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Wednesday, April 30, 2014
Eric Turkewitz on Legal Blogging
Talking Legal Evolution: Innovation's Pace in the Legal Industry
Kansas' Unauthorized LL.M. Program Draws ABA Censure
Source: http://www.nationallawjournal.com/id=1202634055202?rss=rss_nlj
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Broadcasters Prevail Against 'Ghost Hunters' Theft Claim
Kenya president signs polygamy bill into law
Source: http://jurist.org/paperchase/2014/04/kenya-president-signs-polygamy-bill-into-law.php
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Evernote’s Power of Collaboration, Storage, and OCR for Attorneys
Katie Floyd is a litigator and the co-creator and host of the Mac Power Users Podcast. She is a regular speaker at Macworld Expo and contributor for ScreenCastsOnline Monthly Magazine. Katie also serves as the President of her local Macintosh Users Group and is a member of the Mac Roundtable Podcast.
Delaware Court of Chancery Grants Summary Judgment Dismissing Breach of Fiduciary Duty Claims In Absence of Evidence of Directors’ “Conscious Disregard” of Fiduciary Duties
In In re Answers Corp. Shareholders Litigation, C.A. No. 6170-VCN, 2014 WL 463163 (Del. Ch. Feb. 3, 2014), the Delaware Court of Chancery (Noble, V.C.) granted summary judgment in favor of defendants in a stockholder class action for breach of fiduciary duty arising out of the merger of Answers Corporation (“Answers” or the “Company”) with AFCV Holdings, LLC (“AFCV”). Because the undisputed material facts showed that a disinterested majority of the Board of Directors approved the transaction, plaintiffs were required to offer evidence that the Board consciously acted in bad faith or was controlled by an interested party to survive summary judgment. Plaintiffs were unable to do so. The Answers decision highlights the high burden stockholder plaintiffs face to proceed with breach of fiduciary duty claims where a merger is approved by an independent/non-controlled board, even where the sale process may have been flawed. As the court explained, there is a vast difference between “a flawed inadequate effort to carry out fiduciary duties and a conscious disregard for them.”
Answers was a publicly traded Delaware corporation focused on the questions and answers space online. Approximately 90% of the website’s traffic and 75% of its revenue came from Google. In March 2010, AFCV, a portfolio company of a private equity firm with a focus on social media and online information resources, submitted an expression of interest to members of the Answers board concerning a possible business combination. In September 2010, AFCV sent Robert Rosenschein, the Company’s CEO, a letter of intent proposing to acquire Answers for between $7.50 and $8.25 per share. The Board eventually obtained an offer of $10.25 per share, but refused to grant AFCV exclusivity while it continued to evaluate other alternatives and strategic buyers.
While negotiations were proceeding, the Company’s financial conditions improved significantly when Answers announced its fourth quarter results for 2010. In January 2011, the financing committee of the Board recommended attempting to increase the offer price beyond the pending $10.25 per share, but to accept that amount if no further concessions on price were obtained. AFCV responded with its best and final offer at $10.50 per share. After noting that there were no other offers of the table and recognizing that Google continued to significantly threaten the Company’s core business, the Board unanimously approved the proposed transaction.
Shortly after the announcement of the merger agreement, several stockholder plaintiffs filed complaints in the Delaware Court of Chancery challenging the transaction. Plaintiffs alleged that Rosenschein (and two other directors) were conflicted and controlled the negotiation process. Plaintiffs also alleged that the members of the Board breached its fiduciary duties by acting in bad faith to sell Answers before its rising stock price would exceed AFCV’s offer by (1) purposefully engaging in a limited shopping process, (2) failing to act in the interest of the Company’s public stockholders after circumstances had changed to indicate the offer price was too low and (3) exerting willful blindness by ignoring alternatives to the AFCV transaction.
The court granted defendants’ motion for summary judgment. The court recognized that a disinterested majority of the Board approved the transaction. Thus, to survive summary judgment, plaintiffs were required to show that the Board consciously acted in bad faith or that it was controlled by an interested party. Plaintiffs failed to do so. The directors submitted evidence that they fielded a variety of unsolicited offers and participated in numerous meetings where they discussed transaction alternatives. Despite discussions with at least seven other possible acquirers, nobody else made a credible offer to acquire Answers. The directors also caused the Company’s financial advisor to perform a market check. Moreover, the directors actively negotiated with AFCV on price. This evidence undermined any assertion of bad faith.
The court discounted plaintiffs’ contention than an email where a director stated that the value of Answers could be as much as $1.50 higher than AFCV’s $10.25 offer price showed “bad-faith” by recognizing that the Board had plausible business concerns regarding the stability and future success of the Company tied to its reliance upon Google for traffic and revenues. Plaintiffs also ignored the fact that the Board secured additional merger consideration as a result of the Company’s improving financial condition. As the court explained:
Plaintiffs’ proffered evidence does not create a genuine issue of material fact. Evidence based upon a few isolated quotes stating the deal was accelerated or reflecting one director’s belief, or perhaps mere bargaining position, of the Company’s value does not state a claim for bad faith in this context. Such considerations are within the purview of a disinterested Board . . . . [N]o allegations have been made concerning the Board’s motives for favoring AFCV as a bidder or presenting some other motive for failing to maximize shareholder value.
Ultimately, although plaintiffs argued a “variety of ways in which they believe the process could have been better conducted, they offer no evidence of that extreme set of facts required to show that the board utterly failed to comply with its duties.”
The court also rejected plaintiffs’ claim that Rosenschein and two other directors dominated and controlled the Board to such a degree as to render it not independent.
The decision in Answers confirms that stockholders bear a high burden when challenging a disinterested/non-controlled board’s decision to approve a strategic transaction. When faced with non-exculpated duty of loyalty claims, Delaware courts will accept a less-than-optimal shop process as long as the directors did not act with a “conscious disregard” of their duty under Revlon, Inc. v. MacAndrews & Forbes Holdings, 506 A.2d 173 (Del. 1986) [see generally here] to maximize stockholder value in a change-in-control transaction.
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Evernote’s Power of Collaboration, Storage, and OCR for Attorneys
Katie Floyd is a litigator and the co-creator and host of the Mac Power Users Podcast. She is a regular speaker at Macworld Expo and contributor for ScreenCastsOnline Monthly Magazine. Katie also serves as the President of her local Macintosh Users Group and is a member of the Mac Roundtable Podcast.
Tuesday, April 29, 2014
Former Chief of Justice Department’s Criminal Division to Join Covington
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Pay-To-Play Laws Celebrate 20th Anniversary
The latest Supreme Court ruling easing campaign finance laws could trigger a challenge to pay-to-play laws. That would affect two governors with national ambitions: Andrew Cuomo and Chris Christie.
Source: http://www.npr.org/2014/04/25/306851757/pay-to-play-laws-celebrate-20th-anniversary?ft=1&f=1070
Enhanced 911, The FCC, and a Grandfather’s Mandate for Direct Dial
Henry Hunt's nine year old granddaughter, through no fault of her own, could not reach 911 to save her mother. Despite her multiple attempts, the calls would not connect because the hotel's phone system required dialing 9 to get an outside line. In the wake of these events, this Texas grandfather started the Kari's Law petition which calls for mandated direct-dial 911.
Ajit Pai serves as FCC Commissioner focusing on regulatory environments where competition and innovation flourish. He is the former Associate General Counsel at Verizon. In addition, he has served as Senior Counsel with the Department of Justice and Chief Counsel to the Senate Judiciary Committee's Subcommittee on the Constitution, Civil Rights, and Property Rights.
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THE CAREERIST: Magic Circle Partner Rates Up
Source: http://www.nationallawjournal.com/id=1202631240493?rss=rss_nlj
Who Represents Corporate America
Source: http://www.nationallawjournal.com/id=1202625300999?rss=rss_nlj
Affirmative action ban in state constitution violates US constitution (8-7)
Michigan voters adopted a state constitutional amendment that prohibits "all sex- and race-based preferences in public education, public employment, and public contracting."
The 6th Circuit (8-7) held this provision - as it relates to education - violates the 14th amendment's equal protection clause.
Coalition to Defend Affirmative Action v. Univ of Michigan (6th Cir 11/15/2012)
(Plaintiffs limited their challenge to racial discrimination in public education.)
The court said that a black applicant could seek adoption of a constitutionally permissible race-conscious admissions policy only through the "lengthy, expensive, and arduous process" of amending the state constitution. On the other hand, someone wishing to change any other aspect of a university's admissions policy has four options - lobby the admissions committee, petition the leadership of the university, seek to influence the school's governing board, or initiate a statewide campaign to alter the state's constitution.
"The existence of such a comparative structural burden undermines the Equal Protection Clause's guarantee that all citizens ought to have equal access to the tools of political change."
Seven judges wrote five DISSENTING opinions. Six said that the majority relied on two US Supreme Court cases that "have no application here," and one said that the majority relied on "an extreme extension" of those cases. The cases are Hunter v. Erickson, 393 US 385 (1969), and Washington v. Seattle Sch Dist, 458 US 457 (1982).
Source: http://www.lawmemo.com/blog/2012/11/affirmative_act.html
License Loss Keeps Habeas Claim Alive
Source: http://valawyersweekly.com/2014/01/02/license-loss-keeps-habeas-claim-alive/
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Former Chief of Justice Department’s Criminal Division to Join Covington
Monday, April 28, 2014
Stopping Link Rot: Aiming To End A Virtual Epidemic
Getting a "File Not Found" or "Error 404" message is annoying, but in the academic world, it can be a minor tragedy. One professor explains why we need those pages, and what's being done to save them.
Marijuana, Federal Law, and the States: The Great Legal Divide
Brian Vicente is a Colorado criminal defense attorney and founding partner of Vicente Sederberg. He also serves as Executive Director for Sensible Colorado, chairs the Denver Mayor's Marijuana Policy Review Panel, and coordinates the Colorado Bar Association's Drug Policy Project.
Dan Riffle is a former assistant prosecutor for Vinton County, Ohio who has turned lobbyist on Capitol Hill. He currently serves as the Director of Federal Policies for Marijuana Policy Project and has shepherded 2013 legislation through Illinois making it the second largest medical marijuana state.
Kathy Haddock is the Senior Assistant City Attorney for the City of Boulder, Colorado. She is primarily responsible for advising finance, records, elections, airport, special districts, and special projects including medical and recreational marijuana. She has also been responsible for drafting the laws that license and govern medical marijuana businesses in Boulder, Colorado.
Federal courts warn of email scam
The federal judiciary has learned of an email scam, in which emails purporting to come from federal and state courts are infecting recipients with computer viruses, it announced on its website
According to the Security Operations Center of the Administrative Office of the U.S. Courts, the emails are instructing recipients to report to a hearing on a specified day and time. The emails also instruct recipients to review an attached document for detailed case information. When the attachments or links in the email are opened, a malicious program is launched that infects the recipient’s computer. Several state courts have reported similar schemes, and also are warning the public about potential viruses.
The court’s website states that unless you are actively involved in a case in federal court and have consented to receive court notifications electronically, you generally will not be served with court documents electronically.
Source: http://minnlawyer.com/minnlawyerblog/2014/01/20/federal-courts-warn-of-email-scam/
Two Steps Forward in Chicago: Helping Advance Women in Law
Source: http://www.nationallawjournal.com/id=1202652533579?rss=rss_nlj
WILG, MBA, and Attorney Generals: Meet the Lawyers Keeping the Workplace Safe
Douglas Sheff is the current President of the Massachusetts Bar Association and the Senior Partner at Sheff Law. He has over 30 years experience in all aspects of personal injury law and is currently serving as the Chairman for both the Massachusetts Bar Association's Workplace Safety Task Force and the Massachusetts Academy of Trial Attorneys' Federal Legislation Committee.
Chuck Davoli is an attorney and sustaining board member for WILG and chairs its Workplace Safety and Occupational Disaster Committee. He is the Managing Partner for Davoli, Krumholt and Price and serves as a labor representative on the Louisiana Governor's Workers' Compensation Advisory Council.
Will Green is currently an Assistant Attorney General assigned to the Louisiana Workforce Commission Office of Workers' Compensation where he assists the Director of the Office of Workers' Compensation in developing and drafting legislation, rules, and policies for workers' compensation. In addition, he serves as general counsel to the Second Injury Board and is the former in-house counsel at Louisiana Workers' Compensation Corporation.
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BP's Billions Draw Scam Artists
Special Needs Trusts or Pooled Special Needs Trusts
Source: http://traffic.libsyn.com/ringler/RR_021814_CPT.mp3
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A Look Inside the Massachusetts Bar Association
Sunday, April 27, 2014
Trial Lawyers and Structured Settlements
Source: http://ringlerradio.com/podcasts/ringler-radio/2014/02/trial-lawyers-and-structured-settlements/
Magic Words, Magic Rights
Or does the 4th Amendment REALLY vanish with those magic words?
I've been stopped and the cop claimed he smelled pot, when, at the time, I hadn't touched the stuff in years. I told him I'd consent to a search if he apologized for wasting both of our time when he didn't find anything. He searched, didn't find anything, and I was on my way without an apology and a "verbal warning" to fix my tail light
Do you ask for another officer's opinion?
Do you tell the officer "bullshit"?
I'm just trying to help some people know what to do in this situation.
Initially, it helps for have a basic understanding of the law as it currently exists. When a cop says he "smells pot," he is invoking the automobile exception to the warrant requirement, which is based on exigent circumstances. Since a person can drive away, and thereby evade arrest and seizure of evidence of a crime in a car, the Supreme Court crafted the exception fin Carroll v. United States, a 1925 opinion about bootleggers getting away from the revenuers, which has done more harm to the 4th Amendment than perhaps any other case.
Since smell can't be captured and bottled for later presentation to a judge, the only "proof" of what an officer smelled is the officer's testimony. If he says so, it becomes real, and that's why they are magic words. Other than proving impossibility or incredibility, there is essentially nothing that can be done to challenge what the cop says he smelled. More importantly, even if a subsequent search turns up no pot, that doesn't mean he didn't smell what he smelled. The officer will testify about his training and experience in smelling pot, and yet he can be mistaken. The law doesn't require the cop to be right.
But the discussion thread about the magic words is where a grave misunderstanding about the system becomes clear. The problem derives from the absence of any marijuana in the car. The cop says he smelled it. This gives rise to probable cause to search and the automobile exception allows the cop to do so without a warrant. A search follows, and it can be as intrusive as the cop chooses to make it. By intrusive, it can include dismantling your brand new Maserati into a million pieces on the side of the road and, when it's over, leaving it there.
So the cop smells pot, searches and comes up empty. No apology. No help putting your Maserati back together. He drives away without so much as a tip o' the hat. This is where people don't seem to understand how constitutional rights work.
There are no elves in the backroom enforcing your constitutional rights. Had the police officer found something in the car to justify an arrest, the question of the constitutionality of the search could be hashed out in court in a suppression motion and hearing. Bear in mind that the cop may have claimed to smell marijuana, but that doesn't mean pot is what was found. Maybe other drugs. Maybe an illegal gun. Maybe a dead body. The smell of pot claim serves to except the search from the warrant requirement, and whatever comes of the search is the basis for the subsequent arrest.
But the cop finds nothing. Nada. Zip. You are clean and, surrounded by the pieces of your brand new Maserati, free to go. What then?
This is where people get confused. That's it? Don't the cops have to, you know, do something?
No red light goes off in the backroom of the constitutional elves. Actually, there is no such backroom. There's nothing. As the cop drives away, that's the end of the encounter, unless the person chooses to take action to contest the violation of his constitutional rights, such as a §1983 claim.
The problem there, of course, is that the cop, invoking the magic words that he "smelled pot," will very likely prevail despite the fact that he found nothing. You won't make it past summary judgment. More significantly, no lawyer will take the case on contingency, meaning that you will have to pay to play, and it will prove to be an expensive longshot to even make the effort to enforce your constitutional rights.
Consider the plight of people stopped in the street in New York City under the stop & frisk program, where the most generous view is that the police take action against 12% of the people stopped. They've performed millions of stops, and a tiny fraction have resulted in people going before a judge, where they can contest what happened. The others, the millions of people stopped and searched where nothing was found, just walk away, having been violated, humiliated and treated like pond scum.
The Constitution is not a self-effectuating document. It requires someone to act upon it to challenge police conduct. Otherwise, they are words without meaning, easily thwarted by police invoking the myriad exceptions the courts have provided. And here's an even worse secret: they don't even have to use magic words unless they ultimately find something, arrest a person and want to use it as evidence in court.
They get this. Most people don't. Most people harbor a naïve belief that, despite everything they know about how the police function, there is still some thread of honesty woven through their conduct that somehow makes them behave in accordance with the Constitution.
There are some excellent videos and writings about how to best conduct oneself to properly invoke constitutional rights and to create countervailing evidence to support one's invocation. The pervasiveness of video is a huge factor in showing that police have manufactured claims and false allegations, and these go a long way in keeping police clean where in the past they could make up anything they want to and there would be no way to challenge them.
But these rights we love so dearly don't happen on their own. Someone has to make them happen. We make them happen. And if we don't, then we're left on the side of the road with our Maserati in pieces cursing. The cops have magic words, but constitutional rights aren't magic. They only happen if we make them.
© 2007-13 Simple Justice NY LLC. This feed is for personal, non-commercial & Newstex use only. The use of this feed on any other website is a copyright violation. If this feed is not via RSS reader or Newstex, it infringes the copyright.
Source: http://blog.simplejustice.us/2013/07/08/magic-words-magic-rights.aspx?ref=rss
'EEOC v. Ford' Accelerates Telecommuting Issues
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United States Supreme Court Holds That Section 806 of the Sarbanes-Oxley Act Extends to Employees of Private Companies Who Are Contractors or Subcontractors for Covered Public Companies
In Lawson v. FMR, LLC, No. 12-3, 2014 WL 813701 (U.S. Mar. 4, 2014), the Supreme Court of the United States, in a 6-3 decision reversing the United States Court of Appeals for the First Circuit, held that the whistleblower protection provision in Section 806 of Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A (“SOX”), protects employees of publicly traded companies and employees of privately held companies that are contractors or subcontractors for a covered publicly traded company. In reaching this decision, the Supreme Court has clarified the definition of “covered employee” under the whistleblower provisions of SOX and expanded the scope of SOX.
Petitioners in this action were former employees of privately held companies that contracted to advise or manage mutual funds, which were publicly traded companies with no employees. Petitioners each brought separate actions in the United States District Court for the District of Massachusetts, where they alleged unlawful retaliation by their employers in violation of the whistleblower protections of Section 806 of SOX. Section 806 provides, in relevant part, that “[n]o company with a class of securities registered under section 12 of the Securities Exchange Act of 1934 . . . or any officer, employee, contractor, subcontractor, or agent of such company, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act done by the employee . . . . ”
Petitioners’ privately held employers moved to dismiss the claims, arguing, in part, that petitioners were not “covered employees” within the meaning of Section 806. The district court denied the motions, ruling that the SOX whistleblower protection in Section 806 extended to employees of private agents, contractors and subcontractors to public companies. On appeal, the First Circuit reversed, holding that the whistleblower protections of Section 806(a) do not extend to an employee of a contractor or subcontractor [see blog article here]. The Supreme Court granted certiorari.
The Supreme Court (Ginsberg, J.) reversed. In its review, the Court looked first to the ordinary meaning of the statute. The Court held that “nothing in [SOX’s] language confines the class of employees protected to those of a designated employer [and] absent any textual qualification, we presume the operative language means what it appears to mean: A contractor may not retaliate against its own employee for engaging in protected-whistle blower activity.” Thus, “based on the text of [SOX], the mischief to which Congress was responding, and earlier legislation Congress drew upon, that [SOX] shelters employees of private contractors and subcontractors, just as it shelters employees of the public company served by the contractors and subcontractors.”
In reaching this decision, the Court chose to disregard the titles and headings within SOX, some of which lend credence to respondent’s arguments, because, the Court explained, SOX “is attended by numerous indicators that the statute’s prohibitions govern the relationship between a contractor and its own employees; we do not read the headings to ‘undo or limit’ those signals.”
The Court found further support by reviewing the underlying purpose of SOX — namely, to prevent “another Enron debacle.” The Court held that the desire to prevent another Enron debacle was reflected in the legislative record of SOX, a record which focused on the role that contractors had in facilitating the Enron fraud. Given the extensive legislative record, the Court concluded that “one can safely assume that Congress enacted [SOX] aiming to encourage whistleblowing by contractor employees who suspect fraud involving public companies with whom they work.”
Finally, the Court rejected the dissent’s view that the Court’s ruling was “all too inclusive” and could open the floodgates to SOX litigation. The majority argued that the dissent’s view that the floodgates would open was simply hypothetical as the “DOL’s regulations have interpreted [SOX] as protecting contractor employees for almost a decade.”
In light of the Supreme Court’s ruling, the definition of the term “covered employee” has been clarified and broadened, and it is now clear that the group of persons potentially covered by the protections of Section 806(a) of SOX include not only employees of publicly traded companies, but also employees of privately held contractors and subcontractors who provide services to the publicly traded companies.
ICC opens preliminary investigation into alleged Ukraine crimes
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Special Needs Trusts or Pooled Special Needs Trusts
Tech Companies Agree To Settle Wage Suit
Source: http://blogs.wsj.com/law/2014/04/24/tech-companies-agree-to-settle-wage-suit/?mod=WSJBlog
Delaware Court of Chancery Grants Summary Judgment Dismissing Breach of Fiduciary Duty Claims In Absence of Evidence of Directors’ “Conscious Disregard” of Fiduciary Duties
In In re Answers Corp. Shareholders Litigation, C.A. No. 6170-VCN, 2014 WL 463163 (Del. Ch. Feb. 3, 2014), the Delaware Court of Chancery (Noble, V.C.) granted summary judgment in favor of defendants in a stockholder class action for breach of fiduciary duty arising out of the merger of Answers Corporation (“Answers” or the “Company”) with AFCV Holdings, LLC (“AFCV”). Because the undisputed material facts showed that a disinterested majority of the Board of Directors approved the transaction, plaintiffs were required to offer evidence that the Board consciously acted in bad faith or was controlled by an interested party to survive summary judgment. Plaintiffs were unable to do so. The Answers decision highlights the high burden stockholder plaintiffs face to proceed with breach of fiduciary duty claims where a merger is approved by an independent/non-controlled board, even where the sale process may have been flawed. As the court explained, there is a vast difference between “a flawed inadequate effort to carry out fiduciary duties and a conscious disregard for them.”
Answers was a publicly traded Delaware corporation focused on the questions and answers space online. Approximately 90% of the website’s traffic and 75% of its revenue came from Google. In March 2010, AFCV, a portfolio company of a private equity firm with a focus on social media and online information resources, submitted an expression of interest to members of the Answers board concerning a possible business combination. In September 2010, AFCV sent Robert Rosenschein, the Company’s CEO, a letter of intent proposing to acquire Answers for between $7.50 and $8.25 per share. The Board eventually obtained an offer of $10.25 per share, but refused to grant AFCV exclusivity while it continued to evaluate other alternatives and strategic buyers.
While negotiations were proceeding, the Company’s financial conditions improved significantly when Answers announced its fourth quarter results for 2010. In January 2011, the financing committee of the Board recommended attempting to increase the offer price beyond the pending $10.25 per share, but to accept that amount if no further concessions on price were obtained. AFCV responded with its best and final offer at $10.50 per share. After noting that there were no other offers of the table and recognizing that Google continued to significantly threaten the Company’s core business, the Board unanimously approved the proposed transaction.
Shortly after the announcement of the merger agreement, several stockholder plaintiffs filed complaints in the Delaware Court of Chancery challenging the transaction. Plaintiffs alleged that Rosenschein (and two other directors) were conflicted and controlled the negotiation process. Plaintiffs also alleged that the members of the Board breached its fiduciary duties by acting in bad faith to sell Answers before its rising stock price would exceed AFCV’s offer by (1) purposefully engaging in a limited shopping process, (2) failing to act in the interest of the Company’s public stockholders after circumstances had changed to indicate the offer price was too low and (3) exerting willful blindness by ignoring alternatives to the AFCV transaction.
The court granted defendants’ motion for summary judgment. The court recognized that a disinterested majority of the Board approved the transaction. Thus, to survive summary judgment, plaintiffs were required to show that the Board consciously acted in bad faith or that it was controlled by an interested party. Plaintiffs failed to do so. The directors submitted evidence that they fielded a variety of unsolicited offers and participated in numerous meetings where they discussed transaction alternatives. Despite discussions with at least seven other possible acquirers, nobody else made a credible offer to acquire Answers. The directors also caused the Company’s financial advisor to perform a market check. Moreover, the directors actively negotiated with AFCV on price. This evidence undermined any assertion of bad faith.
The court discounted plaintiffs’ contention than an email where a director stated that the value of Answers could be as much as $1.50 higher than AFCV’s $10.25 offer price showed “bad-faith” by recognizing that the Board had plausible business concerns regarding the stability and future success of the Company tied to its reliance upon Google for traffic and revenues. Plaintiffs also ignored the fact that the Board secured additional merger consideration as a result of the Company’s improving financial condition. As the court explained:
Plaintiffs’ proffered evidence does not create a genuine issue of material fact. Evidence based upon a few isolated quotes stating the deal was accelerated or reflecting one director’s belief, or perhaps mere bargaining position, of the Company’s value does not state a claim for bad faith in this context. Such considerations are within the purview of a disinterested Board . . . . [N]o allegations have been made concerning the Board’s motives for favoring AFCV as a bidder or presenting some other motive for failing to maximize shareholder value.
Ultimately, although plaintiffs argued a “variety of ways in which they believe the process could have been better conducted, they offer no evidence of that extreme set of facts required to show that the board utterly failed to comply with its duties.”
The court also rejected plaintiffs’ claim that Rosenschein and two other directors dominated and controlled the Board to such a degree as to render it not independent.
The decision in Answers confirms that stockholders bear a high burden when challenging a disinterested/non-controlled board’s decision to approve a strategic transaction. When faced with non-exculpated duty of loyalty claims, Delaware courts will accept a less-than-optimal shop process as long as the directors did not act with a “conscious disregard” of their duty under Revlon, Inc. v. MacAndrews & Forbes Holdings, 506 A.2d 173 (Del. 1986) [see generally here] to maximize stockholder value in a change-in-control transaction.
Saturday, April 26, 2014
Townhome Neighbors Can’t Challenge Access
Source: http://valawyersweekly.com/2014/01/02/townhome-neighbors-cant-challenge-access/
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A Double-Edged Win for Apple in Patent Dispute with Motorola
Ninth Circuit Yanks Apple Power Cord Settlement
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Consumer Groups Decry FCC's Net-Neutrality Proposal
GM Confirms Investigations Under Way
Source: http://blogs.wsj.com/law/2014/04/24/gm-confirms-investigations-under-way/?mod=WSJBlog
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Medical Marijuana and Defending Workers’ Compensation Claims
Source: http://ringlerradio.com/?p=13782
WILG, MBA, and Attorney Generals: Meet the Lawyers Keeping the Workplace Safe
Douglas Sheff is the current President of the Massachusetts Bar Association and the Senior Partner at Sheff Law. He has over 30 years experience in all aspects of personal injury law and is currently serving as the Chairman for both the Massachusetts Bar Association's Workplace Safety Task Force and the Massachusetts Academy of Trial Attorneys' Federal Legislation Committee.
Chuck Davoli is an attorney and sustaining board member for WILG and chairs its Workplace Safety and Occupational Disaster Committee. He is the Managing Partner for Davoli, Krumholt and Price and serves as a labor representative on the Louisiana Governor's Workers' Compensation Advisory Council.
Will Green is currently an Assistant Attorney General assigned to the Louisiana Workforce Commission Office of Workers' Compensation where he assists the Director of the Office of Workers' Compensation in developing and drafting legislation, rules, and policies for workers' compensation. In addition, he serves as general counsel to the Second Injury Board and is the former in-house counsel at Louisiana Workers' Compensation Corporation.
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ABA TECHSHOW 2014 Wrapup
Special thanks to our sponsor, ServeNow.
Source: http://legaltalknetwork.com/podcasts/kennedy-mighell-report/2014/04/aba-techshow-2014-wrapup
Friday, April 25, 2014
What Should Lawyers Know About Information Governance?
Source: http://legaltalknetwork.com/podcasts/digital-detectives/2014/01/lawyers-know-information-governance
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Summary of Knox v. SEIU
My summary of Knox v. SEIU at SCOTUSblog.com: Knox knocks unions on mid-year assessment for non-members.
Source: http://www.lawmemo.com/blog/2012/06/summary_of_knox.html
Supreme Court Watch: Employment law cases
We will be watching three pending cases at the US Supreme Court as the Court's session opens today:
Kloeckner v. Solis
Oral argument on October 2.
The Merit Systems Protection Board (MSPB) hears appeals by federal employees regarding certain adverse actions, such as dismissals. If the employee asserts that the challenged action was the result of unlawful discrimination, that claim is referred to as a "mixed case."
Question Presented: If the MSPB decides a mixed case without determining the merits of the discrimination claim, is the court with jurisdiction over that claim the Court of Appeals for the Federal Circuit or a district court?
Vance v. Ball State Univ
Oral argument on November 26.
Faragher v. City of Boca Raton, 524 U.S. 775 (1998) and Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998) held that under Title VII, an employer is vicariously liable for workplace harassment by a supervisor of the victim. If the harasser was the victim’s co-employee, however, the employer is not liable absent proof of negligence.
Question Presented: Whether the Faragher and Ellerth “supervisor” liability rule (i) applies to harassment by those whom the employer vests with authority to direct and oversee their victim’s daily work, or (ii) is limited to those harassers who have the power to “hire, fire, demote, promote, transfer, or discipline” their victim.
Genesis HealthCare v. Symczyk
Oral argument December 3.
Symczk sued under the Fair Labor Standards Act (FLSA) on behalf of herself and all others similarly situated. This was a section 216(b) collective action. The defendants extended an offer of judgment under Fed. R. Civ. P. 68 in full satisfaction of her alleged damages, fees, and costs - prior to her moving for conditional certification and prior to other potential plaintiffs opting in.
Question Presented: Whether a case becomes moot, and thus beyond the judicial power of Article III, when the lone plaintiff receives an offer from the defendants to satisfy all of the plaintiff's claims.
Source: http://www.lawmemo.com/blog/2012/10/supreme_court_w_11.html
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Fourth Circuit Affirms Dismissal of Securities Fraud Complaint Where Inference of Scienter Was Not Sufficiently Strong
In Yates v. Municipal Mortgage & Equity, LLC, No. 12-2496 (4th Cir. Mar. 7, 2014), the United States Court of Appeals for the Fourth Circuit affirmed the dismissal of a securities fraud claim under Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. § 78(b), against defendant Municipal Mortgage & Equity (“MuniMae”) and its individual officer and director defendants. The Court held that plaintiffs failed to plead facts sufficient to give rise to a strong inference of defendants’ scienter under the Private Securities Litigation Reform Act of 1995 (“PSLRA”), 15 U.S.C. § 78u-4, et seq. The Court declined to accept that the inference of scienter offered by plaintiffs — supported by statements from confidential witnesses, presence of red flags, allegations of insider trading and general business incentives — was at least as compelling as the opposing inference of mere negligence that could be drawn from the amended complaint. Yates is one of the few reported decisions from the Fourth Circuit applying the PSRLA, and it solidly reaffirms the PSLRA’s requirement that a plaintiff plead more than just allegations based upon conjecture and happenstance to satisfy heightened pleading requirements.
During the putative class period (May 3, 2004 to January 29, 2008) MuniMae was involved in organizing investment partnerships to pool low-income housing tax credits (“LIHTCs”) and sell them to investors. Prior to 2003, MuniMae treated its LIHTC investment partnerships as off balance sheet entities. In 2003, the Financial Accounting Standards Board adopted Interpretation No. 46R (“FASB 46R”), requiring that a company that is the primary beneficiary of “Variable Interest Entities” consolidate the entities assets and liabilities onto its financial statements. MuniMae began asserting compliance with FASB 46R in the first quarter of 2004. However, at that time MuniMae internally concluded that FASB 46R did not require it to consolidate for financial statement purposes all of tis LIHTC investment partnerships. MuniMae continued to assert compliance with FASB 46R through 2006. In September 2006, MuniMae announced it would be restating certain financial statements and through a series of later disclosures finally announced that the restatement would deal with FASB 46R accounting errors. As a result of the piecemeal disclosures, MuniMae’s share price dropped precipitously. The following day, MuniMae disclosed the full extent of the restatement’s scope and MuniMae’s stock experienced an additional decline. Eventually, in April 2008, MuniMae disclosed that it had spent over $54 million on the restatement.
Plaintiffs filed a class action complaint alleging that defendants made false representations that MuniMae was complying with FASB 46R and concealed the expected cost of the restatement in violation of Section 10(b). The United States District Court for the District of Maryland held that the amended complaint did not sufficiently allege a claim under Section 10(b) because it did not meet the PSLRA’s heightened pleading standard for scienter allegations. Plaintiffs appealed.
The Court of Appeals affirmed. First, the Fourth Circuit held that the confidential witness testimony supplied by plaintiffs did not support a “strong inference of wrongful intent.” The testimony did suggest that defendants knew earlier than disclosed that MuniMae was not in compliance with 46R and that the required restatement would be a difficult and costly undertaking. It also indicated that the issue was difficult and complex and had thrown MuniMae into “confusion and chaos” — which the Court held supported the opposing inference that the defendants were merely negligent. In fact, the Court explained, defendants’ subsequent disclosures negated an inference of fraudulent intent because, although the disclosures were not “as timely or as fulsome” as plaintiffs would have liked, they gave rise to a compelling inference that the MuniMae defendants were attempting to keep the investing public informed.
Second, the Court held that while there were several “red flags” concerning MuniMae’s core operations — the need in and of itself for several restatements, frequent accounting meetings, the firing of outside auditors, and rapid CFO overturn — they did not in and of themselves give rise to a strong inference of scienter. Not only was the FASB 46R accounting error not especially obvious, but the other warning signs easily lent themselves to benign interpretations as a result of MiniMae’s obvious attempts to get a handle on its creeping accounting problems.
Third, the Court of Appeals followed the decisions of several other Circuits in holding insufficient plaintiffs’ allegation that the individual defendants “must have acted intentionally or recklessly” merely because they were senior executives and the LIHTC investment partnerships represented a core business of MuniMae.
Fourth, in addressing plaintiffs’ allegations concerning insider trading, the Court held that while the overall value of MuniMae shares sold during the class period was higher than in previous years and thus consistent with an inference that the insiders who traded had a motive to commit fraud, the inference that the trades were innocent was stronger. There were no allegations that the insiders timed their sales to take advantage of any particular disclosure. Nor was the level of any insiders’ divestiture particularly alarming. Moreover, the Court noted, the fact that several of the individual defendants traded under non-discretionary Rule 10b5-1 plans further weakened any inference of fraudulent purpose.
Finally, the Court held that plaintiffs other allegations of motive were similarly lacking as the alleged motivations amounted to nothing more than “financial motivations common to every company.”
Thus, in Yates, the Fourth Circuit reaffirmed the heightened standard of pleading a plaintiff must meet to satisfy the PSLRA. Specifically, the Court emphasized that the allegations of scienter under Section 10(b) cannot be read in a vaccum. They must be holistically analyzed in comparison with the disclosures actually made by defendants. General business motivations, insider trading and the core nature of the problems alleged by plaintiffs cannot turn a company’s repeated attempts to inform investors of the ongoing and ever-evolving nature of a problem into intentional rather than merely negligent conduct.
Roberta Gelb on Technology Training
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The Limited License Legal Technician: Washington State’s Paralegal Law Practice
Ann Atkinson is the current President of the National Association of Legal Assistants and Senior public finance paralegal at Kutak Rock, LLP. Ann has also served on the Board of Directors for the Nebraska Paralegal Association and is a former adjunct professor for Metro Community College in Omaha, Nebraska. She is a prominent author and presenter in matters paralegal.
Steve Crossland has been a practicing attorney for nearly 40 years. He is the former President of the Washington State Bar Association and has been dealing with the unauthorized practice of law and access to justice for 21 years. He is also the recipient of WSBA's Award of Merit and the current Chair for the Limited License Legal Technician Board.
Thea Jennings is the LLLT Program Lead and Staff Liaison to the LLLT Board at the WSBA. She began her career at the WSBA in 2008 as a paralegal in the Office of Disciplinary Counsel, the disciplinary body that prosecutes ethical violations by Washington attorneys. In 2006, she received her post-baccalaureate certificate in paralegal studies from the University of Washington, where she also received her undergraduate degree in English and French studies.
Special thanks to our sponsors, NALA and ServeNow.
Privacy Fence Violates Injunction
Source: http://valawyersweekly.com/2014/01/02/privacy-fence-violates-injunction/
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Thursday, April 24, 2014
License Loss Keeps Habeas Claim Alive
Source: http://valawyersweekly.com/2014/01/02/license-loss-keeps-habeas-claim-alive/
Washington's sexual orientation discrimination amendment is not retroactive
The Washington State Supreme Court held today that a sexual orientation discrimination amendment adopted in 2006 is not retroactive.
The court also concluded that conduct that took place prior to the amendment is admissible background evidence to prove the discriminatory nature of certain conduct occurring after the amendment.
Loeffelholz v. Univ of Washington (Washington 09/13/2012)
Loeffelholz sued under the Washington Law Against Discrimination (WLAD) claiming discrimination based on sexual orientation. WLAD was amended in 2006 to include sexual orientation as a protected class, and Loeffelholz alleged several pre-amendment acts and one post-amendment act.
The Washington Supreme Court held that (1) the WLAD amendment is not retroactive and the pre-amendment conduct is not actionable as it was not unlawful when it occurred, and (2) the post-amendment allegedly discriminatory comment is arguably similar enough to the pre-amendment conduct to survive summary judgment.
Loeffelholz alleged that her supervisor between 2003 and June 2006 maintained a hostile work environment based on sexual orientation. This was prior to the WLAD amendment. Loeffelholz also alleged a single act of discrimination by this supervisor after the WLAD amendment.
The court's findings:
(1) Pre-amendment conduct is not actionable. Retroactive application of the amendment would violate the employer's due process rights. The plain language of the amendment and its legislative history indicate only prospective application.
(2) Pre-amendment conduct is admissible as background evidence to prove why the post-amendment conduct is discriminatory.
(3) The post-amendment conduct was a single statement by Loeffelholz's supervisor, who was about to be deployed to Iraq, that he was "going to come back a very angry man." The court found that a reasonable jury could infer that this comment was a natural extension of pre-amendment conduct - the supervisor's dislike of lesbians and his anger management problems as illustrated by his comments that he had a volatile temper and kept a gun. This is enough to preclude summary judgment.
Source: http://www.lawmemo.com/blog/2012/09/washingtons_sex.html
Report Decries A Cozy Relationship Shared By DHS And Watchdog
A Senate panel released a report Thursday that criticizes the inspector general of the Department of Homeland Security. It accuses him of repeatedly compromising his independence.
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