2017 NJSBA Annual Meeting Client Crisis Management and Expedited Litigation Co-Sponsored by the Equity Jurisprudence Committee M
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2017 NJSBA Annual Meeting Client Crisis Management and Expedited Litigation Co-Sponsored by the Equity Jurisprudence Committee Moderator/Speaker: Alexandra V. Gallo, Esq. O’Toole Scrivo Fernandez Weiner Van Lieu, LLC, Cedar Gove Speakers: Hon. Freda L. Wolfson United States District Court for the District of New Jersey Attorney General Christopher Porrino Frederick W. Alworth, Esq. Gibbons, PC, Newark Thomas P. Scrivo, Esq. O’Toole Scrivo Fernandez Weiner Van Lieu, LLC, Cedar Grove HYPOTHETICALCRISIS SCENARIO New Jersey Lancers Professional Basketball Alleged Fixing Of Games The New Jersey Lancers have been the hottest expansion team in the NBA forthe last three years. They play at Two Guys arena. However, this year the team has been terrible. A recent report from a blog has discovered a "dump" of emails which point to a wide conspiracy to fix their basketball games. It is alleged that a foreign government has hacked into several accounts and was blackmailing the principal Owner "Buddy" Keefe (a notorious billionaire), and a Referee. Buddy appears to have conspired with the rookie players on the team and p·aid them to participate in point shaving. Numerous publications and media reports are now reporting the same scenario. It was just discovered that a grainy videotaped recording appears of a meeting between the principal Owner Buddy Keefe, a referee, and a foreign Minister at a restaurant in Cedar Grove. The video and audiotape are poor quality but appear to back-up some of the allegations and have gone viral on the internet and on cable news shows. Two Guys - The Retail Juggernaut -- paid $50 Million Dollars for the stadium naming rights, now wants their money back andto be immediately removed fromthe stadium to get away from the scandal. Two Guys is three (3) years into a ten (10) year deal and has branded with the Lancers on numerous promotions and their brands are linked in the public perception. The agreement between Two Guys and the Lancers contains a "morals" clause. The Lancers advertisements have featured the slogan come see our Guys at Two Guys. Two Guys believes their brand will now be irreparably damaged. Public Boycotts are threatened at Two Guys. Similarly, the league is threatening immediate legal action against Buddy to strip him of ownership, and several vendors, everything froma shoe contract to a restaurant supplier, have threatened legal action. From a crisis management perspective, identifythe public relations, media, and legal, strategy and issues and immediate action plans from: 1. The teams/owners perspective - public relations, legal; 2. The league and damage to the sport- is an independent investigation necessary - public relations, legal; 3. From the contract/vendor/naming rights- Two Guys: 4. What immediate public relations and legal action should be sought; 5. What are the potential criminal regulatory issues involved for the owners, players, referees; 6. Foreign Governmentintervention/government - is it relevant? 2540524.1 099998-00014 CLIENT CRISIS MANAGEMENT & EXPEDITED LITIGATION New Jersey State Bar Convention May 18, 2017 New Jersey Lancers Professional Basketball Alleged Fixing of Games ➢ The New Jersey Lancers have been the hottest expansion team in the NBA for the last three years. They play at Two Guys arena. However, this year the team has been terrible. A recent report from a blog has discovered a “dump” of emails which point to a wide conspiracy to fix their basketball games. It is alleged that a foreign government has hacked into several accounts and was blackmailing the Owner “Buddy” Keefe (a notorious billionaire), and a Referee. The Owner appears to have conspired with the rookie players on the team and paid them to participate in point shaving. ➢ Numerous publications and media reports are now reporting the same scenario. It was just discovered that a grainy videotaped recording appears of a meeting between the Owner Buddy Keefe, a referee, and a foreign Minister at a restaurant in Cedar Grove. The video and audiotape are poor quality but appear to back-up some of the allegations and have gone viral on the internet and on cable news shows. ➢ Two Guys – The Retail Juggernaut -- paid $50 Million Dollars for the stadium naming rights, now wants their money back and to be immediately removed from the stadium to get away from the scandal. Two Guys is three (3) years into a ten (10) year deal and has branded with the Lancers on numerous promotions and their brands are linked in the public perception. The Lancers advertisements have featured the slogan come see our Guys at Two Guys. Two Guys believes their brand will now be irreparably damaged. Public Boycotts are threatened at Two Guys. Similarly, the league is threatening immediate legal action against the Owner to strip him of ownership, and several vendors, everything from a shoe contract to a restaurant supplier, have threatened legal action. 2 Crisis Management Action Plan From a crisis management perspective, identify the public relations, media, and legal, strategy and issues and immediate action plans from: ➢ The teams/owners perspective – public relations, legal; ➢ The league and damage to the sport – is an independent investigation necessary – public relations, legal; ➢ From the contract/vendor/naming rights – Two Guys: ➢ What immediate public relations and legal action should be sought; ➢ What are the potential criminal regulatory issues involved for the owners, players, referees; ➢ Foreign Government intervention/government - is it relevant? 3 The Crisis ➢ A critical event or point of decision which if not handled in an appropriate or timely manner may turn into a DISASTER or CATASTROPHE. 4 The Crisis: How will it end? 5 A Crisis Is Also An Opportunity ➢ Will the client be a “client for life,” or will the client be an unhappy account receivable? ➢ Important and often overlooked: stress/health impact on those involved. Client needs to take care of themselves to assist the crisis team. 6 Two Guys Cancels The Deal ➢ The Lancers receive a demand to immediately cease and desist from using the Two Guys brand on the arena and in connection with all other promotions. ➢ Buddy and the Team want to take immediate action to stop the bleeding. 7 Procedure: Initial Considerations ➢ State or Federal? ➢ Crowe factors vs. F.R.C.P. 65? ➢ Judge/venue selection? ➢ Arbitration ➢ Criminal Considerations 8 Expedited Litigation • Kill or be killed • The case will be won/lost at initial hearings • Keep it simple: Must be able to articulate your side in a few sentences 9 Success vs. Failure ➢ Success = Catastrophe avoided (No High- Fives/Touchdown Celebration) 10 Failure.... ➢ Failures are more memorable.... 11 The First Rule: Don’t Let a Crisis Become a Disaster ➢ Don’t compound the problem 12 PED Scandal – who handled it better? 13 Common Themes to Any Crisis ➢ Decisions are made in real time with imperfect information. ➢ Decisions are magnified 100-fold. ➢ Decisions need to be active -- not reactive. ➢ There is a 100% chance that decisions will be second guessed down the road. 14 Key Point: Client Intake ➢ Are they telling the whole story? ➢ Are they credible? ➢ Did they give you the key documents/emails? ➢ Where is the evidence/emails? ➢ Have you ever taken a contrary position? ➢ Text messages? 15 Lawyer’s Role in a Crisis – Trusted Advisor ➢ Important to keep communication privileged 16 Lawyer’s Role in a Crisis – Discussion of Privilege ➢ Credibility is key ➢ Read the X-ray ➢ Tension between “the case” and business interests ➢ Holding statements – you do NOT know what is out there ➢ Insurance issues 17 New Age Considerations ➢ The danger of email/talking about the crisis ➢ Social media ➢ Handling press inquiries 18 The World Has Changed 19 Back when we started, many of us used 20 Everyone Has A Camera And Is A Witness – The Truth Will Come Out. 21 Criminal Charges/Investigation ➢ Accounting irregularities ➢ Executive misconduct impacting organization ➢ Federal/State investigation impacting client 22 The Client’s Crisis Management Team ➢ Executive ➢ Committee ➢ Human Resources ➢ Legal ➢ Tech ➢ Operations ➢ Insurance 23 What Types of Crises Do We Encounter? • Government investigation • Data breach • Employee/Executive Departure • Product defect • Environmental 24 Questions? 25 www.gibbonslaw.com Frederick W. Alworth Director, Business & Commercial Litigation Newark One Gateway Center Newark, New Jersey 07102-5310 [email protected] P: 973-596-4531 | F: 973-639-6251 Services: Business & Commercial Litigation; Real Property & Environmental; Crisis Management; Governmental Transaction/Public- Private Partnerships (P3); Public/Private Infrastructure Projects OVERVIEW Mr. Alworth is a past president of the Essex County Bar Association, New Jersey’s largest and oldest county bar association. He has extensive trial experience in all aspects of civil litigation and regularly appears as trial counsel before state and federal courts, as well as the American Arbitration Association. He recently defeated a challenge to a $1.1 billion bond issuance, which is part of a larger $2.7 billion financing package involving one of the largest public-private development projects on the East Coast. Mr. Alworth has served as lead trial counsel in business and real estate related litigations throughout New Jersey, New York, Pennsylvania, Delaware, Arizona, Wisconsin, Nevada, Virginia, and Florida. He frequently lectures for the Institute for Continuing Legal Education and presently serves as Vice Chair for the Equity Jurisprudence Committee of the New Jersey State Bar – routinely involved in emergent and expedited proceedings involving injunctive relief. Prior to joining Gibbons, Mr. Alworth served as a law clerk to the Honorable Harry A. Margolis, Presiding Judge for the Chancery Division of the Superior Court of New Jersey, Essex County, and since then has earned the trust of the judiciary and the bar, serving as court appointed counsel on numerous matters and as a Condemnation Commissioner for property condemned by the New Jersey Department of Transportation due to the change in infrastructure for the New Jersey Performing Arts Center.