The National Law Review is pleased to bring you information regarding the upcoming ABA Conference on Business Acquisition Negotiations:
When
November 01 – 02, 2012
Where
The National Law Review is pleased to bring you information regarding the upcoming ABA Conference on Business Acquisition Negotiations:
When
November 01 – 02, 2012
Where
The National Law Review is pleased to bring you information regarding the upcoming ABA Conference on Business Acquisition Negotiations:
When
November 01 – 02, 2012
Where
The National Law Review is pleased to bring you information regarding the upcoming ABA Conference on Business Acquisition Negotiations:
When
November 01 – 02, 2012
Where
The National Law Review recently published an article by Harvey Saferstein, Bruce D. Sokler, Nada I. Shamonki, and Robert G. Kidwell of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., regarding the Robinson-Patman Act:
In Drug Mart Pharmacy Corp. v. American Home Products Corp., 2012 U.S. Dist. LEXIS 11582 (E.D.N.Y. Aug. 16, 2012), Magistrate Judge Steven M. Gold gave the Robinson-Patman Act another drubbing. He granted summary judgment for the defendants in this complex, long pending antitrust litigation between retail pharmacies and various pharmaceutical companies.
Numerous independently owned retail pharmacies claimed that five manufacturers of brand name prescription drugs offered discounts and rebates to their competitors in violation of the Robinson-Patman Act prohibition on price discrimination. In order to establish their losses, the pharmacies set out to compare their customers with the customers of favored pharmacies for the brand name prescription drugs in question. The “matching” process showed a very low number of lost customers. On average, each plaintiff pharmacy lost less than 200 customers and 537 transactions over the entire period examined—a 12-year time frame from 1998 to 2010.
Magistrate Judge Gold characterized these results as “de minimis.” “Many pharmacies lost no more than ten customers per defendant over the relevant twelve-year time period, or less than one customer per year.”
Accordingly, Judge Gold held summary judgment was appropriate—especially in light of the Supreme Court’s admonition in Volvo Trucks N. Am, Inc. v. Reeder-Simco GMC, Inc., to construct the Robinson-Patman Act narrowly. With that view in mind, the court concluded that plaintiffs could not show competitive injury required by Section 2(a) of the Robinson-Patman Act. Moreover, the same de minimis impact made it impossible for plaintiffs to demonstrate antitrust injury.
Despite the existence of a price disparity in drug prices, the plaintiffs were not able to show any real consequences in their business or as a matter of antitrust competitive injury. This doomed their Robinson-Patman claims.
©1994-2012 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
The National Law Review is pleased to bring you information regarding the upcoming ABA Conference on Business Acquisition Negotiations:
When
November 01 – 02, 2012
Where
The National Law Review is pleased to bring you information regarding the upcoming ABA Conference on Business Acquisition Negotiations:
When
November 01 – 02, 2012
Where
The critical protection offered by the attorney-client privilege—maintenance of the confidentiality of communications between an attorney and client—is increasingly under attack from both government regulators and private litigants. Moreover, there are some situations in which it is not at all obvious that the protections afforded by the attorney-client privilege are put at risk. For example, in stark contrast to US attorney-client privilege protections, the privilege is not even recognized in some situations outside the US, such as conversations between business people and in-house counsel. Here are some practical tips for ensuring that your communications with counsel are protected by the attorney-client privilege and not subject to disclosure.
Communications that are clearly attorney-client privileged, i.e., they are made for the purpose of seeking or providing legal advice, should be identified as such. Use of phrases within the body of privileged communications, such as “I am seeking legal advice related to…” or “In response to your request for legal counsel regarding…” further confirm that the communication is privileged. Use of the “privilege” label does not create a privilege that might not otherwise exist. Therefore, do not overuse the “privilege” label; doing so may make it more difficult to establish the protection of the privilege for communications that were truly made to obtain or provide legal advice.
Although most countries recognize some form of attorney-client privilege, the scope and application of the privilege may vary significantly by country. For example, while communications between in-house counsel in the US and their internal business clients in the US are protected by the same privileges that apply to outside US counsel, there is no in-house counsel privilege in the majority of countries in the European Union (EU). Those countries reason that inside counsel are not independent of their employers and therefore are not entitled to the same privilege protections afforded communications with outside counsel who are deemed to be independent. EU law is also unlikely to recognize as privileged a communication between in-house counsel based in the US and a business client based in the EU. Indeed, in one case, the EU seized legal memoranda from inside counsel and relied on them to determine that a company knowingly violated the law. Case law further suggests that the EU may not even recognize as privileged a communication between outside US counsel and a business client located in the EU. The implications of the starkly different treatment of the attorney-client privilege as between the US and the EU can be serious. For example, parties to litigation in the US may attempt to seek discovery of sensitive communications between in-house counsel in the EU and internal business clients based in the EU. To maintain the protection of the attorney-client privilege outside the US to the greatest extent possible, the following steps should be taken:
Most outside directors have other business interests, and many are employed by other companies. If these outside directors use email addresses provided by their employer or other business interests, they may subject emails relating to the company on whose board they serve, including attorney-client communications, to discovery because they have a very limited, if any, expectation of privacy related to an email address that is controlled by their employer or unrelated business interest. To protect email communications with outside directors to the greatest extent possible, the outside directors should use either an email address provided by the company on whose board they serve or a personal email address. If that is not possible, any board-related emails going to or from another company’s email address should be clearly identified in the subject line as board-related business and, if to or from an attorney, that the communication is privileged, and the outside director should segregate those emails in a separate folder.
Signing affidavits or other sworn statements on behalf of the company, such as verifications of discovery responses in litigation, may subject the signer to a deposition or other discovery of the factual basis on which the statement or affidavit was made. If the affidavit or sworn statement is signed by in-house counsel, protecting information obtained by in-house counsel in the course of investigating the matter that led to the affidavit or statement becomes very difficult because the act of signing may be viewed as a waiver of the attorney-client privilege. Therefore, to the extent possible, use non-attorney business people to sign affidavits or other sworn statements on behalf of the company.
In sum, recognition of those situations in which the protection of the attorney-client privilege may be at risk and adherence to best practices are necessary to continue maintaining the confidentiality of attorney-client communications.
© 2012 Andrews Kurth LLP
The National Law Review recently featured an article by the Hotels, Resorts & Clubs Group of Greenberg Traurig, LLP regarding Club Memberships and Bankruptcy:
As noted in our “Club Membership Deposits — From Gold to Paper” posted on August 4, 2011, many membership deposit clubs have resorted to bankruptcy to restructure their membership deposit debt liability. Below are descriptions of how the membership deposits have been restructured in four bankruptcies.
Dominion Club. Members will receive in full satisfaction of their membership deposit claims, distributions pro rata from an escrow account to be funded in part from future new membership sales proceeds and certain contributions from a club owner affiliate. Each member had the option to receive in lieu of distributions from the escrow account an upfront payment equal to 11% of the member’s membership deposit.
Amelia Island. The purchaser of the multiple golf course club and resort entered into a lease/purchase agreement with a club member entity with respect to one golf course and clubhouse. Members received in satisfaction of their membership deposit claims membership rights in the member owned club. Under the new Membership Plan, a golf member who converted to equity membership by paying $2,000 was to receive a refund of 30% of the membership deposit after resignation from available funds, increasing to 80% over a seven year period. Golf members who did not convert to equity membership were to receive a refund of 30% of their membership deposit after resignation from available funds.
Palmas del Mar. A government affiliated entity that acquired the club established a fund to pay, first, administrative claims and a tax claim, and then, if any amount remained, members would receive a pro rata share of the balance based on the present value of their membership deposit liability. It was expected that club members would be paid a very small percentage of their membership deposits.
PGA West. Membership deposits payable after resignation and reissuance will be paid at 50% of the total membership deposit; starting two years after the date of the reorganization plan, the refund percentage will increase by 5% each year. Members retain their right to 100% of their membership deposits at the end of 30 years and after death subject to annual caps on the total amount of payments under such provisions.
The individual circumstances for each club impacted the final provision governing the membership deposit restructure.
Membership deposits must be restructured so that members as a class of creditors vote in favor of the reorganization plan or the bankruptcy court determines that the reorganization plan does not unfairly discriminate and is fair and equitable. The club governing documents and the economics of the restructure must be carefully reviewed.
©2012 Greenberg Traurig, LLP
The National Law Review recently published an article regarding PAGA Representative Claims written by Labor & Employment Practice of Morgan, Lewis & Bockius LLP:
On June 4, a unanimous panel of the California Court of Appeal for the Second District upheld a lower court’s ruling compelling individual arbitration of a plaintiff’s wage and hour claims and dismissing both class and representative claims under the California Labor Code Private Attorneys General Act (PAGA). Iskanian v. CLS Trans. Los Angeles, LLC, — Cal. Rptr. 3d —, No. B235158, 2012 WL 1979266 (Cal. Ct. App. 2d Dist. June 4, 2012). In so ruling, the court (i) held that the U.S. Supreme Court’s opinion in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011) (Concepcion), preempted any California law prohibiting arbitration of certain claims; (ii) rejected a recent decision from the National Labor Relations Board (NLRB); and (iii) held that employees may validly waive their right to bring PAGA claims on behalf of others as part of an arbitration agreement.
As a driver for defendant CLS Transportation, LLC (CLS), plaintiff Arshavir Iskanian signed a “Proprietary Information and Arbitration Policy/Agreement” providing that any and all employment-related disputes would be submitted to binding arbitration. The arbitration agreement contained a waiver of the right to bring claims on behalf of a class or as a representative of others.
Notwithstanding this arbitration agreement, Iskanian filed a putative class action complaint against CLS, alleging that the company failed to pay overtime, provide meal and rest breaks, reimburse business expenses, provide accurate and complete wage statements, and pay final wages in a timely manner. CLS moved to compel arbitration, which the trial court initially granted. Shortly after the trial court issued its order, the California Supreme Court issued its opinion in Gentry v. Superior Court (Circuit City Stores), 42 Cal. 4th 443 (2007), holding that class action waivers in employment arbitration agreements were unenforceable as contrary to public policy. On appeal, CLS’s initial motion to compel arbitration was reversed, and the case proceeded to litigation in Superior Court.
Soon after the U.S. Supreme Court issued its opinion in Concepcion, which overruled California law in regards to class action waivers in commercial contracts, CLS renewed its motion to compel arbitration. The trial court granted the motion, and a second appeal followed.
On appeal, the court affirmed, holding that Concepcion overruled Gentry and rejecting the plaintiff’s “vindication of statutory rights” argument. Finding that a purported intent to vindicate statutory rights “is irrelevant in the wake of Concepcion,” the court held that “[t]he sound policy reasons identified in Gentry for invalidating certain class waivers are insufficient to trump the far-reaching effect of the [Federal Arbitration Act (FAA)].” Iskanian, 2012 WL 1979266 at *5. Thus, the court held that any California statute or policy prohibiting arbitration of certain claims is invalid, and that under the FAA, class and representative waivers should be enforced according to their terms “so as to facilitate streamlined proceedings.” Id.
The court also rejected the plaintiff’s argument that a recent decision by two members of the NLRB in D.R. Horton, Inc., 357 NLRB No. 184 (2012), barred enforcement of class and representative waivers in employment arbitration agreements as a violation of Section 7 of the National Labor Relations Act (NLRA).
Finding several faults with the D.R. Horton decision, the Iskanian court declined to give any deference to the NLRB, noting that “the FAA is not a statute the NLRB is charged with interpreting.” Iskanian, 2012 WL 1979266, at *6. The court instead followed the Supreme Court’s binding authority in CompuCredit Corp. v. Greenwood, 132 S. Ct. 665 (2012), that, unless the FAA is “overridden by a contrary congressional command,” then “agreements to arbitrate must be enforced according to their terms.” Iskanian, 2012 WL 1979266, at *7. Finding no such “congressional command” in the NLRA, the court rejected D.R. Horton. Id.
Departing from two prior decisions issued by other California Courts of Appeal, theIskanian court held that the representative action waiver of PAGA claims in the parties’ arbitration agreement was enforceable under Concepcion. The court compelled individual arbitration of the plaintiff’s PAGA claim, holding that “any state rule prohibiting the arbitration of a PAGA claim is displaced by the FAA.” Id. at *9. The court further held that California’s “Broughton-Cruz rule”—which bars arbitration of public injunctive relief actions—has been overruled by Concepcion. Accordingly, “the public policy reasons underpinning the PAGA do not allow a court to disregard a binding arbitration agreement. The FAA preempts any attempt by a court or state legislature to insulate a particular claim from arbitration.” Id. The court concluded that the plaintiff could not pursue representative claims against CLS.
The Iskanian decision, when coupled with another recent California opinion,Kinecta Alternative Financial Solutions, Inc. v. Superior Court (Malone), 205 Cal. App. 4th 506 (2012), which held that class allegations may be dismissed when a court compels individual arbitration, represents a significant development for parties seeking to enforce arbitration agreements containing class and representative waivers.
The Iskanian decision, however, creates a clear split in authority among California Courts of Appeal regarding the enforceability of PAGA representative action waivers. See, e.g., Brown v. Ralphs Grocery Co., 197 Cal. App. 4th 489 (2d Dist. 2011) (holding that PAGA waivers were not enforceable); Reyes v. Macy’s, Inc., 202 Cal. App. 4th 1119 (1st Dist. 2011) (following Brown and refusing to compel individual arbitration of PAGA claims). This split may lead to California Supreme Court review, which means that the issue may not be resolved anytime soon.
While awaiting a final outcome, employers should carefully consider enforcement of arbitration agreements and the scope of waivers contained in such agreements.
Copyright © 2012 by Morgan, Lewis & Bockius LLP
