Posts tagged ‘Inc.’

Can Your Employee Use Medical Marijuana At The Credit Union?

Since 2014 when New York legalized the use of marijuana for medical purposes, lawyers, HR professionals and employers have grappled with how best to reconcile two provisions of New York’s law which seem to be in conflict with one another. On the one hand, § 3369(2) of New York’s Public Health Law stipulates that a certified patient authorized to use marijuana shall be deemed a disability under New York’s Human Rights Law which bans discrimination against the disabled and mandates that employers provide employees reasonable accommodations to do their jobs.

Conversely, this same subdivision goes on to explain that it does “not bar the enforcement of a policy prohibiting an employee from performing his or her duties while impaired by a controlled substance” or put the employer in the position of violating Federal Law.

New Jersey also authorizes the medical use of marijuana with provisions similar to New York’s. A recent decision by its Supreme Court, while not binding in New York, could be used as persuasive authority by future employees claiming to have been discriminated against by their employers. I would certainly take a look at this case and consider whether the type of activities performed by your credit union employees justify policies that you may have regarding the use of marijuana in the workplace.

In Wild v. Carriage Funeral Holdings, Inc., a funeral director came down with cancer in 2015 and was prescribed marijuana under New Jersey’s Medical Use Law. One day he got into an accident while driving a company vehicle. He went to the emergency room and explained that he had marijuana in his system because of his cancer treatment but the doctor was unconcerned because he was clearly not impaired. Nevertheless, he was fired for violating the corporate policy against using drugs during work hours, a policy with which NCUA’s employees are all too familiar these days.

He sued claiming that he was lawfully using marijuana and he was being discriminated against because of his medical disability in violation of NJ law. The lower court disagreed because of a provision of the New Jersey Compassionate Use Act that “nothing” requires an employer to accommodate a medical user of marijuana. The case eventually found its way up to the New Jersey Supreme Court. In a brief decision, it held that it was obligated to interpret New Jersey law in a way that reconciled the two provisions. It ruled that “The Compassionate Use Act does not have an impact on the plaintiff’s existing employment rights. In a case such as this, in which plaintiff alleges that the Compassionate Use Act authorized his use of marijuana outside the workplace, the Act’s provisions may be harmonized” with New Jersey’s anti-discrimination laws.

Think about the impact that this decision has for those of you who have branches in New Jersey. Most importantly, you should make sure that your policies don’t discipline an employee simply because he or she is lawfully using marijuana. The case also raises an interesting issue that employees also need to consider. In this case, there was documented evidence that the employee was not impaired. Would the outcome have been different if the employee was impaired? And if so, how are employers going to make the distinction between an employee with marijuana in his system and an employee with marijuana in his system who is impaired? These are interesting questions that we won’t know the answer to for several years. But in the meantime, your policies have to be drafted in consideration for these questions in any state which authorizes medical marijuana use.

March 12, 2020 at 11:27 am Leave a comment

Just What Is a Robocall Anyway?

As really hardcore readers of this blog know, my wife has suggested that I am a beater of dead horses. While I respectfully disagree some issues really do get under my skin and right now one of those is the recent ruling by the FCC banning robocalls. A recent decision by the Court of Appeals for the 9th Circuit underscores that the FCC did not ban robocalls. Instead, it made it even more difficult to reach out to members using equipment that could make robocalls. I’ve explained this before but the 9th Circuit decision underscores just how unworkable the 1991 statute has become. Duguid v. Facebook, Inc., No. 17-15320, 2019 WL 2454853, (9th Cir. June 13, 2019)

When Congress decided to clamp down on unsolicited marketing phone calls it decided to do this by placing restrictions on the equipment used to make such phone calls. Consequently the TCPA’s consent requirements are triggered any time “equipment which has the capacity—(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” 47 USC 227(a)(1)(A).

The plaintiff in this case brought a claim under the TCPA after receiving several unsolicited messages for Facebook even though he belongs to that rare group of people such as your faithful blogger who has never belonged to Facebook and never will. No one seems to know how or why he got these messages. In seeking to dismiss this lawsuit, Facebook made a frontal assault on the breath of the statute and the way some courts and regulators have chosen to interpret it. Specifically it complained that under the existing interpretation of the TCPA it could be understood to include smart phones because they can store numbers and use automated response technology. Consequently, any use of a smart phone triggers the TCPA.

In rejecting Facebook’s argument, the 9th Circuit basically said that the statute says what it says and if it is being interpreted too broadly then this is an issue for Congress to address and not the courts. It explains that the text of the statute “provides no basis to exclude equipment that stores numbers including cell phones.” In other words, if you are calling up your member to inquire about a late bill payment or you are emailing a member to tell them about a loan product you think they may be interested in, the TCPA is implicated unless you are using a roto dialer.

Now why does this annoy me so much? Because despite of the uncertainty regarding the proper interpretation of the TCPA, the FCC rushed out regulations allegedly clamping down on robocalls. But this simply isn’t true. What the FCC actually did was clamp down on the use of equipment which could be used to make robocalls. But that doesn’t fit as neatly into a headline. It really is time for Congress to clean up this mess but then again the election is a mere year and a half away. No time for any work to get done.

One Down One To Go

Around 9:30 last night a weary Assembly passed legislation giving credit unions the right to participate in banking development districts for the first time since the legislation was passed in 1997. It now goes on to the Governor for his signature. Passage of the bill is a tribute not only to the tenacity of credit unions but to pioneering institutions like Lower East Side Federal Credit Union in Manhattan which were created specifically to address the needs of consumers who found themselves in banking deserts as banks began to contract branches.

As for the Holy Grail, our municipal deposit bill is still in the Assembly Ways and Means Committee. We will keep you posted on developments throughout the day. It still looks as if the legislature will be in town beyond today but we won’t know for sure until an official announcement is made. We will keep you updated on developments throughout the day. Let’s keep our fingers crossed.

June 19, 2019 at 8:43 am 2 comments

Court Gives NCUA Green Light to Sue Investment Banks Over Faulty Securities

NCUA notched another important legal victory in its quest to have the investment banks which  sold  residential mortgage backed securities to the corporates prior to the Mortgage Meltdown  pay up for allegedly  not adequately warning of the risks involved in buying these securities. The NCUA announced in April that it had recovered more than $3 billion in settlements.  But remember that the lawyers have to be paid and the litigation could still drag on for many years.

To understand yesterday’s decision it’s necessary to take a not so pleasant trip down memory lane. In 2009 NCUA took over Wescorp, then the second largest corporate credit union, after the RMBS’s  it had purchased tumbled in value.  Remember that these bonds are pools of packaged mortgages and investors are paid off from the stream of mortgage payments.   When homeowners stopped paying their mortgages these securities  became almost worthless, necessitating a lifeline from the Treasury  Department and the creation of the Stabilization Fund that all credit unions had to pay into.

NCUA became the first federal agency to sue the investment banks. Its basic argument is that they failed to properly disclose the risks of buying the securities to the corporates because they knew that many of the packaged mortgages were destined to tumble faster than Donald Trump’s poll numbers.

A central issue in this litigation has been whether or not federal law gives NCUA six years to bring these lawsuits under what’s called the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) or at most  three years under the Securities Act of 1933. If the Securities Act applies  NCUA’s claims are time barred.

Yesterday,  the Court of Appeals for the Ninth Circuit reversed a lower court ruling and ruled that the longer period applied. NCUA can  continue its suit against Wachovia Trust  and Nomura Home Equity.  (NATIONAL CREDIT UNION ADMINISTRATION BOARD, as Liquidating Agent of W. Corp. Fed. Credit Union, Plaintiff-Appellant, v. RBS SECURITIES, INC., FKA RBS Greenwich Capital Markets, Inc., Defendant, & NOMURA HOME EQUITY LOAN, INC., Defendant-Appellee., No. 13-56620, 2016 WL 4269897,  (9th Cir. Aug. 15, 2016) The decision means that two federal circuits have now upheld the right of NCUA to bring these suits which translates into more money for credit unions.  The Tenth Circuit reached a similar conclusion in Nat’l Credit Union Admin. Bd. v. Nomura Home Equity Loan, Inc., 727 F.3d 1246 (10th Cir. 2013).

Of course, everyone wants to know how this is going to impact their bottom line but  the truth is no knows yet.  This litigation could drag on for years.   For instance, the investment  firms could appeal yesterday’s decision to the Supreme Court and the core allegations still haven’t been litigated. But give NCUA credit.  It’s already had more success than many people, including this blogger, thought it would when it decided to call in the lawyers.

August 16, 2016 at 9:12 am Leave a comment

Banker Hypocrisy And Municipal Deposits

One of the first arguments the banks regurgitate in opposition to municipal deposit legislation is that tax dollars shouldn’t go to institutions that don’t pay taxes.  First, we all know that credit unions do pay taxes; but, more importantly for this post, banks have never quite explained why their for-profit tax status automatically makes them better protectors of the public Fisc than credit unions.

That question is worth asking the Legislature next year in light of the New York Bankers Association successful efforts to keep New York City from scrutinizing the community investment performance of banks holding the City’s deposits.  On Monday, a federal court ruled that a NYC ordinance mandating that banks holding or wishing to hold municipal deposits be subject to a local review of their investment activities was preempted by federal law and could not be enforced.  (The New York Bankers Association, Inc., v. The City of New York, 15 Civ. 4001).

The Responsible Banking Act had its roots in the worst days of the Great Recession.  NYC council members grew frustrated by the juxtaposition of mounting foreclosures and shoddy banking practices even as billions of dollars of public money was being deposited into banks for safe keeping.  The bill established an advisory board that would report on how well banks were doing meeting financial benchmarks.  The report would be used in evaluating institutions wishing to hold municipal deposits from the City.

To be fair, the information the advisory board was seeking was much more extensive than what needed to be supplied under the Community Reinvestment Act.  For example,  the banks were to be evaluated on  how they addressed serious material and health and safety deficiencies in the maintenance and condition of their foreclosed property; developed and offered financial services needed by low and moderate income individuals throughout the city, and how much funding they provided for affordable housing.

Mayor Bloomberg hated the bill so much that he vetoed it and refused to appoint members to the advisory board after his veto was overridden.  When Mayor DeBlasio was elected, he embraced the idea and the advisory board came to life.  It was time to call in the lawyers.

In arguing against the legislation, the Bankers Association argued that both Federal and State law preempted the ordinance.  They pointed out that the Community Reinvestment Act was intended to establish the framework for nationally chartered banks to be assessed for their community works.  On the state level the Banking Law gave the Department of Financial Services  broad powers of regulation to control and police the banking institutions under their supervision.

In response, the City argued that it was not regulating bank activity; but simply carrying out a proprietary function.  It should be able to establish its own standards for deciding who gets the city’s money the same way it gets to decide what companies are awarded city contracts.  It also argued that the activities undertaken by the Advisory Board were “purely informational.”  Its findings were not binding on anybody deciding where the money should be placed.

Southern District Judge Katherine Polk Failla ruled in favor of every major issue raised in opposition to the bill concluding that “the RBA’s very structure secures compliance through public shaming of banks and/or threatening to withdraw deposits from banks that do not provide information to the CIAB. The Court sees no reason why regulation through coercive power, rather than by explicit demand or stricture, should be immune from preemption scrutiny.”

While the lawsuit may have solved the immediate legal problem facing banks it doesn’t change the fact that banks didn’t do enough in return for their public bailout.  Nor does it change the fact that there are local leaders who feel that banks still don’t do enough for the communities in which they operate.  Giving localities the ability to work with credit unions. which by their very structure invest in the communities in which they operate,  would be a perfectly legal way of ending the banker monopoly and perhaps make these banks more responsive to local concerns.

Epilogue A Failure To communicate?

NCUA officials have fallen into the habit lately of making bold statements one day that have to be clarified the next.  First, we had Chairman Matz’s   clarification of her Congressional testimony that credit union CEOs  aren’t representing their members when they advocate for budget hearings. Yesterday NCUA felt  the need to clarify to the CU Times its  position on how much information the  public is entitled to about the Overhead Transfer Rate methodology following the release of a letter  from its General Counsel to NASCUS on that very subject(See yesterday’s blog).  I think it’s fair to say that NCUA is suffering from some communication problems.

The article  quotes Board renegade Mark McWatters, who is  emerging as a much needed voice of reason, as saying  that “The agency will make the final determination as to the calculation of the OTR and I see no harm in subjecting the agency’s OTR methodology to public comment as a proposed rule under the APA,” Here is a link


August 12, 2015 at 8:47 am Leave a comment

4 and 1 Blog

This is one of those days where in between the end of last night’s hockey game and this morning’s news about four or five issues popped up that I think are blog-worthy.  So, with the caveat that you might see any one of these issues develop more fully in a future blog, here are some things to keep an eye on over the weekend.

New Developments in Global Payments Data Breach

There are reports circulating that the Global Payments breach started much earlier than originally thought.  The KrebsOnSecurity Blog indicates that the breach may have occurred as early as 2011, obviously expanding the window of potential harm for issuers and their members.  This blog is highly credible since it was its reporting that exposed the Global Payments breach in the first place.  Global Payments is a third-party processor like Heartland Payment System.  Basically, these corporations aggregate payments from merchants.  They are becoming an increasingly vital part of the debit and credit card payment systems and our legal system hasn’t adjusted to make sure that banks and credit unions can adequately recover damages from them when they are responsible for breaches.


Reuters is reporting that for several years HSBC has tolerated huge inadequacies in its Bank Secrecy Act program, despite being warned as early as 2003 by both New York State and federal regulators to get its act together.  According to an investigative report by Reuters, HSBC engaged in “massive” violations of banking law including intentionally ignoring BSA requirements by failing to appropriately track suspicious accounts.  My quote of the day is from the U.S. Attorney for the Northern District of West Virginia who said:  “”HSBC is to Riggs, as a nuclear waste dump is to a municipal land fill.”  Riggs was subjected to the largest fine in U.S. history for its BSA violations.  The problem is this stuff tends to flow downhill, so beware of renewed interest in BSA in the coming months and years.

How Low Can They Go?

CU Times tells us that Market Rate Insight is predicting that deposit rates are expected to remain flat in May, the first time since 2007 that these rates have not declined.  This is one of those subtle signs that the economy is picking up, making this one of those particularly challenging times to tweak lending products over the next year and one-half.

New Fracking Regulations to be Introduced

New York State’s Department of Environmental Conservation is still mulling over what conditions to place on companies wishing to drill for natural gas in the Southern Tier using the hydro-fracking technique.  My guess is it will probably take a look at regulations to be introduced by the Department of the Interior, which regulates drilling activities on federally owned land.  The regulations have not yet been published but they address, among other things, the proper storage of waste water, which has become an increasingly prominent concern among opponents of drilling in New York State.  Remember, credit unions, and banks for that matter, don’t have to be for or against drilling, but as members come asking about leases on their mortgage property that is ultimately sold to Fannie Mae or Freddie Mac, as it stands now, it is financial institutions and not the secondary market that will be on the hook if these properties are found to have become environmental hazards.

Viva La France

If you want to see how the stock market does on Monday, you may want to see who wins elections in France and Greece on Sunday.  Right now the polls indicate that Nicolas Sarkozy will be shown the exit by French voters and replaced by Socialist Francois Hollande.  Such a victory would spook financial markets since France has worked with Germany to push through austerity measures which financial markets appreciate because they help keep the Euro a viable currency. 

Meanwhile, in Greece, the first national elections will be held since the unity government pushed through the very austerity measures that France and Germany championed.  The election could be read, depending on its outcome, as a rejection of these policies by Greeks, bringing us closer to the day when a country chooses to walk away from the Euro.  The bottom line:  these elections could have huge implications for the international economy and the vibrations would be felt here. 

On that note, have a great weekend.  I am going to spend my weekend figuring out where to place my new Friedrich Munch painting.  I know $119.9 million is a lot of money to spend, but my wife really wanted it and Mother’s Day is coming up. . .

May 4, 2012 at 8:08 am Leave a comment

Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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