2021 Year in Review

Our employee benefits and executive compensation team supported a pharmaceutical company client in the spinoff of one of its divisions. We assisted in the spinoff of a portion of a 401(k) plan, including establishing new plans, negotiating agreements with third-party administrators, reviewing and drafting employee matters agreements, related plan documents and summary plan descriptions, and other participant communications materials, and advising on the mechanics of the spinoff. We are also currently drafting new plan documents for two health and welfare plans, the summary plan descriptions, and negotiating related administrative and insurance contracts. We will also provide advice on how to transfer the sponsorship of one of the division’s defined benefit pension plan and SERP to the spun-off company in compliance with ERISA and IRC Section 409A. The project has been on a very fast timetable and is exciting in that it allows us to help establish a new, complicated benefits scheme for two new companies that are expected to be publicly traded. The interesting issues involve a host of ERISA fiduciary issues, deferred compensation plan requirements, retirement plan tax qualification requirements, and participant communications.

Seyfarth defeated class certification on behalf of a fast food restaurant chain in a potential class action of more than 42,000 employees claiming that they were not fully reimbursed for their mileage expenses when making pizza deliveries. The decision is important because the court held that an employer does not have to pay the standard mileage rate set by the IRS. Rather, an employer must merely pay the actual expenses incurred by an employee. Given that actual expenses involve thousands of individualized issues, class certification was denied. This case is significant because prior cases have been certified as class actions where an employer paid its own lump-sum rate per delivery, rather than paying the IRS per mile amount. Plaintiffs have also obtained class certification in more than a dozen similar driver expense reimbursement cases handled by different law firms.

Following a four-day trial in a PAGA-only representative action, Seyfarth won a motion for judgment on behalf of a health care client after the close of the plaintiff’s case, securing a complete and total win for the client. The plaintiff purported to represent nearly 2,000 current and former hourly employees who had worked for the employer during the relevant period. While he alleged a multitude of different wage and hour claims and theories, the case centered on the employer’s rounding and grace period practice for purposes of payroll. The court ultimately agreed that the practice was neutral and lawful, and in fact benefitted employees based on the record. The court also held that the plaintiff had failed to meet his burden on each of his additional alleged representative claims, including, inter alia, claims for off-the-clock work, failure to provide meal periods and rest breaks, and failure to reimburse business expenses.

We are currently advising one of the nation’s largest printing companies on a large-scale pension risk transfer. Specifically, the fiduciaries of the client’s pension trust’s fiduciaries have decided to shift the trust’s investment allocation to 100% in group annuity contracts. The result is that liabilities for future pension benefit obligations will be completely “de-risked.” Seyfarth is advising on the pension trust’s liquidation of alternative investment holdings and the insurance company RFP and selection process. Seyfarth will also negotiate the controlling agreements with all stakeholders. Seyfarth has served as outside employee benefits and benefit plan investment counsel to this client for several years.

Driven by extraordinary demand for securitized paper, 2021 saw historic levels of Railcar ABS issuance. Seyfarth’s structured finance team represented Napier Park Global Capital in three Railcar ABS issuances, with a total issue size of $1.077 billion backed by 23,714 tank and non-tank railcars. The first issuance involved a complex consent solicitation executed in parallel with a refinancing of senior notes. The second and third issuances were designated as Green Bonds; an ESG milestone highlighting the importance that the railcar sector plays in low carbon emissions transportation.

We successfully represented a West Coast municipality at trial on its $367 million claim against the United States for the defective design and construction of an intermodal expansion project. Our client asserted that the United States breached its contractual obligations by failing to oversee and manage the design and construction of the project, and failing to deliver a new port facility to the municipality. The court agreed, finding for the municipality and rejecting every defense raised by the United States. The court is now considering the appropriate damage award, which we anticipate will be issued in early 2022.  

Australia’s stevedoring industry is known for its tumultuous industrial relations environment, with complex enterprise bargaining negotiations and protected industrial action commonplace. The impact of industrial action in the ports has a widespread impact, not only on the stevedoring sector, but on the whole of Australia’s economy and international trade. Preventing such action, and finding swift resolutions when it does take place, is paramount.

Two of the world’s largest stevedores called on our Australia employment team to represent them in separate, but related, Federal Court proceedings litigated against the Maritime Union of Australia (MUA). The cases concerned illegal industrial action taken over a two-week period at the Port Botany container terminal in Sydney in mid-2017.

In late 2021, the Federal Court of Australia handed down its decision in the proceedings brought by our clients against the MUA. The court ordered that the MUA pay more than $2.2 million (combined) in compensation to our clients, and in excess of $40,000 in penalties against the union and two senior union officials. The ruling has been touted as a landmark in industrial relations law in Australia because it is a rare instance of an employer pursuing a damages case against a union all the way to the final court decision, as most companies prefer to settle or withdraw their claims before trial.

Seyfarth’s International Corporate & Commercial team in Hong Kong was engaged by a long-established textile manufacturer in the People’s Republic of China (PRC) that sought to list its shares on the Main Board of the Hong Kong Stock Exchange. We were asked to advise the company and its directors on Hong Kong laws and issues in relation to the proposed listing; perform legal due diligence on the company; prepare and comment on the prospectus; represent the company in negotiating and settling the underwriting agreements; and work closely with the experts and professional parties involved with the preparation of prospectus disclosure.

This deal involved a complex and challenging process of dealing with the PRC’s regulators, courts, investors, and professional parties. Many of the disclosure issues concerning our client were complex and highly sensitive, with many major legal, regulatory, and practical issues (especially sanction laws) in light of the nature, complexity, and scale of the client’s businesses, and the technological, market, economic, and operating environment.

The company successfully raised public funding of HK$85.6 million, and their market capitalization has now reached HK$667.8 million.

A US-based financial services company engaged Seyfarth’s International Employment team to provide employment law support in the final pre-acquisition stages of their purchase of a multicountry financial services business from a major multinational technology company. This was the client’s first acquisition of this kind, and they instructed Seyfarth after they ran into serious difficulties having tried to manage the matter internally with input from a global PEO and its advisers. Seyfarth was able to rapidly turn the project around, delivering commercial and practical advice and preparing transfer related documentation for rollout across multiple countries. This enabled the client to close the acquisition on time and be ready for Day 1 post-closing. Following Seyfarth’s successful intervention, the client further retained us as principal adviser on their international employment legal services requirement post-acquisition, including recently in respect to a further planned acquisition in Europe.

Seyfarth represented Dwyer Instruments in the sale of its controlling stake to Arcline Investment Management, a growth-oriented private equity firm.

Owned by the Clark family and management, Dwyer is a leading designer and manufacturer of sensor and instrumentation solutions for the worldwide process automation, HVAC, and building automation markets. The company holds 93 active and pending patents and offers a broad suite of more than 40,000 configurable SKUs, enabling it to service nearly all customer-required applications. Dwyer serves more than 20,000 active OEM, distribution, and end-user customers through its offices in the US, UK, Hong Kong, Australia, and Singapore. Founded in 1931, Dwyer is headquartered in Michigan City, Indiana.

Dwyer is one of Seyfarth’s longest-standing clients, with a relationship dating back more than 50 years. The client sought a buyer fit to carry on the Dwyer legacy and Arcline believes “the Company’s differentiated products position it well to serve the growing trend toward greater process automation, connected devices and improved indoor air quality and energy efficiency.”

The Seyfarth Corporate team representing is cross-practice in nature, including leaders in M&A, Tax, Product Liability, Antitrust, Employee Benefits, and Trusts and Estates.

Seyfarth continues to lead policy discussions in Washington on employment-related topics through amicus briefing, comments, discussions with lawmakers, agency officials and stakeholders as well as though formal regulatory comments and congressional testimony. Highlights include Camille Olson’s testimony before a joint House Subcommittee Hearing of the Workforce Protections & Civil Rights and Human Services subcommittees entitled, “Fighting for Fairness: Examining Legislation to Confront Workplace Discrimination,” and Scott Hecker’s testimony before the same joint subcommittees at a hearing entitled, “Protecting Lives and Livelihoods: Vaccine Requirements and Employee Accommodations.”  In 2021 Seyfarth submitted four sets of comments on behalf of SHRM and the Coalition for Workforce Innovation in February and April regarding the DOL’s 1/7/21 Final Rule on Independent Contractors and the DOL’s 2020 Final Rule on Joint Employer Status.  Seyfarth continues to serve as policy counsel to SHRM and other organizations on a wide variety of workplace and small business job and independent work creation issues. Seyfarth attorneys also provided insights to OIRA prior to the publishing of OSHA’s Emergency Temporary Standard Mandating COVID vaccine and testing protocols for large employers.