The Federal Priority Act: How ‘secure’ is a secured creditor if the debtor is subject to a federal claim or investigation?

by Thompson Coburn LLP
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Although the Federal Priority Act[1] has been deemed to be “almost as old as the Constitution”[2] itself, its application to priority battles between secured creditors and the federal government poses a novel question in litigation today. In fact, the Supreme Court acknowledged, in United States v. Romani, that despite the “age of the statute, and despite the fact that it has been the subject of a great deal of litigation, the question whether it has any application to antecedent perfected liens has never been answered definitively.[3]

Understanding the FPA’s potential application to antecedent perfected liens is particularly significant for secured creditors with an interest in real or personal property owned by a debtor facing a federal investigation. The FPA mandates that government claims take ultimate priority over other creditors[4], but the statute is silent about the impact that a government claim may have on creditors who hold a prior perfected interest in such property. Therefore, litigators and parties interested in better understanding the application of the FPA to antecedent perfected security interests — and, in particular, to those security interests that may be threatened by a competing federal claim — must examine the application of the FPA in other contexts. 

Although federal courts have not conclusively outlined the boundaries of the FPA and its applicability to secured creditors with an interest in collateral subsequently sought by the federal government to satisfy a claim, the body of case law interpreting the FPA demonstrates that the government will not always prevail in priority battles over real and personal property.

Note: This article offers an in-depth analysis of the FPA in the context of competing secured creditor interests. For a detailed analysis of the history and scope of the FPA, see my previous article, “Addressing the Language and Scope of the Federal Priority Act.” 

The FPA and the Federal Tax Lien Act

One area where the courts have consistently endeavored to outline the scope of the FPA is tax law. Several federal cases have analyzed the interaction between the federal Tax Lien Act[5] and the FPA. 

In United States v. Estate of Romani[6], the Supreme Court considered whether the FPA requires that a federal tax claim be given priority over a judgment creditor’s perfected lien on real property. In Romani, Romani Industries obtained a judgment against Francis J. Romani and recorded the judgment in the clerk’s office, which created a perfected lien on Romani’s property.[7] Afterwards, the IRS filed a series of notices of tax liens on the same property.[8] The question then became whether the government was entitled, pursuant to the FPA, to prevent the transfer of the property to the judgment lien creditor because of the government’s purported superseding priority.[9]

The Supreme Court held that the government was not entitled to priority.[10] First, the Court acknowledged that the judgment lien was fully perfected under Pennsylvania state law prior to the government serving the notices of tax liens upon the estate.[11] The Court then noted that the Federal Tax Lien Act of 1966, the final installment in a series of amendments to the Act, solidified congressional intent to broaden the protection of secured creditors from federal tax liens when no notice of those liens would have been available to the secured creditors.[12] Given the express language of the Tax Lien Act, and because the judgment creditor in this case was not notified of federal tax liens on the property until after the judgment lien was created, the judgment creditor was entitled to the property.[13]

In its analysis, the Court cited several decisions contemplating the impact of the FPA on priority battles between judgment creditors and the federal government, particularly in cases where the government is executing a judgment stemming from delinquent taxes. The Court discussed United States v. Gilbert Associates, Inc.[14], which held that the Town of Walpole, New Hampshire, had only a “general lien” on property because it did not take possession of the property.[15] Consequently, the town was not entitled to priority over a subsequent tax lien by the federal government since the town was not a “judgment creditor” within the meaning of the Tax Lien Act.[16] The Supreme Court in Romani seemed to depart from Gilbert’s possession requirement, however, acknowledging that the Court was not aware of any decision since Thelusson v. Smith[17] applying the possession theory to claims for real property, nor was it aware of “any reason to require a lienor or mortgagee to acquire possession in order to perfect an interest in real estate.”[18]

Priority in battles with government lending programs

The Supreme Court and lower federal courts have also analyzed the operation of the FPA in the context of business loans.[19] In particular, courts have addressed the applicability of the FPA in cases where debtors default on government loans and a creditor simultaneously seeks to exercise its priority rights. 

In one such case, the Fourth Circuit Court of Appeals utilized the Gilbert “possession” test in analyzing whether the Small Business Administration was entitled to priority over mechanic’s liens that had been perfected pursuant to Virginia state law. In W.T. Jones & Company v. Foodco Realty, Inc.[20], the Small Business Administration assumed 90 percent of a private bank’s loan, and the debt was secured by a deed of trust on Foodco’s property.[21] After construction on the property began, the appellants filed proper and timely mechanic’s liens under Virginia law.[22] When Foodco eventually became insolvent, one of the appellants instituted a court action to enforce its mechanic’s lien, and a dispute arose when the United States intervened as a party defendant to recover its debt.[23] On appeal, the Fourth Circuit affirmed the district court decision awarding priority to the SBA.

The court held that the FPA applied, despite the appellants’ assertions that their mechanic’s liens were perfected according to state law, and the government’s interest therefore took priority.[24] Without deciding whether an exception exists in the FPA that would allow an unforeclosed mechanic’s lien to defeat a government claim, the court noted that the mechanic’s liens in question were not sufficiently specific and choate to defeat the government claim.[25] After observing that whether a lien is sufficiently “choate” is a matter of federal, not state, law[26], the court stated that a lien cannot be considered specific and choate unless it has been attached to property and the creditor has come into possession of the property.[27]

Although Foodco lends some support to the argument that the FPA might grant the government priority in some cases where a competing state creditor has perfected its interest, the case does not end the inquiry. For one thing, two leading Supreme Court FPA cases – United States v. Kimbell Foods and United States v. Estate of Romani – do not even cite the Foodco case in their analysis. In addition, the Supreme Court expressly stated, over 25 years after Foodco was decided, that the issue of whether an antecedent perfected interest takes priority in cases involving the federal government still had not been decided.[28] More importantly, much like a judgment lien, the mechanic’s lien in question in Foodco was not self-enforcing. According to the Virginia law at play in Foodco, a mechanic’s lien is extinguished unless the lienholder obtains a decree against the debtor’s property.[29] Filing and recording the lien does not actually divest the debtor of possession or title, which is required by federal law for a lien to qualify as “choate.”[30]  

Further undermining the reach of Foodco in resolving FPA disputes between the government and secured creditors, the Supreme Court ruled in favor of a secured creditor over 15 years later in United States v. Kimbell Foods, Inc.[31] This time, however, the Court analyzed whether a loan made by the SBA would take priority in a battle between two lenders that had previously perfected their security interests in inventory and accounts pursuant to Texas’s Uniform Commercial Code. In Kimbell, both Kimbell Foods and Republic National Bank loaned money to O.K. Super Markets. The loans  were secured by O.K.’s equipment and merchandise.[32] Kimbell properly perfected its interest in the collateral by filing a financing statement, pursuant to Texas law, and Republic later filed its financing statement securing its interest in the same collateral.[33] The SBA had guaranteed 90 percent of Republic’s loan, and Republic later assigned its security interest to the SBA.[34] Shortly after O.K. defaulted on its SBA-guaranteed loan, Kimbell filed suit to recover its inventory debt. However, Republic did not record its assignment of the loan to the SBA until after Kimbell filed suit.[35] The Court was then tasked with determining who was entitled to priority. 

The Court held that in cases of federal lending programs like the SBA and the Federal Housing Administration, state laws and commercial codes governing secured transactions should govern.[36] The Court reasoned that complying with state law does not produce hardship on federal loan agencies, in part, because of the sophistication of the SBA’s lending practices.[37] Specifically, because the SBA engages in the practice of ‘individually negotiat[ing] in painfully particularized detail’ each loan, there would therefore be no adverse effect on the administration of such loans.[38] The Court also discussed the difference between tax liens and consensual liens like the type at issue in Kimbell, stating:

The importance of securing adequate revenues to discharge national obligations justifies the extraordinary priority accorded federal tax liens through the choateness and first-in-time doctrines. By contrast, when the United States operates as a moneylending institution under carefully circumscribed programs, its interest in recouping the limited sums advanced is of a different order. Thus, there is less need here than in the tax lien area to invoke protective measures against defaulting debtors in a manner disruptive of existing credit markets.[39]

Thus, read together, the Kimbell and Romani decisions demonstrate that in some disputes between secured creditors and the federal government, perfection under state law will afford those creditors priority in the event that the federal government subsequently pursues a competing claim to real or personal property.[40]

Priority in forfeiture actions: 21 U.S.C. § 853

Although not explicitly purporting to grant the government priority like the FPA, an examination of the federal criminal forfeiture statute[41] also suggests that in at least some instances, the rights of secured creditors take priority over the right of the government to obtain a debtor’s collateral. Section 853 of Title 21 of the United States Code provides that the right, title, and interest in property subject to forfeiture vests in the United States upon the commission of the criminal act in question.[42]

Under this statute, there are two exceptions to the relation-back of the government’s title  that operate to protect the interests of innocent third parties.[43] Subsection (n)(6) of 21 U.S.C. § 853 states that the court must amend a forfeiture order if a third party petitioner demonstrates by a “preponderance of the evidence” that (1) the petitioner has a legal right, title or interest in the property that was vested in the petitioner or superior to any right, title or interest of the defendant at the time the criminal acts occurred”[44]; or (2) the petitioner is a bona fide purchaser for value of the right, title, or interest in the property and reasonably had no notice that the property was subject to forfeiture at the time of purchase.[45]

The Sixth Circuit Court of Appeals recently held that parties with a security interest in property — including intangible property — can be bona fide purchasers for value under the second exception, Section 853(n)(6)(B). In United States v. Huntington National Bank[46], the Sixth Circuit held that Huntington Bank was in fact a bona fide purchaser for value within the meaning of Section 853(n)(6)(B) because a security interest is a property interest.[47] Therefore, the Bank could qualify for the second exception if it could prove that it was an innocent purchaser of that interest. The court held that because the government had already stipulated to the fact that the Bank was indeed an innocent purchaser[48] and the Bank purchased its security interest in the debtor’s accounts for valuable consideration, the Bank was entitled to the protections of the criminal forfeiture statute as a bona fide purchaser for value.[49]

Significantly, to qualify for the bona fide purchaser exception, a party must be an innocent purchaser. In other words, a party must have had an objectively reasonable belief that the property was not subject to forfeiture at the time the party acquired an interest in the property.[50] Case law surrounding criminal forfeitures once again suggests that at least in some cases, courts will respect state secured creditor rights in collateral being seized to satisfy a government claim. Importantly, the case law also makes clear that creditors must conduct due diligence prior to obtaining an interest in collateral to ensure that their interest remains secure even if the debtor is eventually subject to a federal investigation and potential forfeiture action.

Prioritizing state law

Although neither Romani nor Kimbell clearly defines the contours of the FPA in cases where the federal government is investigating a potential claim or actively pursuing a claim, both cases — as well as the federal forfeiture statute — reflect a respect for secured creditors in some instances. There are, however, important distinctions to be made between those cases and the case of a secured creditor who may have an interest in collateral that is later sought by the federal government to satisfy a claim. 

First, the Romani case involves a specific federal statute that conflicts with the mandate of the FPA. In its analysis, the Court concludes that one of the reasons for treating the Tax Lien Act as the governing statute in priority battles involving delinquent taxes is that the Tax Lien Act is “the later statute, the more specific statute, and its provisions are comprehensive, reflecting an obvious attempt to accommodate the strong policy objections to the enforcement of secret liens.”[51] Specifically, the Tax Lien Act prohibits the government from asserting priority in cases of perfected judgment liens, which precisely relates to the facts of the Romani case.[52] Similarly, Congress specifically accounted for innocent bona fide purchasers in the federal forfeiture statute, so creditors secured under state law and unaware of a forfeiture proceeding against a debtor are statutorily entitled to their interest in the collateral.

Conversely, the Kimbell case involves “claims” of the federal government that arise from the government’s voluntary entry into the debt or finances of an individual, such as by making a loan or assuming a loan obligation from a private bank. Unlike in Romani, the Kimbell case does not involve a superseding statute expressly carving out exceptions to the government’s priority. The Kimbell Court devotes a significant portion of its opinion to emphasizing the fact that in these cases, the government has less of a need to invoke “protective measures”[53] against defaulting debtors that run counter to pre-existing state creditor schemes. Unlike taxes, which are “vital to the functioning, indeed existence, of government”[54], there is less of a need for uniformity or for adopting superseding federal common law in cases where the United States is operating as a lender.

Federal government claims arising from statutory schemes such as the False Claims Act[55] may rest somewhere in the middle of the Romani and Kimbell lines of reasoning. On the one hand, the uniqueness of taxes may mandate a general preference for government priority in cases involving tax disputes absent explicit statutory exceptions, such as those found in the Tax Lien Act.[56] However, it may be said that government claims arising from civil or criminal violations are not equivalent to collecting delinquent taxes because these claims are not as substantial a source of revenue as the collection as taxes is. In fact, the federal criminal forfeiture statute has already been interpreted in such a way to reflect that even when claims arise from criminal violations, secured creditors may still retain their interest in real or personal property if they were innocent, bona fide purchasers for value. 

On the other hand, there are some instances when the government relies on state law in order to function efficiently, such as in the case of federal lending programs. Because the government already engages in due diligence prior to distributing a loan, it may be more reasonable to expect the government’s rights to be subject to the state law rights of the debtor, since those rights often coincide with the desirability of a prospective debtor to begin with.[57] Therefore, in priority battles between secured creditors and the federal government, there may be an argument that non-tax government claims should not be afforded priority since these claims do not embody the unique characteristics of taxes and the courts have shown a willingness to subordinate government interests to the interests of perfected creditors in other contexts.

Conclusion

The FPA purports to give the government priority in all claims against insolvent debtors, but case law interpreting the FPA demonstrates that the government is not actually entitled to priority in every case. In cases where there is a conflict between the FPA and another, more specific statute, such as the Tax Lien Act, courts have determined priority rights based upon the mandate of the more specific statute. Similarly, in forfeiture cases, courts have interpreted the government’s apparent entitlement to property as being subject to the security interests of some secured creditors, so long as those creditors adhere to certain statutory requirements, such as being innocent bona fide purchasers for value. 

Absent a conflicting or superseding statute, secured creditor rights in the face of a competing government claim are less certain. However, cases such as Kimbell demonstrate that some policy considerations favor granting secured creditors priority in the face of a competing government claim to real or personal property. Thus, the Kimbell case, combined with the reasoning supporting tax and forfeiture cases, suggests that courts will sometimes respect the priority rights of secured creditors notwithstanding the apparent mandate of the FPA. 

Special thanks to summer associate Katie A. Lee for her assistance with this article.

[1] 31 U.S.C. § 3713. The FPA is sometimes referred to as the federal insolvency act. See, e.g., W.T. Jones & Co. v. Foodco Realty, Inc., 318 F.2d 881 (4th Cir. 1963).

[2] United States v. Moore, 423 U.S. 77, 80 (1975).

[3] The Romani Court also cited a previous Supreme Court decision, United States v. Key, which noted that the case “does not raise the question, never decided by this Court, whether [the priority statute] grants the Government priority over the prior specific liens of secured creditors.” Id. (quoting United States v. Key, 397 U.S. 322, 332, n.11 (1953)).

[4] “A claim of the United States Government shall be paid first when—(A) a person indebted to the Government is insolvent and—(i) the debtor without enough property to pay all debts makes a voluntary assignment of property; (ii) property of the debtor, if absent, is attached; or (iii) an act of bankruptcy is committed; or (B) the estate of a deceased debtor, in the custody of the executor or administrator, is not enough to pay all debts of the debtor.” 31 U.S.C. § 3713.

[5] 26 U.S.C. § 6321.

[6] 523 U.S. 517 (1998).

[7] Id. at 520.

[8] Id.

[9] Id. “[I]t does not seem appropriate to view the issue in this case as whether the Tax Lien Act of 1966 has implicitly amended or repealed the priority statute. Instead, we think the proper inquiry is how best to harmonize the impact of the two statutes on the Government’s power to collect delinquent taxes.” Id. at 530.

[10] Id. at 524.

[11] Id. at 522.

[12] Id. at 524-25.

[13] Id. at 524.

[14] 345 U.S. 361 (1953).

[15] The Court noted that there was a particular importance for uniformity in tax law, so “judgment creditor” in the context of the Federal Tax Act should have the same application in all states. Gilbert, 345 U.S. at 364. It is with this in mind that the Court concluded that “whatever the tax proceedings of the Town of Walpole may amount to for the purposes of the State of New Hampshire, they were not such proceedings as resulted in making the Town a judgment creditor within the meaning of [the Federal Tax Lien Act].” Id. The Court therefore held that “[t]he mere attachment of the Town’s lien before the recording of the federal lien does not, contrary to the holding of the Supreme Court of New Hampshire, give the Town priority over the United States.” Id. at 366.

[16] Id. at 365. It is important to note that the Court declined to rule on whether the FPA exempts “perfected and specific” liens like the one New Hampshire purported to have on the property in question. Id. The Court acknowledged that it “has never actually held that there is such an exception”, but that it is “unnecessary to meet this issue because the lien asserted here does not raise the question.” Id.

[17] 2 Wheat. 396 (1817).

[18] Romani, 523 U.S. at 529-30.

[19] The FPA has also been invoked in cases involving CERCLA claims, tariff and receivership actions, breach of contract claims, and insurance disputes. See Claire Schenk, Addressing the Language and Scope of the Federal Priority Act, FED. LAW., May 2015, at 44.

[20] 318 F.2d 881 (4th Cir. 1963).

[21] Id. at 883.

[22] Id.

[23] Id.

[24] Id. at 886. The court also stated, in dicta, that it is “inclined to doubt that any exception can be carved out of the sweeping language of [the priority statute] which would allow an unforeclosed mechanic’s lien . . . to defeat the absolute priority secured to the United States by the statute.” Id. It is important to note, however, that the court did not actually reach this issue. Id.

[25] Id.

[26] Id.

[27] Id.

[28] “Indeed, the Key opinion itself made this specific point: ‘This case does not raise the question, never decided by this Court, whether [the FPA] grants the Government priority over the prior specific liens of creditors.’ The Key opinion is only one of many in which the Court has noted that despite the age of [the FPA] . . . the question whether it has any application to antecedent perfected liens has never been answered definitively.” United States v. Estate of Romani, 523 U.S. 517, 529 (1998) (quoting United States v. Key, 397 U.S. 322, 332, n.11 (1970)).

[29] Foodco Realty, Inc., 318 F.2d at n.14.

[30] As the Kimbell Court noted, to be “choate,” the “‘identity of the lienor, the property subject to the lien, and the amount of the lien [must be] established.’” 440 U.S. at 721 (quoting United States v. Britain, 347 US. 81, 84 (1954)).

[31] 440 U.S. 715 (1979).

[32] Id. at 718-19.

[33] Id.

[34] Id.

[35] Id. at 719-20.

[36] Id. at 729-30. “Accordingly, we hold that, absent a congressional directive, the relative priority of private liens and consensual liens arising from these Government lending programs is to be determined under nondiscriminatory state laws.” Id. at 740.

[37] “We are unpersuaded that, in the circumstances presented here, nationwide standards favoring claims of the United States are necessary to ease program administration or to safeguard the Federal Treasury from defaulting debtors. Because the state commercial codes ‘furnish convenient solutions in no way inconsistent with adequate protection of the federal interest[s],’ we decline to override intricate state laws of general applicability on which private creditors base their daily commercial transactions.” Id. at 729 (quoting United States v. Standard Oil Co., 332 U.S. 301, 309 (1947)).

[38] Id. at 730; see also id. at 733 (“Since there is no indication that variant state priority schemes would burden current methods of loan processing, we conclude that considerations of administrative convenience do not warrant adoption of a uniform federal law.”).

[39] Id. at 734.

[40] See, e.g., United States v. Krasicky, No. 15-11247, 2016 WL 1242387 (E.D. Mich. Mar. 30, 2016) (following Romani) and KS Financial Group, Inc. v. Schulman, 73 F. Supp. 2d 1373 (N.D. Ga. 1999) (following Romani and refusing to give priority Government tax liens because KS Financial “did all that it could do under Texas law to perfect its lien, [so] its lien was therefore perfected in the sense that there is nothing more to be done to have a choate lien.”); but see Straus v. United States, 196 F.3d 862 (7th Cir. 1999) (declining to extend Romani to case involving dispute between priority of state and federal tax liens).

[41] 21 U.S.C. § 853 (“Any person convicted of a violation of this subchapter or subchapter II punishable by imprisonment for more than one year shall forfeit to the United States, irrespective of any provision of State law, (1) any property constituting, or derived from, any proceeds the person obtained, directly or indirectly, as the result of such violation; (2) any of the person’s property used, or intended to be used, in any manner or part, to commit, or to facilitate the commission of, such violation; and (3) in the case of a person convicted of engaging in a continuing criminal enterprise in violation of section 848 of this title, the person shall forfeit . . . any of his interest in, claims against, and property or contractual rights affording a source of control over, the continuing criminal enterprise.”).

[42] United States v. Huntington Nat. Bank, 682 F.3d 429, 433 (6th Cir. 2012).

[43] Id.

[44] The first exception “leads inevitably to the conclusion that § 853(n)(6)(A) is likely never to apply to proceeds of the crime.” United States v. Sabatino, No. 16-20519-CR-LENARD/GOODMAN, 2018 WL 2074191, at *4 (S.D. Fla. Apr. 13, 2018) (quoting United States v. Eldick, 223 F. App’x 837, 840 (11th Cir. 2007)). See also United States v. Gray, 2017 WL 2544136 (W.D. Okla. June 12, 2017) (“By definition, the proceeds of an offense cannot exist before the offense is committed. Because the government’s interest vests upon commission of the crime that leads to the proceeds, ‘any proceeds that ensue from the criminal act belong to the government from the moment they come into existence.’” (quoting United States v. Watts, 786 F.3d 152, 167 (2d Cir. 2015))).

[45] United States v. Reckmeyer, 836 F.2d 200, 203-04 (4th Cir. 1987).

[46] 682 F.3d 429 (6th Cir. 2012).

[47] Id. at 435. “The forfeiture statute expressly defines the meaning of the term ‘property’ to include real property as well as ‘tangible and intangible personal property, including rights, privileges, interests, claims, and securities.’" Id. (quoting 21 U.S.C. § 853(n)(6)(A)). “Thus, under the plain meaning of the statute, Congress intended the BFP protections to apply to interests in both tangible and intangible property.” Id. In addition, the Sixth Circuit noted that although whether a security interest qualifies under 21 U.S.C. § 853(n)(6)(B) is determined by federal law, the nature and extent of the property interest is governed by state law. Id. at 437.

[48] “We further stated that ‘[t]he government, indeed, conceded away the only issue on which such testimony or evidence could have been relevant here: whether Huntington had cause to believe that the property was subject to forfeiture.” Id. at 437-38 (internal quotations omitted).

[49] Id. at 438.

[50] See, e.g., United States v. Galemmo, 661 F. App’x 294 (6th Cir. 2016) (holding that woman was not reasonably without cause to believe that property was subject to forfeiture when it was clear that the person from whom she received the funds was under investigation); United States v. Coffman, 612 F. App’x 278 (6th Cir. 2015) (holding that party was not innocent bona fide purchaser because it should have known, when purchaser purchased yacht, that red flags surrounding purchaser’s source of funds pointed to illegal activity); Sabatino, 2018 WL 2074191 (S.D. Fla. Apr. 13, 2018); United States v. 198 Training Field Road, No. Civ. A. 02-11498-GAO, 2004 WL 1305875, at *3 (D. Mass. June 14, 2004) (holding that knowledge that defendant’s property had been used to facilitate drug dealing was sufficient to give claimant cause to believe that defendant property was subject to forfeiture, even if she was not aware for certain of the initiation of the criminal proceedings or that the property was subject to forfeiture).

[51] United States v. Estate of Romani, 523 U.S. 517, 532 (1998).

[52] Id. at 532.

[53] Kimbell, 440 U.S. at 734.

[54] Id.

[55] 31 U.S.C. § 3729.

[56] See note 25, supra, and accompanying text.

[57] “Choosing responsible debtors necessarily requires individualized selection procedures, which the agencies have already implemented in considerable detail. Each applicant’s financial condition is evaluated under rigorous standards in a lengthy process. Agency employees negotiate personally with borrowers, investigate property offered as collateral for encumbrances, and obtain local legal advice on the adequacy of proposed security arrangements. Because each application currently receives individual scrutiny, the agencies can readily adjust loan transactions to reflect state priority rules, just as they consider other factual and legal matters before distributing Government funds.” Id. at 732-33.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.