this person as the designated Engineer/Professional/Individual “in responsible charge”
  • Arizona refers this person as the “responsible registrant”
  • Louisiana refers this person as the “supervising professional”
  • Oklahoma, Illinois, and Maryland refer this person as the “managing agent”
  • Hawaii refers to this person as a “responsible managing employee”

Typical consequences of being the designee are as follows:

  • The designee could be held accountable for the work performed by the firm, particularly if the designee is also the Responsible Charge under whom work was done.
  • The designee will likely be responsible for ensuring that all professional services provided by the firm are performed by or under the responsible charge of licensed professionals.
  • The designee may be subject to disciplinary action by the state licensing board for “aiding and abetting” the LLE in a violation of statutes or rules committed by firm.
  • The designee is may be required to sign the LLE’s application for renewal of the firm’s license and to notify the board of any change in the firm’s supervising professionals, and may be held accountable for any errors or omissions in the renewal application, or for the failure to timely make a required notification to the licensing board.

In most states where LLE’s are licensed, violation of applicable licensing law or aiding and abetting a violation can lead to civil, administrative and even criminal liability.


Engineering firms typically carry professional liability insurance, which generally provides coverage against claims of negligent acts, errors, or omissions in the rendering of or failure to render professional services (including engineering), but is often subject to the following notable exceptions:

  • To be covered, there must be a “Claim” which must be both made and reported during the policy period.
  • A “Claim” is often defined as a written demand for damages or for correction of the professional services.
    • Thus, it is imperative that you immediately report any circumstances which could even potentially give rise to liability to your insurer.
  • The policy typically only covers negligent acts, errors, or omissions.
    • Intentional acts, errors or omissions are not covered.
    • Gross negligence is arguably covered.
  • The policy typically does not cover any fraudulent, criminal, dishonest, intentionally or knowingly wrongful, or malicious act, error, or omission, or those of an inherently harmful nature.
  • The policy typically does not cover taxes, criminal fines, criminal penalties, or liability for liquidated damages.

Thus, it may be that the professional liability insurance available to an engineering firm and its employees will not cover or even defend investigations by a state licensing entity for violations or alleged violations of applicable licensing law.

Kean Miller’s insurance group can analyze your insurance policy to determine whether it covers investigations by state licensing authorities and, if necessary, assist you or your broker in procuring insurance to cover those investigations.


[1] For additional resources on these topics see:

Aspen Publishers, State-By-State Guide to Arch. Eng. And Cont. Licensing (available on Westlaw);

Paul M. Lurie, Hugh Anderson, The Practice of Architecture and Engineering by Limited Liability Entities Across State Lines, 24-WTR Construction Law. 24 (2004);

50-State Survey of Firm Licensure Requirements for Architectural and Engineering Firms – 1st ed. Jan. 2015

In March 2021, Virginia’s Governor Ralph Northam signed the Consumer Data Protection Act (CDPA), making Virginia the second state to enact comprehensive data privacy protections for its residents. If you are feeling blindsided by this news, you are not alone.[1] Unlike California’s Consumer Privacy Act (CCPA) and Privacy Rights Act (CPRA) or the European Union’s General Data Protection Regulation (GDPR), which were heavily debated in both the legislature and public commentary for months on end, the Virginia legislature introduced this legislation in mid-January 2021, with Governor Northam signing the CDPA in less than two months’ time.

The CDPA will not go into effect until January 1, 2023 (ironically, the same day that most provisions of the CPRA also become effective). In the meantime, Virginia is assembling a working group to study the implementation of this act comprising “the Secretary of Commerce and Trade, the Secretary of Administration, the Attorney General, the Chairman of the Senate Committee on Transportation, representatives of businesses who control or process personal data of at least 100,000 persons, and consumer rights advocates … to review the provisions of this act and issues related to its implementation.” The findings of this work group are due on November 1, 2021, and that group’s notes will likely provide recommendations for compliance. While November may seem far away, businesses in Virginia or with significant Virginia consumer contacts may be wise to become familiar with the Act and the impending responsibilities.

Who must comply with the CDPA?

The first consideration before beginning compliance preparations is whether the CDPA will even apply to your business. The CDPA applies to persons that conduct business in Virginia or produce products or services that are targeted to Virginia residents and that either:

  • Control or process the personal data of at least 100,000 consumers during a calendar year; or
  • Control or process the personal data of at least 25,000 consumers and derive at least 50% of its gross revenue from the sale of personal data.[2]

For those familiar with California’s CCPA’s $25 million revenue threshold, the lack of a revenue threshold here is a notable omission. The result of that omission is that even large companies can be excused from compliance because they do not process the required amount of covered consumer data, while smaller companies (such as those offering low-cost direct-to-consumer products) will be required to comply regardless of revenue levels.

The definition of “sale of personal data” is also much more restrictive than the CCPA. The CCPA generally defines “sale” as exchange of information for monetary or other valuable consideration. Conversely, the Virginia definition of “sale of personal data” is only an exchange for monetary consideration, with some notable exceptions, such as exchange of personal data during a merger or acquisition.[3]

Do any exceptions exist for certain entity types?

Yes. The CDPA does not apply to the Virginia government, financial institutions subject to the Gramm-Leach-Bliley Act (GLBA), covered entities or business associates subject to the Health Insurance Portability and Accountability Act (HIPAA) and the Health Information Technology for Economic and Clinical Health Act (HITECH), nonprofits, or “institutions of higher learning.” However, the CDPA does appear to apply to third-party processors of government entities, nonprofits, and institutions of higher learning that meet the required data processing thresholds. Broadly speaking, there also exist certain carve outs for data subject to GLBA, the Fair Credit Reporting Act, and the Family Educational Rights and Privacy Act (FERPA).

Who does the CDPA protect?

The CDPA protects the personal information of “consumers”, which are defined as natural persons who are residents of Virginia “acting only in an individual or household context.” The definition explicitly excludes individuals “acting in a commercial or employment context”, which has the effect of excluding business to business communications and large amounts of human resources data. Thus, companies that only collect and hold Virginia consumer data in an employment or business to business context may be able to avoid compliance.

What personal data is protected by the CDPA?

The CDPA defines “personal data” as “any information that is linked or reasonably linkable to an identified or identifiable natural person.” “Identified or identifiable natural person” is defined as “a person who can be readily identified, directly or indirectly.” Special protections are also included for “sensitive data”, which includes data revealing racial or ethnic origin, religious beliefs, mental or physical health diagnosis, sexual orientation, or citizenship or immigration status; genetic or biometric data for uniquely identifying a natural person, data collected from a person known to be a younger than 13 years old, and “precise” geolocation data (locating an individual within a radius of 1,750 feet). Collecting sensitive data will require the consumer’s consent (or the consent of a parent if the consumer is under 13 years old).

The CDPA also excludes “publicly available information” from compliance and defines “publicly available” more broadly than other existing regulations. Unlike California’s limitation on “publicly available” only data that is lawfully obtainable from a government entity, the CDPA constitutes “publicly available information” to include information that a business has “a reasonable basis to believe [that the information is] lawfully made publicly available to the general public through widely distributed media, by the consumer, or by a person to whom the consumer has disclosed the information, unless the consumer has restricted the information to a specific audience.” Information that could thus fall under “publicly available information” in Virginia would include personal information posted publicly on social media; for example, a picture of a COVID-19 vaccine card posted on a public Instagram page.

What rights are Virginia consumers granted in the CDPA?

The rights granted through the CDPA are like those in the CCPA and GDPR. Consumers will generally be granted rights to access, correct, delete or receive copies of the personal data held by applicable businesses. Consumers will be able to opt out of targeted advertising and sale of their personal data, and businesses will also be required to make additional disclosures surrounding their personal data processing activities, the rights, and how consumers may exercise their rights. The specific mechanisms through which customers are able to exercise these rights are detailed and extensive, so thorough review of the CDPA’s specific mechanisms for compliance are recommended for businesses beginning compliance preparations.

What are the penalties for non-compliance with the CDPA?

Virginia’s Attorney General will be the sole enforcement authority of the CDPA. If the Virginia AG provides notice of a violation and the non-compliant business does not cure the compliance issue within 30 days of notice, the Virginia AG can institute enforcement action which carries statutory damages of up to $7,500 per violation for intentional violations. Unlike the CCPA, there is no private right of action.


Much like the CCPA, businesses can expect that regulations will be generated by the Virginia AG that will provide more detail about the CDPA requirements. While the final texts of those regulations are far off, businesses that will need to comply should begin preparations now—especially if they are not currently compliant with the GDPR or CCPA. Consultation with experienced privacy counsel and consultants can provide significant assistance in compliance efforts.


[1] Joseph Duball, “Challenge accepted: Initial Virginia CDPA Reactions, Considerations”, IAPP (Mar. 4, 2021) (

[2] § 59.1-572(A).

[3] Other exceptions include disclosures: (1) to a processor; (2) to a third party for the purposes of providing a product or service requested by the consumer; (3) to a controller’s affiliate; or (4) of information generally made available by the data subject through a mass media channel that is not restricted to a particular audience. The CDPA’s definitions of “processor”, “controller”, and “third party” are virtually identical to the GDPR.

Throughout Joe Biden’s campaign, he made clear that climate change, the environment, and “Clean Energy” were going to be anchors of his Presidential platform. What was less clear was how his administration would treat oil and gas beyond the expected counterbalance to the Trump Administration’s regulatory rollbacks – especially with respect to GHG emissions. On the big ticket items – drilling, fracking, leasing on federal lands, etc. – the campaign messages were mixed. Between Biden’s election and his inauguration, the speculation only increased about how moderate or progressive his approach would be on the industry.

On Inauguration day (Jan. 20), President Biden signed nine (9) Executive Orders addressing a wide range of policies. Most notably for the oil and gas industry was EO 13990, which among other things revoked the permit issued by President Trump for the Keystone XL Pipeline that had already been under construction for several years, and which was fully endorsed by Canada where it originated. That EO also imposed a moratorium on all activities related to the implementation of the Coastal Plain Oil and Gas Leasing Program in the Arctic National Wildlife Refuge and reinstated President Obama’s drilling moratorium in Arctic waters and the Bering Sea. As expected, the EO directed the EPA to propose new regulations to establish comprehensive standards of performance and emission guidelines for methane and VOC emissions from existing operations in the oil and gas sector, including exploration and production, transmission, processing, and storage segments by September 2021. Further, the EO revoked many of the Trump EO’s designed to create a more efficient and expedited federal permitting processes for infrastructure projects, including EO 13087 – One Federal Decision.

The following day, Acting Department of Interior Secretary Scott de la Vega issued Order No. 3395 that temporarily suspended delegated authority held by DOI regional staff for 60-days for specific actions. Most notably, Order 3395 “suspended” the issuance of all leases, permits, land sales, rights of way, and notices to proceed under previous surface use authorizations that will authorize ground-disturbing activities for fossil fuel development on federal lands both onshore and offshore without agency or bureau level approval.

On Wednesday, January 27, President Biden signed an EO entitled “Tackling the Climate Crisis at Home and Abroad”, which solidified the Administration’s commitment to the consideration of climate in all facets of governmental action. Section 208 of the EO ordered Secretary de la Vega to “pause all new oil and natural gas leases on public lands or in offshore waters pending a comprehensive review and reconsideration of Federal oil and gas permitting and leasing practices…” Then in Section 209, President Biden ordered all heads of agencies to report to OMB and his National Climate Advisor if and how they are subsidizing fossil fuels and ordered OMB to seek to eliminate all fossil fuel subsidies for Fiscal Year 2022. The Biden Administration insists that this is not a full ban on new leases, but merely a “pause” that will allow them sufficient time to revaluate how they will issue new leases going forward. Yet, while such an indefinite “pause” in federal land leases and sales still poses economic burdens for oil and gas developers, it is the anticipated follow up legislation or regulations that are most concerning for the future of the industry and economic wellbeing of many States that rely heavily on the production of oil and gas.

The industry response has already been swift. On January 27, Western Energy Alliance filed a Petition for Review of President Biden’s EO in Federal Court in Wyoming. On January 28, Texas Governor Greg Abbott issued his own EO GA-33 entitled Protecting Energy Industry from Federal Overreach. While Texas has practically no federal lands, Texas is home to many of the country’s major fossil fuel companies and workforce. Governor Abbott’s EO directed all of his state agencies to use all lawful powers and tools to challenge any federal action that threatens the continued strength, vitality, and independence of the energy industry. Then on January 28, U.S. Senator Cynthia Lummis (R-WY) and 24 other Senate Republicans from key energy states introduced the POWER Act which seeks to require Congressional approval to ban fossil fuel development. A companion House bill was also submitted.

In a conference call with industry groups on January 29, the Gulf of Mexico Region offices of BOEM and BSEE advised that they were awaiting instruction from the Department and Agency levels as to what authority they would retain with respect to the review, approval, and renewal of offshore leases and permits. They confirmed on the call that Order 3395 and Biden’s January 27 EO had no effect on existing leases or permits, but recent reports have come out that DOI has revoked 70 previously-approved drilling permits in the past few days.

The fossil fuel industry was always going to be a battleground for the Biden Administration; it was the scope and severity of that conflict that hard to predict. To be sure, any restrictions imposed on the industry will have to survive challenges from within the federal government and from outside lawsuits. This story is only starting to unfold and it’s one we will continue to monitor and report on.

The Supreme Court of Louisiana’s recent decision in Rismiller v. Gemini Ins. Co., 2020-0313 (La. 12/11/20), will impact all stages of civil litigation. In Rismiller, the Court held that, like biological and adopted children, children who have been given in adoption fall within the enumerated class of beneficiaries who may bring a wrongful death and/or survival action arising from the death of their biological family members.

Rismiller was the result of a motor vehicle collision that caused the deaths of Richard Stewart and his two minor children, George and Vera Cheyanne Stewart. Wrongful death and survival actions were filed by Mr. Stewart’s wife, Lisa Watts Stewart (who was not the biological mother of George and Vera), and their two adult children, Daniel Goins and David Watts, both of whom had been given up for adoption as minors.

The insurer of the driver who allegedly caused the accident, Gemini Insurance Company, filed an exception of no right of action as to the claims of Mr. Goins and Mr. Watts for the deaths of their biological father and half-siblings. Gemini argued that because Mr. Goins and Mr. Watts had been given in adoption and filiated to another, they did not fall within the enumerated class of beneficiaries who may bring a wrongful death or survival action under La. Civ. Code arts. 2315.1 and 2315.2. The 7th Judicial District Court overruled the exception, and the question eventually worked its way to the Supreme Court.

Supreme Court Justice Boddie, presiding ad hoc, authored the majority opinion. Applying the “clear and unambiguous wording” of La. Civ. Code arts. 2315.1 and 2315.2, the Court held that biological children given in adoption were “children of the deceased” and “brothers of the deceased” who were permitted to bring wrongful death and survival actions arising from deaths of their biological father and half-siblings.

Based on this decision, children previously given up in adoption would retain the right to bring wrongful death and survival actions for both their biological parent and their adoptive parent. This will affect the questions asked in depositions, written discovery requests, fact investigations, and signatures sought and required in settlements. Practitioners will need to inquire as to any and all children of the decedent, both biological and adopted, and should consider filing an exception of failure to join a necessary or indispensable party if any of the decedent’s children are not named plaintiffs to the suit.

One question left unanswered by the Court, but which was raised in Justice Crichton’s dissenting opinion, is how damages would be apportioned in the event that both the biological and adoptive parents of a child given in adoption are killed by the fault of others. Justice Crichton opined that the majority’s holding would “double the rights of the child,” who would collect twice the amount of damages as a child not given in adoption. According to Justice Crichton, this “absurd” outcome is contrary to the intent of the law “which is to equalize children given in adoption unless otherwise provided.” As this question was not before the Court in Rismiller, Louisiana practitioners will be left to debate it amongst themselves until such time as the Court elects to untangle that Gordian Knot.

The U.S. Supreme Court offered some good news to secured lenders last week, tempered with words of caution.  In Chicago v. Fulton, the Court held that a secured creditor does not violate Section 362(a)(3) of the Bankruptcy Code by merely continuing to hold property of its debtor after that debtor files a bankruptcy petition.  The 8-0 opinion written by Justice Alito, and particularly the separate concurring opinion written by Justice Sotomayor, cautioned that a creditor holding a bankrupt debtor’s property could easily run afoul of Section 362(a)(4) or (6) (prohibiting acts to enforce liens and to collect a claim, respectively), or of Section 542(a)’s obligation to deliver property to the debtor or trustee.  But at least there is nationwide clarity on one issue: merely continuing to hold a debtor’s property that was lawfully seized prepetition is not a violation of 11 U.S.C. § 362(a)(3).

This decision arises from several Chapter 13 bankruptcy cases where individuals filed bankruptcy and then demanded that the City of Chicago release their vehicles, which had been impounded for past-due parking fines.  The City refused.  The Bankruptcy Court found that the City’s refusal violated the automatic stay created by 11 U.S.C. § 362(a).  The Seventh Circuit Court of Appeals agreed that by retaining the debtors’ cars, the City had acted “to exercise control over” their property, in violation of the automatic stay.  Decisions from the Second, Eighth, Ninth, and Eleventh Circuits also imposed an affirmative duty on creditors to return seized property once a bankruptcy petition is filed; failure to do so was a violation of the automatic stay in those Circuits.  The Third, Tenth, and District of Columbia Circuits held that merely retaining property was not a violation of the automatic stay.   The Supreme Court resolved the circuit split by holding that simply holding property lawfully seized prepetition (i.e., before the debtor filed its petition for relief in bankruptcy court) and maintaining the status quo is not a violation of the automatic stay.

One interesting effect of this decision is that lenders now have even more incentive to move quickly to seize their collateral.  In commercial cases, the fact that a debtor cannot get its property back by simply filing bankruptcy will affect negotiations between borrowers and lenders, both in and out of a bankruptcy courtroom.  Justice Sotomayor’s concurring opinion notes that where the debtor is an individual, he or she may not be able to get to work to earn money to pay any creditors if his or her car is impounded for parking fines the debtor cannot afford to pay . . . effectively undermining the debtor’s bankruptcy case before it gets underway.  Her opinion suggests some ways that Congress could improve the Bankruptcy Code to give working debtors a better chance at a successful outcome for their case and unsecured creditors a better chance of getting paid something on their claims.  Perhaps the incoming Congress will accept her invitation to make some changes to the Bankruptcy Code.

On January 12, 2021, the U.S. Court of Appeals for the Fifth Circuit vastly changed the landscape for collective action wage and hour claims under the federal Fair Labor Standards Act.

In Swales v. KLLM Transport Services, L.L.C., the Fifth Circuit rejected the lenient standard typically employed by federal district courts for “conditionally certifying” collective actions and ruled that courts must, instead, do the difficult work to rigorously scrutinize whether workers are similarly situated to the named plaintiff before sending notice to potential opt-in plaintiffs.  According to the Court, the importance of the collective action certification issue “cannot be overstated.”

Background: FLSA Collective Actions

The FLSA allows plaintiffs to proceed collectively in litigation, but only when the plaintiffs can show that they and the members of the proposed collective are “similarly situated.”

Group litigation under the FLSA is different from class actions under Federal Rule of Civil Procedure 23. Whereas Rule 23 provides an “opt out” mechanism for class action members to avoid being bound by any judgment, the FLSA requires that similarly situated individuals file written consents to “opt-in” to the collective action.  But, the FLSA does not define what it means to be “similarly situated.”

Lusardi Two-Step Process

There has been much confusion and a lack of uniformity among district courts over how collective actions should proceed.  District courts are required to ensure that notice of the litigation is sent to those who are similarly situated to the named plaintiff, but they must do so in a way that scrupulously avoids endorsing the merits of the case.  Most district courts within the Fifth Circuit applied a “two-step” process to determine (1) who should receive notice of the potential collective action, and then (2) who should be allowed to proceed to trial as a collective.  This method comes from a New Jersey district court case, Lusardi v. Xerox Corp.  Under Lusardi, district courts utilize the two-step process to determine whether other employees or former employees of the defendant are “similarly situated” to the named plaintiff.

In the first step of Lusardi, the district court determines whether the proposed members are similar enough to the named plaintiff to receive notice of the lawsuit. This step is referred to as “conditional certification” of the putative class.  Typically, it is a lenient standard and a relatively low hurdle for the plaintiff to satisfy.

The second step occurs at the end of discovery.  At that time, the district court makes a second and final determination (utilizing a stricter standard) of whether the named plaintiff and opt-in plaintiffs are “similarly situated,” such that they may proceed to trial collectively.  If the court determines that the opt-ins are not sufficiently similar to the named plaintiff, then the opt-ins are dismissed from the lawsuit, and the named plaintiff proceeds to trial.  This step is referred to as “decertification.”

The Swales Court Rejected Lusardi; New Standard Announced

Last week, in Swales, the Fifth Circuit expressly rejected Lusardi. The Court found that the FLSA does not support Lusardi’s lenient conditional certification of a collective. Instead, the Court instructed district courts to “rigorously scrutinize” whether workers are similarly situated at the outset of the case.

Specifically, the district courts are to identify, before sending notice to any potential opt-ins, what facts and legal considerations will be material to determining whether a group of employees is similarly situated.  Then, the district court should authorize preliminary discovery specifically tailored to those facts and legal considerations.  The Fifth Circuit recognized that the amount of discovery necessary to make the determination will vary case-by-case; but the Court made clear that the determination “must be made, and as early as possible.”  As a result, notices of the lawsuit will only be sent to the individuals who actually are similarly situated to the named plaintiff.

Impact on Employers

Swales is a positive development for employers who face the potentially grueling and costly collective action process. Under Swales, threshold and potentially dispositive issues must be addressed early in the case. While the Swales framework may require more discovery at the beginning of the case, it also limits the scope of potential opt-in plaintiffs and number of individuals receiving notice to only those who truly have an interest in the outcome of the case.  The Fifth Circuit’s new standard also provides litigants with more certainty regarding the issues and parties in the case.

Buried in the 5,500-page Consolidated Appropriations Act for 2021 among various COVID-19 relief was the Trademark Modernization Act of 2020 (“TMA”). The TMA, which will become effective on December 27, 2021, makes several important amendments to federal trademark law (the Lanham Act) intended to modernize trademark application examinations and clean house of trademark registrations for marks not used in commerce. For litigants, the TMA also adds important clarity to the Lanham Act’s standard for obtaining injunctive relief by restoring the rebuttable presumption of irreparable harm called into question by the Supreme Court’s decision in eBay v. MercExchange, LLC, 547 U.S. 388 (2006). A summary of these key changes for trademark registrations and trademark litigation follows.

Ex Parte Challenges to Current Trademark Registrations

A significant impetus for the TMA was comments during a 2019 hearing before the House Subcommittee on Courts, Intellectual Property, and the Internet concerning “clutter” and “deadwood” on the United States Patent and Trademark Office (“USPTO”) trademark registers. As of July 18, 2019, the USPTO trademark register comprised approximately 2.4 million registrations.[1]  As testified by Commissioner for Trademarks Mary Boney Denison, the USPTO had seen an increase in trademark applications or registration maintenance filings that contained false or misleading claims and information, particularly with regard to specimens of use.[2] Trademark applicants are required to submit evidence with their applications that the applied-for trademark is actually being used in commerce in the class of goods or services listed on their respective application. Trademark owners are required to regularly submit similar evidence to maintain their registrations. Commissioner Denison testified that the USPTO has increasingly received fake or digitally altered specimens that do not actually show use of the mark in commerce as required by the Lanham Act.[3] These false submissions, as well as excessive registrations for marks no longer in use, limit the usefulness of Trademark Register and significantly increase trademark clearance costs.

The TMA seeks to address these issues through two new ex parte proceedings. The first mechanism, an ex parte reexamination, permits third parties to challenge use-based registrations where the trademark owner swore that the marks were used in commerce, either in the application itself or in a statement of use. This mechanism allows the USPTO to reexamine the accuracy of the applicant’s claim of use at the time the averment was made. The second mechanism primarily targets foreign applications that claim use under Lanham Act section 44(e) or 66(a)—which allows foreign applicants to bypass submitting a statement of use in lieu of providing evidence of trademark registration in another country—and allows challenges to marks that have never been used in commerce. These proceedings can each be initiated by submitting testimony or evidence establishing a prima facie case of non-use, or the Director of the USPTO may determine on his or her own initiative that a prima facie case of nonuse exists. The registrant will then have the opportunity to respond to the alleged prima facie case. The registration will then either be cancelled, subject to the registrant’s right of appeal to the Trademark Trial and Appeal Board, or confirmed valid. A validity decision will preclude all further ex parte challenges to the registration.

These ex parte mechanisms add renewed focus to the Lanham Act’s requirement of “use” for trademark rights. The Lanham Act requires “bona fide use of a trademark in the ordinary course of trade.” For goods, that can include consistently placing the trademark on the product or its packaging, labels, or tags or, if it is impractical to use on the product itself, invoices and documents associated with the sale of the goods. For services, use can include advertising in connection with actual offers for the services.[4] Given these new mechanisms and an increase in fraudulent applications, USPTO trademark examiners may more strictly scrutinize specimens of use for compliance with trademark use requirements. To avoid unnecessary delays in trademark applications, applicants should take care to ensure specimens meet the requirements of the Trademark Manual of Examining Procedure (“TMEP”) and that their use actually qualifies as trademark use. Experience intellectual property counsel can help clients navigate the TMEP and trademark application procedures.

Changes to Trademark Registration Examination Procedures

The Lanham Act currently requires trademark applicants to respond to office actions issued during the examination within 6 months. The TMA now allows the USPTO increased flexibility to set shorter response deadlines. Specifically, the USPTO can, through regulations, set shorter response periods between 60 days to 6 months, provided applicants can receive extensions of time to respond up to the standard 6 months. Much like extensions of time granted by the USPTO for patent applications, any such extension requests will incur additional fees.

Formalization of the Informal Protest Procedure

Though not a formal process, the USPTO has long allowed third parties to submit evidence regarding registrability of a mark during examination of a trademark application. Section 3 of the TMA now formalizes that process by: (1) expressly allowing third party evidence submissions; (2) setting requirements that the submission include identification of the grounds for refusal to which the submission relates; and (3) authorizing the USPTO to charge a fee for the submission. The USPTO is required to act on that submission within two months of its filing. The decision on the submission is final, but the applicant may raise any issue regarding the grounds for refusal in the application or any other proceeding.

Presumption of Irreparable Harm for Trademark Infringement Plaintiffs

The primary goal of most trademark infringement litigation is to stop the infringing behavior, typically through injunctions. Section 6 of the TMA provides that a “plaintiff seeking an injunction shall be entitled to a rebuttable presumption of irreparable harm.” This language codifies a standard that most courts had applied to establish harm before the U.S. Supreme Court’s 2006 decision in eBay v. MercExchange, LLC.[5] In eBay, the Supreme Court held that patent owners were no different than any other litigant seeking equitable relief, so those owners must demonstrate irreparable harm to be entitled to a permanent injunction. Several courts then applied eBay’s holding by extension to trademark owners, finding they also must demonstrate irreparable harm for an injunction to be warranted.[6] Some courts, like the Fifth Circuit, have struggled in their application of eBay to trademark infringement disputes, leading to confusion and disagreement among lower district courts.[7] The eBay decision thus ultimately led to a circuit split on whether the rule presuming irreparable harm remained valid in Lanham Act cases.[8]

The TMA makes clear that trademark infringement plaintiffs are entitled to the presumption that they will be irreparably harmed if the infringer is allowed to continue use of the infringing trademark. Section 6(b) further confirms the retroactivity of this presumption, stating that Section 6’s amendment “shall not be construed to mean that a plaintiff seeking an injunction was not entitled to a presumption of irreparable harm before the date of enactment of this Act.” This change increases the likelihood that trademark infringement plaintiffs will be awarded preliminary and permanent injunctive relief, decreasing overall litigation costs and evidentiary burdens on plaintiffs.

The Trademark Modernization Act of 2020 addresses a grab-bag of challenging trademark issues that together provide additional protections for trademark owners and, ultimately, consumers. Trademark owners seeking to register their marks will soon have expedited procedures to tackle fraudulent or “deadwood” registrations that block their trademark applications. The Act further resolves a circuit split for awarding an injunction, easing the burden on trademark owners to show harm. While the ultimate effect of the TMA remains to be seen, these changes should empower trademark holders with additional tools to combat problematic registrations and ease litigation burdens.


[1] Statement of the Commissioner for Trademarks Mary Boney Denison before the United States House Subcommittee on Courts, Intellectual Property, and the Internet Committee on the Judiciary, Jul. 18, 2019 (available at

[2] Id.

[3] Id.

[4] Services must actually be offered in connection with the advertisement to qualify as “use.” Couture v. Playdom, Inc., 778 F.3d 1379 (Fed. Cir. 2015).

[5] 547 U.S. 388 (2006).

[6] See Peter J. Karol, Trademark’s eBay Problem, 26 Fordham Intell. Prop. Media & Ent. L.J. 625, 636–653 (2016) (available at; Mark A. Lemley, Did eBay Irreparably Injury Trademark Law?, 92 Notre Dame L. Rev. 1795 (2017) . See also Gene Quinn, “Why eBay v. MercExchange Should, But Won’t, Be Overruled”, (Feb. 16, 2020) (

[7] See Karol, supra n. 5 at 646–47.

[8] Testimony of Douglas A. Rettew, “Fraudulent Trademarks: How They Undermine the Trademark System and Harm American Consumers and Businesses” at p. 13, Hearing Before the Senate Committee on the Judiciary, Subcommittee on Intellectual Property (Dec. 3, 2019) (available at

The Louisiana First Circuit Court of Appeal once again recognized the primacy of legislation as a source of law in the state and that the power to tax is reserved to the Legislature alone, not the Louisiana Department of Revenue (the “Department”). In Davis-Lynch Holding Co., Inc. v. Robinson, 2019-1574 (La. App. 1 Cir. 12/30/20), ___ So.3d ___, the court invalidated a regulation that had the effect of increasing the corporate taxpayer’s Louisiana apportionment percentage and, therefore, its corporate tax liability. The Davis-Lynch court held that the Department’s regulation (LAC 61:I.1134(D), the “Regulation”)  improperly excluded sales not made in the regular course of a corporation’s business from the sales factor used to determine its Louisiana apportionment percentage and was, therefore, invalid, because it exceeded the scope of the underlying statute and intruded on the Legislature’s sole authority to tax.

La. R.S. 47:287.95(F) (the “Apportionment Statute”) provides the three ratios used to determine the taxpayer-corporation’s Louisiana apportionment percentage. The only ratio at issue – the sales ratio – includes “net sales made in the regular course of business and other gross apportionable attributable to [Louisiana]” in the numerator and includes “total net sales made in the regular course of business and other gross apportionable income of the taxpayer” in the denominator. The Apportionment Statute does not exclude income from sales that were not made in the regular course of a taxpayer’s business. In contrast, the Department’s Regulation excludes sales not made in the regular course of business from the numerator and the denominator, which inflates an affected corporation’s Louisiana apportionment percentages. After reviewing the rules of statutory construction and the Apportionment Statute’s legislative history, the Davis-Lynch court concluded that the Legislature did not intend to exclude sales not made in the regular course of business from the sales factor. Therefore, the court held that the Regulation impermissibly exceeded the scope of the Apportionment Statute and as a result, was invalid.


Davis-Lynch Holding Co., Inc. (“Davis-Lynch”) is a Texas Corporation that, during the relevant tax period, did not do business in the state of Louisiana. Its only business activity consisted of holding its interest in Davis-Lynch, LLC (“D-L LLC”), a Texas single-member limited liability company authorized to do business in Louisiana and that was disregarded for federal and state income tax purposes. D-L LLC manufactured float and cementing equipment and sold its products to, among others, customers drilling oil wells in Louisiana and the Gulf of Mexico. Davis-Lynch maintained a warehouse in Louisiana. In 2011, Davis-Lynch sold its interest in D-L LLC and realized a gain on the sale of its investment.

During the tax year at issue, 2011, Davis-Lynch derived Louisiana net apportionable income from: (i) D-L LLC’s manufacturing activities; and (ii) the gain realized from the sale of its interest in D-L LLC (the “Gain”). Davis-Lynch used the three-factor apportionment formula, described in the Apportionment Statute and consisting of sales; property; and payroll factors, to determine its 2011 Louisiana apportionment percentage. For the sales factor, Davis-Lynch included the Gain in its tax base and in the ratio’s denominator.

On audit, the Department removed the Gain from the sales factor ratio completely, relying on LAC 61:I.1134(D) (the “Regulation”), which provides that “[s]ales not made in the regular course of business are not included in the formula provided by R.S. 47:287.95(F).” Removing the Gain from the ratio resulted in a higher Louisiana apportionment percentage and, as a result, a corporation income tax deficiency. The Department assessed Davis-Lynch for the alleged deficiency and the taxpayer appealed to the Louisiana Board of Tax Appeals (the “BTA”) for redetermination of the assessment.

Applicable Louisiana Law

Under Louisiana’s corporate income tax laws, every item of corporate income falls into one of two categories:  allocable or apportionable. “Allocable” income consists of the exclusive, enumerated list of income provided in La. R.S. 47:287.92(B). “Apportionable” income is a residual class, which includes all income that is not defined as allocable, by default. See, La. R.S. 47:287.92(C). A corporation’s allocable income is taxable only by the state in which it was earned. A corporation’s apportionable income is taxable in proportion to its activities in a given state. The Gain was not a type of income enumerated in 2011 as “allocable” income. It was, therefore, apportionable, by default.

Before 2006, the Gain would have been classified as allocable income, because “profits…from the sale or exchange of property…not made in the regular course of business” was among the enumerated items of allocable income. See, La. R.S. 47:287.92(B)(2) (West 2005). But, in 2005, the Legislature amended the categories of allocable income for tax years beginning January 1, 2006 and removed profits from the sale or exchange of property as an enumerated category. See, La. Acts 2005, No. 401 (Reg. Sess.). As a result, after 2005, the profits from the sale of property not made in the regular course of business were included in the residual class – apportionable income.

To determine what proportion of Davis-Lynch’s apportionable income Louisiana may tax (i.e., its Louisiana apportionment percentage), the starting point is La. R.S. 47:287.95(F)(1). The sales factor ratio during the Taxable Period was as follows:

The ratio of net sales made in the regular course of business and other gross apportionable income attributable to this state to the total net sales made in the regular course of business and other gross apportionable income of the taxpayer.

La. R.S. 47:287.95(F)(1)(c). Davis-Lynch included the Gain in the denominator as “other gross apportionable income of the taxpayer.” On audit, the Department removed the Gain from the sales factor pursuant to the Regulation, which provides that “[s]ales not made in the regular course of business are not included in the formula provided by [the Apportionment Statute].”

The Board of Tax Appeals Decision

After receiving the assessment from the Department, Davis-Lynch filed a Petition for Redetermination with the BTA. At issue in the case was: (i) whether the Regulation exceeded the scope of the underlying statute; and (ii) whether Davis-Lynch properly included the Gain in the denominator of the sales factor ratio under the Apportionment Statute. The BTA ruled, after a trial, that the Apportionment Statute required inclusion of the Gain in the sales factor ratio’s denominator but not its numerator. The BTA determined that the Regulation exceeded the scope of the underlying statute. In so holding, the BTA reasoned that “the clear meaning of [the Apportionment Statute] requires that the ‘other gross apportionable income’ be included in the ratio” and that the Department’s  attempt to “exclude entirely the income recognized by Davis-Lynch on the sale of the LLC from the three factor ratio”  was “a result clearly not contemplated by the statute.”  The BTA found that the Department’s interpretation would “render the phrase ‘other gross apportionable income’ meaningless.” Thus, the Board found the Gain was properly included in the denominator of the sales factor ratio.

The First Circuit Court of Appeal’s Decision

The Department appealed the BTA’s judgment to the Louisiana First Circuit Court of Appeal. On appeal, the Department argued that the Regulation is applicable, operates with the full force and effect of law, and mandates that sales not made in the regular course of business, such as the sale of D-L LLC, be excluded from the sales factor.  In response, Davis-Lynch asserted that the Apportionment Statute required the Gain be included in the denominator of the sales factor as “other gross apportionable income of the taxpayer” and that the Regulation exceeded the scope of the statute and was invalid.

On review, the First Circuit recognized the well-established principle that, even though the Department “has the authority to prescribe rules and regulations to carry out the purposes of Louisiana’s tax statutes, and such rules and regulations will have the full force and effect of law,” the Department’s regulations cannot “extend the taxing jurisdiction of the statute, as taxes are imposed by the legislature, not the Department.” In addition, the court noted, the Department’s “construction of its own regulation cannot be given effect where it is contrary to or inconsistent with the legislative intent of the applicable statute.” Thus, it was necessary to determine whether the Regulation was a reasonable interpretation of the Apportionment Statute or “a prohibited expansion of the scope of the statute.”

The First Circuit began its analysis by considering prior legislative actions related to the classification and treatment of the Gain. In La. Acts 1993, No. 690 (“Act 690”), the Legislature first attempted to reclassify “profits or losses from the sales or exchanges of property…not made in the regular course of business” from allocable to apportionable income. Act 690 would have, further, amended the statute providing specific apportionment formulas (i.e., La. R.S. 47:287.95) to expressly provide that “gross apportionable income…shall not include sales not made in the regular course of business…” See, La. Acts 1993, No. 690 (emphasis supplied). However, Act 690 was later declared unconstitutional. In 2005, the Legislature again attempted to reclassify “profits or losses from the sales or exchanges of property…not made in the regular course of business” as apportionable income, but it declined to exclude sales not made in the regular course of business from “gross apportionable income” as it had in Act 690. See, La. Acts 2005, No. 401 (“Act 401”). Nevertheless, in 2006, the Department adopted the Regulation, which provided, simply, that sales not made in the regular course of business are not included from the sales factor ratio.

The First Circuit found significant and determinative that the Legislature’s previous expression in Act 690, that sales not made in the regular course of business were not included as “gross apportionable income,” was not contained in the 2005 legislation (Act 401). The court, recognizing the primacy of law in the state, stated:

Legislation is the superior source of law in Louisiana. Where the Legislature expressly repealed the provisions of La. R.S. 47:287.95 stating “gross apportionable income shall not include…income not made in the regular course of business” and the language was not reintroduced in subsequent amendments, we find the Legislature’s intent was not to include this language in La. R.S. 47:287.95.

As a result, the court concluded that the Department’s exclusion of sales not made in the regular course of business from the sales factor was “contrary to the clear wording of the [Apportionment Statute] as well as the legislative history excluding similar language from the [Apportionment Statute].” Thus, the court held that the Gain should be included in the denominator as “other gross apportionable income” (but not the numerator) and that the Regulation impermissibly expanded the scope of [the Apportionment Statute].


The Davis-Lynch decision directly impacts any business whose Louisiana apportionment percentage is determined using the ratio provided in the Apportionment Statute. This includes pipeline transportation companies; businesses whose net apportionable income is derived primarily from the manufacture, production, or sale of tangible personal property; and any business whose net apportionable income is not derived primarily from (i) transportation by aircraft; (ii) transportation by means other than by aircraft or pipeline; (iii) services; or (iv) the exploration, production, refining or marketing of oil and gas. See, La. R.S. 47:287.95(F)(b)(i)-(ii). If the decision becomes final or is otherwise affirmed by the Louisiana Supreme Court on review, all gross apportionable income, from whatever source, must be included in the sales factor ratio’s denominator.

In Davis-Lynch’s case, the Gain was a significant amount from a sale not made in the regular course of its business and including the Gain in the ratio’s denominator had the effect of reducing the taxpayer’s Louisiana apportionment percentage. For other taxpayers, including such sales may not have a similarly beneficial effect on its sales factor. Louisiana taxpayers who determined their Louisiana apportionment percentage and corporate income tax liability using the Regulation – that is, excluding sales not made in the regular course of business – should consider reviewing their returns for whether refund opportunities exist.

The decision is also important because it is yet another example of a Louisiana court recognizing the primacy of legislation as a source of law and denying the Department’s ability to make law through regulation when that regulation exceeds the scope of the statute it purports to interpret. The First Circuit’s decision in UTELCOM, Inc., et al. v. Bridges, 2010-0654 (La. App. 1 Cir. 9/12/2011), 77 So.3d 39 is the most prominent example of this in recent years. The courts’ fidelity to this well-established principle of law is an important check on the Department’s expansive view of its rule-making authority.

As of the date of publication, it is unclear whether the Department will move the First Circuit Court of Appeal for a rehearing or seek a writ of certiorari from the Louisiana Supreme Court.

Other Considerations

The decision makes note of a second assessment the Department issued Davis-Lynch for the 2011 tax period. After the audit, and more than a year into the litigation, the Department determined that Davis-Lynch should have used single-factor versus three-factor apportionment, because it earned income from D-L LLC and D-L LLC derived its income primarily from the manufacturing, production, or sale of tangible personal property. The Department relied on La. R.S. 47:287.95(F)(2)(b)(i), which provides: “For taxable periods beginning on or after January 1, 2006, and for the purpose of this Subsection, the Louisiana apportionment percent of any taxpayer whose net apportionable income is derived primarily from the business of manufacturing or merchandising shall be computed by means of a single ratio consisting of the ratio provided for in Subparagraph (1)(c) of this Subsection.” – i.e., the sales factor ratio.

The Department reversed the three-factor apportionment formula Davis-Lynch used and recomputed its Louisiana apportionment percentage using a single sales factor ratio (excluding the Gain). The reversal had the effect of further increasing the Davis-Lynch’s alleged deficiency for the 2011 year. Davis-Lynch appealed the second assessment to the BTA arguing that, because the Gain far exceeded the income it earned from D-L LLC, its net apportionable income for 2011 was not derived “primarily from the business of manufacturing or merchandising,” but from the sale of D-L LLC. The Department conceded the matter and withdrew the assessment in open hearing before the BTA. Davis-Lynch, thereafter, formally dismissed its appeal.

It is important to note the second assessment in order to make clear that the appropriate apportionment formula is determined by a taxpayer’s net apportionable income for the year in question, not necessarily its primary business.


In summary, the Davis-Lynch court determined that, because the Legislature had included language in its previous attempt in 1993 (Act 690) to remove “profits…from the sales or exchanges of property…not made in the regular course of business” as allocable income, rendering it apportionable, and expressly provided that “gross apportionable income shall not include income…not made in the regular course of business,” its decision declining to include similar language in its subsequent attempt in 2005 (Act 401) showed that the Legislature did not intend to exclude sales not made in the regular course of business from the sales factor. Thus, the Department improperly decided on its own to make such a change through regulation. While state regulations are generally given a large amount of deference by state courts, it is important to remember, as this case demonstrates, that a regulation may not constrain or expand the scope of a taxing statute in any way. Taxpayers should not hesitate to test the validity of any regulation that exceeds the underlying taxing statute.

If you are interested in discussing the Davis-Lynch decision and whether or how it impacts the determination of your business’s Louisiana apportionment percentages for current or past periods, please contact: Jason R. Brown at (504) 293-5769, or Willie J. Kolarik II at (225) 382-3441.


Jason R. Brown and Willie J. Kolarik II of Kean Miller LLP represented Davis-Lynch Holding Co., Inc. in this litigation.


On December 27th, the President signed into law a second pandemic relief package as part of a larger government funding bill passed by Congress entitled The Consolidated Appropriations Act, 2021 (“CAA”). In March of this year, President Trump signed the first pandemic-related stimulus bill: H.R. 748, the Coronavirus Aid, Relief and Economic Security Act (Public Law No: 116-136, the “CARES Act”). The tax provisions in the CAA, are numerous, but for the most part, extend certain tax relief provided in the CARES Act and resolve the controversy regarding Congress’ intent related to certain CARES Act relief provisions.  The CAA also contains several important federal income tax changes, as set out below.

Tax Treatment of PPP Loans

The CAA clarifies that otherwise-deductible expenses funded by loans received under the Paycheck Protection Program (PPP), which was created by the CARES Act, will be deductible under Internal Revenue Code (“IRC”) Section 163. While Congress made clear in the CARES Act that the loans made under PPP were not taxable, it was not clear whether expenses funded by PPP loans would be deductible.  Confusion arose regarding deductibility of the expenses when the Internal Revenue Service (the “IRS”) issued guidance that expenses funded by PPP loans would not be deductible.  However, the new legislation clarifies that it was Congress’ intent that such expenses be fully deductible.

Retention Credit Expanded

One of the major business policies behind the CARES Act was to encourage businesses to retain their employees during the economic turmoil caused by the lockdowns. To that end, the CARES Act provided an employee retention credit to employers, based on wages (and a proportionate amount of qualified health plan expenses) paid to employees.  The CAA  increases the credit percentage to 70 percent of qualified wages and expands the wage base to $10,000 per employee per quarter (as opposed to per year in the CARES Act). The CAA  also reduces the amount of losses that a business must incur to be eligible for the credit.  In addition, the CAA revises the credit to allow a business that received a PPP loan to claim the credit to cover payroll expenses not covered by PPP. The credit expires four quarters after June 30, 2021.

Business Meals Deduction

In an effort to help restaurants that have suffered substantial economic losses during the pandemic, the CAA  increases the deduction for business related meals to 100 percent through December 31, 2022.  Under current federal income tax law, a business may only deduct 50 percent of the cost of business-related meals.

Again, these are just a few of the many tax provisions proposed in the CAA.  Businesses and individuals will be analyzing the impacts of the new law for quite some time.

For additional information, please contact: Jaye Calhoun at (504) 293-5936 or Willie Kolarik at (225) 382-3441.