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Legal Report May 2015

​U.S. Judicial Decisions

Compensation. Security guards who monitor their radios during meal periods are not required to be compensated for that time, according to a ruling by a federal appeals court. Instead, the court held that under the Fair Labor Standards Act (FLSA), the guards could not be paid because they could not dem­onstrate that time spent during their meal breaks was “predominantly” for the benefit of their employer.

The ruling stems from a case brought by former and current security guards at the MotorCity Casino in Detroit, Michigan. Active guards at the casino work five 8-hour shifts per week and are responsible for escorting large amounts of cash, monitoring the casino floor, and listening to two-way radios.

Under a collective bargaining agreement, a guard working an 8-hour shift is entitled to a paid, 30-minute meal period. However, guards are not allowed to leave casino property, have food delivered to the casino, or receive visitors, and are required to monitor their radios during meal periods.

“The guards were responsible for listening to their radios and, if they heard a dispatcher call the appropriate code, responding to an emergency in the casino,” according to the suit. “A guard who did not respond to a mid-meal emergency call was subject to discipline.”

In 2012, a group of former and current guards sued MotorCity for violating the FLSA’s overtime provision. They alleged that MotorCity required them to work at least 41.25 hours per week, but paid them for only 40 hours’ work. “The crux of this claim was plaintiffs’ contention that their half-hour meal periods constituted working time—and were thus compensable—because guards spent that time predominantly for MotorCity’s benefit,” the suit said.

A district court ruled in favor of Motor­City and the guards appealed the verdict, which reached the U.S. Court of Appeals for the Sixth Circuit. The guards charged that monitoring their two-way radios during meal times exposed them to a “steady stream of work-related radio chatter,” making it a substantial job duty. However, the appeals court upheld the district court’s ruling, saying that “neither the case law nor the evidence in the record supports their claim.”

In his opinion, District Judge James G. Carr explained that, based on case law and the freedoms that the guards were given during their meal times, monitor­ing a radio is “generally a peripheral activity that an employee can perform while spending her meal breaks however she likes…[and] the absence of any evidence that plaintiffs performed a substantial job duty during their meal breaks supports the district court’s judgment that those breaks were predominantly for the guards’ own benefit.” (Ruffin v. MotorCity Casino, U.S. Court of Appeals for the Sixth Circuit, No. 14-1444, 2015)

Investigations. A fisherman who disobeyed an inspector’s orders and threw undersized fish overboard cannot be prosecuted under a federal criminal law against destroying corporate records, according to a ruling by the U.S. Supreme Court.

The case involved Florida commercial fisherman John Yates, who caught under­sized red grouper in federal waters in the Gulf of Mexico. His fishing boat was boarded by an inspector, who measured the undersized fish, separated them from the rest of the catch, and told Yates to keep the fish separate until he returned to port.

However, after the inspector left the boat, Yates ordered a crew member to toss the undersized fish overboard. Yates was then charged and convicted with de­­stroying, concealing, and covering up undersized fish to impede a federal investigation under the Sarbanes-Oxley Act of 2002.

Under section 1519 of the act, a person can be fined or imprisoned for up to 20 years if he “knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence” a federal investigation.

Yates appealed the decision, and the case ultimately reached the U.S. Supreme Court. Plaintiffs argued that the phrase “tangible object” only applies to objects used to store information, and not to fish.

A divided Court ruled in favor of Yates, with Justice Ruth Bader Ginsburg writing the main opinion. “A fish is no doubt an object that is tangible,” she wrote. “But it would cut [the section] loose from its financial-fraud mooring to hold that it encompasses any and all objects, whatever their size or significance, destroyed with obstructive intent.”

Because the Sarbanes-Oxley Act was designed to protect investors, Ginsburg wrote that a “tangible object…must be one used to record or preserve information.” (Yates v. United States, U.S. Supreme Court, No. 13-7451, 2015).

U.S. Legislation

Airport Security. The U.S. House of Representatives passed legislation that would verify that airports have working plans in place for responding to security incidents inside their perimeter.

The bill (H.R. 720), the Gerardo Her­nandez Airport Security Act of 2015, directs the assistant secretary of homeland security to conduct outreach to all U.S. airports in which the Transportation Security Administration (TSA) performs, or oversees implementation of, security measures. This outreach includes providing technical assistance to verify that they have working plans in place to respond to active shooters, acts of terrorism, and incidents that target passenger-screening checkpoints in place.

The bill then requires the assistant secretary to report the findings to Congress, including an analysis of the level of preparedness each airport has to respond to the various incidents. The assistant secretary will then use the information to identify best practices and establish a mechanism to share those with other airport operators.

The bill was introduced by Rep. John Katko (R-NY) and has seven bipartisan cosponsors. It has been received in the Senate and referred to the Commerce, Science, and Transportation Committee.

Information sharing. Rep. Dutch Ruppersberger (D-MD) introduced legislation that would allow the federal government to provide real-time sharing of actionable, situational, cyberthreat information between all designated federal cyber operations centers.

The bill (H.R. 234), the Cyber Intelli­gence Sharing and Protection Act (CISPA), is designed to help the United States protect, prevent, mitigate, respond to, and recover from cyber incidents. It amends previous laws to require the director of national intelligence to let the intelligence community share cyberthreat information with private-sector entities and utilities that have appropriate certifications or security clearances.

Additionally, the bill authorizes cy­ber­­security providers to use systems to ob­tain threat information to protect the rights and property of the entity that’s contracted the provider, and to share that information with other entities, including the U.S. Department of Homeland Security and the U.S. Department of Justice.

The bill has three cosponsors and has been referred to several House committees for consideration, including the Homeland Security, Armed Services, and Intelligence committees.

Other Legislation


Terrorism. Canadian Prime Minister Stephen Harper introduced legislation that greatly expands the Canadian Security Intelligence Service’s (CSIS) powers to combat terrorism following an attack on Parliament Hill in October 2014.

The Anti-Terrorism Act, 2015 (C-51), allows CSIS to actively prevent terror plots in Canada and abroad instead of just acting as an intelligence gathering service. The bill also allows authorities to remove “terrorist propaganda” from websites and creates a new criminal offense of encouraging an individual to carry out a terrorist attack.

Additionally, the bill lengthens the time authorities can detain suspected terrorists from three days to seven and lowers the evidentiary threshold for authorities to apply to courts, allowing them to take action if terrorist activity “may be carried out” instead of the previous threshold of believing an act “will be carried out.”

The bill also allows government departments to share private information about Canadians with law enforcement agencies, including passport applications and confidential commercial data.

The bill has been introduced in the House of Commons.


Technology. China has drafted new government regulations that would require technology vendors to meet strict security tests before being able to sell products to Chinese banks. The guidelines, created by the Chinese Banking Regulatory Commission, would require source code that powers operating systems, database software, or middleware to be registered with the commission to be considered “secure and controllable.”

Technology firms that seek to sell com­puter equipment to Chinese banks would also be required to create research and development centers in the country, obtain permits for workers servicing technology equipment, and build ports to allow Chinese officials to manage and monitor data processed by their hardware.

Additionally, the guidelines would require wireless routers to have approved encryption or virtual private networking certificates to be used. The guidelines have not gone into effect, and China is facing pressure from western technology firms to abandon the scheme.