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German Data Protection Authority Fines Three Companies for U.S. Data Transfers

Client Alert | 2 min read | 06.08.16

In a press release of June 6, 2016, the Data Protection Authority (DPA) of Hamburg announced that three fining decisions it has issued against companies unlawfully relying on the invalidated “U.S.-EU Safe Harbor Framework” (Safe Harbor) have become final. The Hamburg DPA concluded that after the invalidation of the former “U.S.-EU Safe Harbor Framework” by the European Court of Justice in October 2015, the companies had failed to otherwise adequately ensure the protection of employee and customer data transferred from Europe to the U.S.

At least two of the companies fined are not typical “data-related” businesses: addressees of the fining decisions are consumer goods manufacturer Unilever (€ 11,000), software company Adobe Systems Inc. (€ 8,000), and fruit juice maker Punica, a subsidiary of PepsiCo Inc. (€ 9,000).

The fines issued are relatively low. However, Mr. Johannes Caspar, director of the Hamburg DPA, underlined that the fact that the companies had implemented standard contractual clauses (SCCs) after the start of the investigations, had been taken into account in favor of the companies when determining the amount of the fines. This confirms the need for companies who relied on Safe Harbor in the past, to make sure that they install other safeguards, in particular Standard Contractual Clauses.

However, the overall situation regarding the transfer of personal data from the EU to the U.S. remains uncertain. The draft “EU-U.S. Privacy Shield,” a recently drafted framework designed to replace the invalidated “Safe Harbor,” still needs to be approved by the Article 31 Committee in a binding opinion before it can be confirmed by the European Commission in an adequacy decision. In addition, the Standard Contractual Clauses are possibly also soon to be challenged before the ECJ based on an initiative of the Irish DPA, a process that may however take several years to play out.

At bottom, the underlying political issue of a clash between European fundamental rights and U.S. government mass surveillance activities remains. And according to many, only a change in the U.S. legal system with regard to surveillance practices could solve the issue, which is highly unlikely to occur.

In light of the above, for now, Standard Contractual Clauses are the best solution for personal data transfers from the EU to the US. In addition, companies should keep monitoring further developments. Crowell & Moring’s Privacy & Cybersecurity team will continue to closely monitor and provide updates on future developments.

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Client Alert | 1 min read | 07.08.26

CAS Board Publishes Final Rule Rescinding CAS 404, 408, 409, and 4117

As part of its ongoing effort to conform the Cost Accounting Standards (“CAS”) to generally accepted accounting principles (“GAAP”), the CAS Board published a final rule rescinding CAS 408 (Accounting for costs of compensated personal absence) and CAS 411 (Accounting for acquisition costs of material).  The CAS Board also rescinded CAS 404 (Capitalization of tangible assets) and CAS 409 (Depreciation of tangible capital assets) but retained certain requirements of CAS 404 and 409, which will be located in new paragraphs of CAS 405 (Accounting for unallowable costs).  Specifically, the CAS Board retained the requirements currently located at CAS 404-50(d)(1), CAS 409-50(e)(5), CAS 409-50(j)(1), and CAS 409-50(j)(4), which the CAS Board explained are necessary to protect the Government’s interests.  Otherwise, the CAS Board determined that the requirements of CAS 404, 408, 409, and 411 overlapped with GAAP such that GAAP “may be applied reasonably as a substitute for CAS to support contract cost and pricing.”...

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