Human Behavior vs. Corporate Behavior

ragm@ragm.com (Robert AG Monks) — Tue, 21 May 2013 11:52:00 -0400

A few years ago -- around the time of the 2010 Citizens United decision -- I was thinking about "corporate citizenship" and corporate "speech." These ideas don't make sense to me. Corporations are a legal construct -- something made by humans -- and yet we've given them human rights, as it were.

Then I started to compare human behavior to corporate behavior

A Short Paper You Must Read About Board-Level Corporate Risk Management – NACD Advisory Council on Risk Oversight

tateatty@yahoo.com (Dave Tate) — Tue, 21 May 2013 10:13:00 -0400

If you are interested in the process of board oversight over corporate risk management, here is a short paper that you must read from the National Association of Corporate Directors.

First, let me sincerely compliment the NACD for discussing this topic and making portions of the discussions available for reading and comment. Whether you agree or disagree with portions of the paper and the discussions therein, making the paper available demonstrates an effort at leadership which I believe is often lacking at professional organizations.

Prior to Derivative Suit, Shareholder Demand Must Clearly Identify Wrong and Demand Action

info@berliklaw.com (Lee Berlik) — Mon, 20 May 2013 15:47:00 -0400

A shareholder acting on behalf of a corporation may bring a "derivative suit" against corporate directors and management for fraud, mismanagement, self-dealing or dishonesty. Before bringing such a suit, the shareholder must make a written demand that clearly identifies the alleged wrong and demands the corporation take action to redress it. A court will examine a complaint and a written demand to insure that they are sufficiently connected. A Norfolk Circuit Court recently addressed the sufficiency of a demand letter in here), Eastern District of Missouri Magistrate Judge Terry Adelman, applying Missouri law, determined that the failure of an insured under a management liability insurance policy to provide timely notice of claim precluded coverage under the policy, even in the absence of a showing of prejudice to the insurer.

Background

On December 28, 2007, Secure Energy's Board of Directors received a demand from Michael

Federal Court to Rule On Challenge to Use of Former Officer's Interview Statements in Corporate Internal Investigation

Tue, 14 May 2013 08:15:00 -0400

by Robert N. Rapp

In cases whether allegedly incriminating statements given in the course of interviews during an internal investigation conducted by the Audit Committee with the assistance of outside counsel and forensic accountants should be admitted as evidence against a person in his upcoming trial. Such ruling may significantly impact internal investigations conducted by public companies into potential wrongdoing or issues raised in government investigations.

Excerpt:

In a criminal case alleging multimillion-dollar securities and accounting fraud brought against the former Executive Vice President of Sales of Carter's

Delaware Court of Chancery Declines to Enjoin Acquisition of Plains Exploration and Production Co.

FPileggi@eckertseamans.com (Francis G.X. Pileggi) — Mon, 13 May 2013 11:54:00 -0400

In Re Plains Exploration & Production Company Stockholder Litigation, Cons., C.A. No. 8090-VCN (Del. Ch. May 9, 2013) [an enhanced version of this opinion is available to lexis.com subscribers].

Issues Addressed: Were Revlon duties of the board breached due to the absence of a special committee and pre-market check in connection with the sale of the company, and (ii) were disclosure obligations

Management Liability Insurance for Law Firms and the Dewey & LeBoeuf Bankruptcy

klacroix@oakbridgeins.com (Kevin M. LaCroix) — Mon, 06 May 2013 15:36:00 -0400

The collapse of the venerable Dewey & LeBoeuf law firm is a cautionary tale from which observers have drawn many lessons, including cautions about the perils associated with large law firm mergers and the challenges associated with various forms of law firm partner compensation. The firm's failure and the claims that have subsequently arisen against the firm's former managers also highlight important issues surrounding management liability insurance for law firms.

As discussed here, the Dewey & LeBoeuf firm was the result of a 2007 merger between

Foley & Lardner: Most Favored Nation ("MFN") Pricing Draws Scrutiny as Potential Anticompetitive Practice

FoleyandLardner@placeholder.com (Foley & Lardner LLP) — Tue, 30 Apr 2013 10:59:00 -0400

An interesting and growing debate in the antitrust arena is whether most favored nation ("MFN") pricing provisions are pro-competitive or anticompetitive. For many years, MFN provisions have been considered a fairly noncontroversial contract term included by purchasers in an attempt to assure that other buyers do not receive a more favorable price. But not all agree that MFNs result in lower prices, including some economists and, more importantly, the Department of Justice Antitrust Division ("DOJ"). The DOJ not only has expressed potential concerns about MFN clauses but also has filed several antitrust actions alleging that particular

Attorney/Client Privilege and Work Product Doctrine Again Addressed by Delaware Court of Chancery

FPileggi@eckertseamans.com (Francis G.X. Pileggi) — Fri, 26 Apr 2013 12:57:00 -0400

AM General Holdings LLC v. The Renco Group, Inc., C.A. No. 7639-VCN (Del. Ch. April 18, 2013). A prior Chancery decision in this case was highlighted on these pages at this link.

Issue Addressed: Whether the attorney/client privilege and the work product doctrine are defenses to a motion to compel.

Short Answer: They can be.

Statistical Programs Under Antitrust Scrutiny

Keller.Heckman@placeholder.com (Keller and Heckman LLP) — Fri, 26 Apr 2013 12:03:00 -0400

Information exchanges, such as statistical programs, drew considerable attention at the marquee Spring Meeting of the American Bar Association Section of Antitrust Law this month. Two cases merit consideration because there was no evidence in either case that the information exchanges lead to price fixing or anticompetitive effects, but government prosecutors used the information exchanges to support price fixing charges.

The takeaway for those of us that counsel or review information exchanges is the need for a broader, and more measured evaluation of the context in which the information exchanges will occur, coupled with an increased need to articulate

D&O Insurance to Fund Entire "Largest Ever" $139 Million News Corp. Derivative Suit Settlement

klacroix@oakbridgeins.com (Kevin M. LaCroix) — Wed, 24 Apr 2013 10:35:00 -0400

In what the plaintiffs' lawyers claim to be the largest derivative lawsuit settlement ever, the parties to the News Corp. shareholder derivative litigation have agreed to settle the consolidated cases for $139 million. The company also agreed to tighten oversight of the company's operations and to establish a whistleblower hotline, as well as other corporate therapeutics. The cash portion of the settlement is to be funded entirely by D&O insurance. The settlement is subject to court approval.

The parties' April 17, 2013 memorandum of understanding regarding the settlement can be found University of Chicago Masters in Liberal Arts Program. The universe has order. There's synchronicity and "smoothness" to where it is and how it came to be that scientists have a hard time explaining.

Such laws rarely seem to apply very well to human nature. Where did earthbound humans part ways

Chancery Addresses “At Issue” Exception to Attorney/Client Privilege

FPileggi@eckertseamans.com (Francis G.X. Pileggi) — Wed, 17 Apr 2013 14:29:00 -0400

In re Comverge, Inc., Shareholders Litigation, C.A. No. 7368-VCP (Del. Ch. April 10, 2013) [an enhanced version of this opinion is available to lexis.com subscribers].

Issue Presented: Whether the attorney-client privilege was a defense to a motion to compel documents.

Short Answer: Yes, under the circumstances of this case.

Taylor Bean and Whitaker Mortgage Corporation, must repay the nearly $1 million in defense fees the company's D&O insurer had advanced on his behalf, according to an April 11, 2013 Fourth Circuit opinion. The terse three-page appellate opinion adopts the ruling of the lower court, holding that Farkas's criminal conviction triggered the D&O insurance policy's "in fact" conduct exclusions which in turn triggered the insurer's right to recoup the defense fees

JPMorgan Chase, And Dimon, Starting To Sweat About Everything

retheauditors@gmail.com (Francine McKenna) — Fri, 12 Apr 2013 16:39:00 -0400

I put two new columns up at Forbes recently that talk about JPMorgan, PwC, Senator Levin's "Whale" hearings, and all the other stuff JPMorgan and Jamie Dimon are really worried about. The New York Times had an interesting scoop about JPMorgan and Deloitte and the foreclosure reviews that I followed up on, too, in "JPMorgan Chase Still Haunted By Foreclosure Reviews, And More".

Update April 4: The GAO has now issued its report on the regulators and their use of the third

Default Fiduciary Duties Coming for Delaware LLCs

bjmquinn@bc.edu (Brian JM Quinn) — Fri, 12 Apr 2013 16:24:00 -0400

There has been a back and forth between the Chancery Court and the Delaware Supreme Court about whether there are default fiduciary duties for LLCs. The Chancery Court takes the position that there are default fiduciary duties, though you may contract around them. The Supreme Court on the other hand take a more extreme, contractualist position. The Chief Justice's position is that there are no default duties because the LLC form is a creature of contract. If parties to an LLC have not contracted for fiduciary duties, then

Supreme Court Reverses Chancery on Collateral Estoppel/Demand Futility and Section 220 Issues

FPileggi@eckertseamans.com (Francis G.X. Pileggi) — Thu, 11 Apr 2013 14:25:00 -0400

Pyott v. Louisiana Municipal Police Employees' Retirement System, No. 380, 2012 (Del. Supr., April 4, 2013) [an enhanced version of this opinion is available to lexis.com subscribers]

Issues Addressed: (1) Whether or not a prior ruling by a California court dismissing a derivative suit served as a bar to subsequent Delaware derivative

Delaware Supreme Court Blasts Chancery Court's Controversial Refusal to Recognize California Court Judgment

klacroix@oakbridgeins.com (Kevin M. LaCroix) — Mon, 08 Apr 2013 15:35:00 -0400

One of the more vexing litigation problems to emerge recently has been the proliferation of multi-jurisdiction litigation, where corporate defendants are forced to litigate essentially the same claim in multiple courts at the same time. This problem is a particular issue in the context of M&A litigation, although not contained to those kinds of lawsuits. In the midst of what has become essentially a jurisdictional competition, Delaware's courts have tried to establish themselves as the preferred and presumptive court for corporate litigation.

As discussed In re: Bank of America Corp. Securities, Derivative, and ERISA Litigation, No. 09-MDL-2058, S.D. N.Y.; See October 2012, Page 4).

According to a media relations source at shareholder

Comcast v. Behrend Sets a Higher Bar for Class Certification

Tue, 02 Apr 2013 16:13:00 -0400

by Jennifer Driscoll-Chippendale

On March 27, 2013, the U.S. Supreme Court continued its recent trend of imposing more stringent standards for class certification in Comcast Corporation v. Behrend, 569 U.S. ___ (2013) [lexis.com subscribers may access the opinion]. At issue was whether the proponents of certification satisfied Federal Rule of Civil Procedure 23(b), which requires that "questions of law or fact common to class members predominate

Business Succession Planning

McNees@placeholder.com (McNees Wallace & Nurick LLC) — Tue, 02 Apr 2013 15:46:00 -0400

by Vance E. Antonacci

Introduction

The transition of a family owned or closely-held business is an important event for families. In a prior article, we covered the issues that a business owner faces in general in preparing a succession plan. This article will address specific issues that arise when some but not all of the owner's children are actively involved in the family business.

Transitioning a Family Business to Children - Overview

Many family business owners are fortunate to have one or more children work in the business

Big News: Consolidated LIBOR-Scandal Antitrust and RICO Claims Dismissed

klacroix@oakbridgeins.com (Kevin M. LaCroix) — Mon, 01 Apr 2013 12:17:00 -0400

On March 29, 2013, in a ruling that she acknowledged some might find to be "unexpected" in light of the substantial regulatory fines and penalties that some of the defendants have paid, Southern District of New York Naomi Reice Buchwald granted the defendants' motions to dismiss the antitrust and RICO claims in the consolidated LIBOR-based antitrust litigation. Judge Buchwald also dismissed the plaintiffs' state law claims and some of the plaintiffs' commodities manipulation claims. However, she denied the defendants' motions to dismiss at least a portion of the plaintiffs'

Mutual Fund Directors in the Hot Seat?

klacroix@oakbridgeins.com (Kevin M. LaCroix) — Thu, 28 Mar 2013 17:04:00 -0400

Mutual fund directors have been attacked before. For example, in his 2002 letter to shareholders of Berkshire Hathaway, Berkshire chairman Warren Buffett took a detour in an essay about corporate governance to express concerns about mutual fund directors. He noted that mutual fund directors effectively have only two "important duties"; to pick the fund manager and to negotiate the manager's fee. The record of mutual fund managers pursuing either goal has been "absolutely pathetic." The manager selection process for far too many funds has become a "zombie-like process

Delaware Affirms That Reverse Triangular Mergers Do Not Trigger Contract Clauses Generally Prohibiting Assignment

DLAPiper@placeholder.com (DLA Piper) — Thu, 28 Mar 2013 15:58:00 -0400

by Ed Batts

Negotiation fatigue is an age-old problem in completing any contract - and often, whether fair or not, the further back in the document the clause is positioned, the greater the fatigue.

A choice-of-law provision, which decides which jurisdiction's law shall govern the contract, is almost always near the last clause in a contract. How often have dueling sets of lawyers (and more frequently, frazzled and puzzled clients who simply want a contract done before the end of the quarter) exhausted themselves on other provisions, only to trade away choice of law for a perceived gain

High Court: Class Certification in Antitrust Case Was Improper

joan.grossman@lexisnexis.com (Joan Grossman) — Wed, 27 Mar 2013 14:39:00 -0400

WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court today ruled 5-4 that a district court may not certify a class action under Federal Rule of Civil Procedure 23(b)(3) without resolving whether the class has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a classwide basis (Comcast Corporation, et al. v. Caroline Behrend, et al., No. 11-864, U.S. Sup.; See November 2012) (lexis.com subscribers may

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