FINANCE Sustainability Linked Loans: Client Alert Digest
This client alert discusses the recent release of sustainability linked loan principles (SLLP) by the loan syndication industry associations in the U.S., Europe, and Asia. SLLP is a means of rewarding borrowers for achieving pre-negotiated sustainability performance (i.e., green) objectives. The Loan Syndication and Trading Association (LSTA), Asia Pacific Loan Market Association (APLMA), and the Loan Market Association (LMA) on March 20, 2019 released the SLLP “to facilitate and support environmentally and socially sustainable economic activity and growth.” Read more.
Practice Note: Environmental Due Diligence
CORPORATE AND M&A CONTENT AWARENESS Delaware Supreme Court Reverses Aruba Appraisal Decision: Client Alert Digest
On April 16, 2019, in a per curiam decision in Verition Partners Master Fund Ltd. v. Aruba Networks, Inc., the Delaware Supreme Court reversed an appraisal decision from the Court of Chancery, marking the third time in two years that significant appraisals have been reversed. The Supreme Court held that the fair value of Aruba’s stock for appraisal purposes was the deal price less the portion of the merger synergies included in the deal price ($19.10 per share). The Chancery Court had relied on the 30-day unaffected stock price to determine the fair value of Aruba at $17.13 per share. In doing so, the Supreme Court noted the importance of merger consideration as strong evidence of fair value in appraisal actions, as recognized in its DFC Global and Dell, Inc. decisions (cited below). Read more.
Practice Note: Expert Insights: Shareholder Activism in M&A (2014) by Fried Frank LLP
CAPITAL MARKETS & CORPORATE GOVERNANCE Financial Exploitation of Seniors and Other Specified Persons: FINRA Rules
This practice note discusses recently effective rules of the Financial Industry Regulatory Authority, Inc. (FINRA) that address the financial exploitation of seniors (i.e., persons age 65 or older) and other vulnerable adults. Specifically, this practice note discusses (1) amended FINRA Rule 4512 (Customer Account Information), pursuant to which FINRA member firms must make reasonable efforts to obtain the name of and contact information for a trusted contact person for each noninstitutional account maintained at the firm, and (2) new FINRA Rule 2165 (Financial Exploitation of Specified Adults), which requires FINRA member firms to identify, prevent, and report financial exploitation of older investors and other specified persons. Understanding these rules will assist you in advising clients in the identification, prevention, and reporting of financial exploitation of the persons intended to be protected by the new rules. Read more.
LABOR & EMPLOYMENT CURRENT AWARENESS:
The Labor & Employment Key Legal Development Tracker tracks key legal changes at the federal, state, and local levels that affect Labor & Employment. Alongside the key legal development, the tracker lists the date of the development and the specific documents in the Lexis Practice Advisor® Labor & Employment practice area that we updated. The tracker lists the recent legal developments, organized by jurisdiction, in reverse chronological order.
Jury Finds That Walmart Must Pay $6.1 Million For Unlawful Meal Break Policys
On April 12, 2019, a federal jury in California decided that Walmart must compensate a class of employees who it discouraged from taking meal breaks by requiring them to be processed at a time-consuming, asset-protection checkpoint, complete with metal detectors, every time they left the building. The eight-member jury deliberated for nearly four hours before awarding workers in a Chino, California warehouse $6.1 million in damages. However, the jury rejected the named plaintiffs’ claims that Walmart failed to properly calculate overtime to employees working more than eight hours a day on an alternative workweek schedule. Read more.
CIVIL LITIGATION Computing and Extending Time in Litigation (Federal)
ThisThis practice note describes how to compute time periods in federal court litigations under Rule 6 of the Federal Rules of Civil Procedure (Federal Rules). Specifically, this note discusses determining the length of your time period, identifying your trigger event, computing time periods measured in hours, days, or longer periods, extending time periods for service by mail or by stipulation or court order, and strategic considerations. For related checklists, see Computing Time in Litigation Checklist (Federal) and Deadlines in Civil Litigation Chart (Federal). Read more.
CORPORATE COUNSEL Arbitration Clause Drafting by Timothy Murray, Murray, Hogue & Lannis
This practice note provides a brief overview of arbitration and highlights issues to take into consideration when drafting an arbitration clause. For more information, see Arbitration Laws Overview and Arbitration Advantages and Disadvantages. Read more.
DATA SECURITY & PRIVACY CURRENT AWARENESS Student Social Media Privacy State Law Survey
This survey addresses state laws prohibiting educational institutions from asking or requiring students to divulge their social media usernames and passwords or otherwise provide access to their social media accounts. This survey covers whether a state has enacted social media account privacy legislation, describes the conduct that these state laws prohibit, and addresses exceptions to these state laws. Read more.
FINANCIAL SERVICES REGULATION CURRENT AWARENESS Federal Reserve and Federal Deposit Insurance Corporation Propose Significant Changes to Resolution Plan Requirements
On April 8, 2019, the Board of Governors of the Federal Reserve System (Federal Reserve) and the Federal Deposit Insurance Corporation (FDIC) released a joint notice of proposed rulemaking (Proposal) that would revise regulations implementing resolution planning requirements under section 165(d) (SIFI Planning Requirements) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) for U.S. and foreign banking organizations (FBOs) (collectively, Covered Companies). These changes are consistent with requirements of the Economic Growth, Regulatory Relief, and Consumer Protection Act (Economic Growth Act), and would create different filing frequencies and resolution plan information and content requirements based on the risk a firm poses to the U.S. financial system. On April 16, 2019, the FDIC, with respect to covered insured depository institutions (CIDI) resolution plans, issued an advance notice of proposed rulemaking (ANPR) proposing substantially similar revisions to filing cycles and information requirements for CIDI resolution plans. This article reviews the Proposal and the ANPR and covers planning considerations for Covered Companies and CIDIs. Read more.
INSURANCE Contribution, Subrogation, and Indemnity
This practice note will cover the issues of contribution, subrogation, and indemnity in the context of insurance and specifically, the circumstances under which attorneys and insurance personnel may encounter the issues. Discussion includes definitions of each term, typical scenarios involving each issue, and strategies on how to address each issue. Indemnity and subrogation rights both may arise from contract, and indemnity rights usually do. Many kinds of contracts contain indemnity provisions. Indemnifications of persons or entities can be the subject of separate agreements. Construction contracts nearly always contain indemnity provisions whereby, for example, a general contractor is given the right to seek indemnity from a sub-contractor. Regardless of how it appears, the function of an indemnity provision is to transfer a risk of loss from one party, the indemnitee, to another, the indemnitor. They are sometimes referred to as hold-harmless agreements and serve to transfer the risk without the direct use of insurance. Read more.
TAX Moving a Domestic Corporation (Tax and Other Issues)
This practice note discusses the United States tax implications of moving a C corporation from one state to another. There exist three basic ways to move a corporation: (1) you can continue your corporation in your original jurisdiction and then register as a foreign corporation in a new state, (2) you can dissolve the corporation and form a new one in a new state, or (3) you can execute a statutory merger. While analyzing the three options, this practice note explains certificates of merger, annual reports, franchise taxes, plans of conversion, how to liquidate a C corporation, the benefits of reincorporating in Delaware, and IRS filings. You should remember to consult the business corporation laws of the old and new jurisdictions as they vary from state to state. For more information on incorporating in Delaware or other states, see Formation Basics: C Corporations. Read more.
REAL ESTATE Termination and Suspension Clauses in Construction Contracts by Leonard M. Kessler, Construction Attorney, Arbitrator, and Mediator
Sometimes, during the construction of a project, an owner is confronted with a contractor that defaults on its contract obligations. The owner’s initial reaction may be simply to terminate the contractor, but this is an extreme remedy that can ultimately increase the time and expense of the project. Thus, it is important for a construction contract to provide an owner with a variety of options when dealing with a defaulting contractor. This practice note provides drafting and implementation strategies for termination and suspension clauses in construction contracts and focuses on the following issues:
EMPLOYEE BENEFITS & EXECUTIVE COMPENSATION Performance-Based Equity Award Trends in Public Companies by James F. Reda, Arthur J. Gallagher & Co.
This practice note discusses trends and emerging practices in the granting of performance-based equity awards by public companies. It discusses factors that have contributed to these trends and the prevalence of certain plan design characteristics, including through the examination of survey data on plan design among mid-market companies. Finally, it predicts the effect of recent tax reform on future performance-based compensation. Read more. For related content, see ERISA Fiduciary Duties.
INTELLECTUAL PROPERTY & TECHNOLOGY Trademark Dilution Claims: Proving Fame by Roberta Jacobs-Meadway, BakerHostetler
This practice note addresses how to prove a trademark is famous when asserting a dilution claim in federal court or in a Trademark Trial and Appeal Board (TTAB) proceeding pursuant to the Trademark Dilution Revision Act of 2006 (TDRA), 15 U.S.C. § 1125(c). Topics discussed include the legal standard for fame, the statutory fame factors, and the types of evidence that may be submitted. For a checklist detailing the evidence that may be submitted to prove fame, see Fame Evidence in a Trademark Dilution Case Checklist. For more information on federal dilution claims, see Trademark Dilution Claims, Remedies, and Defenses. For information on dilution in opposition or cancellation proceedings at the TTAB, see Gilson on Trademarks § 9.03[f] and TTAB Decision Tracker: Dilution. Read more.
PRIVATE EQUITY & INVESTMENT MANAGEMENT Real Estate Private Equity Investments: Types of Structures by Debbie Klis, Polsinelli PC
This practice note discusses the various private equity investment structures available to investors seeking to invest in real estate in the United States. Investors may select a direct or indirect ownership structure of their investment, which can hold a single asset or multiple properties in a single asset class or multiple classes. There is a myriad of structural options available which affords sponsors flexibility in creating investment vehicles with varying strategic goals, risk tolerance and transparency levels, management styles, minimum and maximum investment amounts, fee structures, and distribution policies. The most basic structure is a single-asset structure through a direct investment, where a specially created investment vehicle owns a single asset. From here, the complexity of structures increases to real-estate syndicates that hold a single asset and privately offered real estate funds that are pooled funding structures holding multiple assets. The most complex structure for U.S. investment in real estate is the real estate investment trust (REIT), which is a pooled investment vehicle that consists of relatively large numbers of investors. For additional guidance, see Private Real Estate Funds Formation: Special Considerations and Private Equity Investment Structures. Read more.
BUSINESS ENTITIES Pass-Through Entities Taxation
Over the last two decades, the use of pass-through entities to minimize taxes has become very popular., Unlike pass-through entities, C corporations are subject to tax themselves, and their shareholders are also generally subject to tax on dividends and gains from the sale of C corporation stock. While C corporations were long the preferred entity for “going public” transactions, it is becoming more common for partnerships or other pass-throughs to be utilized until an IPO is on the horizon. In addition, many structures involving corporations still deploy pass-throughs as a means of creating tax efficiencies for founders and smaller investors. Read more.
TRUSTS & ESTATES Same-Sex Couples and Tax Planning
This practice note discusses planning for same-sex couples, specifically same-sex married couples. It begins with some historic background to the recognition of same-sex marriage as provided by the Supreme Court decisions in United States v. Windsor and Obergefell v. Hodges, followed by a discussion of wills and estate planning documents such as financial powers of attorney, living wills and health care proxies, and inter vivos trusts. Read more.
COMMERCIAL TRANSACTIONS Meeting the Definition of a Small Business Concern Checklist
This Meeting the Definition of a Small Business Concern Checklist is for existing or prospective federal government contractors to determine whether they can meet the definition of a small business concern (SBC) under the Small Business Act (SBA). This checklist includes the definitional thresholds and size standards for SBCs. This checklist can also be used to determine if an SBC can qualify under a specific small business category, including the 8(a) Business Development Program, a Veteran-Owned Small Business (VOSB), a Service-Disabled Veteran-Owned Small Business (SDVOSB), a Women-Owned Small Business (WOSB), an Economically Disadvantaged Women-Owned Small Business (EDWOSB) and a Historically Underutilized Business Zone (HUBZone) SBC. Read more.
ANTITRUST Third Party Involvement in Merger Reviews by Michael B. Bernstein and Justin P. Hedge, Arnold & Porter
When the Federal Trade Commission (FTC) or Department of Justice (DOJ) reviews a transaction for potential anticompetitive effects, not only will the authority seek extensive information from the parties, but it also will gather information from third parties, typically customers and competitors. The reviewing authority uses this information to augment and verify the information received from the parties and ultimately to ensure it has sufficient information to evaluate the potential competitive impact of a proposed transaction. Read more.
BANKRUPTCY CURRENT AWARENESS Extraterritorial Fraudulent Conveyance in the Second Circuit: Client Alert Digest
This client alert discusses a decision issued on February 25, 2019, by the U.S. Court of Appeals for the Second Circuit where the court reversed the bankruptcy court’s dismissal of fraudulent conveyance claims based on the presumption against extraterritoriality and international comity grounds. The court first considered the presumption against extraterritoriality, which provides that absent clearly expressed congressional intent to the contrary, federal laws are construed to have only domestic application. The pertinent question was whether the avoidance of a fraudulent conveyance from foreign subsequent transferees under Sections 548(a)(1) and 550 of the Bankruptcy Code was a domestic application of the statutes. The Second Circuit held that the appropriate transaction to determine the extraterritoriality question is the initial transfer and not the subsequent transfer since the initial transfer is the only transfer the debtor made. The court further found that there was no presumption against extraterritoriality because the debtor’s intentional fraudulent transfer was a transfer of U.S. property and is therefore a domestic activity under Sections 548(a)(1)(A) and 550(a). With respect to comity, the court found that the U.S. has a compelling interest in allowing domestic estates to recover fraudulently transferred property. The following client alerts and news article discuss the case. Read more.
Form: Complaint to Avoid and Recover Fraudulent Transfers