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June 2013

Coming in July: The LexisNexis Legal Newsroom

The LexisNexis Legal Newsroom delivers breaking news headlines, opinions, fast-turn analysis and more. This free website will replace the current LexisNexis Practice Area Communities in July, and brings significantly increased coverage, more social media interaction and other enhancements. The Legal Newsroom brings the number of practice areas covered up from 15 to more than 30, includes new jurisdictional options for select states, and introduces other significant enhancements.

Release of Lexis® for Microsoft® Office Now Integrates with Lexis Advance® Content and Expands Functionality

NEW YORK — LexisNexis® Legal & Professional, a leading provider of content and technology solutions, has announced that its industry-leading legal drafting solution, Lexis® for Microsoft® Office now integrates with Lexis Advance®. With the advanced features, functionality and content of Lexis Advance, Lexis for Microsoft Office now offers users even more options to quickly surface relevant results directly within their legal drafting process, streamline their workflow and improve the quality of their work product—directly embedded within Microsoft® Word and Outlook®. Click here to learn more.

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Bankruptcy Law:

May 2013 Ponzi Scheme Roundup

It’s springtime, and Ponzi schemes are in full bloom. Here is a summary of stories that were reported in May. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it. Click here to read this post by Kathy Bazoian Phelps.

U.S. Supreme Court Deciphers “Defalcation” in Bullock: A Canonical Exercise in “Reading Law” (Scalia/Garner)

Last year, U.S. Supreme Court Justice Antonin Scalia and Professor Bryan Garner published a phenomenal book, Reading Law: The Interpretation of Legal Texts. Many know of Justice Scalia, though he’s probably at the low end of the already historically low favorability rating for the Supreme Court. Many fewer know of Professor Garner, but if you’re not his fan, you should be. He’s prolific beyond words, which are his specialty (and as to which he has no modern equivalent). Click here to read this post by Steve Jakubowski.

Supreme Court Sets Defalcation Bar at Gross Recklessness under Section 523(a)(4)

In the only bankruptcy case pending before it this term, a unanimous Supreme Court has ruled that the archaic term “defalcation” used in 11 U.S.C. Sec. 523(a)(4) requires knowledge of, or gross recklessness in respect to, the improper nature of the relevant fiduciary behavior complained of. Click here to read this post by Stephen Sather.

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Corporate & Securities Law:

The SEC Should Make Financial Fraud an Enforcement Priority Now

At the Financial Reporting Institute Conference, SEC Commissioner Walter and Chief Accountant Paul Beswick addressed the necessity for high-quality financial reporting, the application of international accounting standards, or IFRS, and the work of the Public Company Accounting Oversight Board. Commissioner of PCAOB, Elisse B. Walter’s Keynote Luncheon Speech, 32nd Annual SEC and Financial Reporting Institute Conference, Pasadena, Calif. Click here to read this post by Thomas O. Gorman.

D&O Insurance: Providing Coverage for Plaintiffs’ Fee Awards?

A recurring D&O insurance coverage issue is the question of whether or not the D&O insurance policy provides coverage for a plaintiff’s fee award. The question often arises in the context of a settlement of a shareholder’s derivative suit that includes an agreement to pay the plaintiffs’ attorneys fees as part of the settlement. In many instances, the settling company’s D&O insurer will contest coverage for the plaintiffs’ attorneys’ fees. Click here to read this post by Kevin M. LaCroix.

What Are the Essential Elements of a Corporate Compliance Program?

Can you synthesize and reconcile the world’s leading laws, regulations and commentaries on the best practices an anti-bribery and anti-corruption compliance program? I recently saw one such approach by Paul McNulty and Stephen Martin of the law firm Baker and McKenzie. They have developed what they term the five essential elements of a corporate compliance program. These five elements are based upon the best practices as set out in the seven elements of a corporate compliance program under the U.S. Sentencing Guidelines; the 13 Good Practices by the OECD on Internal Controls, Ethics, and Compliance; the FCPA Guidance’s 10 Hallmarks of Effective Compliance Programs; and the UK Bribery Act’s Six Principles of an Adequate Procedures compliance program. Click here to read this post by Thomas Fox.

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Emerging Issues Law:

William A. Ruskin: Balancing the Rights of Landowners, Wind Power Developers and Mineral Rights Owners

It is the dream of many landowners in the United States to one day have both oil wells and wind turbines on their land. For this to happen, however, landowners must play an active role in keeping oil and wind companies from trying to overreach each other in concurrent development of the land. Click here to read this post by William A. Ruskin.

Sands Anderson PC: A Cloud of Suspicion: Legal Issues Surrounding Cloud Computing

We have seen a rise in the number of start-ups offering cloud-based services and are reviewing an increasing number of SaaS or cloud-based software services contracts for our clients. Cloud computing may be a viable business model for either vendor or business owner, but as with anything, you have to do your homework. Click here to read this post by Donna Ray Berkelhammer of Sands Anderson PC.

William A. Ruskin: Are Environmentalists Who Oppose Wind Farms Environmentalists?

Wind power can help address the nation’s compelling demand for electric power without increasing greenhouse gas emissions or enlarging our carbon footprint. Environmental activists, who are critical of the use of fossil fuels due to their perceived negative impact on the environment, are generally supportive of developing wind power as an alternative energy source. Wind is renewable, sustainable and non-polluting. Why is it then that environmental groups sometimes oppose the development of wind power in the courtroom? Click here to read this post by William A. Ruskin.

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Environmental Law & Climate Change:

Pepper Hamilton Client Alert: 4th Circuit Brownfields Decision Stops Short of Worst-Case Outcome

In a closely watched Superfund case, the Fourth Circuit U.S. Court of Appeals has interpreted the scope of landowner liability protections Congress put in place to “promote the cleanup and reuse of brownfields,” that is, previously contaminated properties. Under those provisions of the Small Business Liability Relief and Brownfields Revitalization Act, landowners of contaminated property that meet eight statutory criteria qualify as “bona fide prospective purchasers” (BFPP), protecting them against Superfund liability stemming solely from current property ownership. Without BFPP protection, redevelopment of contaminated properties would be a far riskier proposition and financing these projects would be problematic. Click here to read how brownfield redevelopment projects avoided a potential disaster.

Jenner & Block: Climate Change May Cause Greater Aviation Turbulence

A recent study published in the British journal Nature Climate Change suggests that turbulence on flights may be stronger and occur more often if carbon dioxide emissions double by 2050, further heating up the atmosphere. Turbulence is created by atmospheric pressure, jet streams, air around mountains, cold or warm weather fronts, or thunderstorms, among other conditions, and severe turbulence is responsible for 58 passenger injuries a year. Click here to learn more about this study.

U.S. Government’s Proposed Wildlife Climate Adaptation Strategy

As hundreds of starving sea lion pups wash up on the California coast, and as the Canadian government shuts down research into climate change, a coalition of American federal, state and tribal government agencies has released a National Fish, Wildlife and Plants Climate Adaptation Strategy. The wildlife strategy provides a unified approach—reflecting shared principles and science-based practices—for reducing the negative impacts of climate change on fish, wildlife, plants and the natural systems upon which they depend. Click here for more information on the key goals of this strategy.

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Estate Practice & Elder Law:

Personal Injury Damages and Medicaid Liens—SCOTUS Decides

You have a horrific accident and are looking at a life of extreme medical care. The accident was caused by another person (drunk truck driver). You get a multi-million dollar award. Does the state that you live in get a share? Click here to read this post by Deirdre Wheatley-Liss.

When Is a Legacy from a Debtor to a Creditor Considered to Be in Satisfaction of the Debt?

On occasion, testators during the course of their life make promises with respect to legacies or incur debts to people they intend to be beneficiaries of their will. Executors sometimes take the position that a legacy is merely a satisfaction of a debt and is not deemed to be a gift in addition to the satisfaction of the debt. Click here to read this post by Peter K. Kelly.

Bullivant Houser Bailey PC: In a Cold Sweat: Last Wishes Must Be Considered in Estate Planning

The Godfather of Soul, James Brown, lives on in music and culture, but a recent South Carolina Supreme Court ruling is adding estate planning to the legend’s history. The Court overturned a settlement reached by the state attorney general, Brown’s children, and his “wife.” In its decision, the court also severely criticized the attorney general (the AG) for an unprecedented extension of his power. Click here to read this post by Darin Christensen of Bullivant Houser Bailey PC.

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Immigration Law:

Alina Das: 2013 LexisNexis® Matthew Bender® Daniel Levy Memorial Award Recipient!

LexisNexis® Matthew Bender® is pleased to announce that the 2013 honoree for the Daniel Levy Memorial Award for Outstanding Achievement in Immigration Law is Prof. Alina Das. Alina Das, Assistant Professor of Clinical Law at New York University School of Law, Co-Director of the Immigrant Rights Clinic, and Faculty Director of Bickel & Brewer Latino Institute for Human Rights, is a national leader on issues related to immigrants with criminal convictions. Click here to read the entire post.

News Excerpts from the June 15 Bender’s Immigration Bulletin

Read excerpts from the June 15 Bender’s Immigration Bulletin, including “USCIS Finalizes Policy Memo on EB-5 Adjudications.” Click here to read this and other news excerpts from the June 15, 2013, Bender’s Immigration Bulletin.

Ask Lambda Legal: Immigration Reform Is an LGBT Issue

Why are LGBT groups working on immigration issues and what does the recent debate about Comprehensive Immigration Reform have to do with the rights of LGBT individuals and families? Click here to read this post by Ivan Espinoza-Madrigal of Lambda Legal.

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Insurance Law:

Force-Placed Insurance: Another Multi-Billion Dollar Industry Caught in the Regulatory Cross Hairs

Forced-placed insurance (FPI), which is sometimes referred to as “lender-placed insurance,” is a specialty product that is intended to insure properties when standard property coverage is allowed to lapse. During the housing boom, FPI occupied an overlooked corner of the hazard insurance business. Its importance has been growing, both as a result of increased demand for FPI in the wake of the nation’s housing crisis, but also because of the rising vulnerability of property to damage from increased catastrophe activity. Click here to read more about this insightful insurance commentary by Karen Yotis.

Neal, Gerber & Eisenberg LLP: Missouri Court Applies “All Sums” Allocation to Long-Tail Environmental Coverage Dispute

The court held that excess liability insurers were jointly and severally liable under policies issued to Doe Run in the 1950s for “all sums” that Doe Run paid to investigate and remediate environmental contamination that occurred over more than 90 years. Doe Run spent more than $62 million to investigate and remediate environmental contamination at six Missouri sites where it had conducted mining, milling and smelting operations since the late 1800s. In December 2006, Doe Run sought coverage for these costs under seven excess insurance policies in effect from 1952 through 1961. Click here to learn why the appellate court found that the trial judge was in error in holding that the insurers were only liable for $5 million.

8th Circuit: No CGL Cover for Property Damage to Insured Contractor’s Own Defective Work and Resulting Loss on Use During Its Ongoing Operations

On May 20, the Eighth Circuit U.S. Court of Appeals issued its decision in Spirtas Co. v. Nautilus Ins. Co., holding that the Performing Operations Exclusion, the Incorrectly Performed Work Exclusion, and the Impaired Property Exclusion each separately barred CGL coverage for an insured bridge demolition contractor’s bungled work during its ongoing operations and resulting loss of use of a river to navigation. Click here to read the analysis by Scott Turner of Anderson Kill & Olick, P.C. and the flaws that he finds in the Eighth Circuit’s decision.

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Intellectual Property Law:

It’s a Bird, It’s a Plane: Superman Claims Victory in the Federal Court of Australia

On May 22, 2013, Justice Bennett refused an application in the Federal Court of Australia by Cheqout Pty Ltd. to register the trade mark “superman workout.” Adopting the test relied upon by Justice Dodds-Streeton in Fry Consulting v. Sports Warehouse Inc (No 2) (2012), Her Honour held that Cheqout made the application in bad faith as its “conduct fell short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons.” Click here to read this post by Melinda Upton and Danielle Selig of DLA Piper.

Who Owns #Hashtags?

Proliferation of social media continues to stretch the boundaries of the law and its definitions. It prompts us to apply the proven legal concepts to new technological and social phenomena with no clear and well-defined answers. A good example is a question of whether Twitter® hashtags are anybody’s intellectual property. If yes, then can a non-descriptive hashtag be used as a trademark? Does it mean that we need to expand our trademark searches to include Twitter hashtags? Click here to read this post by Arina Shulga.

E-Commerce & Software Patent Trolls Targeted by Congress

Congress is considering fixes to the U.S. patent system that are designed to combat the patent troll problem. On May 7, S.866, or the “Patent Quality Improvement Act,” was introduced by Sen. Charles Schumer (D-N.Y.) to amend Section 18 of the recently passed America Invents Act. The bill proposes to remove the eight-year sunset provision of the Transitional Program for Covered Business Method (CBM) Patents so that it becomes permanent. Additionally, the bill proposes to remove the language “a financial product or” from the standing definition. In its place, the bill proposes “an enterprise, product, or.” The change would effectively make clear that any e-commerce patent, even if not related to finances per se, is subject to a CBM challenge. (Note that the USPTO has been sued very recently on the importance of this “financial” component of the statute.) Click here to read this post by Scott A. McKeown.

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International & Foreign Law/International Rule of Law:

Looted Resources in Global Supply Chains: Asking the Right Questions

Business globalization can be the source of human rights and environmental violations that trigger criminal and civil liability for corporations and their executives. This is particularly the case in conflict-affected areas and weak governance zones. Click here to learn more.

Cheap Shots: EU Privacy, the USA PATRIOT Act and Cloud Computing

For the past year or two, foreign cloud providers—particularly some based in the EU—have been making claims and insinuations about the scope and use of the Patriot Act in an attempt to secure a marketing advantage over their U.S. competitors. Click here to read an excerpt of this article by David Bender.

Military Tenders and Procurement in Saudi Arabia: Guidelines for the Payment of Commissions, Success Fees and Agency Fees

Concerning bribery, focus is on laws with international reach (the U.S. Foreign Corrupt Practices Act, the UK’s Bribery Act 2010), local laws are often overlooked. One is a Saudi Council of Ministers Resolution on the defense industry. One can run afoul of these restrictions on payment of commissions to third parties, while complying with the FCPA or Bribery Act. Click here to read this post by John Balouziyeh.

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Labor & Employment Law:

Employees: Better Think Twice before Suing Your Employer (4 Reasons Why)

Earlier, I busted on “my own side” by giving four reasons why employers shouldn’t be so quick to fire their employees. To be fair, this week I’ll talk about the other side—four reasons why employees shouldn’t be too quick to sue their employers. Click here to read this post by Robin Shea.

13 Things Every Teen Needs to Know about Workplace Rights

School’s out for summer! Or it will be soon, and many teens will start summer jobs or even their very first real job. Yet schools do little, if anything, to prepare teens for the realities of the workplace. I’m always shocked when I encounter teens whose parents drag them to me after they suffer workplace abuse with no idea they have any rights at all. Click here to read this post by Donna Ballman.

“Fire Me … Make My Day” Does Not Equal Protected Concerted Activity

The Rolling Stones famously sang, “You can't always get what you want.” One employee recently got exactly what she wanted (and needed) from her employer, yet filed a claim anyway. After taking to Facebook® and pleading to be fired, she sought the help of the NLRB, claiming that she had been fired in retaliation for protected concerted activity. Thankfully, the NLRB concluded that she should not be entitled to proceed with her case. Click here to read this post by Jon Hyman.

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Litigation Resource:

William A. Ruskin: 2nd Circuit Grapples with Medical Monitoring

On May 1, 2013, the Second Circuit issued an important decision in Caronia v. Philip Morris USA Inc., 2d Cir., No. 11-0316 (5/1/13) [enhanced version available to lexis.com® subscribers]. The court provides an excellent summary of the law concerning medical monitoring claims in New York state and federal courts, and in other jurisdictions around the country. However, the Second Circuit concluded that the New York Court of Appeals was best suited to determine whether New York recognizes an independent claim for medical monitoring. Click here to read this post by William A. Ruskin.

Abbey Spanier: California Appeals Court Reverses Its Previous Denial of Class Certification in Light of Brinker Decision

Plaintiffs brought a class action on behalf of approximately 4,000 current and former employees of Boyd & Associates, Inc. which provides security guard services. Plaintiffs alleged that Boyd denied off-duty meal breaks and off-duty rest breaks and did not include certain reimbursements and an annual bonus payment in calculating the hourly rate of overtime pay. Plaintiffs proposed three subclasses: (1) the Meal Break Class, (2) the Rest Break Class, and (3) the Overtime Class. The appeals court initially issued an opinion affirming the denial of class certification of the Meal Break Class and the Rest Break Class and reversing the order denying certification of the Overtime Class. After the court issued its opinion, the California Supreme Court issued its landmark decision Brinker Restaurant Corp. v. Superior Court, 53 Cal. 4th 1004 (2012) [enhanced version available to lexis.com subscribers]. Upon reconsideration, the appellate court concluded that all three subclasses should be certified [enhanced version]. The only class certification question in dispute before the appellate court was the predominance of common questions. The court concluded that in light of Brinker, common issues of fact predominate in determining whether Boyd was liable for not providing off-duty meal breaks. The court explained that “Brinker teaches that we must focus on the policy itself and address the issue whether the legality of the policy can be resolved on a classwide basis.” Click here to read this post by Abbey Spanier of Rodd & Abrams LLP.

William A. Ruskin: Comcast Corp. v. Behrend Decision Levels Class Action Playing Field

Comcast Corp. v. Behrend, 133 S. Ct. 1426, 2013 WL 1222646 (Mar. 27, 2013) [enhanced version available to lexis.com subscribers] was filed as a hope-to-be antitrust class action in the U.S. District Court of the Eastern District of Pennsylvania. Among other Rule 23 requirements, plaintiffs were required to prove that the damages resulting from the alleged injury were measurable on a class-wide basis through use of a common methodology. Although plaintiffs proposed four distinct theories as to how they had been injured by defendants’ anti-competitive conduct, the trial court held that only one theory of damages was capable of class-wide proof. Nevertheless, the court certified a class under that single theory. On appeal to the Third Circuit, defendants argued certification was inappropriate because plaintiffs’ expert had acknowledged that his model measured damages resulting from all four of plaintiffs’ theories of harm, not just a single theory. Click here to read this post by William A. Ruskin.

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Real Estate Law:

Denial of a Zoning Variance Application Can Amount to “Confiscation” of Property

Jeffrey Jerman bought an undersized lot in Berkeley Township, N.J., and sought a zoning variance so he could build a residence on the lot. When he bought it, he knew the lot was smaller than the zoning rules required for homebuilding. The lot was 7,500 square feet in an area where R-125 zoning required 12,500 square foot lots for single-family homes. The zoning board denied the variance because Jerman earned a living applying for variances on isolated lots, and then he would build on the property or sell the property to the town at an enhanced price if the variance was not granted. Click here to read the complete analysis of this decision by Andrea Lee Negroni.

Vetstein Law Group: GMAC Mortgage and First American Battle over Title Insurance Coverage

One little mistake in drafting and recording legal documents during a refinance can result in a huge problem for a lender—such as the lender having no legal ability to enforce the mortgage! (A slight problem ...) GMAC Mortgage learned this the hard way in GMAC Mortgage v. First American Title Insurance Company when the court found in favor of First American Title Insurance Co. in a dispute over coverage under a lender’s title insurance policy. Click here to find out what small mistake the closing attorney made that cost GMAC its right to enforce its mortgage.

More Courts Reject 11th-Hour Attempts to Avoid Foreclosure Based on an Alleged Lack of Standing

Two more New Jersey Appellate Division panels have refused to allow defendants in foreclosure lawsuits to raise standing as an 11th-hour defense. There is now a clear trend against allowing defendants to stay silent in the face of a foreclosure lawsuit only to appear at the last minute, usually on the eve of a sheriff’s sale, and seek to vacate a final judgment based on an alleged lack of standing to foreclose. Click here to learn more about this decision from Peter Gallagher.

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Tax Law:

FATCA Withholding Compliance

Certain categories of U.S. source income are subject to withholding “at source”—i.e., in the United States. The Qualified Intermediary program defining withholding rules is amplified by the Foreign Account Tax Compliance Act (FATCA). LexisNexis® Guide to FATCA Compliance authors William Byrnes and Robert Munro examine FATCA Withholding Compliance.

Valuation of Artwork for Federal Estate Tax Purposes

Under IRC Section 2703(a), the value of a decedent’s gross estate includes the value at the time of the decedent’s death of all property, real or personal, tangible or intangible, wherever situated. How to Save Time and Taxes Preparing Fiduciary Income Tax Returns author Diane L. Mutolo discusses Estate of Elkins v. Comm'r, 2013 U.S. Tax Ct. LEXIS 6 (T.C. Mar. 11, 2013) and other key factors bearing on the Valuation of Artwork for Federal Estate Tax Purposes.

Offset Elixir: Elusive Antidote for Medical Device Excise Tax Pain

Although the U.S. Senate has voted 79 – 20 to repeal the Medical Devices Excise tax, the approved amendment requires a complete offset of the loss from repeal through new revenue from undetermined sources. Lexis® Federal Tax Analyst Deanne Morton examines the potential for an Offset Elixir: Elusive Antidote for Medical Device Excise Tax Pain.

Multistate Tax Compact: Is the End Near?

South Dakota Senate Bill 239 repealed all provisions of the Multistate Tax Compact from South Dakota law. The move to repeal the measure could be indicative of a growing trend amongst states. Lexis® Tax Analyst Sean Craig discusses the Multistate Tax Compact: Is the End Near?

Securities Brokers Get Another Reporting Compliance Break

Final regulations issued in April provided securities brokers time extensions on debt instrument sales reporting compliance requirements. Lexis Federal Tax Analyst Patricia Tyler reviews developments explaining why Securities Brokers Get Another Reporting Compliance Break.

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Workers’ Compensation Law:

California: The AME/PQME Quagmire on Determining Medical Necessity Post SB 863

SB 863 has brought to us new laws and regulations that govern whether or not portions of medical opinion can be admissible before the WCAB at trial. A revolutionary part of SB 863 mandates that the opinions of treating and evaluating physicians are NOT admissible on the issue of medical necessity. To become more familiar with this process, click here to read Robert Rassp’s explanation on what the Labor Code really prohibits and how counsel should utilize the opinions of treating and evaluating physicians.

I Walked Out into West, Texas

On April 17, 2013, an explosion at the West Chemical and Fertilizer Co., registering 2.1 on the Richter scale, leveled the plant and much of the surrounding town of West, Texas. The explosion was so powerful and destructive that it created a cloud of confusion as well as a swath of death and destruction. Initial reports indicate that at least 14 people were killed and hundreds injured. Many of the dead included firemen and medical personnel who had rushed to the scene to control the fire just before the explosion. The explosion and destruction highlights the risks and costs of the deregulation movement, and the inadequacies of state workers’ compensation systems. Click here to read why Stephen C. Embry says that the new Texas state motto may be “Deregulation may kill you, but we don’t care.”

Arthur Larson and the Rule of Law

In this article, LexisNexis pays tribute to Arthur Larson, who wrote the seminal treatises The Law of Workmen’s Compensation (Matthew Bender & Co.) and Employment Discrimination (Matthew Bender & Co.). Larson, one of the pioneers of the rule of law, had a passionate conviction in the pursuit of world peace and became instrumental in helping to spread the rule of law by advocating international law, arms control and disarmament. During his lifetime, Larson wrote and contributed to more than 80 books, booklets and articles relating to the rule of law. The rule of law is a theme that unifies LexisNexis across the globe and is one that is passionately supported by the company’s people. LexisNexis is committed to actively working to advance the rule of law, through its day-to-day business, products and services, and its actions as a corporate citizen. Click here to read about rule of law movement in the United States during the height of the Cold War and Larson’s contributions to world peace through law and human rights.


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