As New Yorkers enjoy their pumpkin spice lattes, the fact that a Grande (16oz) serving will cost them about 380 calories (including 2% milk and whipped cream, because why not?) is becoming common knowledge.  Calorie information has been conspicuously posted on menus at “covered establishments” in New York City for nearly a decade, but on August 28, 2017, New York City agreed to postpone enforcement of its rule requiring restaurants, convenience stores and other establishments to post calorie counts for prepared food in response to a law suit brought by the food industry and supported by the Federal government.

In 2008, New York City became the first jurisdiction in the United States to require chain restaurants to post calorie information on menus and menu boards.   Shortly thereafter in 2010, the Federal government adopted similar laws by way of the Affordable Care Act.  The Federal government’s implementation of such laws has continually been delayed over the years, but now the Food and Drug Administration (“FDA”) plans to provide additional guidance on menu labeling requirements in May 2018.  New York City did not want to wait for the Federal guidance to begin enforcement of its Rule 81.50, New York City’s nearly identical version of its federal counterpart.

New York City’s most recent version of Rule 81.50 tracks its federal counterpart and applies to “covered establishments”, which means “a food service establishment or similar retail food establishment that is part of a chain with 15 or more locations nationally doing business under the same name and offering for sale substantially the same menu items, or a food service establishment that is not party of such a chain that voluntarily registers with the United States Food and Drug Administration to be subject to the federal requirements for nutrition labeling of standard menu items pursuant to 21 CFR 101.11(d), or successor regulation”.   For any such covered establishment, “[m]enus and menu boards must provide the number of calories contained in each standard item.”

While the FDA plans to provide guidance in May 2018, New York City nonetheless wanted to move forward with its enforcement of Regulation 81.50 beginning on August 21, 2017, but on July 7, 2017, the Food Marketing Institute and the National Restaurant Association teamed with several other food-service industry groups to file suit against the City of New York for what it said was premature enforcement of nutritional disclosure guidelines for food-service establishments. The National Association of Convenience Stores and the New York Association of Convenience Stores also joined in the suit, which was filed in the U.S. District Court for the Southern District of New York.

Court documents claim that that the local New York City rules are not identical to the impending FDA rules because they are effective immediately which would clash with the Federal government’s plan to delay compliance for one more year.  The plaintiffs asked the court to stop New York City from enforcing the regulations on the local level prior to the nation-wide rollout in May 2018 and argued that New York City’s Rule 81.50 was preempted by Federal law. The FDA filed court papers in support of the lawsuit.

New York City has now agreed to honor May 2018 as the start date due to the preemption of Regulation 81.50 by the similar provisions contained in the Affordable Care Act. As such, “covered establishments” will have more time to comply and the FDA will be able to set forth guidance as it planned in May 2018.

As the nation awaits the FDA’s guidance, food establishments in New York City should begin to think about whether or not they are a “covered establishment” and the steps they will need to take in order to avoid eventual enforcement action.

New York entrepreneurs in the virtual currency space must be careful to follow New York’s licensing requirements enacted under Financial Services Law Sections 102, 104, 201, 206, 301, 302, 309, and 408. Under the new regulations issued by the New York State Department of Financial Services, a business that engages in “Virtual Currency Business Activity” must be licensed by the New York State Department of Financial Services.  A business is engaged in Virtual Currency Business Activity if it:

  1. receives virtual currency for transmissions or transmits virtual currency;
  2. stores, holds, or maintains custody or control of virtual currency on behalf of others;
  3. buys and sells virtual currency;
  4. exchanges or converts something of value, into virtual currencies; or
  5. controls, administers, or issues a virtual currency.

However, businesses chartered under New York Banking Law and “approved by the superintendent to engage in Virtual Currency Business Activity,” as well as “merchants and consumers” that use virtual currencies for investment purposes or to buy and sell goods or services are exempt from the licensing requirement.

The license application fee to register as a business engaged in Virtual Currency Business Activity is $5,000.00 and is nonrefundable.  The application must include:

  1. the exact name of the applicant, including any doing business as name;
  2. a list of all of the applicant’s affiliates and an organization chart illustrating the relationship among the applicant and such affiliates;
  3. a list of, and detailed biographical information for, each individual applicant and each director, principal officer, principal stockholder, and principal beneficiary of the applicant;
  4. a background report prepared by an independent investigatory agency for each individual applicant, and each principal officer, principal stockholder, and principal beneficiary of the applicant, as applicable;
  5. for each individual applicant; for each principal officer, principal stockholder, and principal beneficiary of the applicant, as applicable; and for all individuals to be employed by the applicant who have access to any customer funds, whether denominated in fiat currency or virtual currency: (i) a set of completed fingerprints, or a receipt indicating the vendor (which vendor must be acceptable to the superintendent) at which, and the date when, the fingerprints were taken, for submission to the State Division of Criminal Justice Services and the Federal Bureau of Investigation; (ii) if applicable, such processing fees as prescribed by the superintendent; and (iii) two portrait-style photographs of the individuals measuring not more than two inches by two inches;
  6. an organization chart of the applicant and its management structure;
  7. a current financial statement for the applicant and each principal officer, principal stockholder, and principal beneficiary of the applicant, as applicable, and a projected balance sheet and income statement for the following year of the applicant’s operation;
  8. a description of the proposed, current, and historical business of the applicant;
  9. details of all banking arrangements;
  10. all written policies and procedures required by, or related to, the requirements of this part;
  11. an affidavit describing any pending or threatened administrative, civil, or criminal action, litigation, or proceeding before any governmental agency, court, or arbitration tribunal against the applicant or any of its directors, principal officers, principal stockholders, and principal beneficiaries, as applicable;
  12. verification from the New York State Department of Taxation and Finance that the applicant is compliant with all New York State tax obligations in a form acceptable to the superintendent;
  13. if applicable, a copy of any insurance policies maintained for the benefit of the applicant, its directors or officers, or its customers; and
  14. an explanation of the methodology used to calculate the value of virtual currency in fiat currency; and

Businesses operating in the virtual currency space, that are not exempt from these new regulations, must ensure that they comply with these new licensing requirements. Businesses interested in pursuing a New York virtual currency license should consult with legal counsel.

 

Does your operating agreement reflect your intentions?
New Jersey’s Revised Uniform Limited Liability Company Act (the “RULLCA”) became effective on March 18, 2013. As noted in a post we authored in 2014, although initially applicable only to limited liability companies formed after its effective date, the RULLCA now governs all New Jersey limited liability companies.

Similar to other limited liability company statutes in other states, the RULLCA provides a number of default provisions that apply if the members of a limited liability company (the “LLC”) have not adopted an operating agreement for the LLC or if the operating agreement is silent on a particular issue.  As a result, the rules that apply to New Jersey LLC’s and their members may not reflect the parties’ intentions as to certain topics, even if the parties had previously entered into an operating agreement drafted to conform to the New Jersey’s original Limited Liability Company Act (the “Original LLC Act”).

By way of example, and without limitation, in the absence of a contrary provision in an operating agreement the RULLCA provides that: (1) distributions made by an LLC to its members are to be made to the members in equal shares (in lieu of proportionate distributions based on capital contributions); (2) most decisions are made by a majority in number of the members of a member-managed LLC (rather than based upon the vote of members holding a majority of the interests in the profits of the LLC); (3) an assignment of a member’s “transferable interest” in an LLC is an assignment only of the member’s right to receive distributions from the LLC (with the transferring member retaining all voting rights of member, unless such transferring member is expelled by the unanimous consent of the remaining members following the assignment of a member’s entire “transferable interest” in the LLC).

These are just some examples to highlight the importance of  reviewing with counsel your existing operating agreements, particularly if prepared prior to the adoption of the RULLCA, to confirm that the operating agreement complies with current law and overrides any default provisions of the RULLCA that are contrary to the parties’ intended business arrangement. Further, the current law provides some other possible provisions which may be desirable and which were not available under the Original Act.   The same holds true for entities formed in other states. It is important to note that the default provisions of the RULLCA do, in certain cases, differ from the default provisions of limited liability company statutes in other states. For example, under the default provisions of the New York Limited Liability Company Law, distributions by an LLC are made to the members in proportion to their capital contributions, member voting is in proportion to the members’ respective interests in profits, and a member ceases to be a member or have any voting rights upon the transfer of all of his membership interest in the LLC.

Regardless of the state of formation, you should be certain that what your operating agreement says (and does not say) accurately reflects the parties’ business deal.

On May 30, 2017, Mayor de Blasio signed into law Int. No. 1456, requiring mobile food vendors (food trucks, hotdog carts, etc.) to display letter grades received after sanitary inspections akin to those displayed in windows of city restaurants. The new law will be a win-win for both consumers and vendors as seeing satisfactory grades will assure customers of a sanitary product, further legitimizing the ever-expanding food truck industry in NYC.  A similar bill is active in the NY State Senate. The state law would require the inspection grades to be displayed and require tracking of the mobile food vendors in order to efficiently find their protean locations for inspection purposes. Currently, the NY State bill has passed the State Senate and has been delivered to the State Assembly.  At the very least, expect to see health inspection grades displayed on mobile food vendors in the near future.

After a Saturday night of taking in the Big Apple, you meet your friends for 10:00 a.m. brunch on the Upper West Side.  You decide that you’d like to chase your blueberry pancakes with a refreshing mimosa, but the server stops you: “I’m sorry, but we don’t serve alcohol until noon.” This was the response for decades until now.

The Alcoholic Beverage Control Law, a law which dates back to the prohibition era, disallowed the sale of alcohol on Sundays until noon throughout the State of New York.¹  On Wednesday, September 7, 2016, Governor Andrew Cuomo signed legislation which sought to modernize the prohibition era law which originally established the rules and regulations regarding the sale of alcohol.²  As of September 7, 2016, restaurants in New York may serve alcohol as early as 10:00 a.m. on Sundays.  Additionally, twelve permits per year will be made available outside of New York City for restaurants to serve alcohol as early as 8:00 a.m.

The looser measures come as Governor Cuomo seeks to embrace New York’s burgeoning craft alcoholic beverage industry and stimulate business for bar and restaurant owners.  The legislation as originally proposed permitted alcohol to be served at 8:00 a.m. on Sundays, but 8:00 a.m. was opposed by some legislators who feared that an earlier time would invite unwelcomed morning noise and ruckus.  Thus, compromise was struck with drinks being poured starting at 10:00 a.m.  Cheers!

¹ N.Y. Alco. Bev. Cont. Law.

² NY LEGIS 297 (2016), 2016 Sess. Law News of N.Y. Ch. 297 (S. 8140).