Fall/Winter 2014

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FALL | WINTER | 2014

WHAT HAPPENS WHEN YOU FINALLY REACH MILLIONAIRE ACRES How a Few Words Can Trigger Millions More in Insurance Coverage pg2

How the Long Island Rail Road Could Be a Model for All Employers pg6

FULL-COURT PRESS

The Legal Challenges Facing the NCAA

ACTUAL SERVICE THROUGH A VIRTUAL COMMUNITY

Trends in Service of Process by Social Media RM7996_MAGAZINE_Layout 1 8/26/14 4:00 PM Page B

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ProudrP oud PPartnertner USLaroud USLAWAW N&5803,,3085& , Inc.Inc. sinc, sincee 2004 www.uslaw.org From the Incoming Chair's Desk Page 1 FEATURES: What Happens When You Finally Reach Millionaire Acres – How a Few Words Can Trigger Table of Millions More in Insurance Coverage – William J. Mitchell • Ahmuty, Demers & McManus Page 2 Pending U.S. Trade Issues – Robert L. Brown • Bingham Greenebaum Doll LLP Page 4 Fighting Disability Fraud – How the Long Island Rail Road Could Be a Model for All Employers Contents Damon M. Gruber, Todd M. Jones, and Paul J. Kilminster • Goldberg Segalla LLP Page 6 Think None of Your Cases Are eDiscovery Cases? Think Again. Brandon J. Hechtman • Wicker Smith O’Hara McCoy & Ford P.A. and Dennis Kiker • Granite Legal Systems Page 8 Can’t You Hear the Whistle Blowing – Are Your Employees Now Protected Under the Sarbanes-Oxley Whistleblower Provisions? – Joshua F. Silk • Hall Booth Smith, P.C. Page 10 Full-Court Press – The Legal Challenges Facing the NCAA Kevin Nelson and Alex Greenberg • Huddleston Bolen LLP Page 12 Revising Employment Agreements and Computer Policies to Protect Confidential/Proprietary Information Under The Computer Fraud and Abuse Act – Peter Gleekel, Larson • King, LLP Page 14 The Science & Necessity of Risk Management – Ron Kurzman • Magna Legal Services, LLC Page 16 Recalculating the Risk of Intellectual Property Litigation – The U.S. Supreme Court Lowers the Threshold for Awarding Attorneys’ Fees in Patent Litigation Richard M. Carter and Adam J. Eckstein • Martin, Tate, Morrow & Marston, P.C. Page 18 Does the Patient Protection and Affordable Care Act End Life Care Plans as We Know Them? Jerry Green and Amy Neathery • Pierce Couch Hendrickson Baysinger & Green, L.L.P. Page 20 It’s Not Over – New Mortgage Forms Required in 2015 Christopher K. Loftus • Simmons Perrine Moyer Bergman PLC Page 22 In Defense of Using a Claimant’s Attorney in FINRA Arbitrations Patrick Lubenow • SmithAmundsen LLC and Robert Usinger • Everest National Insurance Company Page 24 Guidelines and Standards and Rules, Oh My! Standard of Care Under the ACA Martin S. Driggers, Jr. and Richard E. McLawhorn, Jr. • Sweeny, Wingate & Barrow, P.A. Page 26 Actual Service Through a Virtual Community – Trends in Service of Process by Social Media Jennifer Lewkowski • Traub Lieberman Straus & Shrewsberry LLP Page 28 How to Be Secure in an Unsecure World – Karen Painter Randall and Steven A. Kroll • Connell Foley LLP Page 30 Will Proposed Changes to the Federal Rules Decrease the Costs of Civil Discovery? Keely E. Duke and Kevin A. Griffiths • Duke Scanlan & Hall, PLLC Page 32 Union “Ambush” Elections – Be Prepared or Be Unionized Matthew D. Austin • Roetzel & Andress, LPA Page 34 New Legislation May Prohibit Sending Commercial Electronic Messages to Canadians Victor Dudas • Clark Wilson LLP Page 35 Purchasing a Business in Canada? Understand the Key Assets: Your New Employees Andrea Raso • Clark Wilson LLP and Sean Bawden • Kelly Santini LLP and Ralph D. Farley • Therrien Couture lawyers L.L.P. and Veronique Poirier • Therrien Couture lawyers L.L.P. Page 36 Brazilian Internet Law – The New Legal Panorama to Consider When Conducting Business on the Web or Providing Internet Services to Brazilian Users Tomás Filipe Schoeller Paiva • Mundie e Advogados Page 38 Reform of Challenges to English Government Decisions – Jeremy Lederman • Wedlake Bell LLP Page 40 Data Privacy and Data Retention in Europe Rainer Kaspar and Hermann Hansmann • PHH Prochaska Havranek Rechtsanwälte GmbH Page 42 TELFA Continues European Expansion Page 44 USLAW Showcases Network with a Heart Supporting Champions in Communities and in Sport Page 51

DEPARTMENTS: Successful Recent USLAW Law Firm Verdicts / Transactions Page 46 Firms On the Move Page 49 USLAW NETWORK Client Services and Products Page 57 Spotlight on Partners Page 59

About USLAW Page 54 2014 Membership Roster Page 56

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FROM THE Incoming Chair’s Desk

Publisher ROGER M. YAFFE

Editor CONNIE WILSON

In 2001, a few attorneys had an idea to create a net- Art Director JEFF FREIBERT • COMPASS CREATIVE work of independent firms that had the capability to respond quickly, efficiently and economically to client BOARD OF DIRECTORS needs, while delivering excellent client service. They shared a vision of a national network of attorneys, built BRADLEY A. WRIGHT, CHAIR upon lasting professional relationships and friendship. Roetzel & Andress • Cleveland, OH C. ERIK GUSTAFSON, VICE CHAIR Where you need us to be with a home field advantage. Today that idea LeClairRyan • Alexandria, VA stands stronger than ever as USLAW NETWORK, and we are proud to LEW R. C. BRICKER, SECRETARY-TREASURER showcase more than 100 law firms and more than 7,000 attorneys from SmithAmundsen LLC • Chicago, IL virtually everywhere in the United States, coast-to-coast in Canada, in JILL ROBB ACKERMAN, ASSISTANT TREASURER Argentina, Brazil, China and all across Europe through our partnership Baird Holm LLP • Omaha, NE

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WHAT HAPPENS WHEN YOU FINALLY REACH MILLIONAIRE ACRES HOW A FEW WORDS CAN TRIGGER MILLIONS MORE IN INSURANCE COVERAGE

William J. Mitchell Ahmuty, Demers & McManus

In 1860, Milton often the ques- the “escalating phrases”). As a result, a Bradley originally intro- tion of “how contractual requirement to procure “a duced The Game of Life. much coverage minimum of $1 million in liability coverage” Players moved around a board, did the insured – while technically satisfied by a $1 million hoping to someday reach agree to provide?” policy – could present additional exposure “Millionaire Acres.” Of course, can no longer be an- on policies with higher limits. back then, a million dollars meant swered “the contract requires In an industry accustomed to the much more than it does today. a million dollars in coverage.” phrase “a million dollars in coverage,” the In the more serious game of risk Aside from specifying outright higher addition of these words can be a pitfall for transfer, it has been quite common for a limits like “$2 million” or “$3 million” in the unwary. While it may be common to ig- general liability policy to have a damages general liability coverage, a few simple words nore these escalating phrases, several courts limit of $1 million. Like dollar figures every- can potentially multiply a $1 million limit have not. where, those limits have been creeping up into something much more. These phrases by the millions. And above that, an excess appear in the insured’s contracts with third THE POLICY LANGUAGE COMPARED layer or two of coverage is not uncommon. parties, in that part of the contract that re- TO THE INSURED’S CONTRACT On the other side of the coin, an in- quires additional insured status for another Generally speaking, an insurance pol- sured’s business contracts have changed as party. They are simple prefaces like “at icy is a stand-alone contract between the in- well. Parties seeking additional insured sta- least,” “no less than,” or “a minimum of” (for surer and the insured. But a common tus demand higher and higher limits, and purposes of this article, we’ll call these terms exception exists in instances where the in- RM7996_MAGAZINE_Layout 1 8/26/14 4:04 PM Page 3

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surance policy incorporates another docu- tain sum. Otherwise, the new endorsement accordance with the contract; in other ment, such as another contract entered into is still susceptible to the same argument. words, the excess carrier's obligation would by the insured, by reference to it. It would appear that absent a specific, be offset by the underlying carrier’s contri- Many additional insured endorse- stated policy limit for additional insureds, bution. But the excess policy indicated that ments simply add insureds where required that any policy endorsement, by its plain it provided “the minimum limits of insur- by contract. Other endorsements have the language, would support this interpretation ance required in the contract or agree- same language, but go further to add that that exposes the policy limits for additional ment.” By the plain language, the terms of the coverage provided will be capped at ei- insureds. In that regard, even language that the excess policy agreed to provide a mini- ther the policy limits or by the amount re- limits coverage to whatever is required by mum of $2 million, which was the amount quired by the insured’s contract. Clearly, contract, where the contract contains esca- required by the contract. The court held the intent is to limit additional insured cov- lating phrases, only sets a minimum floor that “the average insured could reasonably erage to the amount the insured agreed to for the coverage limit. expect $2 million in coverage” under the ex- provide in its contract. At first blush, this cess policy, ruling against the excess carrier. would appear to neutralize the escalating WHAT ABOUT EXCESS POLICIES? But at least one court has ruled that the phrases, but upon further review, this con- When you think about it, if a contract underlying policy fulfills the contractual ob- dition generally does not. sets a minimum for coverage, the argument ligation. There, a drilling contractor was re- The courts have found that these esca- could be made that if no limit applies at all, quired to procure liability coverage “with lating phrases expose the insurer for the en- then coverage is triggered up through any limits of not less than $100,000,” and that tire policy. In one example, an appellate applicable excess policies. Here, the courts “no other insurance shall be carried at the New York court compared a contract that generally agree, but are not unanimous. expense of the joint account.” The drilling required “minimum general liability limits One court heard the same arguments contractor purchased a number of policies, of $500,000” to such an additional insured on a contract requiring “at least $250,000 including a $1 million general liability pol- endorsement. The additional insured ar- in coverage,” but with a twist. One carrier icy and a $1 million excess policy. A large gued that the plain language requiring “a issued a general liability with a $1 million loss occurred, and the owner sought addi- minimum” of $500,000 also triggers any cov- limit, as well as an umbrella policy with a tional insured status. The Texas court found erage above that, in this instance a $1 mil- limit of $5 million. The certificate of insur- that the first policy must provide coverage lion general liability policy. The carrier ance listed the additional insured party “as up to its $1 million limit, but that the excess argued that the figure that appeared in the an additional insured as their interests may policy was not reached. They reasoned that contract was $500,000, and that the addi- appear.” The carrier included an argument the excess policy added insured “only to the tional insured endorsement capped the lim- that this limitation supported a $250,000 extent of” the contractual obligations, and its for additional insureds to the coverage cap. Like the other courts, the Illinois court that the contract did not require “excess” in- amount required by the contract. The court found no limitation on coverage, and in surance. Moreover, the underlying policy found the terms were clear; but at worst, the this instance, the “policies themselves pro- “wholly fulfilled” the contractual obligation limitation was ambiguous and thus inter- vided up to $6 million in coverage, and to procure insurance. Nevertheless, the preted in the insured’s favor. As a result, contained no language limiting coverage court appears to have glossed over the “not what may have looked like a $500,000 insur- for additional insureds.” There, the addi- less than” language. ance requirement turned into a $1 million tion of the simple words “at least” in the in- requirement. sured’s contract resulted in the significant CONCLUSION In a similar example, a California court movement of the coverage limit from Overall, there appear to be several rea- reviewed a subcontract that required the $250,000 to $6 million. sonable arguments that an additional in- general contractor to have additional in- Similarly, another court looked at a sured can make to increase available sured coverage “of not less than $300,000” contract that required “at least $4 million insurance coverage, if the magic escalating per occurrence. The carrier argued that per occurrence” and contained the com- phrases appear in the contract. It may be “not less than” meant that a coverage limit mon proviso that “this limit may be pro- that the value of these little words is often below that was unacceptable, but that vided by a combination of primary and overlooked, but a sampling of the case law $300,000 satisfied the subcontract. The umbrella/excess policies.” The underlying on the subject suggests that this is an argu- court disagreed, finding that the subcon- policy provided $1 million in coverage, but ment well worth pursuing by the additional tract language did not support a restriction the excess policy had a $9 million limit. insured. on the terms of the policy, because “the sub- Although the court recognized that other contract only sets a floor, not a ceiling, for primary policies would be triggered prior coverage.” Under this interpretation, when to the excess policy, the excess policy was William J. Mitchell is a the subcontract set forth a “minimum” limit, still triggered for its entire limit; whether or member of Ahmuty, Demers the endorsement that agreed to provide that not that limit would be reached was an- & McManus in New York, limit really doesn’t have a limit at all. other story. where he chairs the firm’s The 2013 standard additional insured On a slightly different issue, a subcon- Insurance Coverage Group. endorsements introduced by Insurance tractor was required to include the general His practice focuses on in- Services Office, Inc. (ISO) place some limi- contractor as an additional insured, with a surance coverage litigation, tations on additional insured coverage. One limit of $2 million per occurrence, with no for both policy holders and of the new limitations is that the insurance escalating phrases. The underlying carrier’s insurers. Bill currently serves as Secretary of the afforded to the additional insured will not policy set a $1 million limit, which applied USLAW Insurance & Risk Management be broader than that required by the con- first. So far, so good. The excess carrier ar- Services Practice Group.He may be reached at tract or agreement. That’s fine, as long as gued that its contribution was limited to an- [email protected]. the contract or agreement specifies a cer- other $1 million, for a total of $2 million, in RM7996_MAGAZINE_Layout 1 8/26/14 4:05 PM Page 4

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Pending U.S. Trade Issues

Robert L. Brown Bingham Greenebaum Doll LLP

Of the major trade policy concerns fac- U.S. EXPORT-IMPORT BANK STATUS ing the United States today, there are four ex- REAUTHORIZATION U.S. Congress is considering The Export- port-related issues that are especially The Export-Import Bank of the United Import Bank Reauthorization Act of 2012, significant: States (Ex-Im Bank) is an independent fed- which would extend the Bank’s authority and • U.S. Export-Import Bank Reauthorization eral agency that supplements private export increase its portfolio cap up to $140 billion. (Ex-Im Bank) financing for U.S. exporters. The Bank pro- • Trade Promotion Authority (TPA) vides a variety of financing mechanisms, in- TRADE PROMOTION AUTHORITY • Trans-Pacific Partnership (TPP) cluding working-capital guarantees, export Trade Promotion Authority (TPA) is a • Transatlantic Trade and Investment credit insurance and financing to help for- strategic working relationship between the Partnership (TTIP) eign buyers purchase domestic goods and President and Congress for the negotiation services. It also assumes credit and country and implementation of U.S. trade agree- Each has a direct impact on U.S. busi- risks that private sector banks are unable or ments. This partnership consists of legisla- nesses and their ability to compete in the unwilling to accept and levels the playing tion that: (1) sets the parameters for the global marketplace – which comprises 95 field for U.S. exporters by matching com- United States in various international trade percent of all consumers and 80 percent of petitive foreign export financing. negotiations; (2) establishes a framework the world’s purchasing power. Since Ex-Im Bank is profitable, there is for Congress and the Executive Branch to U.S. economic growth and job creation no cost to U.S. taxpayers. In 2012, it actually work together in pursuing trade agree- depends upon the expansion of foreign trade contributed $1.1 billion to the U.S. Treasury. ments and enacting bills implementing and investment opportunities for U.S. compa- such agreements into law; and (3) includes nies and workers. In 2011, more than 38 mil- BENEFITS a set of legislative procedures that allows the lion U.S. jobs (about 20 percent) depended on In FY 2013, Ex-Im Bank approved more President to submit to Congress bills imple- U.S. exports and imports. This represents 24 than $27 billion in total authorizations to sup- menting trade agreements for an up-or- million more trade-related U.S. jobs than two port an estimated $37.4 billion in U.S. export down vote within a set period of time, decades ago, before the U.S. implemented a sales and approximately 205,000 American without amendments. series of bilateral, regional and multilateral jobs in communities across the country. trade agreements. U.S. Free Trade Agreements The Ex-Im Bank offers financial re- HISTORY (FTAs) in effect in 2008 generated more than sources that are especially critical for small Every President from the 1930s until $300 billion in U.S. output (2.1 percent of U.S. businesses, providing credit insurance to 2007 has been granted the authority in one gross domestic product), expanded U.S. ex- small business exporters that might other- form or another to negotiate market-open- ports of goods and services by more than $460 wise be unavailable through private sector ing trade agreements in consultation with billion and supported more than five million banks for sales by U.S. exporters to foreign Congress. The most recent TPA was granted U.S. jobs. U.S. exports have helped drive the buyers with insufficient credit history. Last in 2002 but lapsed in 2007 without a renewal. U.S. economy and its recovery in recent years, year, the Bank approved a record 3,413 trans- Since that time, negotiation and approval of positively contributing to U.S. economic actions – or 89 percent – for small-businesses. U.S. trade agreements has languished. growth every year since 2010. RM7996_MAGAZINE_Layout 1 8/26/14 4:05 PM Page 5

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BENEFITS HISTORY BENEFITS Trade negotiations are of vital impor- The United States is currently negotiat- More than $1.5 trillion in goods, serv- tance to the U.S. economy. Nearly half of all ing the TPP with 11 other countries ices and income receipts flow between the U.S. goods exports now go to the nation’s (Australia, Brunei Darussalam, Canada, United States and the EU annually. Together 20 free trade agreement (FTA) partners, Chile, Japan, Malaysia, Mexico, New Zealand, the U.S. and EU represent 60 percent of which generated a roughly $58 billion man- Peru, Singapore and Vietnam). It is hoped global gross domestic product, 33 percent of ufactured goods trade surplus in 2012. that over time the TPP will include additional world trade in goods and 42 percent of world By renewing TPA with updated negotiat- countries in the Asia-Pacific region. If final- trade in services. U.S. firms have direct in- ing objectives, Congress can strategically ad- ized, TPP would be the most comprehensive vestments of nearly $2 trillion in the EU, dress issues pertaining to current U.S. trade trade agreement in the Asia-Pacific region. which is 20 times greater than what they have negotiations, including the Trans Pacific invested in China. These European invest- Partnership (TPP), the Transatlantic Trade BENEFITS ments generate some $3 trillion in annual and Investment Partnership (TTIP), the Trade The Asia-Pacific region accounts for revenues for American companies. in Services Agreement (TISA) and an updated half of the world’s population and boasts While European and U.S. tariffs are Information Technology Agreement (ITA). many of its fastest growing economies. Two often low, the sheer volume of trans-Atlantic billion Asians joined the middle class in the commerce is so large that one-third of all tar- STATUS last 20 years. The International Monetary iffs on U.S. exports are paid to the EU. It is On July 30, 2013, the current Fund (IMF) estimates that nearly half of the estimated that eliminating trans-Atlantic tar- Administration requested that Congress world’s economic growth over the next five iffs will increase U.S.-EU trade by more than reauthorize TPA. On Jan. 9, 2014, legisla- years will occur in Asia. The TPP countries $120 billion within five years. It will also gen- tion to renew TPA – the Bipartisan are the largest goods and services export erate GDP gains of $180 billion—a budget- Congressional Trade Priorities Act of 2014 market for the United States. U.S. goods ex- neutral gain for the U.S. and EU economies. – was introduced in the House (HR. 3830) ports to the broader Asia-Pacific totaled In addition to eliminating tariffs, two of and in the Senate (S. 1900). This legislation $942 billion in 2012, representing 61 per- the greatest benefits of TTIP will be the im- would reauthorize TPA for four years with cent of total U.S. goods exports. provement in compatibility of the U.S. and the possibility of a three-year extension. EU regulatory regimes and the liberalization STATUS of investment, services and procurement. TRANS-PACIFIC PARTNERSHIP After 19 rounds, the 12 TPP countries The Trans-Pacific Partnership (TPP) is have made significant progress and the ne- STATUS a landmark, 21st-century trade agreement gotiations are moving toward the conclusion EU and U.S. negotiators held a fifth that could set a new standard for global of a comprehensive agreement. However, round of trade talks in Arlington, Virginia, trade and incorporate next-generation is- some doubt that it will be adopted before from May 19-23, 2014. However, as with sues that may boost the global economic the next presidential election in 2016. TPP, there is some risk of delay. competitiveness of the TPP countries. Its features include: TRANSATLANTIC TRADE AND CONCLUSION • Comprehensive market access that will INVESTMENT PARTNERSHIP (TTIP) Foreign trade means increased sales, eliminate tariffs and other barriers to The Transatlantic Trade and Investment and increased sales mean more jobs. goods and services trade and investment; Partnership (TTIP) is a comprehensive trade Therefore, the expansion of foreign trade • A fully regional agreement that will facil- and investment agreement between the opportunities for U.S. businesses are an ab- itate the development of production and United States and the European Union (EU) solutely crucial function for the U.S. govern- supply chains among the TPP countries; that is in the preliminary stages of negotia- ment. U.S. foreign trade policy, such as the and tion. TTIP would remove trade barriers in a four initiatives outlined above, could • A focus on cross-cutting trade issues such wide range of economic sectors to make it achieve these twin goals of increased sales as regulatory coherence, competitiveness easier to buy and sell goods and services be- and jobs. For this reason, U.S. foreign poli- and business facilitation, market access tween the U.S. and the EU, and make it easier cymakers must prioritize the enhancement and trade benefits for small and medium for U.S. and EU companies to invest in each of foreign trade opportunities for the ben- enterprises (SMEs), trade in services, in- other’s economy. Specifically, this agreement efit of U.S. businesses and workers. tellectual property protection and eco- will reduce and remove tariffs and trade bar- nomic development. riers on manufactured goods, services and agricultural products; liberalize investment Robert L. Brown is a member The TPP is being negotiated as a single regimes; increase access to government proof the Bingham Greenebaum undertaking that covers all key trade and curement; and protect intellectual property. Doll LLP Corporate and trade-related areas. In addition to updating Transactional practice traditional approaches to issues covered by HISTORY group. Robert serves on the previous free trade agreements, the TPP in- In 2011, the U.S. and the EU set up a steering committee of the U.S. cludes new and emerging trade issues. More High Level Working Group on Jobs and Department of Commerce than 20 negotiating groups have met to de- Growth (HLWG) to investigate what kind of National District Export velop the legal texts of the agreement, and trade and investment agreement between the Council and is chair of the Kentucky District the specific market access commitments the two economic powers might be developed. Export Council. He also serves on the board and TPP countries will make to open their mar- The HLWG concluded that a wide-ranging executive committee of Global Ties, which man- kets to each other’s goods, services and gov- trade and investment agreement between the ages U.S. State Department visitors program. He ernment procurement. world’s two largest economies presented the previously was chair of the World Trade Center best opportunity for advancing economic Kentucky. growth and jobs on both sides of the Atlantic. RM7996_MAGAZINE_Layout 1 8/26/14 4:07 PM Page 6

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FIGHTINGFIGHTING DISABILITYDISABILITY FRAUDFRAUD HOWHOW THETHE LONGLONG ISLANDISLAND RAILRAIL ROADROAD COULDCOULD BEBE AA MODELMODEL FORFOR ALLALL EMPLOYERSEMPLOYERS

Damon M. Gruber, Todd M. Jones, and Paul J. Kilminster Goldberg Segalla LLP

Disability benefit recipients playing claims on the rise, identifying and deterring gation spanning several years and involving golf or working on their bench press at the fraud may be more important than ever. an extensive analysis of disability applications, gym? Such images of fraud may not be all medical records, employee data, and covert that uncommon to seasoned employers, but THE INCENTIVE AND THE surveillance of benefit recipients. in the case of the Long Island Rail Road, it INVESTIGATION occurred on an uncommonly massive scale. According to the criminal complaint THE DOCTORS The railroad’s response to the widespread filed in the U.S. District Court in At the center of the government’s in- disability retirement scandal that first Manhattan, hundreds of LIRR employees vestigation were a handful of physicians. emerged in 2008 was equally monumental, falsely alleged disabilities to collect more According to a press release from the resulting in more than 30 arrests and mak- pension money from ages 50 to 65, when Department of Justice, between the late ing a bold statement in its lasting effects: A they would otherwise qualify for full bene- 1990s and 2008, one particular doctor rec- year after the initial arrests, disability appli- fits.4 The incentive to commit fraud was a ommended that at least 734 retiring LIRR cations at the LIRR were down almost 50 consequence of the railroad’s contract with employees receive disability benefits and percent. Further, 600-700 retirees who had its employees’ union. The contract permit- was responsible for treating nearly half of all previously been collecting $2 million in ted retirement at age 50 so long as the re- LIRR employees who retired and received benefits per month had their benefits sus- tiree had at least 20 years of service. The disability benefits in one four-year period. pended and were forced to reapply.1 LIRR, which transports passengers to points In effect, this doctor siphoned millions of The investigation and prosecution of between Manhattan and Long Island, is the dollars from stakeholders through his oper- this fraud scheme provides a template for only railroad in the country that has such ation of a “disability mill” where prospective analyzing similar disability and pension sys- an arrangement with its workers. retirees could go to receive a medical nar- tems, such as workers’ compensation, where The investigation itself was prompted, in rative in support of their disability applica- attempts at fraud by employees, health care part, by statistical evidence showing that the tions in exchange for cash. providers, and even employers are frequent. vast majority of Long Island Rail Road work- In January 2013, that doctor plead According to the Insurance Information ers who retired in their 50s had done so due guilty to one count of conspiracy to commit Institute, the exact amount of insurance to an “occupational disability” despite the mail fraud, wire fraud, and health care fraud is difficult to determine, but health LIRR’s impressive workplace safety record.5 fraud, and one count of health care fraud, care, workers’ compensation, and auto in- Further, Long Island Rail Road workers ap- which resulted in an eight-year prison sen- surance are believed to be the most vulner- plied for occupational disability benefits at a tence.7 Later that year, after a three-week able lines of insurance.2 Questionable rate 12 times higher than workers of Metro jury trial, a second doctor was convicted on insurance claims rose by 16 percent in 2011 North Rail Road, a comparable railroad that all 10 counts with which he was charged. He from 100,201 to 116,171, according to the services New York’s northern suburbs.6 This was sentenced to three years of supervised National Insurance Crime Bureau (NICB).3 dissonance prompted federal agents and release and ordered to forfeit $70,947,699 With the frequency and cost of such prosecutors to initiate a painstaking investi- and pay $70,632,900 in restitution. RM7996_MAGAZINE_Layout 1 8/26/14 4:07 PM Page 7

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THE RAILROAD WORKERS standards and guidelines put forth by mul- on four key players: two doctors, a former The New York Times instigated the fed- tiple jurisdictions to determine whether the union chief, and a former RRB insider. In eral investigation with a 2008 article that facts of a particular case would meet the dealing with your own claims, you may began with the image of dozens of former standards or guidelines for fraud. begin to notice the same doctor, the same railroad employees playing golf every day. Understanding the ins and outs of each sys- lawyer, or similar fact patterns starting to The description of the scene made it clear tem and the statutes that govern them is emerge. While that is not determinative of that this was an open secret. probably an unrealistic expectation. fraud, it is certainly the sort of indicator that The complaint noted that there were Instead, it might be worthwhile to contem- should warrant further scrutiny. two types of disability annuities provided by plate utilizing an analysis that targets red When people are committing fraud of the Railroad Retirement Board (RRB). The flags and allows an organization to identify this variety, it is often due to the prospect of first used standards similar to the Social metrics and landmarks for a faulty process. continued and significant income in combi- Security Disability application process. The The lessons of the LIRR fraud scheme nation with absolving themselves of the bur- second was an “occupational disability” stan- lie in the patterns that emerged and the ac- dens of a work schedule. As noted in the dard that determined whether an employee tivities of its central figures, all of whom history of the Long Island Rail Road disabil- could perform their own job description were in a position to spur along a multitude ity scheme, most of the eventual defendants with the railroad. Despite complaints that in- of claims. One defendant was a former could be found in broad daylight engaging cluded inabilities to grasp with strength, sit, member of the RRB who began advising ex- in activity that highlighted the fraud. stand, walk, or even bathe, the federal inves- workers on their disability applications. tigation of the pensioners revealed that a sig- Another was a former union chief who also CONCLUSION nificant number of defendant pensioners set out to advise applicants for profit. The Circumstances are going to be different were engaged in daily activities completely doctors facilitated the application process as organizations, jurisdictions, agreements, inconsistent with those complaints, includ- of thousands by failing to scrutinize the and workforces differ. The LIRR scandal is in- ing golf, tennis, intense gym activity, shovel- claims made by their patients. In the com- structive, however, because it demonstrates ing snow, and being a volunteer firefighter. plaint, it was reported that one doctor had that patterns tend to emerge – and that tak- For many, the disability benefits re- noted he thought he may have signed off on ing action to stop fraud makes a powerful ceived by former employees were calculated 100 percent of his patients’ complaints, hav- statement to would-be abusers. If you are able using earnings from five years prior to their ing no reason to question their integrity. to recognize a fraudulent pattern and its im- retirement. In the case of the Long Island In the end, the LIRR system provided plications, the ability to assemble a framework Rail Road, days worked are often measured incentive for the perversion of its intended and strategy to address that pattern may help by union rules pertaining to the duties and purpose, and plenty of actors were willing to reduce such activity in the future. projects completed, not time actually spent manipulate that system for monetary gain. working. A common thread in the cases Damon M. Gruber is a brought against former employees was a WHAT SHOULD YOU LOOK FOR? partner in Goldberg concerted effort to increase productivity de- A single disability allegation may result Segalla’s Buffalo office and spite the fact that these workers were going in numerous proceedings across a number Chair of its Workers’ to claim a developing inability to do the of venues. A workers’ compensation claim, Compensation Practice work. The complaints against former em- for instance, may also include questions re- Group. He advises on all ployees often laid out a timeline for fraud garding a collective bargaining agreement, aspects of claims and has that started months – or even years – before an application for social security disability, extensive appellate experi- the claim for disability retirement was made. and potentially retirement benefits. ence in cases involving hearing loss, psycholog- Knowing to ask how these benefits would po- ical stress, insurance coverage, and other issues. LESSONS LEARNED tentially interplay is itself an invaluable asset Not every business has access to the in- to analyzing whether a warped incentive has Todd M. Jones is an attorney vestigative resources of state and federal been created, inadvertently or otherwise. in the firm’s Workers’ agencies, but the Long Island Rail Road It turns out that the Long Island Rail Compensation Practice case serves as a model for larger businesses Road, in many cases, could have predicted Group. His experience in- and organizations to help identify indica- when a claimant would retire with a disabil- cludes accidental, occupa- tors for fraud. ity based upon the increases in productivity tional, and death claims at The human resources departments of that preceded many of the disability retire- all stages of litigation, includ- larger organizations often have to deal with ment applications. Hindsight is 20/20, but ing trials, depositions of med- the implications of systems like workers’ maintenance of the records later helped in- ical experts, and appeals. compensation, collectively bargained stan- vestigators put together timelines that were dards for disability leave or retirement, the useful. Paul J. Kilminster, also a Family Medical Leave Act, and short-term A common refrain for any legal action member of the firm’s disability. It then often falls to someone is that “every case is different.” That said, Workers’ Compensation within that organization to navigate the the Long Island Rail Road scandal turned team, is experienced in a wide variety of cases involving accidental injuries and 1 http://www.huffingtonpost.com/2013/07/02/lirr-fraud-scandal-retirees-disability-benefits_n_3534620.html 2 http://www.iii.org/fact-statistic/fraud occupational diseases, in- 3 Id. cluding occupational hear- 4 http://www.post-gazette.com/news/nation/2011/10/28/Rail-workers-in-NYC-linked-to-1-billion-disability- fraud/stories/201110280173 ing loss, repetitive stress 5 http://www.justice.gov/usao/nys/pressreleases/pcremarks/lirrremarks.html injuries, heart attack cases, and claims for as- 6 Id. bestos-related injuries and death benefits. 7 Id. RM7996_MAGAZINE_Layout 1 8/26/14 4:10 PM Page 8

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THINK NONE OF YOUR CASES ARE THINKEDISCOVERY AGAIN. CASES?

Brandon J. Hechtman Wicker Smith O’Hara McCoy & Ford P.A. Dennis Kiker Granite Legal Systems

Think about it. Where did you get the LEGAL OBLIGATIONS all its business information? In boxes, or information that you have acted on today? Legally, eDiscovery is an integral part on computers or in the cloud? How much of it came from a book or letter? of the discovery process. Attorneys have • FRCP 26(b) – “Parties may obtain discov- How much came from your computer, legal obligations to ensure that electronic ery regarding any non-privileged matter tablet, or phone? The odds are great that data is collected and preserved. Although that is relevant to any party’s claim or de- the vast majority of the information that you many of the Federal Rules of Civil fense.” At the risk of being redundant, work with every day comes from a com- Procedure referencing eDiscovery are per- the vast majority of the information that puter. Yet it is remarkable how often attor- missive in nature, several are not. Consider will be relevant to your case is stored on neys say that their cases are not eDiscovery the following: computers and is discoverable. cases. The truth is that the overwhelming • FRCP 16(b) – The pretrial scheduling • FRCP 26(f) – Parties must “discuss any is- majority of business information is created order “may provide for disclosure or dis- sues about preserving discoverable infor- and maintained on computer systems, in- covery of electronically stored informa- mation,” and their discovery plan must cluding mobile devices. Whether a case is tion.” Do you want it to? If not, is that include “any issues about disclosure or an eDiscovery case is not a question of how because you do not want to put undue discovery of electronically stored informa- large the case is. It is a question of where the pressure on the opposing party, or be- tion.” This is one of the few clear man- information is. And more often than not cause you do not want that pressure on dates in the Federal Rules. Are you that information is on a computer or other your client? Does this decision comply discussing preservation of information device. In other words, it is virtually impos- with your district’s local rules? with opposing parties? Do you include sible to complete discovery without the “e” • FRCP 26(a) – Required disclosures in- disclosure and discovery of ESI in your anymore. Indeed, there are serious legal, clude “electronically stored informa- discovery plan? Have you considered how ethical and practical concerns with acting tion…that the disclosing party has in its to preserve the data, including not only on the misconception that your case is not possession, custody, or control and may locally stored information, but data that an eDiscovery case. Simply ignoring use to support its claims or defenses.” You is in the cloud? eDiscovery may be illegal, unethical, and might imagine that you are not planning • FRCP 26(g) – Attorneys must certify that, place you and your client at a strategic dis- to use any electronically stored informa- “with respect to a disclosure, it is com- advantage. If that sounds a bit overstated to tion (“ESI”) to support your claims or de- plete and correct” and “with respect to a you then read on. fenses, but you would probably be wrong. discovery…response…, it is consistent Remember: where does your client keep with these rules.” Is it possible to comply RM7996_MAGAZINE_Layout 1 8/26/14 4:11 PM Page 9

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with this rule without addressing ESI in requirements that attorneys be conversant ponent will look for the smoking gun, your disclosures and discovery responses? with eDiscovery: but who will find the information that • FRCP 34(a) – Parties may request ESI within a) Rule 1.1 – The ABA revised the com- supports your case if you do not? the scope of Rule 26(b). Not only “may” mentary to Rule 1.1 in 2013 to state c) Cases are decided on the facts and the they, but invariably they will. Just check that attorneys “should keep abreast of law. Generally counsel with a quicker the boilerplate definitions in the next RFP changes in the law and practice, includ- and greater command of the facts has you receive. The question is whether you ing the benefits and risks associated a decided strategic advantage in postur- are responding (see Rule 26(g) above). with relevant technology” to remain ing the case for settlement or prepar- • FRCP 37(e) – A court may not impose competent. ing for trial. spoliation sanctions “for failing to provide b) Rule 1.5 – The rule on fees has not d) The most common fear associated with electronically stored information” only if changed. The standard is reasonable- eDiscovery is cost. Of course, spoliation it is “lost as a result of the routine, good ness. However, consider the implica- or just not knowing the facts can cost faith operation of an electronic informa- tions if leveraging eDiscovery could you dearly as well. But, eDiscovery costs tion system.” If currently proposed actually reduce overall costs in a case? need not be a great concern. amendments go into effect, a party will c) Rule 1.6 – Confidentiality is the hall- Technology has advanced significantly only be sanctioned if it failed to take rea- mark of the attorney-client relation- over the past decade, and there are a sonable steps to preserve information. So, ship. Maintaining that confidence can variety of tools, including “predictive how good is your client’s legal hold be difficult in the modern world. A coding,” that can help control, or even process for ESI? Does it even have one? number of recent cases highlight the reduce, the overall cost of eDiscovery. This is particularly concerning with re- risk of inadvertent disclosure of privi- It is important that counsel consult gard to enterprise systems because users leged information in eDiscovery. See, with those internally and externally maintain data in different ways and may e.g., First Tech. Capital, Inc. v. that can facilitate the efficient and eco- transport it to different platforms (desk- JPMorgan Chase N.A., No. 5:12-CV- nomical collection and review of ESI. top, laptop, tablet, and/or phone). 289-KSF-REW, 2013 WL 7800409 (E.D. Further, it is incumbent upon attorneys Without a defined process to preserve the Ky. Dec. 10, 2013) (privileged waived to understand and leverage these tools data in each location you could be faced for failure to take reasonable steps to for their clients’ benefit. with a spoliation problem. prevent disclosure where the average document was reviewed for only 9.84 Like it or not, eDiscovery is a permanent Moreover, over the past 10 years, courts seconds). part of the litigation landscape. Attorneys that have repeatedly reminded attorneys that d) Rule 3.4 – Did you know that you are embrace it will not only ensure compliance they are responsible and accountable for ethically required to “make reasonably with their legal and ethical obligations, they proper identification, preservation and pro- diligent effort to comply with a legally will realize a significant strategic advantage duction of relevant ESI. From the seminal proper discovery request by an oppos- over attorneys that do not. As for the latter, Zubulake decisions (“[c]ounsel must take af- ing party”? If you have not included well, they can always hope those new-fangled firmative steps to monitor compliance so ESI in your discovery response plan, computers are just a fad. that all sources of discoverable information where does that leave you? are identified and searched”) to more recent decisions such as Procaps S.A. v. Patheon, The DC Bar has added to its compe- Brandon J. Hechtman is an Inc., Case No. 12-24356-CIV-GOODMAN tency requirement that an attorney under- associate at Wicker Smith (S.D. Fla. Feb. 28, 2014) (issuing sanctions stand the risks/benefits of technology. The O’Hara McCoy & Ford P.A. because outside counsel “permitted its client California Bar explicitly includes eDiscovery in Coral Gables, FL. to self-collect ESI and documents, allowed with regard to attorney competence and the Brandon is admitted to prac- some of its client’s executives to use a single duty of confidentiality. Other states are cer- tice in Florida, the Southern search term to collect e-mails, and failed to tain to follow suit, as predicted in the ABA and Middle U.S. District realize that its client never actually imple- Commission on Ethics 20/20 Resolution. Courts of Florida, and the mented the litigation hold”), judges have in- District of Columbia. He primarily practices com- creasingly taken counsel – inside and out – PRACTICAL CONSIDERATIONS mercial and probate litigation in federal and to task for discovery failures committed by The greatest surprise for many attor- state courts. He can be reached at their clients. Note that an attorneys’ search neys is not that they are required to engage [email protected]. should not end with consulting the IT de- in eDiscovery; it is that they should want to. partment. Usually, one should identify target Why? Because: Dennis Kiker is a consultant ESI custodians (people who created, used, a) Most information is stored on computer at Granite Legal Systems in or viewed the information) and ask them devices. If you are not identifying that in- Houston, Texas, specializ- how they view and edit ESI. More often than formation, you simply do not know what ing in eDiscovery consulting not, attorneys will find ESI stored locally on you are missing. You only know this: you and technology. He is a personal devices. Attorneys should also ask are missing most of the information, and Martindale-Hubbell AV- whether those people are communicating that can never be a good thing. rated attorney and legal con- on mobile devices; like e-mail, text messages b) The information that you are missing sultant working with law can be especially revealing. could be harmful, or helpful. In either firms and their clients to facilitate and improve case, you want to know. For every “smok- discovery response. He is a member of the State ETHICAL OBLIGATIONS ing gun” e-mail, experience shows that Bar of Arizona and the Virginia State Bar. He The ABA Model Rules of Professional there are a dozen innocuous or even can be reached at [email protected] or Conduct include both explicit and implicit helpful ones. You can be sure your op- 713-652-0881. RM7996_MAGAZINE_Layout 1 8/26/14 4:16 PM Page 10

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CAN’T YOU HEAR THE WHISTLE BLOWING

Joshua F. Silk Hall Booth Smith, P.C.

In March 2014, the Supreme Court issued its decision in Lawson v. FMR LLC,1 which has the potential to greatly expand the number of employees who may bring lawsuits under the “whistleblower” provision of the Sarbanes-Oxley Act. This decision is the first to interpret the whistleblower provision of the Sarbanes-Oxley Act. In Lawson, the Court held by a 6-3 margin that Sarbanes-Oxley creates a cause of action not only for employees of public companies, but also for employees of non-public companies that perform work for public companies.

AN INTRODUCTION TO WHISTLEBLOWER PROTECTION In response to the catastrophic collapse of Enron Corp., Congress passed the Sarbanes-Oxley Act of 2002, which included a provision protecting whistleblowers who work for public companies, including law firms, accountants, and auditors. The law provides that: No [public] company…, or any officer, employee, contractor, subcon- tractor, 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 [whistleblowing or other protected activity].2

The term “protected activity” is defined broadly to include reports made to federal regulatory and law enforcement agencies, Congress, an employee’s supervisor, and internal corporate investigators. The employee must be reporting alleged mail fraud, wire fraud, bank fraud, securities fraud, or a violation of any rule or regulation of the Securities and Exchange Commission, or any provision of Federal law relating to fraud against shareholders. Employees who prevail under this law may be entitled to reinstate- ment, back pay with interest, “make-whole” compensation (including restoration of seniority, vacation/sick leave), “special damages” for emotional distress and loss of professional reputation, attorney’s fees and costs, and “affirmative relief” such as a letter of apology or formal posting of the decision. As a result, before a company delves into any factual allegations a whistleblowing employee might make, they could raise the defense that the employee is not covered by the whistleblower statute because the company is not public.

THE SUPREME COURT’S RECENT DECISION IN LAWSON V. FMR LLC In Lawson, the Plaintiffs were former employees of a private company that contracted to advise publicly traded mutual funds. The Plaintiffs alleged that their employer, FMR LLC, unlawfully terminated them for reporting alleged shareholder fraud. Each employee sued FMR under the Sarbanes-Oxley whistleblower provision. RM7996_MAGAZINE_Layout 1 8/26/14 4:16 PM Page 11

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In a wide-ranging decision, the DECISIONS AFTER LAWSON Lawson has weakened or eliminated this Supreme Court held that the Sarbanes- While it is still too soon to tell whether gatekeeping defense to whistleblower Oxley whistleblower provision does protect Lawson will have the sweeping effects antic- claims, with the result that courts will reach employees of privately held companies that ipated by the dissent, it has been applied in the merits of many more such claims raised are contractors or subcontractors who per- at least two cases since March. In Safarian v. by employees. form work for public companies. The Court American DG Energy, Inc.,3 the Defendant was reached this conclusion based on the text a publicly traded company in the utility PRACTICE TIPS of the statute and the intent of Congress, business, and the Plaintiff was an engineer After Lawson it is clear that privately which the majority explained was to “ward who serviced and installed Defendant’s ma- held companies can no longer assume that off another Enron debacle.” Despite this, chines. However, Plaintiff admitted that he they are immune from liability under the the Court did not limit whistleblower pro- was not an employee of American DG Sarbanes-Oxley whistleblower provision. tections to the kind of harm which led to Energy, and instead he was an employee of Directors of Human Resources and other the Enron collapse. In short, the Court de- a company owned by DG Energy called corporate officers should consider the fol- clined to define the scope of Sarbanes- Multiservice. The Plaintiff was eventually lowing steps: Oxley’s whistleblower protection, while terminated for disclosing and threatening First, review your relationships with expanding the class of persons who would to disclose alleged acts and omissions to public companies. Consider whether your be eligible for such protection. Defendant’s employees and customers. private company contracts or subcontracts Writing for the dissent, Justice Sotomayor Plaintiff repeatedly objected to what he per- with a public company, whether any employ- (joined by Justice Kennedy and Justice Alito) ceived as overbilling, improper construc- ees may also work for public companies, or explained that the decision had far-reaching tion, and a failure to obtain permits. whether any employees may also be agents and potentially absurd results. Justice As an initial matter, the District Court of public companies. Sotomayor argued that the Court’s decision for the District of New Jersey concluded that Second, consider what activity is pro- would now allow an employee of a small, pri- the Plaintiff was an independent contractor, tected under Sarbanes-Oxley. Train your su- vately owned business that, for example, con- but based on Lawson, the court held that his pervisors and managerial employees to tracts to clean the local Starbucks, to sue the independent contractor status did not bar understand what activity is protected and to company if the employee is demoted or fired him from bringing a whistleblower claim ensure that they appropriately address con- after reporting that another client has mailed under Sarbanes-Oxley. While the Court ul- duct that may be protected. Also consider the cleaning company a fraudulent invoice. timately concluded that Plaintiff had not instituting internal procedures for employ- Thus, under Lawson, the Sarbanes- stated a claim for protection under those ees to complain about alleged violations Oxley whistleblower protections may now acts, he was eligible for such under Lawson which could be protected, and ensure that extend to (1) employees of public compa- despite his independent contractor status. sufficient procedures are in place to prevent nies; (2) household employees of individu- Similarly, in Wiest v. Thomas J. Lynch,4 retaliatory conduct against such employees. als who work for public companies; the Plaintiff sued Tyco Electronics Third, private companies now need to (3) employees of private companies that Corporation and four individual defendants consider revising or preparing policies that contract with public companies; (4) em- under the whistleblower protections in prohibit retaliation to include the protected ployees of any private company that subcon- Sarbanes-Oxley. Wiest worked for Tyco until activities set forth in Sarbanes-Oxley. tracts with a private company that contracts his termination in 2010 after he began re- Finally, remain cautious in making ad- with a public company; and (5) employees jecting and questioning certain expenses verse personnel decisions. Many companies of any agent of a public company. that he believed violated accounting stan- have problem employees, and the Supreme The consequences for extending dards or securities and tax laws. The Court may have opened the door for those whistleblower protections may be severe. Defendants argued, among other things, employees to claim whistleblower protec- According to the Department of Labor’s sta- that Mr. Wiest was not covered under tion. Take care to ensure that you under- tistics from 2005, public companies hired 10 Sarbanes-Oxley because Tyco was a non- stand whether these individuals are now million independent contractors and 11 publicly traded subsidiary of Tyco covered under Sarbanes-Oxley, and that you million contract workers, all of whom po- Electronics Limited. The District Court for are taking the necessary precautions to pre- tentially could now fall within the protec- the Eastern District of Pennsylvania stated vent retaliation for protected activity. Be tion of Sarbanes-Oxley. that “[t]here is no reason to think that the proactive, and get ahead of this potential Justice Sotomayor concluded by noting Supreme Court’s holding in Lawson does flood of employment litigation. that a flood of litigation could result from not also apply, beyond contractors of public this decision, and that the whistleblower companies, to agents of public companies provision protects reporting not only of se- and those agents’ employees.” The court curities fraud, but also mail, wire, and bank went further and explained that agency fraud. By interpreting a statute that protects could be established by the fact that Tyco Joshua Silk is an associate an expansive class of conduct to now cover performed accounting and tax services for with Hall Booth Smith, P.C. a large and more expansive class of employ- Tyco Limited. The Court concluded that Mr. in Atlanta, Ga. He special- ees, Justice Sotomayor concluded that Wiest had established that Tyco acted as an izes in healthcare litigation “today’s opinion threatens to subject private agent for Tyco Limited, and under Lawson, and employment law. He re- companies to a costly new front of employ- his Sarbanes-Oxley claims could proceed. ceived his J.D. from the ment litigation.” Wiest and Safarian illustrate that University of Georgia School of Law, magna cum laude, 1 Lawson v. FMR, LLC, 134 S. Ct. 1158, 188 L.Ed. 2d 158 (2014). served on The Georgia Law Review, and was 2 18 U.S.C. § 1514A(a). 3 2014 U.S. Dist. LEXIS 59684. awarded the Order of the Coif. 4 2014 U.S. Dist. LEXIS 52472; 38 I.E.R. Cas. (BNA) 1. RM7996_MAGAZINE_Layout 1 8/26/14 4:19 PM Page 12

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FULL-COURT PRESS

Kevin Nelson and Alex Greenberg Huddleston Bolen LLP

“(n) Amateurism: the conviction that coaches are paid twice that amount. through their scholarships. The value of people should participate in sports as a According to a 2013 study, in 40 different that education, however, so pales in compar- hobby (for the fun of it) rather than for states the highest-paid state employee was a col- ison to the billions of dollars flowing to the money.”1 lege football or basketball coach.2 NCAA and its members that it is no longer Playing for the love of the game. It may Not surprisingly, an increasing number easy to perceive scholarships alone as ade- be why the American public fell in love with of players and former players are seeking a quate or just compensation. And even that college sports. With professional athletes piece of the pie. The NCAA is facing attacks recompense is questionable for the players making millions of dollars from guaranteed in courtrooms and before administrative who are in college simply because it is the salaries and endorsement deals, there is an bodies by those amateur athletes while, in only viable avenue in the United States to undeniable attraction to the purity of ama- the court of public opinion, it is accused of prepare themselves for a career in profes- teur athletics. But does the term ama- exploiting them. It is difficult for many to sional football or basketball. As a result of teurism still apply to the current state of see the NCAA’s position regarding compen- these legal assaults, the NCAA has been “big time” college football and basketball? sation of players as anything other than an forced to change, and likely will be required The National Collegiate Athletic attempt to cling to 19th Century definitions to change again, how it admin- Association (“NCAA”) continues to answer of amateurism while reaping the isters college sports. this question affirmatively. It has long ar- benefits of 21st Century gued that its amateurism rules protect com- media contracts. petitive balance among schools and Undoubtedly conferences and allow colleges to provide the NCAA is cor- scholarships across a spectrum of sports and rect that players sexes. It even invented the term “student- do receive athlete” to combat the notion that colle- compensa- giate athletes should be rewarded for their tion for efforts on the field. their ath- But while colleges do not pay their letic en- players, television contracts for college deavors sports have reached staggering heights, making NCAA executives and college coaches rich. Dr. Mark Emmert, President of the NCAA, has a $1.7 million annual compensation package. Some college RM7996_MAGAZINE_Layout 1 8/26/14 4:19 PM Page 13

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In California, Ed O’Bannon (a former 2014 Peter Ohr, a regional director at the Under this new system, the Power 5 UCLA basketball player) sued the NCAA National Labor Relations Board, deter- conferences have autonomy to regulate is- and its corporate partners, EA Sports and mined that Northwestern University foot- sues including stipends and medical cover- the Collegiate Licensing Company. The ball players were employees of their age for athletes, the amount of class action lawsuit sought an injunction to university. Ohr found that: (1) the athletes coaching/support staff, time demands, and end the NCAA’s ban against paying college were not primarily students; (2) their labor paying for athletes’ families to attend athletes for use of their names, images, and (playing football) did not connect meaning- games. As soon as they are allowed, the likenesses (“NIL”). Prior to trial, the fully to their studies; (3) academic faculty Power 5 schools will likely introduce new O’Bannon plaintiffs reached a $40 million did not sponsor athletic endeavors; and (4) legislation allowing schools to give a stipend settlement with EA Sports and CLC. Even athletes’ scholarships were for playing (approximately $2,000 to $5,000 per year before the settlement, EA Sports discontin- sports, not academics. depending on the school) on top of an ath- ued production of its NCAA video games. Under this decision football players are lete’s scholarship to cover expenses beyond After slogging its way through the legal employees and not merely student-athletes, tuition, room, board, and books. system, the case proceeded to a three-week contrary to the stance that the NCAA has Smaller conferences will have the ability bench trial. On August 8, 2014, U.S. District long maintained. Although an appeal is cur- to adopt the same rules as the Power 5 but it Court Judge Claudia Wilken found in favor rently pending before the full panel of the is doubtful that they will be able to compete of the O’Bannon plaintiffs and granted them NLRB in Washington, the regional direc- due to their financial constraints. Allowing their requested injunctive relief.3 tor’s ruling has opened the door for athletes the bigger schools to offer these additional Judge Wilken’s order provides for com- at private institutions across the country to financial enticements will likely cause a pensation to future athletes (those who en- form collective bargaining units. major competitive gap between the teams in roll in college on or after July 1, 2016) “in If precedent is an indication, the Power 5 conferences and the smaller an amount of $5,000 per year or less” for Northwestern’s players may have a tough conferences. This concern must be weighed, the licensing of Division I men’s basketball battle in front of the full NLRB. The NLRB however, against the argument that it is un- and Football Bowl Subdivision (“FBS”) foot- denied a previous effort to organize by grad- fair for the smaller schools to prohibit their ball players’ NIL. The payments will be put uate assistants at Brown University, finding wealthy brethren from implementing into a trust, payable upon graduation or that the assistants were primarily students, changes that benefit student-athletes. when athletic eligibility is exhausted. Judge not employees. Whether this same reason- The O’Bannon case, the potential Wilken also prohibited the NCAA and its ing applies to athletes remains unresolved. unionization of players, and public opinion member schools from including the NIL An even more interesting question, how- have combined to put the NCAA at a cross- payments in any calculation of the value of ever, is why an individual cannot be both a roads.5 One fork takes the form of endless an award of a full grant-in-aid. student and an employee. appeals and seeking relief from rabidly in- The O’Bannon decision, however, leaves While the Northwestern NLRB case terested politicians while repeating the twin many issues with regard to NCAA athletes may yet be decided in favor of the NCAA mantras of "amateurism" and "student-ath- unresolved. There are other actions pend- (and, as a result, it may not have to bargain letes." The other, recently discovered, path ing in which current and former players with an organized labor force), the is to adopt policies that reflect a willingness seek actual payment for their work, in other O’Bannon case seemingly had an impact on to consider the contributions that its mem- words direct “pay for play.” Additionally, be- the organization even before it was decided. ber schools' athletes make to those institu- cause O’Bannon applies solely to Division I A recent decision by the NCAA to allow for tions and their bottom lines. Which path it basketball and FBS football players, the the payment of stipends in addition to schol- chooses will not likely determine whether rights of other college athletes to their NIL arships may be its first move to attempt to college athletics will continue to change, are still undetermined. Similarly, the issue head off a full-scale revolt in its workforce. but may decide whether the NCAA will con- of how Title IX, which requires federally- Just one day before the O’Bannon deci- tinue to play a role in that change. funded universities to provide equal partic- sion was handed down, the NCAA Board of ipatory opportunities to female athletes, Directors approved a new model that gives applies to NIL payments is unresolved. the nation’s five biggest conferences (the If the O’Bannon decision stands (the ACC, Big Ten, Big 12, Pac-12, and SEC) the NCAA has indicated that it will appeal and ability to unilaterally change some basic may decide to take the fight in a different di- rules governing college sports. The sixty-five rection by seeking an anti-trust exemption), universities that encompass the “Power 5” schools will have to offer the best high school conferences have the financial resources to recruits the maximum value for their NIL provide more benefits to student-athletes when recruiting. Emmert previously said that than the organization’s smaller members. an adverse ruling could lead to the “end of In the past, the smaller conferences op- college sports as we know it.”4 That is un- posed these benefits because their members doubtedly true, but whether that “end” is un- are unable to provide them and, therefore, Kevin Nelson is a partner and Alex Greenberg desirable is a different question altogether. to compete for the recruits that may be of- an associate in Huddleston Bolen LLP’s On the labor relations front, in March fered them. Charleston, West Virginia, office. They represent national and regional retail companies, man- 1 http://wordnetweb.princeton.edu/perl/webwn?s=amateurism ufacturers, financial institutions, and others in 2 DEADSPIN.COM, Is Your State’s Highest-Paid Employee A Coach? (Probably), http://deadspin.com/infographic- is-your-states-highest-paid-employee-a-co-489635228 (May 29, 2013). employment matters. They also have active First 3 https://espn.go.com/pdf/2014/0808/espn_wilkindecision.pdf Amendment practices representing parties in 4 http://www.nytimes.com/2014/06/09/sports/face-of-the-ncaa-battered-early-and-often.html defamation and privacy cases with regard to 5 While unaddressed in this article, the NCAA also faces the issue of whether it must provide future medical care to athletes. If ultimately college athletes are found to be employees, a modified workers’ compensation system may traditional and web-based media. address those concerns. RM7996_MAGAZINE_Layout 1 8/26/14 4:19 PM Page 14

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REVISING EMPLOYMENT AGREEMENTS AND COMPUTER POLICIES TO PROTECT CONFIDENTIAL/PROPRIETARY INFORMATION UNDER THE COMPUTER FRAUD AND ABUSE ACT

Peter Gleekel Larson • King, LLP

Your client learns that a disgruntled em- But all is not lost. When state law fails panies of all sizes to both conduct and ployee has accessed her company’s computer to offer protection, Federal courts may offer record business becomes universal, the system and pilfered proprietary business in- remedy under the Computer Fraud and CFAA has become a potentially effective formation – valuable assets such as customer Abuse Act (CFAA) (18 U.S.C. § 1030). A tool to protect the confidential and/or pro- lists, pricing structures and distributor or sup- Federal Statute Act, the CFAA was enacted prietary information of a business by clearly plier data. She contacts you, explains what in 1984 as a criminal statute to protect clas- restricting employee access to computer has occurred, instructs you to prepare a law- sified information in government computer content in writing before proprietary infor- suit and get into court ASAP to enjoin use of systems. A decade later, that protection – mation is breached. Afterwards, in absence the misappropriated information based providing both compensatory damages and of written restrictions, court decisions show upon state trade secret law. Your response injunctive relief – was extended to private that exploiting the CFAA is potentially effec- may not make her happy – that despite what civil matters (18 U.S.C. § 1030(g)) in which tive but more complex. her company has done to designate its infor- computers are used for interstate or inter- The prima facie elements of a CFAA mation as confidential, she is not protected national commerce or communication. claim under § 1030(a)(2) are: (1) inten- under state law. The reason: courts can be While state courts considering trade secret tional accessing of a computer; (2) access surprisingly restrictive in how they define issues focus on content, Federal courts con- “without authorization” or that “exceeds au- trade secrets, often rejecting an organiza- sidering CFAA fact patterns focus on access thorized access”; (3) data taken from a pro- tion’s view as to what is, in fact, a secret. to content. As the use of computers by com- tected computer; and (4) data taken for RM7996_MAGAZINE_Layout 1 8/26/14 4:19 PM Page 15

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commercial advantage or private financial ity for employees who abuse otherwise legit- writing, such as by a service contract, com- gain where the value of the information ob- imate access to computerized company files. puter access policy, website notice, confi- tained exceeds $5,000. Section 1030(g), cre- By this reasoning, an employee who copies dentiality agreement, employment ates a private right of action, provides a civil files and sends them to a competitor, for ex- agreement or similar contract. Additionally, remedy to any person who suffers “damage ample, has not exceeded authorized access password protection is an implicit limit on or loss,” and provides for compensatory and so, regardless of motivation or misuse, access for otherwise authorized users who damages, injunctive and other equitable re- is not legally liable. These cases hold that have not been given the password. lief. Section 1030(e)(8)(A) defines damage authorized access to a computer system The importance of creating written as “any impairment to the integrity or avail- does not “exceed authorized access” unless computer access policies with clearly articu- ability of data, a program, a system or infor- the authorization is actually revoked. E.g., lated restrictions cannot be overstated. mation” that causes a loss of at least $5,000 LVRC Holdings LLC v. Brekka, 581 F.3d 1127, Consider the thinking of the Ninth Circuit in aggregate value during any one-year pe- 1133-34 ( 9th Cir. 2009); Shamrock Foods Co. Court of Appeals, which was asked to exam- riod. The statute of limitations is two years v. Gast, 535 F. Supp.2d 962, D. Ariz. 2008; ine the issue of “exceeding authorized ac- from the discovery of the damage. B&B Microscopes v. Armogida, 532 F. Supp.2d cess” under CFAA in United States v. Nosal, In considering strategies around the 744, W.D. Pa. 2007. 642 F.3d 781 (9th Cir. 2011). After dis- CFAA, it is vital to remember that its focus In a potentially troubling trend for cor- cussing an earlier decision in Brekka that an is access to – not necessarily use of – the porations, recent case law reflects this re- employee had not violated CFAA simply by breached information. While Federal courts strictive thinking, increasingly rejecting the misusing accessed information since the ac- are united in their understanding that expansive interpretation of “without author- cess had not been explicitly revoked nor was spammers, hackers, competitors and other ization.” The prevailing view holds that if the authority to access clearly limited, it de- outside infiltrators have no authority to ac- the defendant had some authorization to termined that the Nosal employees had vio- cess a company’s data, their view of an em- access the computer at the time the com- lated CFAA. The difference: because Nosal ployee’s rights differs by Circuit. At the puter was accessed, then, regardless of in- had clearly defined restrictions on access/ heart of the legal interpretation is the tent or misuse, the access was authorized use, its employees had knowingly exceeded phrase “exceeds authorized access,” which, and not protected under the CFAA. their authorized access. according to the CFAA, means “to access a Nor do most courts seem willing to The take away for savvy employers is to computer with authorization and to use allow for interpretation or inference in de- leave nothing unstated, assume nothing is such access to obtain or alter information in termining what constitutes unauthorized ac- self-evident; just because an act of misappro- the computer that the accessor is not enti- cess. In United States v. Phillips (477 F.3d 215, priation defies common sense doesn’t mean tled to so obtain or alter.” 18 U.S.C. 219, 5th Cir. 2007), the court did allow room it defies the law. It’s critical to expressly pro- § 1030(e)(6). for reasonable expectations, asserting the hibit any employee, independent contrac- The Fifth, Seventh and Eleventh need to “analyze the scope of a user’s author- tor or other individual who has Circuit hold an expansive view of the phrase ization through access of protected com- authorization to access a computer for legit- “exceeds authorized access” that takes into puter on the basis of the expected norms of imate business reasons from accessing the account motivation and misuse in their de- intended use or the nature of the relation- computer for any improper purpose. cisions. Under this view, employees who oth- ship established between the computer Clearly written and imparted instructions erwise are authorized to access a company owner and the user.” However, the more that computer access is granted, such as computer can be liable for subsequent mis- common response is expressed in EF Cultural “strictly for business use” and “to be used use of the accessed information under gen- Travel BV v. Zefer Corp. (318 F.3d 58, 1st Cir. solely for the organization’s business pur- eral theories of agency law that recognize 2003), which rejected a reasonable expecta- poses,” or similar restrictive language pro- that an employee has no authorization to tions test for lack of authorization. Only vide an organization with the best access company files or information in a where authority is expressly limited by restric- evidentiary foundation to protect and en- manner adverse to the company. These tions memorialized in writing have most join the use of its proprietary/confidential cases hold that defendants lost their author- courts been willing to enforce the CFAA find- information. That way, even if the propri- ization to access their employer’s computers ing that authorized access has been ex- etary/confidential data is not officially a when they breached a duty of loyalty to their ceeded. E.g., Cont’l Group, Inc. v. KW Prop. trade secret, the CFAA will make sure it’s employer, even if the employer was unaware Mgmt., LLC, 622 F. Supp. 2d 1357, S.D. Fla. nobody else’s business. of the breach, by accessing information for 2009; Modis Inc. v. Bardelli, 531 F. Supp.2d a purpose contrary to the interests of the au- 314, D. Conn. 2008; Hewlett-Packard v. Byd: thorizing party. E.g: Int’l Airport Ctrs., LLC v. Sign, Inc., 2007 WL 275476 at *13, E.D. Tex. Citrin, 440 F.3d 418, 420-21 (7th Cir. 2006); In light of these restrictive rulings, the Peter Gleekel is a commer- Shurgard Storage Ctrs., Inc. v. Safeguard Self- soundest approach for an employer or or- cial litigator at Larson • Storage, Inc., 119 F. Supp.2d 1121, 1125 ganization to ensure protection under the King, LLP with more than (W.D. Wash. 2000); Citrin, 440 F.3d at 420; CFAA is to be able to prove limits to “autho- 30 years of jury and bench ViChip Corp. v. Lee, 438 F. Supp.2d 1087, rized access.” To that end, a company trial experience in federal 1100 (N.D. Cal. 2006); NCMIC Finance Corp. should be prepared to present evidence and state courts throughout v. Artino, 638 F. Supp.2d 1042, 1057 (S.D. showing (a) how an employee’s authority to the nation. He serves as Iowa 2009). obtain or alter information on the com- lead counsel and strategist A different view on issue of loyalty is at puter was limited, rather than absolute, and for international, national and local clients, the core of the more restrictive interpreta- (b) how the employee exceeded the limita- with particular expertise in complex corporate tion of the phrase “exceeds authorized actions in obtaining or altering the informa- ownership and governance disputes, and intel- cess” that has been adopted by the Fourth tion. The most prudent manner in which to lectual property litigation. and Ninth Circuits, prohibiting CFAA liabil- do so is to memorialize the restrictions in RM7996_MAGAZINE_Layout 1 8/26/14 4:24 PM Page 16

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The Science & Necessity of Risk Management

Ron Kurzman Magna Legal Services, LLC

A struggling economy, surge in distrust overall causes a huge worry for all types of of corporations and a social media frenzy companies. In today’s highly litigious envi- that makes it nearly impossible to control ronment, it’s no wonder that companies are The science of risk management, natu- what people are saying all add up to one primarily concerned with how general rally, leads to the image of the proverbial thing for businesses: they are being sued counsel manages the risk of litigation and “men in lab coats,” the people taking the more often, for more money. And it’s not handles increased exposure. With so much lead to research, analyze and make recom- only the legal fees and potential settlement at stake, an entire science has evolved mendations for the next course of action. “payouts” that are affecting bottom lines. around helping businesses weigh every fac- The origins of corporate general counsel The impact of the consumer aftermath on tor and predict the effect of a jury trial vs. demonstrate how its role has come full circle profits and the livelihood of the business settlement… that is, risk management. as it now fills this critical role of “scientist” for RM7996_MAGAZINE_Layout 1 8/26/14 4:24 PM Page 17

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businesses in the 21st century. In the 1920s the company’s products and/or services or settlement decision. Therefore, more and 1930s, general counsel were involved in that may result from the uncertainty of liti- questions need to be asked and added to making critical business decisions with the gation, including the potential loss of sales the analysis. What is the potential for “talk,” management of the company. However, with or intellectual property. positive or negative before, during and after the emergence of business schools from the Of course, each of these three risk cate- the trial? How long will the conversations 1940s to the mid 1970s, business decisions gories has its own myriad of tangential risks continue and impact business post trial or were taken away from lawyers and handed that also must be uncovered. Moreover, there settlement? Does this one case have the po- over to business school graduates. This left are other possibilities, such as the risk of ad- tential of being re-visited every time the general counsel to act primarily as a legal additional lawsuits spurred by the original. Jury company announces a new product, service visor during the 1970s to the late 1990s, research consultants are invaluable in assist- or structural change? Does the longevity of when there was an unparalleled growth of ing general counsel with identifying these those conversations increase or decrease regulatory agencies and corporate regula- risks. By performing research on representa- with a settlement? tions. However, starting in late 1990s and tive populations, trial consultants can help a A huge number of spokes feed into the continuing to present, general counsel has corporation uncover the true nature of the hub where the decision is made to go to trial returned to more of its historical roots – risk associated with a particular lawsuit. or to settle. Risk management requires giving being heavily involved in making critical busi- each the appropriate weight it deserves, and ness decisions as Legal Risk Managers. PUTTING RESEARCH TO WORK painting the most comprehensive and accu- So, exactly what do they do? General The research and data uncovered have rate picture possible. The analytical process counsel’s role as legal risk manager encom- a great deal of potential power, but knowing may vary by type of case and among general passes a wide array of responsibilities includ- is not enough to effectively manage the counsel; however, the one thing that is for ing identifying and analyzing risk, legal risks and avoid unnecessary costs to sure is that with the use of additional analyt- counseling senior management and the the corporation. The real power of this ical tools, companies can feel comfortable board, and controlling costs. knowledge is in its analysis. By performing that their general counsel have systematic strategy development and testing research, mechanisms to measure the WHOLE risk. WHAT IS RISK MANAGEMENT? or what is more commonly known as “focus The process of risk management con- group” research, the guessing game of risk MORE VALUE THAN “YES OR NO” sists of well-defined steps, which when taken analysis is eliminated. Research provides Risk management is complex, intense, in sequence, can be used to analyze expo- general counsel with a detailed report set- time-consuming and cost-incurring. But it’s sure and determine how to best handle ting forth the identified risks, as well as pro- also critical. Plus, it is an incredible asset in such exposure. When done with concentra- viding a breakdown of demographic and/or that it offers more critical value beyond the tion and skill, the benefits of risk manage- socioeconomic trends. The job of analyzing decision of whether or not to go to trial. In ment can be many, including: the risk is then turned over to the general the event a company decides to proceed • Identifying risks and avoiding surprises counsel, who equipped with this research, with litigation, it will be ahead of the game • Developing a strategic plan for better cost now has a reliable basis upon which to eval- for several reasons. First, the results from re- control uate the identified risks of litigation. search can be used to identify the issues that • Enhancing shareholder value by minimiz- It’s important that the focus of the are most important to the jury. Second, once ing losses and maximizing opportunities analysis be on the cumulative effect that the the case has been tested on a venue-specific • Informing the CEO and the board of the identified risk may have for the company. pool of surrogate jurors, the trial consultant exposure to risk With a broad perspective of the risk and the will work with outside counsel to develop • Resolving lawsuits in a systematic, well-in- company’s objectives in mind, general coun- recommendations and trial strategy. Next, formed and cost-effective method sel will be able to better determine whether research can inform the development of in- the company should defend litigation. formational and persuasive graphics for Like any science, risk management is presentation at trial. Finally, the research re- heavily dependent on research – discover- MORE SCIENCE NEEDED sults can be used to assist in jury selection ing and uncovering key information. Upon The data provided by research in and and witness preparation. If the decision is to entering into the research phase, there are of itself is not enough to make a decision not go to trial, the corporation can still share layers upon layers of risk connected with about going to trial. Even if initial research its newly found knowledge and strategies any given lawsuit. For example, legal risk, and analysis points toward a jury trial, and with other counsel who are facing similar public perception risk and business risk are demonstrates confidence in a company pre- cases. The company also has a solid ground- layers that cannot be accurately identified vailing at trial, there are many more consid- work and best practices for the future. without proper testing. erations that can be revealed by further Legal risk is the identified financial risk research and that are involved in risk man- Ron Kurzman, Esq., found- that may result from the uncertainty of liti- agement. What will a public jury trial due to ing Partner and Litigation gation, including: regulatory sanctions, the company’s image, even if the ruling is Consultant at Magna shareholder lawsuits, and damages awarded in its favor? What will the legal fees run to Legal Services, LLC, is one by a jury. Public perception risk is the finan- for a relatively quick trial? For a lengthy of the leading experts in be- cial risk to a company’s image due to the un- trial? What are the potential damages costs? havioral research and jury certainty of litigation, which includes: And then, there is a whole other set of analysis. He assists counsel customer mistrust in a corporation’s prod- considerations put in motion by the power in the development of win- ucts or services, customer dissatisfaction of social media. With social media Internet ning trial strategies for complex commercial with the company’s management, and/or traffic up 66% from just a year ago, jurors matters, and works with top law firms and cor- loss of stock value due to negative corporate and non-jurors alike have potential to be porations nationwide. image. Business risk is the financial risk to talking about a business’s pending trial, trial RM7996_MAGAZINE_Layout 1 8/26/14 4:24 PM Page 18

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RECALCULATING THE RISK OF INTELLECTUAL PROPERTY LITIGATION THE U.S. SUPREME COURT LOWERS THE THRESHOLD FOR AWARDING ATTORNEYS’ FEES IN PATENT LITIGATION

Richard M. Carter and Adam J. Eckstein Martin, Tate, Morrow & Marston, P.C.

On April 29, 2014, the U.S. Supreme amount at risk. The findings are reflected which hears all patent-related appeals, held Court issued two opinions that substantially in the chart below.1 that a prevailing party could recover its at- relaxed the standard for awarding attor- On average, a litigant incurs between torneys’ fees if it showed by clear and convinc- neys’ fees in patent infringement litigation. fifty and sixty percent of these fees through ing evidence that the losing party committed The opinions likely will relax the standard the end of discovery.2 The cost of litigation some “material inappropriate conduct” or for awarding attorneys’ fees in trademark can be a substantial fraction of, or in some brought the litigation “in subjective bad and copyright cases, too. Take note, because cases exceed, the potential monetary award. faith” and the litigation was “objectively the benchmarks for assessing the risk of in- Consequently, the standard governing the baseless.”3 This was a very difficult burden tellectual property litigation just moved. award of attorneys’ fees is critically impor- of proof. Thus, awards of attorneys’ fees tant to both plaintiffs and defendants. were the exception, not the rule. THE COST OF INTELLECTUAL Federal law authorizes the court in in- PROPERTY LITIGATION tellectual property cases to grant attorneys’ “EXCEPTIONAL” NOW MEANS Intellectual property litigation is a fees to the prevailing party if the court finds EXCEPTIONAL costly endeavor. The American Intellectual the case “exceptional.” Prior to April 29, In Octane Fitness v. Icon Health & Fitness, Property Law Association’s 2013 Report of 2014, the U.S. Courts of Appeals had devel- Inc., the U.S. Supreme Court called “[t]he the Economic Survey provided the median oped standards for determining when a framework established by the Federal cost of litigating a patent infringement, case was “exceptional” and warranted attor- Circuit…unduly rigid.” The Supreme trademark infringement, and copyright in- neys’ fees. For patent litigation, the U.S. Court observed that the statute on attor- fringement suit through trial based on the Court of Appeals for the Federal Circuit, neys’ fees states a court “may award reason-

AMOUNT AT RISK PATENT INFRINGEMENT TRADEMARK COPYRIGHT Less than $1 mil. $700,000 $300,000 $300,000 $1 mil. to $10 mil. $2 mil. $550,000 $563,000 $10 mil. to $25 mil. $3.325 mil. $1 mil. $1 mil. More than $25 mil. $5.5 mil. $1.5 mil. $1.625 mil. RM7996_MAGAZINE_Layout 1 8/26/14 4:25 PM Page 19

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able fees to the prevailing party” in “excep- RECALCULATING THE RISK Frivolousness, for example, may be in the tional cases,” and held, “This text is The Supreme Court’s ruling on attor- eye of the beholder (the judge), as can patently clear. It imposes one and only one neys’ fees should cause intellectual property whether particular circumstances exist in constraint on district courts’ discretion to litigants to consider the following: which a judge feels the need to deter others award attorneys’ fees in patent litigation: Know your case. Review claims and de- from similar actions. Experienced local The power is reserved for ‘exceptional’ fenses with a dispassionate and critical eye. counsel should act in concert with lead cases.”4 An exceptional case, the Court Being able to survive a motion to dismiss or counsel and assist the litigant in accurately stated, “is simply one that stands out from a sanctions motion does not preclude the evaluating the risks throughout the case. others with respect to the substantive court from awarding attorneys’ fees to the Keep the case unexceptional. The strength of a party’s litigating position (con- other party. A weak claim or defense that re- Rules of Civil Procedure, Rules of Evidence, sidering both the governing law and the quires the opposing party to expend sub- and Local Rules of Practice establish a script facts of the case) or the unreasonable man- stantial attorneys’ fees more likely will result a court expects all cases to follow; follow ner in which the case was litigated.” The in an award of attorneys’ fees against the them. Do not play fast and loose with discov- Court observed that trial courts may con- proponent of the claim or defense. Courts ery. File motions only when a good basis ex- sider “frivolousness, motivation, objective will have more authority to shift costs if ists for the court to grant the motion, and unreasonableness (both in the factual and there is evidence of willful infringement or oppose motions only when no good basis legal components of the case) and the need of fraud or inequitable conduct in obtain- exists for the relief requested. Be courteous in particular circumstances to advance con- ing the patent, trademark, or copyright. Be to the opposing party in all communica- siderations of compensation and deter- the first to know if the court may have justi- tions. Intellectual property disputes often rence” when determining whether to award fication to award the opposing party fees. are fought against a business competitor for attorneys’ fees.5 Venue matters. The law is uniform, but whom no love is lost, and forcing a competi- The holding of Octane Fitness tends to application of the law to your case will de- tor to expend attorneys’ fees now may be level the field in litigation by making it pend on whether the judge finds the case useful business strategy. But trial courts more likely that the prevailing party may re- “exceptional.” In the next few years, before likely will award attorneys’ fees to a prevail- cover its fees and expenses. This potential the U.S. Courts of Appeals have an oppor- ing party when pursuit of the case appears cost shifting will force both plaintiffs and de- tunity to construe the Supreme Court’s def- unrelated to the goal of vindicating intellec- fendants early in the case to assess the inition of “exceptional,” judges will rely on tual property rights. Know that, cumula- strength of their case more carefully. In a their experience with past or concurrent tively, petty trial disputes may have patent case, a plaintiff seeking $1 million in cases to determine if attorneys’ fees should substantial monetary ramifications. actual damages will have the potential up- be awarded. Employee emails can become exhibits. side of recovering that plus its $700,000 in For patent infringement suits, be aware A few emails indicating litigation is for an attorneys’ fees if it wins, but the downside that since 2011 fourteen federal district improper purpose or has an improper ef- risk of having to pay the defendant’s courts have been participating in a ten-year fect could serve as a basis for the court to $700,000 in attorneys’ fees if it loses. pilot program: the Eastern and Southern award attorneys’ fees. In Octane Fitness, for Likewise, the prevailing defendant under Districts of New York, the Western District of example, an executive responded to the Octane Fitness more likely could recover its Pennsylvania, the District of New Jersey, the comment, “I heard we are suing Octane!” attorneys’ fees but, in the event of a loss, District of Maryland, the Northern District by emailing “Yes – old patent we had for a more likely would face judgment of $1 mil- of Illinois, the Southern District of Florida, long time that was sitting on the shelf. They lion plus plaintiffs’ $700,000 in attorneys’ the District of Nevada, the Eastern and are just looking for royalties.”8 Remind em- fees. Octane Fitness, therefore, dramatically Northern Districts of Texas, the Western ployees to communicate about the litigation changes the risk assessment for litigation. District of Tennessee, and the Central, as though the court is reading their corre- Moreover, a district court’s award of at- Northern, and Southern Districts of spondence; it may be. torneys’ fees is unlikely to be reversed on ap- California. In these districts, patent cases are peal. In Highmark Inc. v. Allcare Health assigned to judges who requested to hear Management System, Inc., also issued on April patent cases and who, in all likelihood, have Richard M. Carter is a di- 29, 2014, the Supreme Court held that, be- a depth of experience in the area. These dis- rector of Martin, Tate, cause the statutes authorize a trial court to use tricts also have adopted local rules for patent Morrow & Marston, P.C., its discretion when awarding attorneys’ fees cases. These jurisdictions are venues where and head of its Litigation in exceptional cases, an appeals court should a litigant can expect an experienced hand at Department. Mr. Carter reverse the trial court’s decision only when the till of the patent case.7 has more than 30 years of the trial court abused its discretion. An ap- Local counsel matters. If the lead attor- experience in litigation and peals court will reverse an award of attorneys’ ney is out-of-state or unfamiliar with the more than 15 years of expe- fees only if the trial court based its ruling “on judge who will be presiding over the lawsuit, rience litigating patent and other intellectual an erroneous view of the law or on a clearly obtain local counsel who knows the judge property cases. erroneous assessment of the evidence.”6 and the court’s tendencies. The factors the court considers are subjective. Adam J. Eckstein is a senior associate with Martin, Tate, Morrow & Marston, 1 American Intellectual Property Law Association, Report of the Economic Survey, pp.34-36 (July 2013). 2 Id. P.C. who primarily practices 3 Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378, 1381 (2005). in the areas of intellectual 4 Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. __, 134 S.Ct. 1749, 1755-56 (2014). 5 Id., 134 S.Ct. at 1756 & n.6. property and commercial lit- 6 Highmark Inc. v. Allcare Health Management System, Inc., 572 U.S. __, 134 S.Ct. 1744, 1748-49 & n.2 (2014). igation. 7 The Third Branch News, District Courts Selected for Patent Pilot Program (June 7, 2011), available at http://www.uscourts. gov/news/newsview/11-06-07/District_Courts_Selected_for_Patent_Pilot_Program.aspx, last visited July 3, 2014. 8 Octane Fitness, 134 S.Ct. at 1755 n.5. RM7996_MAGAZINE_Layout 1 8/26/14 4:28 PM Page 20

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DOES THE PATIENT PROTECTION AND AFFORDABLE CARE ACT END LIFE CARE PLANS AS WE KNOW THEM?

Jerry Green and Amy Neathery Pierce Couch Hendrickson Baysinger & Green, L.L.P.

In order to ensure those with cata- The ACA contains several key provi- provision means that insurers cannot turn strophic or life-long injuries are fairly com- sions which are now effective and work in away any individual because of the injuries pensated, personal injury attorneys often tandem to fundamentally alter how medical he has suffered, even when they know with secure a life care plan that projects antici- services are accessed and compensated. reasonable certainty that the individual’s pated future health care costs allegedly ne- These provisions should operate to limit the claim costs will far exceed his/her premi- cessitated by the tort. These life care plans injured person’s recoverable damages for ums paid. Prior to the ACA, an injured have been a necessary, appropriate, and future medical care. First, the act contains claimant could argue that the life care plans costly part of injury cases for much of the an “individual mandate,” (26 U.S.C.A. § represented actual costs because the injury recent history of tort litigation. Lifetime 5000A; “Requirement to maintain mini- rendered him/her uninsurable. Now, even costs of medications, doctor’s appoint- mum essential coverage”) imposing a in cases involving lost limbs, severe burns, ments, and therapies quickly drive life care “penalty” on those who fail to conform. In or traumatic brain injury, an individual will plan totals into the millions. An argument essence, as law abiding United States citi- still be able to obtain and maintain health can be made that as a consequence of the zens, the injured party must now obtain insurance benefits. Patient Protection and Affordable Care Act health insurance. (“ACA”), these projections no longer accu- Second, the ACA contains a provision rately reflect the measure of damages, titled “Prohibition of preexisting condition which allows respondents (whether insurers exclusions or other discrimination based on or defendants) to attack supporting expert health status.” 42 U.S.C.A. § 300gg-3. This reports as unreliable. Damages in tort cases are designed to provide compensation for the injury caused – no more, no less. As such, Courts recognize that an injured person has a duty to mitigate his/her damages, and Courts generally will not allow an injured claimant to recover medical expense damages that exceed amounts actually incurred or that reasonably will be incurred. RM7996_MAGAZINE_Layout 1 8/26/14 4:28 PM Page 21

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Third, the ACA sets forth yearly out-of- ical expense amounts (not what was written example, most, if not all components, of a pocket maximum limits. Under 42 U.S.C.A. off by providers under agreements with $3 million, 20-year life care plan could be § 18022(c)(1), the sum of an individual’s health insurance companies, Medicaid, or fully satisfied with 20 years of premium pay- deductible and out-of-pocket expenses shall workers’ compensation schedules), reduced ments (average rate of $348 per month for not exceed $5,000 (exclusive of the cost of future damages under the ACA arguably are a total of $83,520) and 20 years of yearly out premiums, which average $348 per month). not a collateral source. In analyzing the rea- of pocket maximum (currently $5,000, for This sum includes those medical services sonableness of future medical costs, the re- a total of $100,000), a total payment of caused by the incident and those that are spondent has the right to expect that the $183,520 and a savings of over $2.8 million2. not. For 2015 and later, this cap will be ad- injured person will take the steps legally Even on smaller cases such as a spinal fusion justed as determined by the Secretary of the available (and indeed required) to mitigate or bilateral knee replacement, an award of Department of Health and Human Services. his/her expenses1. Moreover, if part of the $50,000 for surgery and $10,000 of physical 42 U.S.C.A. § 18022(c)(1)(B). However, the damages awarded or paid includes the an- therapy is not justified. The claimant would adjusted maximum will not ever approach nual policy premiums, the respondent be compensated with 1-2 years of ACA cov- the actual cost of services such as surgery or funds the policy, and it is not a collateral erage ($9,176-$18,352). If presented to the intense physical and occupational therapy. source. jury, applying the benefits of compliance Expert reports supporting life care The second argument against the ACA with the ACA supports arguments that (1) plans are not yet taking into account the sav- is that following a future election, the ACA the plaintiff is not prevented from receiving ings available under the ACA. This omission will be repealed. This article is not a forum all of the medical treatment his/her physi- is substantial in terms of the actual value of for political debate, but given the millions cians claim will be needed, and (2) the any future medical expense needs and of Americans who are benefiting from the plaintiff is actually obtaining an extra bene- makes the reports unreliable under the ACA, a repeal may not be as likely as some fit because not only are injury-related future standards set forth by Fed. R. Evid. §§ 401, think. Regardless, the ACA is the law now, medical expenses covered, but the awarded 402 and Daubert v. Merrell Dow and the ACA should be considered and fol- premiums will provide coverage for other Pharmaceuticals, Inc., 509 U.S. 579 (1993) lowed as long as it remains operational law. health ailments (e.g., flu, diabetes, or al- and its progeny. In their current format, The 2014 provisions of ACA are in lergy shots) not related to the incident. most life care plans presume that injured their infancy and too new for any binding When examining life care plans (or any parties will violate the “individual mandate” precedent regarding application in these large future damage claim), the ACA imposed by law. Further, by not taking ad- circumstances. However, in trying to estab- should be considered and strongly argued. vantage of the ACA and the yearly out-of- lish precedent and convince Courts to ac- There is no harm to the claimant – he/she pocket limits it offers, the plans assume a cept the applicability of the ACA in receives compensation for all claimed med- failure of the duty to mitigate damages. The computing future medical costs, there are ical expenses – but the savings for the re- duty to mitigate damages does not require three primary arguments to urge. First, tak- spondent are significant. an injured person to do what is unreason- ing advantage of the ACA falls within a able or impracticable. However, buying claimant’s duty to mitigate his/her dam- health insurance to cover preexisting con- ages. Second, the ACA is not a collateral ditions is no longer unreasonable or im- source, particularly if the respondent is practicable. Indeed, it is now required by funding premiums as an element of dam- Jerry Green is a senior part- federal law and available to everyone. ages. Third, experts who do not consider ner with Pierce Couch Claimants have asserted two primary the ACA in their life care plans do not meet Hendrickson Baysinger & arguments against consideration of the Daubert standards for reliability because in Green, L.L.P. After attend- ACA in computing future damages. The order to conform to the tort system’s man- ing the U.S. Air Force first argument is that the insurance ob- date of providing compensatory rather than Academy and obtaining a tained under the ACA is a collateral source. windfall damages, assumptions made about Bachelor’s from the The policy behind the collateral source rule a plaintiff’s future ability to receive care University of Oklahoma, is that the respondent should not benefit must also change with this fundamental Jerry received his J.D. from the University of from reduced exposure because the injured shift in federal law; the plans that do not do Oklahoma in 1976. His litigation practice person had his own health insurance. so are not reliable. largely focuses on insurance, environmental Although states are increasingly abolishing Application of the ACA can provide sig- and energy, and professional liability litigation. the collateral source rule and limiting the nificant settlement savings or reduce the fu- introduction of evidence of incurred med- ture damage claims presented to juries. For Amy Neathery is a senior associate with Pierce Couch 1 The purchase of post-loss insurance to mitigate future losses is recognized by the Courts as part of the duty to mit- Hendrickson Baysinger & igate. See, e.g., In Pattee v. Georgia Ports Authority (S.D.Ga. 2007) 512 F.Supp.2d 1372, 1381-2; Maere v. Churchill 452 Green, L.L.P. She gradu- N.E.2d 694, 699?700 (Ill.Ct.App. 1983) (plaintiffs refusal to purchase title insurance policy barred measure of damages that would have been recoverable); Brzoska v. Olson, 668 A.2d 1355, 1367 (Del. 1995) (evidence that free HIV ated summa cum laude testing was available presented a jury question as to whether plaintiff improperly failed to mitigate damages by in- from the University of Texas curring the expense of private HIV testing); Sanford Bros. Boats, Inc. v. Vidrine 412 F.2d 958, 973?974 (5th Cir. 1969) (seaman’s failure to accept free medical services available at a nearby Marine Hospital barred him from recovering at Dallas, and in 2004, ob- the cost of private medical care); Fariss v. Lynchburg Foundry, 769 F.2d 958, 965-66 (4th Cir. 1985) (“Nor is it sufficient tained an M.P.A. and J.D. to respond that an employer who discriminates in violation of the ADEA deserves to bear such a sizable and unan- ticipated penalty, for in most instances, the employee can easily avoid the risk of being uninsured by purchasing with distinction from the University of an individual policy of comparable value”). Oklahoma. Amy’s practice focuses on insurance bad faith litigation and coverage opinions. 2 Obviously, there are going to premium and out-of-pocket limit increases, which will be hard to estimate. But, if damages are reduced to present value, then an economist should be able to estimate the amount needed to cover such increases. RM7996_MAGAZINE_Layout 1 8/26/14 4:31 PM Page 22

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IT’S NOT OVER NEW MORTGAGE FORMS REQUIRED IN 2015

Christopher K. Loftus Simmons Perrine Moyer Bergman PLC

January 2014 marked a new day for (2) the Closing Disclosure. These two lines of credit (“HELOCs”), reverse mort- mortgage lenders as most of the Consumer forms, part of the CFPB’s “Know Before You gages or mortgages that are not secured by Financial Protection Bureau’s (“CFPB”) Owe” campaign, are easy-to-read and easy- property attached to land. Further, lenders new mortgage rules under the Dodd-Frank to-understand forms that replace the four should take note that the new disclosures Wall Street Reform and Consumer existing disclosures (i.e., Good Faith are required for mortgage applications re- Protection Act (“Dodd-Frank”) were imple- Estimate (“GFE”), HUD-1 and the two ceived on or after August 1, 2015. There mented. The CFPB introduced new regula- Truth-in-Lending forms) currently used by may be an overlap period where lenders will tions changing the way financial institutions lenders. The CFPB found that the current be using both the old disclosures (i.e., for underwrite, disclose and service their con- forms were difficult for consumers to under- applications submitted before August 1, sumer mortgages. While financial institu- stand and contained redundant informa- 2015, but for which the closing occurs after tions are wiping their brows in exhaustion tion. Based upon its extensive research, the August 1, 2015) and the new disclosures following months of implementing new CFPB believes these new forms will make (i.e., for applications submitted on or after policies and procedures to keep up with the terms of the mortgage easier for the August 1, 2015) during the application and these regulations, their rest will be brief as consumer to understand, and less burden- closing process. the CFPB has more to come in 2015. some for lenders and settlement agents to Effective for most closed-end consumer provide and explain to the consumer. LOAN ESTIMATE mortgage applications received after August While most closed-end mortgages se- The first form that is part of the new 1, 2015, lenders will be required to use two cured by a dwelling are included in this new “Know Before You Owe” campaign is the disclosure forms: (1) the Loan Estimate and rule, the rule does exempt home equity Loan Estimate form. The Loan Estimate is a RM7996_MAGAZINE_Layout 1 8/26/14 4:31 PM Page 23

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three-page document that consolidates and which the consumer cannot shop; and serv- lenders may rely upon the settlement agent replaces the GFE and the initial Truth-in- ices for which the consumer can shop. For to deliver the disclosure to the consumer, Lending form (“Initial TIL”) for covered each category, the lender will disclose the the lender is ultimately responsible for any transactions. The Loan Estimate must be de- individual fees and charges for various serv- errors or defects within the document. livered or mailed to the consumer within ices (e.g., appraisals, credit reports, closing The first page of the Closing Disclosure three business days on receipt of a loan ap- agent fee, etc.). The total from all three cat- mirrors the first page of the Loan Estimate plication. If there is a change to the Loan egories will be added up and listed for the allowing the consumer to do a side-by-side Estimate, the lender must deliver a revised consumer as the “Total Loan Costs.” A comparison of the two documents. Within estimate to the consumer within three busi- fourth table, entitled “Other Costs,” details the Closing Disclosure, the creditor must dis- ness days of the change and no later than other associated costs to be paid by the con- close the actual terms and costs of the trans- seven business days prior to consummation.1 sumer at consummation, including transfer action (e.g., taxes and fees), disclosures that The CFPB consolidated the GFE and taxes and government fees, pre-paids (e.g., currently are included in the HUD-1. If the Initial TIL into one form and placed what insurance premiums and property taxes) terms change after the Closing Disclosure is it deems to be the most pertinent loan in- and the initial escrow payment. delivered to the consumer, a new disclosure formation at the beginning of the form. The third page provides the consumer must be provided. A new three-business-day The first page of the Loan Estimate pro- with helpful information to consider prior waiting period will be required for all vides the consumer with the essential infor- to closing on the loan. For example, the changes (1) to the loan’s APR, (2) to the mation in regard to the mortgage (e.g., loan lender must provide the consumer with the loan product or (3) that result in the addi- amount, interest rate, monthly principal estimated amount of principal paid off, as- tion of a prepayment penalty to the loan. For and interest, estimated closing costs, etc.), suming the consumer makes his/her mort- all other changes, creditors must ensure that which previously was disclosed in the first gage payment (i.e., principal, interest, the consumer receives a new disclosure at or pages of the GFE and Initial TIL. Similar to mortgage insurance and loan costs) for five before consummation. Furthermore, in in- the GFE, the first page also highlights less consecutive years. The lender must also dis- stances where the amounts change for events desirable loan terms such as a prepayment close the annual percentage rate (“APR”) that occur post-consummation (e.g., record- penalty and/or balloon payment, and (i.e., the costs over the loan term, expressed ing fees), a creditor will be required to pro- whether the loan amount, interest rate, or as a rate); the total interest percentage vide the consumer with a revised disclosure monthly principal and interest may change (“TIP”) (i.e., the total amount of interest reflecting the changed amount following following consummation. paid over the loan term, expressed as a per- consummation. The first page contains a section de- centage); and whether the lender will be Additionally, the new regulations im- signed to assist the consumer in under- servicing the loan or transferring its service pose restrictions upon creditors with re- standing the total amount of their projected rights to a third party. Lastly, the lender spect to certain fees they charge in relation loan payments. Here, the lender will have and/or mortgage broker must provide the to the loan. For example, creditors may not to disclose the principal and interest, mort- consumer with sufficient information to impose fees for the application, appraisal gage insurance, estimated escrow, estimated identify and contact the agent (i.e., NMLS and underwriting until the borrower has in- monthly payment, taxes, insurance and as- ID, email and phone number). The con- dicated an intent to proceed with the loan. sessments. If the periodic payment may sumer is not required to sign the Loan However, the lender may impose a fee for change over the life of the loan due to cer- Estimate; however, the lender may add a sig- obtaining the consumer’s credit report. tain events (e.g., negative amortization, in- nature block for the consumer’s signature While much of the content of these dis- terest only payments or a balloon payment), to acknowledge receipt of the document. closures is already contained within the cur- the lender will have to disclose what the pe- rent closing documents, the forms riodic payment will be following the trigger- CLOSING DISCLOSURE themselves are quite different and will re- ing event. For adjustable rate mortgages The second form that is part of the new quire updates to a lender’s policies and pro- (“ARMs”), the lender must disclose what “Know Before You Owe” campaign is the cedures and training to staff prior to the the maximum payment could be, assuming Closing Disclosure form. The Closing August 1, 2015, deadline. The CFPB has the interest rate will rise as rapidly as possi- Disclosure is a five-page document that re- published guides, instruction manuals and ble under the terms of the loan. places the HUD-1 and final TIL disclosure examples, as well as the new disclosures The second page of the Loan Estimate (“Final TIL”) by combining the two docu- themselves, on its website to assist lenders details the projected costs associated with ments into one form. For any federally re- ahead of this transition. the loan, similar to the information previ- lated mortgage loan subject to Real Estate Additional Resources: www.consumerfinance. ously found on the second page of the GFE. Settlement Procedures Act (“RESPA”), gov/regulatory-implementation Here, the consumer receives a breakdown lenders must use the Closing Disclosure of the projected costs, including: a good- form issued by the CFPB. In contrast, for faith itemization of the loan costs; a table loans subject to RESPA that are not feder- Christopher K. Loftus is an calculating the amount of cash needed to ally related mortgage loans, lenders do not attorney at Simmons close; and a table for loans with adjustable have to use the Closing Disclosure, but the Perrine Moyer Bergman payments or interest payments containing closing document must include the same PLC in Cedar Rapids, relevant information as to how the monthly headings, format, and information. Iowa. He is engaged prima- payment or interest rate will change. Loan The Closing Disclosure must be pro- rily in finance and finan- costs are broken into three separate cate- vided to the consumer at least three busi- cial institutions, banking gories: origination charges; services for ness days before consummation. While litigation and bankruptcy law. Prior to joining the firm, Mr. Loftus served 1 Lenders should take note that the new regulations set the deadlines around the date of “consummation.” While as associate general counsel for the Minnesota generally the same date, consummation is not considered the date of closing or settlement; rather, “consummation” is defined by the CFPB as the date when the consumer becomes contractually obligated to the seller under the Credit Union Network. transaction. RM7996_MAGAZINE_Layout 1 8/26/14 4:31 PM Page 24

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IN DEFENSE OF USING A CLAIMANT’S ATTORNEY IN FINRA ARBITRATIONS

Patrick Lubenow SmithAmundsen LLC Robert Usinger Everest National Insurance Company

In addition to prosecuting claims for If no attorney will take the case, a plaintiff some jurisdictions already. At other times a clients and in the process, ideally making can note that there is a very strong chance non-lawyer will take a flier on representing them whole, plaintiffs attorneys should, in the case is frivolous. However, the Financial claimants in a FINRA arbitration. In the theory, serve a gatekeeper role for culling Industry Regulatory Authority (FINRA) FINRA context, this person is often an ac- out claims that are frivolous. When a rules permit a party to an arbitration to be countant or another financial representa- prospective client approaches a plaintiff’s represented by a non-lawyer. This allowance tive acting as a non-lawyer representative of attorney, a business decision has to be made seems to promote litigation that never claimants in front of FINRA. by that attorney. It would be irrational for a should have been filed. This article dis- Take, as an example, a recent case in- plaintiff’s attorney to take on cases that can- cusses one recent example of how this prac- volving a married couple who filed a claim not be won at trial or settled for less than tice can be harmful to both respondents as against a financial advisor they became un- the cost of prosecuting the lawsuit. well as claimants. happy with. In this matter, the claimants Experienced plaintiffs attorneys know Certain organizations staffed by non- had a 10-year relationship with the respon- which cases are potentially lucrative and lawyers, such as Stock Market Recovery dent financial advisor. They invested which are not. In the process they prevent Consultants Inc., advertise for and repre- $450,000 with two of the respondents and utterly baseless claims from being pursued. sent claimants in FINRA arbitrations in invested an additional $300,000 with them RM7996_MAGAZINE_Layout 1 8/26/14 4:31 PM Page 25

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over that 10-year period. In the 10-year pe- not being paid, but that she was only speak- The claimants never consulted with an riod, which spanned the recession of 2002 ing on their behalf because the claimants attorney but instead relied on the advice of and the great recession of 2008, financial were not capable of presenting their side Expert Witness. After the award, one of the advisors grew the claimants’ account by without assistance. claimants stated that if anyone ever thinks $168,000. In 2010, the claimants moved about proceeding to a FINRA arbitration their money to another financial advisor. without consulting an attorney that her name In 2011, one of the claimants attended The presentation of and contact information should be given to a lecture at a local community college in- that person so that she could communicate volving financial investing. After the lecture, what a poor decision that would be. the claimant spoke with the lecturer and ex- evidence at an The presentation of evidence at an ar- plained to her that he was confused by some bitration is uniquely a skill reserved for an investments that had been made by two of arbitration is uniquely attorney and in the minds of the authors the respondents who had been his financial constitutes the practice of law. In this mat- advisors over the last decade. This conversa- a skill reserved for ter, the fault does lay with FINRA alone. The tion eventually led to the lecturer recom- easiest way to end the practice of non-attor- mending that the claimants file a FINRA neys representing clients in FINRA would complaint against their two financial advi- an attorney clearly be for FINRA to amend its rules. sors, the advisors’ supervisor, another re- Representing claimants in FINRA arbitra- spondent who only met with the claimants and...constitutes tions requires a lawyer that has experience once to answer certain questions about in litigation. At a time when FINRA is em- their accounts and the broker dealer in barking on new reforms in other areas, this September 2011. The lecturer would later the practice of law. is an area that should also be addressed. An become the claimants’ expert witness, attorney familiar with litigation would have (herein referred to as “Expert Witness”). In this matter, concluded that the claimants did not sus- During the discovery phase of the tain damages even if they could have some- FINRA case, Expert Witness appeared tele- the fault does lay with how proven liability. The claimants would phonically with the claimants and spoke on have saved $75,000 plus the cost of the arbi- their behalf. At that point, the respondents tration hearing in addition to the anxiety of all believed that Expert Witness was repre- FINRA alone. going through the arbitration hearing. We senting the claimants in the proceedings. can only speculate on what motivated Several times during the discovery process, The easiest way to Expert Witness in this matter, but people which occurred over a one and a half year like Expert Witness, who have no legal train- period, the respondents approached Expert ing or litigation skills should not be allowed Witness and asked if she and the claimants end the practice of to lead financial investors into a forum that would agree to attend mediation with a could become very costly to them. Similarly, FINRA mediator. The respondents’ attor- non-attorneys the respondents who, with their insurance neys explained to Expert Witness that they carriers, collectively spent hundreds of would pay the mediation expenses and that representing clients thousands of dollars defending these mer- the claimants were not obligated to resolve itless claims, and who had to proceed to their claim at mediation. The respondents, post-arbitration court proceedings to have their counsel and insurance carrier knew in FINRA would clearly these claims expunged from their CRD, that the claimants were not properly analyz- would be spared and time and FINRA re- ing damages and felt strongly that if a me- be for FINRA sources would be saved. diator became involved, he/she could explain to the claimants the mistakes they were making in calculating damages and to amend its rules. Patrick Lubenow is the man- end the wasteful litigation costs of defend- aging partner for the ing this frivolous action. It never happened. Milwaukee office of Each time she was approached, Expert The arbitrators entered an award in SmithAmundsen LLC. He Witness stated that the claimants were not favor of the respondents and found “the ev- devotes a substantial interested in mediation or attempts to set- idence admitted at hearing demonstrated amount of his practice to de- tle. It was clear to the respondents that that respondents did not violate any statute, fending professionals includ- Expert Witness did not properly understand rule or duty owed to claimants, and ing financial advisors and the legal process as there was no downside claimants knew that their claims were com- financial institutions in FINRA arbitrations. for the claimants to proceed to a mediation pletely without merit in that they suffered where the respondents would pay the ex- no economic loss attributable to the behav- Robert Usinger is a Director penses. After the arbitration award in favor ior of respondents in managing their ac- for Everest National of the respondents, it was learned from the counts, but in fact realized substantial gains Insurance Company, where claimants that Expert Witness had even rec- in their accounts during the time period his primary focus is on ommended against mediation to them. covered by their claims.” The arbitrators claims involving financial At the arbitration hearing, Expert awarded $75,000 in attorney fees to be paid institutions, including Witness explained to the arbitrators that she by the claimants as well as all of the arbitra- FINRA arbitrations. was not representing the claimants and was tion costs. RM7996_MAGAZINE_Layout 1 8/26/14 4:32 PM Page 26

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GUIDELINES AND STANDARDS AND RULES, OH MY! Standard of Care Under the ACA

Martin S. Driggers, Jr. and Richard E. McLawhorn, Jr. Sweeny, Wingate & Barrow, P.A.

With the implementation of the ments, and will begin to use payment adjust- cost), based on how far the Provider is from Affordable Care Act (“ACA”) and the ments in 2015, to encourage eligible health the national mean.2 changes it has and will continue to make in care professionals (“Providers”) to report Beginning in 2015, the VBM will affect the medical field, hospitals, doctors, nurses, on specific “Quality Measures.” A Quality Medicare payments to Providers in groups and risk managers are worried about how Measure is a Centers for Medicare and of 100 or more Providers based on 2013 the ACA will affect the standard of care in Medicaid (“CMS”) created best practices performance on quality and cost measures. malpractice lawsuits. While the ACA does list. It covers everything from how to treat In 2016, the VBM will apply to physicians in not specifically address medical malpractice individual conditions to the prevention of groups of 10 or more Providers based on tort reform, the act will significantly affect transmission of hospital acquired diseases. 2014 performance. In 2017, the VBM will medical malpractice cases across the coun- For example, 2014 PQRS Quality apply to all Providers based on 2015 per- try by potentially creating a de facto federal Measure 65, titled “Appropriate Treatment formance.3 standard of care for many, if not all, mal- for Children with Upper Respiratory The ACA uses Quality Measures to de- practice claims. Infection (“URI”)” provides incentives and termine the quality of care score of the VBM will adjust payments for the treatment of formula. In registering for the VBM, THE ACA AND MEDICARE PAYMENT that condition based on the percentage of Providers must select at least one Quality PROVISIONS children three months to 18 years of age di- Measure area for evaluation. In addition, The ACA expands Medicare and agnosed with URI but not dispensed an an- CMS will also evaluate group Providers on Medicaid’s current uses of Quality Measures tibiotic prescription on or three days after three outcome Quality Measures under the by developing additional measures and link- the episode.1 This Quality Measure is de- administrative claims option. “These in- ing the use of those measures with medical signed to steer Providers to prescribe antibi- clude: 1) an all cause readmission measure; providers’ reimbursements. While the ACA otics within three days to children 2) an acute preventive quality indicator did not create the idea of creating Quality diagnosed with URIs. composite; and 3) a chronic preventive Measures, in linking Quality Measures with quality indicator composite.”4 physician reimbursement, it, in effect, cre- 2. VALUE BASED PAYMENT MODIFIER In addition to the Quality Measure ates a standard of care. The Value Based Payment Modifier composite score, the VBM creates a cost (“VBM”) creates differential payment to in- composite score based on: 1) a total per 1. QUALITY MEASURES dividual Providers or groups of Providers capita cost measure; and 2) total per capita Most physicians who treat Medicare under the Medicare Physician Fee Schedule cost measures for beneficiaries with four and Medicaid patients are familiar with the based on the quality of care and cost during chronic conditions (chronic obstructive Physician Quality Reporting System a performance period. Each Provider group pulmonary disease, heart failure, coronary (“PQRS”). The PQRS uses incentive pay- receives two composite scores (quality and artery disease, and diabetes). The payment RM7996_MAGAZINE_Layout 1 8/26/14 4:32 PM Page 27

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adjustments are determined by a combina- though similar legislation has been pro- There will be cases where defendant tion of the Quality Score and the Cost score. posed on the federal level. Georgia House providers complied with the Quality For example, a high-quality, low cost score Bill 499 states payment standards like the Measures and yet the patient had a bad out- would result in a 2% increase in Medicare VBM cannot establish a standard of care come. Providers who met the Quality reimbursements while a low quality, high without competent expert testimony estab- Measure can argue that their compliance cost score would result in a 1% reduction in lishing the appropriate standard of care. with the Quality Measure means they met Medicare reimbursements.5 The proposed federal law, H.R. 1473, con- the standard of care. Concerns about physi- tains similar language, but has not been cians making this argument led to Georgia’s 3. QUALITY MEASURES, VBM AND passed into law. standard of care law to include language in- CHANGING STANDARD OF CARE The Georgia statute and Federal pro- dicating compliance with the Quality The current standard of care in mal- posal are limited in their scope and are un- Measures does not, by itself, prove compli- practice cases is how a similarly qualified likely to significantly stem the changes in ance with the Standard of Care. Providers in practitioner would have performed under the Standard of Care. In any medical mal- states other than Georgia could argue that the same or similar circumstances. Most practice case, the standard of care can only compliance with a Quality Measure is evi- states require practitioners to adhere to a na- be established through expert testimony. dence of compliance with Standard of Care. tional standard. However, in 21 states the These laws only require that any party wish- Finally, when faced with a Plaintiff alleg- standard of care requires the practitioner to ing to use the Quality Measures or VBM to ing failure to comply with a Quality Measure have a reasonable caliber of skill and knowl- establish the standard of care do so through was a violation of the Standard of Care, edge possessed by practitioners in the locality expert testimony. providers should be sure to point out that where he or she practices. Therefore, de- Neither the Georgia law nor Federal each patient is treated as an individual and pending on where a doctor or other medical proposal will curb the underlying risk of that each patient’s treatment is tailored to provider practices, he or she may be held to Quality Measures becoming a de facto stan- that patient’s needs. Providers treat patients a national standard or a local standard. dard of care. As more Providers participate based on the provider’s training and experi- The ACA’s changes to the standard of in the VBM, they will not be able to argue ence. If a provider does not follow a Quality care will affect Providers in both national they are unfamiliar with the Quality Measure, he or she will need to ensure that and local standard states. As Providers in- Measures or that the Quality Measures are her deviation from the Quality Measure is crease compliance with the Quality not used in their locality. These laws only based on their training and experience and Measures to receive payment increases eliminate the possibility of Quality Measures the individual patient’s conditions. through the VBM, the Quality Measures will being able to be introduced as Standard of become the standard practice. Rather than Care without expert testimony. a direct assault on the Standard of Care through direct legislation, the ACA more WHAT ARE RISK MANAGERS, subtly alters the Standard of Care through PRACTITIONERS, AND DEFENSE the use of the Federal government’s spend- COUNSEL TO DO? Martin Driggers is the man- ing powers. Those concerned about the Quality aging shareholder of Additionally, as more Providers are Measures changing the standards of care in Sweeny, Wingate & pulled into the PQRS and VBM systems, it their field can be comforted in three argu- Barrow’s Pee Dee Region of- will become increasingly difficult for ments: 1) the Quality Measures are written fice in Hartsville, South Providers in locality standard states to argue with the understanding that they will not Carolina. His practice fo- their locality has a different standard of care apply in every case; 2) Quality Measures can cuses on civil litigation, than the national standard. Providers in lo- actually bolster a defense in a medical mal- with an emphasis on de- cality standard states will be following the practice suit; 3) physicians treat individuals. fending clients involved in professional mal- same Quality Measures that are followed First, as more Quality Measures are practice and business disputes. He is licensed to across the country. Concern over this fun- created, it is likely that a Provider will often practice law in both North and South Carolina damental alteration of the standard of care prescribe treatment that does not comply and is a member of the bar associations of both has led to several attempts to curb the PQRS with the Quality Measures. In fact, some states. Martin joined the firm in 1999, follow- and VBM’s impact. level of noncompliance seems to be pre- ing a two year judicial clerkship under the sumed. The Quality Measures only look at Honorable Henry M. Herlong, Jr., United ATTEMPTS TO CURB THE ACA’S percentages of compliance and do not re- States District Judge for the District of South ALTERATIONS OF THE STANDARD quire that the Quality Measure be met in Carolina. OF CARE every individual case. Georgia recently adopted a law based Secondly, the use of Quality Measures Richard McLawhorn joined on model legislation drafted by the as a standard of care can, in some instances, Sweeny, Wingate & American Medical Association (“AMA”), al- be used to bolster a physician’s defense. Barrow, P.A. in June, 2012. He is a 2005 graduate of North Greenville 1 Centers for Medicare and Medicaid, 2014 Physicians Quality Reporting System (PQRS) Measures List (January 23,, 2014). University and a 2011 2 American Osteopathic Association, Physician Value-Based Payment Modifier, How Will the VBM Affect Your Practice, graduate of the University http://www.osteopathic.org/inside-aoa/advocacy/regulatory-issues/Documents/value-based-modifier-policies- of Alabama School of Law. faq.pdf (last visited July 3, 2014). 3 Providers that refuse to participate could face penalties up to a 2.5% reduction in Medicare reimbursement. Id. His areas of practice include Medical 4 Heart Rhythm Society, Physician Value-Based Payment Modifier: Transforming Medicare From a Passive Payer to an Active Malpractice Defense, Health and Healthcare, Purchaser of Higher Quality, More Efficient Healthcare, http://www.hrsonline.org/content/download/11418/ 513930/file/VBM_Analysis_2013.pdf (last visited on July 3, 2014). and Professional Malpractice. 5 Id. RM7996_MAGAZINE_Layout 1 8/26/14 4:32 PM Page 28

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ACTUAL SERVICE THROUGH A VIRTUAL COMMUNITY TRENDS IN SERVICE OF PROCESS BY SOCIAL MEDIA

Jennifer Lewkowski Traub Lieberman Straus & Shrewsberry LLP

In today’s world, everyone seems to THE INTERNATIONAL APPROACH dence showed that the Twitter account be- have an online presence. E-mail has largely Courts in Australia and the United longed to the defendant, that the defendant replaced regular mail. Courts have em- Kingdom have led the way in permitting used it regularly and that it was possible to braced e-filing. Social media continues to service by social media, although they have confirm receipt through Twitter. Blaney v. increase in popularity, with Facebook alone limited its use. Service by social media is not Persons Unknown (unreported). Therefore, boasting over one billion users. As a result viewed as a viable option until either: (1) service by social media was the only method of this increasing reliance on social media traditional methods have failed or (2) the which could reasonably be expected to ap- to communicate and conduct business, it is defendant cannot be physically located. For prise the defendant of the injunction. often easier to locate someone online example, a court in the United Kingdom Because courts are concerned with the rather than in person or by mail. In addi- permitted service of an injunction by reliability of service by social media, the abil- tion, as newspaper readership declines, serv- Twitter, where an unknown person imper- ity to confirm receipt of a message sent via ice by publication is becoming outdated. sonated a blogger utilizing a Twitter ac- social media is another consideration. An Social media offers a cost effective and, in count which included the blogger’s Australian court held that service was prop- many instances, more reliable means to photograph and linked to the real blog. erly accomplished by messaging the defen- serve process than traditional methods. Because the plaintiff did not know the de- dant on Facebook where the plaintiff Accordingly, courts are increasingly permit- fendant’s identity and could not physically showed electronic confirmation that the ting the use of social media to serve process. locate him, the court permitted service via message was delivered, and the defendant Twitter. The court reasoned that the evi- removed his Facebook page not long after RM7996_MAGAZINE_Layout 1 8/26/14 4:32 PM Page 29

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its receipt. Accordingly, the court could rea- mail. See WhosHere, Inc. v. Orun, 1:13-CV- be physically located but has a verifiable so- sonably infer that service was effectuated. 00526 (E.D. Va. Feb. 20, 2014). The defen- cial media presence, the court is more likely Byrne & Howard, ([2010] FMCAfam 509). dant, who resided in Turkey, had responded to permit service by social media. Courts also seek to ensure that the so- to e-mail communications from the plaintiff Courts have also sought evidence that cial media account actually belongs to the in the past, but ceased doing so. He had pro- the Facebook page or social media account defendant. Therefore, a second Australian vided the plaintiff with his two e-mail ad- at issue actually belongs to the defendant. court permitted service by social media on dresses and referred the plaintiff to his social Due to the ease of creating a social media a couple who could not be physically lo- media profiles, which were regularly viewed profile and the fact that people with the cated, but were active social media users and maintained. Therefore, the court found same name have social media accounts, whose Facebook pages listed their dates of that service by e-mail and social media was courts want to ensure that the account be- birth, e-mail addresses and personal details reasonably calculated to provide defendant longs to the defendant. known to the plaintiff. This convinced the with notice of the pending litigation. Courts consider whether the defendant court that the accounts belonged to the de- However, not all United States courts actively utilizes the social media account. If fendants, and the court permitted service have been persuaded that social media pro- a Facebook account exists but the defendant via Facebook. MKM Capital Pty. v. Corbo, No. vides a reasonable alternative method of has not posted on it for several months, SC 608 of 2008 (Aust. Cap. Terr. Sup. Ct.). service. In Fortunato v. Chase Bank USA, 11 courts are more likely to deny an application However, courts have not permitted this CIV. 6608 (S.D.N.Y. June 7, 2012), Chase for service by social media. The frequency method of service if the plaintiff cannot Bank sought leave to serve a third-party of posts and when the account was last ac- show that the account belongs to the defen- complaint via social media on a defendant cessed are relevant to this analysis. dant. See Citigroup Pty Ltd. v. Weerakoon, who could not be physically located, but had When permitting service by social 2008 QDC 174 (April 16, 2008). a Facebook profile. The court denied the re- media, courts also consider privacy issues, quest on the basis that Chase Bank did not such as whether the social media page or SERVICE BY SOCIAL MEDIA IN articulate any evidence that the Facebook profile is public or private. Courts permit- UNITED STATES COURTS page was operated and maintained by the ting service by Facebook have evidenced a Courts in the United States have not third-party defendant. Although the court preference for service via private Facebook been as quick to embrace service by social denied this particular application, it left the message, rather than posting on the defen- media, although this is changing. In general, door open for similar applications where dant’s “wall,” where others can view the mes- United States courts have been more willing the plaintiff can demonstrate that the page sage. See MKM Capital Pty. v. Corbo, supra. to permit service by social media where the belongs to the defendant. The final factor is cost. Service by other defendant is located outside the country. At least one state court has permitted methods, such as print publication, is costly The Federal Rules of Civil Procedure service by social media. In an unpublished de- and increasingly unlikely to provide effec- distinguish between service of an individual cision, a Minnesota court permitted service tive notice, especially when the plaintiff is in the United States and abroad. As such, the by social media where the respondent could unsure where the defendant is located. In Rules permit service of process on an indi- not be located, noting that “service is critical, contrast, service by social media is targeted vidual defendant in the United States pur- and technology provides a cheaper and hope- specifically toward the defendant and is suant to either: (1) the law of the state where fully more effective way of finding [him].” See more cost effective. the district court is located or (2) where serv- Mpafe v. Mpafe, 27-FA-11 (May 10, 2011). ice is made. Fed. R. Civ. Pro. 4(e)(1). Thus, Similarly, House Bill 1989, introduced CONCLUSION if state law permits service of process by social in the Texas legislature in 2013, would per- Courts are increasingly permitting serv- media, service can be accomplished in this mit substituted service via social media if the ice by social media when traditional meth- manner in federal court. The Federal Rules court determines that: (1) the defendant ods have been exhausted or are impossible. do not include a specific provision permit- has a social media page on the website at Moreover, as social media becomes more ting service of process via social media. issue, (2) the account belongs to the defen- ubiquitous, service by social media is be- As to foreign defendants, service is per- dant, (3) the defendant regularly utilizes coming more likely to apprise a defendant mitted, inter alia, by any means permitted by the social media account and (4) the defen- of a pending action than traditional means, law in the foreign country where service is dant could reasonably be expected to re- such as print publication. Thus, when tradi- to be effectuated. Fed. R. Civ. Pro. 4(f)(1). ceive notice if served through the social tional methods are unsuccessful, practition- This means that service by social media is media account. If this bill passes, other ers should consider seeking leave for service permissible in a country which has recog- states will likely follow. by social media. nized it as a valid method of service. In addition, the Federal Rules include a provision FACTORS permitting service “by any other means not As the foregoing examples show, courts Jennifer Lewkowski holds a prohibited by international agreement,” if both in the United States and abroad exam- J.D. from Georgetown ordered by the court. Fed. R. Civ. Pro. ine several factors in determining whether University and is a litiga- 4(f)(3). Thus, the Federal Rules recognize to permit service of process via social media. tion attorney at Traub the difficulty in serving foreign defendants, The primary concern is whether or not serv- Lieberman Straus & and permit courts to direct an alternate ice by social media is reasonably expected to Shrewsberry LLP in means of service, such as social media. apprise the defendant of a pending lawsuit. Hawthorne, N.Y. She han- Federal courts have permitted service of Because courts still prefer traditional dles general liability, prem- process via social media in certain limited in- methods of service, the plaintiff must show ises liability and construction cases. Ms. stances. For example, a district court in that these avenues would be impossible or Lewkowski can be reached at Virginia recently permitted a plaintiff to serve unsuccessful before a court will permit serv- [email protected]. a summons via Facebook, LinkedIn and e- ice by social media. If the defendant cannot RM7996_MAGAZINE_Layout 1 8/26/14 4:37 PM Page 30

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HOW TO BE SECURE IN AN UNSECURE WORLD

Karen Painter Randall and Steven A. Kroll Connell Foley LLP

Whether you are a Fortune 500 com- TYPES OF EXPOSURE failing to protect data or provide timely notice pany or a law firm no organization today is In the wake of data breaches across the of a breach. Moreover, even non-government immune from the threat of a costly data se- country that have seen hackers obtain the entities, such as the Payment Card Industry curity breach. Between 2011 and 2012, se- personal information of individuals, busi- Security Standards Council, have established curity breaches were seen across various nesses and law firms alike have been making Best Practice standards. industries from retailers such as Amazon’s significant investments in network hardware Zappos to marketing firms such as Epsilon, and software to protect confidential data. DIRECTOR AND OFFICER LIABILITY to defense contractors such as Lockheed The financial exposure associated with a FOR DATA BREACHES Martin. Perhaps the most publicized breach data breach can be quite substantial as stud- Besides the corporation itself being at took place in 2013, when hackers stole data ies show that the average cost of a breach is risk for litigation, individual directors and from up to 40 million credit and debit cards well over five million dollars. The amount of officers can also be exposed to liability for of Target shoppers who visited its stores dur- damages can also be quite significant. By way breach of a fiduciary duty in failing to prop- ing the first three weeks of the holiday sea- of example, the U.S. Court of Appeals for erly oversee cyber security. With so much at son. It was reported as the second-largest the Sixth Circuit recently held in Retail stake in protecting personal identifiable in- such breach involving a U.S. retailer. These Ventures, Inc. v. National Union Fire Insurance formation, it is not enough for a director security thefts have led to the filing of nu- Company of Pittsburgh, PA, 691 F. 3d 821 (6th and officer of a company to simply delegate merous lawsuits, including class actions, Cir. 2012), that DSW, Inc., DSW Shoe responsibility for protecting such confiden- across the country. Warehouse, Inc., and Retail Ventures, Inc. tial information to their IT staff. The threat posed by criminal hackers were entitled to coverage under a commer- The Division of Corporation Finance who use networks of secretly hijacked com- cial crime policy for a $6.8 million loss re- of the SEC recently issued a ‘Disclosure puters has substantially increased over the sulting from a data breach. Moreover, in Guidance’, which recommends that mate- past several years, and hackers are now cre- Zurich American Insurance Co. v. Sony Corp. of rial information regarding cyber-security ating networks known as “botnets.” It has American, et al., Index No. 651982/11 (N.Y. risks and cyber incidents should be dis- taken an international effort to stop one bot- Sup. Ct.) while granting summary judgment closed in order to make other required dis- net in particular called “Gameover Zeus.” in favor of Zurich in a coverage dispute, closures, in light of the circumstances under Specifically, once a computer is infected by Sony alleged in its Court papers that a data which they are made, not misleading. Gameover Zeus, often after its user clicked breach stemming from the hacking of their Moreover, information is considered mate- on a malicious link or email attachment, it PlayStation online services had exposed per- rial if there is a substantial likelihood that a becomes a “bot” and started communicating sonal information of tens of millions of reasonable investor would consider it im- with other infected computers, creating a users, and Sony’s losses were reportedly esti- portant in making an investment decision network of similarly afflicted machines. mated to be as high as $2 billion. or if the information would significantly While communicating with each other, the Furthermore, the stopping of the botnet alter the total mix of information made bots also pass along stolen banking informa- Gameover Zeus did not occur until after in- available. While this is merely a recommen- tion to servers that relayed that data to the fecting between 500,000 and 1 million com- dation by the SEC, not a rule or regulation, hackers. The hackers commit their cyber puters worldwide and inflicting more than non-compliance is risky. Furthermore, al- burglary by exploiting the security hole $100 million in losses. As a result, the poten- though these recommendations are only di- bored by Gameover Zeus. tial for damages in the event of a data breach rected at public companies under the SEC’s In the electronic age of convenience, a can be astronomical, and, in some cases, jurisdictions, other businesses would be pru- hacker requires very little information to cause a company to go out of business. dent to heed the same advice. As a result, steal personal identification and health in- A cyber breach can also cause substantial directors and officers must be attuned to formation, obtain credit cards in another’s and long term damage in other ways such as new regulations to protect themselves name, or do a host of other damage. loss of productivity, loss of data and intellec- against the impact of cyber risks and costs Breaches are caused not only by hackers but tual property, business interruption, and, per- in the larger context of their company’s dis- rogue employees and loss/theft of equip- haps, most importantly, injury to reputation closure obligations to investors. ment. Because organizations have become and loss of client goodwill. Furthermore, now Shareholder lawsuits have already increasingly reliant on digital technology in more than ever, regulators such as the Federal begun to be filed across the country against their operations, the potential for damages Trade Commission and state Attorney companies like Target and Wyndham from a cyber-attack continues to rise. General offices are getting involved and im- Worldwide Corp. that have fallen prey to posing fines and penalties on businesses for data breaches. In addition to these lawsuits, RM7996_MAGAZINE_Layout 1 8/26/14 4:37 PM Page 31

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directors and officers face other concerns. should be policies in place regarding the should retain a specialized insurance broker For example, a proxy adviser, Institutional privacy and security of business data, which to make sure that any policy in place covers Shareholders Inc., recommended that includes the use of encryption, remote ac- the type of loss associated with a cyber Target stockholders vote against seven of cess, mobile devices, laptops, email ac- breach. As referenced earlier in the Zurich ten directors because they failed to manage counts, and social networking sites. In matter, the Court held that action taken by cyber risks. This is the first time that there addition, conduct an inventory of the soft- a third party hacker was not covered under has been an effort to unseat board members ware systems and data, and assign owner- Sony’s CGL policy. Conversely, in Hartford because of a cyber breach. In the Wyndham ship and categorization of risk; the higher Casualty Insurance Co. v. Corcino & Associates, case, director and officer litigation followed the sensitivity of the information, the et al., the U.S. District Court for the Central an enforcement action by the Federal Trade stronger the security protections and access District of California ruled that there was Commission sending a clear message that control must be. Furthermore, the IT de- coverage under a CGL policy for a data regulators are going to be more active in partment should conduct third-party vul- breach involving hospital records. Thus, in these claims. Today, some regulatory settle- nerability scans, penetration tests, and order to avoid a potential coverage dispute, ments require that the business agree to a malware scans to protect against potential a company should contact an insurance bro- Comprehensive Written Information data breaches. Most importantly train em- ker well-versed in cyber coverage to ensure Security Program, which mandates periodic ployees so that they are aware of the com- that they have the necessary coverages in audits over a period of years and includes pany’s security protocol in place, and place in the event of a cyber breach. fines and penalties along with the cost of im- protected against the potential for acciden- plementing the program. Thus, given the tally exposing a client’s personal, confiden- CONCLUSION increased prevalence and effectiveness of tial information with the click of a button. Overall, companies, including law cyber-attacks and breaches, and in light of Unfortunately, in the evolving techno- firms, are becoming increasingly dependent the Disclosure Guidance, it would be diffi- logical world even the best security can be upon technology to run their business. As a cult to justify why proper protective meas- penetrated by skilled hackers from around result, all organizations need to become fa- ures, including sufficient cyber insurance, the world. Thus, besides having policies and miliar with the risks associated with a data were not implemented, and why the risks procedures in place to prevent a data breach, and have policies and procedures were not disclosed to the investing public. breach, it is critical that a company also im- in place to not only prevent such attacks, plements a Rapid Response Plan to react but provide a quick response plan in the DATA BREACHES INVOLVING quickly to a cyber-attack. Once a potential event of a breach. Being prepared for a po- LAW FIRMS data breach has been identified, a company tential cyber-attack will protect a business In a profession based upon tradition should determine what type of information from significant financial exposure. and precedent, the practice of law is also was exposed, as well as consider reporting not immune from data breaches as many the incident to the law enforcement author- law firms today rely upon digital technology ities for investigation. It should be noted including the use of mobile devices, laptops that each state has its own notification laws Karen Painter Randall is a and email to be in constant communication regarding reporting a data breach, thus, Complex Litigation Partner with their clients. Moreover, as law firms are one should be familiar with same. with Connell Foley LLP in “going green” confidential documents con- A corporation also has an obligation to Roseland, NJ, and Chair of taining a client’s personal information are inform its clients of any potential compro- the firm’s Professional often scanned into and maintained on a mise of personally identifiable and confiden- Liability and Director and computer network or a company’s Cloud tial information. Thus, it is imperative that Officer Practice Groups. She susceptible to hackers. either a timely letter or personal telephone provides representation and Pursuant to American Bar Association call be made to each client advising of the advocacy services to professionals and busi- Model Rules of Professional Conduct data breach so that the client can take reason- nesses in a wide variety of complex litigation 1.6(a), a lawyer shall not reveal confidential able steps to protect themselves from any vul- matters and is a veteran trial attorney in state information. Thus, attorneys have a duty to nerabilities that could potentially result in and federal courts. Ms. Randall, a former take reasonable steps in communicating having their personal information out in the Chair of USLAW’s Professional Liability with their client in a manner that protects open. Many companies also include in the Group, is designated a Certified Civil Trial the confidential information received. As a letters to affected customers a telephone Attorney by the Supreme Court of New Jersey. result, law firms, like many other businesses, number to a call center that will provide in- are making significant investments in net- formation about the extent of the breach, the Steven A. Kroll is an work hardware and software to protect sen- company’s response, or next steps. Moreover, Associate with Connell Foley sitive and confidential client data. However, many times as a courtesy to the client, and in LLP in Roseland, NJ. In the question becomes what exactly should a order to gain back their trust, a company pays addition to representing pro- law firm, or any other business for that mat- for credit and identity monitoring. fessionals in various areas, ter, do to protect against a data breach? Furthermore, many companies are engaging Mr. Kroll concentrates his an external public relations firm that special- practice in the areas of pro- MITIGATION STRATEGY izes in damage control to help mitigate harm fessional liability, general First and foremost, preparation is vital to its reputation caused by a data breach. insurance litigation and employment law han- to preventing any sort of data breach. Thus, Lastly, due to the potential for signifi- dling matters in both New Jersey and New York. consider creating a committee, which in- cant damages, companies should consider Mr. Kroll received his J.D. from Rutgers-Newark cludes members of its IT department, to de- purchasing cyber insurance to cover the School of Law in 2009, cum laude, and re- velop and implement a risk management costs of a breach and claim against them. ceived the distinguished award of Order of the plan for preventing a data breach. Once a Although companies may have a CGL or Coif. committee has been established, there professional liability insurance policy, they RM7996_MAGAZINE_Layout 1 8/26/14 4:38 PM Page 32

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WILL PROPOSED CHANGES TO THE FEDERAL RULES DECREASE THE COSTS OF CIVIL DISCOVERY?

Keely E. Duke and Kevin A. Griffiths Duke Scanlan & Hall, PLLC

INTRODUCTION tial success will ultimately depend on the ac- scope of discovery remains unchanged, al- As anyone who has been involved in tions of the legal community. lowing the parties to “obtain discovery re- civil litigation knows, or quickly learns, one garding any nonprivileged matter that is of the most costly and time-consuming as- THE DUKE CONFERENCE AND THE relevant to any party’s claim or defense.”1 pects of a civil suit is discovery. This is par- PROPOSED AMENDMENTS The key change comes in language con- ticularly true in today’s increasingly The centerpiece of the proposed discov- cerning the breadth of discovery requests. paperless office environment, where the ery amendments is focused on what is known The language of the current rule provides bulk of business and communications are as a proportionality standard. The propor- that the discovery sought need not be ad- conducted through electronic means, cre- tionality standard and accompanying rule missible at trial so long as the request is “rea- ating a vast and, in some instances, difficult changes are based on a set of proposals de- sonably calculated to lead to the discovery to manage electronic footprint. The result veloped during the 2010 Conference on Civil of admissible evidence.”2 Based on a general of these developments is that the costs of Litigation held at Duke University (“Duke consensus at the Duke Conference that the discovery in civil litigation, including man- Conference”). At the Duke Conference, parties had placed too much emphasis on agement and financing of the preservation some 200 practitioners met to discuss ways to this provision, the proposed amendment re- of electronically stored information (“ESI”), deal with the expense of discovery and its im- places it with a proportionality standard. sometimes dwarfs the potential value of the pact on civil litigation. The key change pro- Although proportionality language cur- claims asserted, leading plaintiffs to forgo posed by the Duke Conference and the rently appears in Rule 26(b)(2)(iii), the claims and defendants to reach early settle- later-established conference Subcommittee Subcommittee found it was little used or re- ments. Some proposed changes to the (“Subcommittee”) is a new version of Rule lied upon and, thus, moved the proportion- Federal Rules of Civil Procedure that at- 26(b), along with revisions to associated rules ality standard to the scope provision of Rule tempt to address this problem by changing concerning discovery and litigation manage- 26.3 The Subcommittee determined, after the scope of discovery and the role of attor- ment. These proposed revisions place a comment, that it would change the order of neys and judges in active discovery manage- greater focus on assessing the stakes of the the factors to be considered in applying the ment are working their way through the litigation in question to determine the nec- proportionality standard to demonstrate rule adoption process. As the drafters of the essary scope of discovery in a given case. that the issue of primary importance in de- proposed changes note, however, the poten- Under revised Rule 26(b)(1), the basic termining whether discovery was warranted RM7996_MAGAZINE_Layout 1 8/26/14 4:38 PM Page 33

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should be the importance of issues at stake Subcommittee indicates has been the driv- That said, however, the Subcommittee’s in the litigation. Proposed Rule 26(b)(1) re- ing force behind many of the judicial deci- current proposal is a step in the right direc- quires that discovery be proportional to the sions and litigants’ positions concerning tion. Increased emphasis on the proportion- needs of the case by considering a number discovery that gave rise to the need for dis- ality standard and the guidance provided in of factors: covery reform.7 the commentary will help to generate prece- [P]roportional to the needs of the case, The other takeaway from the proposed dent in those discovery disputes in which ju- considering the importance of the is- commentary is that one of the key factors dicial intervention is available, interpreting, sues at stake in the action, the amount necessary for real discovery reform to occur and hopefully providing guidance for prac- in controversy, the parties’ relative ac- is for the judiciary to take a more active role tice under a proportionality standard. The cess to relevant information, the parties’ in prelitigation planning and discovery language will also hopefully begin to affect resources, the importance of the discov- management (as indicated by the proposed some change in the behavior of the bar, pro- ery in resolving the issues, and whether amendments to Rule 16). This emphasis is viding pause before sending out boilerplate the burden or expense of the proposed shown in commentary noting that “[t]he discovery requests and engaging in costly discovery outweighs its likely benefit.4 parties and the court have a collective re- discovery disputes. sponsibility to consider the proportionality This proposed scope change is accom- of all discovery and consider it in resolving CONCLUSION panied by several associated rule changes discovery disputes” and emphasizing that Ultimately, these changes to the discov- that according to their drafters, were de- the “court’s responsibility, using all the in- ery rules may address the current discovery signed to advance cooperation among the formation provided by the parties, is to con- problems in the federal system, but any parties, proportionality in the use of available sider [proportionality] factors in reaching a change will be slow. The proposed rule procedures, and promote early and active ju- case-specific determination of the appropri- amendments were approved by the United dicial case management.5 The accompanying ate scope of discovery.”8 States Judicial Conference’s Committee on changes include modifications to Rule 1 Rules of Practice and Procedure in June (adding language encouraging increased co- ANTICIPATED IMPACT OF THE RULE 2014. The rule changes will now be recom- operation among the parties), Rule 16 (im- While the proposal put forward by the mended to the United States Supreme posing stricter time limits for holding the Duke Conference and Subcommittee is cer- Court during the Judicial Conference’s scheduling conference at the outset of litiga- tainly a step in the right direction in an ef- September 2014 meeting. If the Supreme tion and increasing the number of topics dis- fort to reign in the ever increasing costs of Court accepts the amendments and enacts cussed therein and adding an increased discovery, its ultimate efficacy is dependent the rules, subject to any congressional mod- focus to the need for greater judicial inter- on the legal community; a fact which is ification, they could take effect in some vention and management of pre-trial matters made prominent in the most recent version form as early as December 2015. Once the including discovery), Rule 34 (allowing early of the Subcommittee’s proposed commen- rules take effect, precedent set by those requests for production and requiring certi- tary. Specifically, the commentary notes that judges and lawyers who fully engage within fication of whether a responsive document previous overhauls of the discovery rules in the spirit of the new rules could have a pos- exists upon objection), and Rule 37 (chang- 1983 and 1993 did not work because, itive impact on discovery as a whole. ing the method of determining sanctions for among other things, the judiciary did not failure to preserve ESI).6 exercise the level of discovery oversight in- In an effort to address feedback re- tended by the architects of the proposed Keely Duke is a founding ceived during the comment period, the pro- rule changes.9 Given the current realities of partner of Duke Scanlan & posed rule changes are accompanied by the caseload of the federal judiciary and Hall, PLLC in Boise, extensive commentary explaining the substantial roadblocks imposed on filling ju- Idaho. Keely is AV rated drafter’s intent. The ultimate takeaway from dicial vacancies by congressional gridlock, and is one of Idaho’s pre- the commentary is that the Subcommittee’s increased judicial oversight seems unlikely.10 mier trial lawyers. She has vision is not to impose a new standard, but The plain fact is that many federal judges dedicated her career to de- to simply redirect the legal community and are simply faced with such a heavy case load fending companies, employ- the judiciary back to the original focus of that increased judicial oversight of civil dis- ers, and individuals in complex business Rule 26, which was to ensure that the bur- covery is not feasible. As such, unless there litigation and in medical malpractice, legal dens imposed by discovery were proportion- is a drastic change in political will concern- malpractice, employment, insurance bad faith, ate to the stakes of the litigation at issue. ing judicial confirmations, which seems un- and product liability/medical device litigation. The commentary notes that this focus was likely, any measure that involves reliance on Keely is currently the pesident of the Federal Bar derailed by improper emphasis on the increased judicial involvement and over- Association, Idaho Chapter. phrase “reasonably calculated to lead to the sight has little chance of producing mean- discovery of admissible evidence,” which the ingful change on a nationwide scale. Kevin Griffiths is an associate attorney with Duke 1 Advisory Committee on Civil Rules, Committee on Rules of 8 Id. at 84. Scanlan & Hall, PLLC, in Practice and Procedure of the Judicial Conference of the 9 Id. Boise, Idaho. Kevin’s prac- United States, Report to the Standing Committee (2014) 10 See, e.g., Daniel O. Jamison, Our Courts Are in Crisis, [hereinafter Committee Report], at 80, available at and Education is the Best Answer, BAKERSFIELD tice is focused on insurance http://www.uscourts.gov/uscourts/RulesAndPolicie CALIFORNIAN, May 7, 2014, available at http://www. coverage and bad faith s/rules/Agenda%20Books/Standing/ST2014- bakersfieldcalifornian.com/opinion/hot-topics/ 05.pdf#pagemode=bookmarks. x1042370463/Our-courts-are-in-crisis-and-education- claims, professional liabil- 2 Fed. R. Civ. P. 26(b)(1). is-the-best-answer (“As of April 26, [2014], there were ity, and product liability lit- 3 Committee Report, supra note 1, at 70. 87 vacancies in the district and appellate courts, with 4 Id. at 80. over 70 of those in the district courts. Over 40 per- igation. Kevin was recently recognized by 5 Id. at 66. cent are judicial emergencies due to caseloads re- Mountain State’s Super Lawyers as a Rising 6 Id. at 71-76. quiring many more judges.”) Star in the area of Insurance Coverage. 7 Id. at 81-85. RM7996_MAGAZINE_Layout 1 8/26/14 4:38 PM Page 34

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HISTORY OF AMBUSH ELECTIONS election. A hearing is held where both wit- Based on the seven-day timeline, a pe- An overly aggressive National Labor nesses testify and evidence is introduced to tition could be filed on Friday at 6 p.m. By Relations Board, which exists solely to ad- determine the scope of an appropriate bar- the time management learns about it on minister the National Labor Relations Act, gaining unit, and thus who should vote. Monday morning, three of those seven days created law in 2011 by implementing new This hearing is usually held at a reasonable have passed. The Company calls me – its rules that dramatically assist labor unions in time after the petition is filed and on a date labor attorney – on Tuesday and we meet organizing workers. Together, these rules agreed to by all parties. the next day. By now the Company and its are commonly called “quickie” or “ambush” counsel only have one day to identify the is- elections. Despite vigorous public outcry re- sues, gather evidence, and prepare wit- garding whether the Board could create nesses for an incredibly important hearing. rules (instead of simply administer the rules already in effect), the Board steadfastly im- COMPULSORY DISCLOSURE OF plemented its ambush election rules. PRIVATE E-MAIL AND PHONE Immediately upon implementation, NUMBERS the U.S. Chamber of Commerce filed a law- Currently, unions are entitled to the suit alleging among other things that the names and home addresses of workers who Board did not have a quorum to approve will vote in a union election. Ambush elec- the new rules. Specifically, the Board only tions mandate that unions will also receive had three Members (instead of its usual workers’ private e-mail addresses and tele- five) at the time it voted on these rules, and phone numbers. only two of those three Members voted – No restrictions are placed on what a two out of five is not a quorum. Incidentally, union can do with employees’ personal in- the two voting Board Members were both formation, i.e. sell it to third-party market- attorneys for labor unions. The Chamber ing companies or continuously leave won and the Board appealed. harassing messages for the recipients. There While on appeal, additional Board is also no relief for employers who provide Members were appointed resulting in a fully wrong e-mail addresses, even if employees functioning Board consisting of three pro- themselves enter their addresses into the union and two pro-business Members. company’s Human Resource Information Rather than wait for the appeal process to System (HRIS) system. With current email conclude, the Board withdrew its appeal addresses often containing strings of num- and re-issued the same ambush election UNION bers, nicknames, and odd word phrases, the rules in early 2014. The three pro-union likelihood of errors and typos is high. Members made a quorum and voted in Overall, ambush election rules erode favor of the rules. “AMBUSH” employer rights and employee privacy in the workplace. They steeply slant the play- DRASTICALLY DECREASED ELECTIONS ing field in favor of organized labor. I have CAMPAIGN PERIOD written and spoken several times over the Overwhelming statistical evidence BE PREPARED OR last few years on these issues and how com- proves that the longer an employer has to BE UNIONIZED panies can get ahead of these changes. I campaign against a labor union the higher even personally lobbied Congress to enact the likelihood the company will prevail in a legislation overruling ambush elections on union election. Historically, the time be- Matthew D. Austin behalf of the Ohio Grocers Association. tween when a union files a petition with the Roetzel & Andress, LPA Unless an eleventh hour miracle happens, NLRB seeking an election to the time when ambush election rules will become law later the election is held averages between 35-40 this year and unsuspecting employers will days. Ambush elections will decrease this become unionized. Union-free companies time to as few as 11-15 days. This decrease Ambush election rules require that must take the time now to prepare for these is a monumental hurdle employers must hearings (except for those that define the impending changes. overcome to remain union-free. Prudent scope of the bargaining unit) be held seven employers cannot wait until after receiving calendar days after the petition is filed and Mr. Austin is a labor lawyer an election notice to establish positive em- any issue not presented at the election is for- at Roetzel & Andress LPA ployee relations and regularly conduct ever barred from being litigated in the fu- who represents companies union avoidance training. ture. Shockingly, whether the proposed against unions nationwide. bargaining unit is appropriate is not liti- He trains managers on the PRE-ELECTION HEARINGS gated until after the election is held. latest, multi-faceted union Pre-election hearings are held for Companies are thus left not knowing who is avoidance strategies and many different reasons. One reason is that lawfully eligible to vote in the upcoming guides employers through the bargaining unit proposed by the union election and if they erroneously treat some union campaigns, elections, negotiations, griev- in its petition to the NLRB for an election workers as supervisors (who are ineligible to ances, arbitrations, strikes, and the decertifica- erroneously contains employees who are vote) or wrongly treat supervisors as eligible tion and withdrawal of recognition processes. Mr. not eligible to vote or does not contain em- voters, companies will unknowingly commit Austin can be reached at [email protected] or ployees who should be eligible to vote in the unfair labor practices. 614-723-2010. RM7996_MAGAZINE_Layout 1 8/26/14 4:40 PM Page 35

USLAW www.uslaw.org 3 5 NEW LEGISLATION MAY PROHIBIT SENDING COMMERCIAL ELECTRONIC MESSAGES TO CANADIANS

Victor Dudas Clark Wilson LLP

Effective July 1, 2014, Canada’s Anti- sent to be a CEM and you must have the im- ship with them includes sending electronic Spam Legislation (“CASL”) significantly af- plied consent of the recipient in order to messages. fects companies’ ability to send electronic send the request. One method by which you The onus is on the party sending a messages to Canadians. CASL is one of the can obtain express consent is to post a link CEM to prove it had the consent of the re- toughest anti-spam laws in the world and to a signup page on your Facebook or cipient and it may be difficult to document failure to comply with it can result in fines Twitter page as broadcast messages are not having implied consent for larger databases. up to $10 million for an organization and regulated by CASL. Express consents ob- CASL also provides rules relating to having up to $1 million for an individual. tained prior to July 1, 2014, will be recog- implied consent from persons with whom CASL regulates any commercial elec- nized as consent under CASL, provided you have an existing non-business relation- tronic message or CEM accessed in Canada. they were obtained in compliance with the ship and to persons that disclose or publish Hence, a company located in the United relevant privacy legislation at the time the their email address. States must comply with CASL if it sends consent was obtained. All companies should take steps to en- CEMs to Canadians. CASL defines CEM as sure compliance with CASL but those steps any electronic message that has as one of its should be tailored to the size of the com- purposes to promote commercial activity. pany. Each company that sends CEMs There is a lot of uncertainty regarding CASL should appoint someone to be in charge of and it will be interesting to see how the compliance with CASL and larger com- CRTC, the governmental agency tasked panies should consider establishing a with enforcing CASL, and the courts in- CASL compliance committee. terpret the definition of CEM. Companies should establish formal The biggest surprise for compa- policies and procedures and doc- nies accustomed to complying with ument all the steps they have U.S. anti-spam legislation, com- taken to comply with the legisla- monly referred to as CAN-SPAM, is tion, since there is a due dili- the consent requirement of CASL. gence defense permitted under In general, CAN-SPAM allows com- CASL. CASL also has prescribed panies to send emails unless the re- content requirements that you cipient has opted out. In other must include in the CEM, such as words, it does not limit the emails providing the recipient with the companies may send provided they ability to unsubscribe. include an unsubscribe mechanism in Many believe that CASL goes each email they send. In contrast, CASL too far in regulating electronic mes- requires the sender to obtain the consent sages. It requires companies to devote of the recipient prior to sending the email. significant resources to ensure compliance That consent can be express or implied but and companies are nervous about the max- it has to exist before the CEM is sent. imum fines permitted under CASL. While I The best option is to obtain the express do not believe CASL will stop companies consent of the recipient. The CRTC has CASL provides a few different ways a from doing business in Canada, it does in- stated that users must take an affirmative company may have the implied consent of crease their costs of complying with step, such as checking a box, in order to the recipient. The most useful way is com- Canadian regulations. provide their consent. The request for con- panies have the implied consent of anyone sent should not be tied to the use of the with whom they have an existing business service. For example, an online store should relationship. Existing business relationship Victor Dudas is an associate not require the user to consent as part of is defined in CASL to include a person that with Clark Wilson LLP’s the process of purchasing a product. There has, within the last two years: (a) purchased Corporate Finance & is also prescribed information you must pro- or leased a product, good or service, (b) ac- Securities Group. He ad- vide the user when asking for consent. You cepted an investment or gaming opportu- vises public and private should ensure that the entity obtaining the nity; or (c) been party to a written contract companies on a variety of consent is the same entity that will send the with the company. There is a transition pro- U.S. and Canadian corpo- CEM. You may need to include language to vision in CASL whereby you have the im- rate and securities law mat- ensure users consent to receive emails from plied consent until July 1, 2017, for anyone ters. He works with companies that are listed on affiliates. One difficulty in obtaining express with whom you have had a business relation- stock exchanges in both Canada and the United consent is CASL deems a request for con- ship at any point in the past if your relation- States. He may be reached at [email protected]. 3 6 www.uslaw.org U S LAW

PURCHASING A BUSINESS IN CANADA? UNDERSTAND THE KEY ASSETS: YOUR NEW EMPLOYEES

Andrea Raso Clark Wilson LLP • Sean Bawden Kelly Santini LLP Ralph D. Farley and Veronique Poirier Therrien Couture lawyers L.L.P.

Purchasing a business in Canada often means that individual employment contracts are care- becoming an employer of Canadian employees. fully reviewed well prior to closing in order to Given the real potential of becoming liable for sev- be aware of the obligations that it will assume, erance payments after acquiring a business in Canada, particularly the obligations related to any future potential buyers would be prudent to consider the ways terminations of employment. by which they can mitigate their exposure to such costs. REASONABLE NOTICE CONTINUOUS EMPLOYMENT Where, however, the seller’s employees have no The first thing potential buyers need to be aware written contracts containing severance provisions (or of is the deemed continuous employment provisions written contracts which are void or unenforceable contained in provincial employment standards leg- for any of a number of reasons), employees in islation (or federal legislation for certain industries Canada (other than in the province of Quebec, as such as inter-provincial transportation and telecom- discussed below) are considered to have ‘common munications). Pursuant to that legislation, if an em- law’ entitlements. Canadian common law presumes ployer sells the whole or a part of a business and that employment can only be terminated with ‘just the buyer employs an employee of the seller, then cause’ (which is a high standard to meet, but a the legislation imposes two important conse- topic for another day) or upon the provision of quences. First, the employee’s employ- ‘reasonable notice’ (or pay in lieu of reasonable no- ment is deemed not to have been tice). Reasonable notice is invariably greater than terminated. Second, the law deems applicable provincial statutory minimums. What is the employee’s employment history reasonable is in the eyes of the judge, based on: the and obligations with the seller to be specific employee’s age; length of service; nature of transferred with the purchase which employment (i.e. skill level, managerial responsibili- will impact any subsequent calculation ties, if any, and compensation); availability of alterna- of the employee’s length or period of tive employment given existing market conditions; and employment. These legal conse- any other factor the Court considers relevant (such as quences are important because it can restrictive covenants which may hinder the employee’s significantly increase the amount of ability to readily secure comparable employment). severance pay to which an employee Unfortunately there is no formula for determin- can become entitled to upon dismissal, as dis- ing reasonable notice; as the judiciary puts it, de- cussed below. termining reasonable notice “is an art, not a science.” But more often than not, the Courts con- INHERITING SEVERANCE OBLIGATIONS sider notice in terms of months, rather than weeks as used Unlike the United States, Canada does not have in minimum standards legislation. It has not been unheard of ‘at will’ employment. Because the concept of at will employment is for employees to be awarded 24 or more months of reasonable no- foreign to Canadian employment law, businesses with Canadian em- tice or pay in lieu thereof. ployees must not include at will employment concepts into In the province of Quebec, the law is based on civil law princi- Canadian employment agreements. In Canada, all employment con- ples (similar to the State of Louisiana) rather than the common law. ditions must comply with at least the minimum requirements pro- Pursuant to the Civil Code of Quebec, with or without written con- vided in employment standard legislation. Some contracts will tracts, the reasonable notice obligation applies. Even if a period of provide for severance entitlements which exceed the minimum ob- notice is provided in a contract, a civil court could decide otherwise ligations, to provide something closer to common law notice (dis- if it considers the notice to be “unreasonable” or insufficient in the cussed below). As a successor employer, the buyer should ensure circumstances. USLAW www.uslaw.org 3 7

In the rest of Canada, for buyers look- entitled to job-protected pregnancy leave ing adjustments, benefit costs, or outstanding to limit this potential significant expo- for up to 17 weeks and both mothers and ing grievances that will have an impact on sure, the positive news is that the fathers are entitled to up to 37 weeks of labour costs and the running of the business. presumption of reasonable notice can be re- job-protected parental leave. Provincial These unwelcome surprises can be butted if the transferred employees sign legislation also mandates other leaves, avoided by the prospective buyer taking steps contracts which may address the issue of no- such as compassionate care leave, emer- during the due diligence process to become tice. That said, a buyer must be careful gency leave and family responsibility fully aware of the current situation. The time when taking on the seller’s employees to leave, to name a few. to do so is before closure of the sale. not alter their existing terms and conditions 5. Drug and Alcohol Testing: Employees are of employment; otherwise, the buyer risks generally free from pre-employment test- constructive dismissal claims. ing and random testing, even in safety- Sean Bawden is a labour sensitive work environments, unless the and employment lawyer CHANGING EMPLOYEES’ TERMS OF employee or the workplace has a known practicing with Kelly EMPLOYMENT drug or alcohol problem. Santini LLP in Ottawa, A buyer must exercise care when plan- Ontario, Canada. He pro- ning to change any of the employment con- AVOIDING THE BAGGAGE vides advice to both employ- ditions that employees enjoyed at the time For purchasers wary about the prospect ers and employees on a of purchase, including common law entitle- of becoming an employer in Canada and broad range of employment ments such as reasonable notice. The no- being bound by the terms and conditions of law issues. He is also the editor of the firm’s em- tion of constructive dismissal prevents employment enjoyed by employees with the ployment law blog “Labour Pains.” employers from imposing unilateral funda- seller, the buyer may try to insist that the mental changes to terms of employment in seller either terminate the employment of Ralph D. Farley, of such matters as salary, benefits, working its existing staff pre-closing or agree to as- Therrien Couture lawyers hours or relocation, without sufficient no- sume those costs associated with future ter- L.L.P., concentrates his tice. For example, a reduction of 10% to mination. This is easier said than done: practice in Labor and 20% of the annual compensation an em- most sellers will be reluctant to incur the Employment Law. He repre- ployee is entitled to will usually be consid- costs of terminating employees pre-closing sents companies in the fields ered as a fundamental change compliant in only to have the buyer immediately re-hire of aeronautics, manufactur- constructive dismissal. them upon closing, particularly when those ing and broadcasting. He The buyer needs to provide adequate costs are contingent on terminations that has pleaded before Labor Arbitrators in all notice for imposing a fundamental change may or may not happen at some time in the Canadian provinces, before various courts and to the terms of employment of those em- future. Labor Relation Boards. He also taught Labor ployees it takes over, or provide adequate Law at the Faculty of Management of McGill consideration (such as a signing bonus) be- BUYING A UNIONIZED WORK FORCE University and is a Trainer recognized by the fore instituting a change to a fundamental The rules are somewhat similar when Quebec Bar. term or condition of employment. the seller’s employees are unionized. A prospective buyer must realize that in addi- Veronique Poirier is a law OTHER OBLIGATIONS tion to purchasing the assets or equity of the graduate from McGill So far we have largely focused on the company, they will also inherit any union al- University. She is part of the purchaser’s obligations as they relate to no- ready in place, as well as the existing certifi- Labor and Employment Law tice or severance. Some other key obliga- cate giving recognition to the representative team at Therrien Couture tions that purchasers should consider are: rights of the union, any proceedings being lawyers L.L.P. She provides 1. Workers’ Compensation: Almost all undertaken by a union to become certified, advice and services to em- Canadian employers are obligated to pay any unfair labour practice complaints in ployers from different sectors into provincial government workers’ com- progress, and collective bargaining agree- with respect to labor standards, health and safety pensation schemes, regardless of whether ments in force between the parties. In issues, employment contracts, internal policies they offer a similar private benefit; Canada, this principle is known as the ‘suc- and employee manuals and interpretation of 2. Overtime pay: All employees are statuto- cessor rights provisions’ of the labour codes laws, regulations and collective bargaining rily entitled to overtime pay, regardless of every Canadian province. The purpose of agreements.She represents employers before civil of whether they are paid hourly or by these legislative rights is to prevent a buyer and administrative tribunals in Quebec. salary (except in the province of Quebec from refusing to recognize a union already where salaried employees are exempt), in place or a union in the process of apply- Andrea Raso is Chair of the unless they fall into a specifically legis- ing to become recognized. Labour & Employment lated exemption (such as the managerial Often, working conditions stipulated in Group of Clark Wilson LLP exclusion); a collective bargaining agreement are over- in Vancouver, B.C., 3. Privacy rights: British Columbia, Alberta looked during the negotiation process lead- Canada. Andrea acts for and Quebec have private-sector privacy ing up to the purchase of the business. Time employers in defence of civil legislation which protects the collection, and again, a buyer only pays attention to in- claims and tribunal pro- use and disclosure of employees’ personal herited working conditions of the collective ceedings, and has appeared information, and which allow employees agreement when it comes to starting to run at every level of Court including the Supreme to access any employer document which the acquired business. The buyer may then Court of Canada. Andrea routinely assists cor- contains their personal information; be in a for a number of surprises regarding porate counsel in managing employee issues in 4. Leaves of Absence: Canadian mothers are the costs attached to wage rates and upcom- business transactions. RM7996_MAGAZINE_Layout 1 8/26/14 4:42 PM Page 38

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Brazilian Internet Law THE NEW LEGAL PANORAMA TO CONSIDER WHEN CONDUCTING BUSINESS ON THE WEB OR PROVIDING INTERNET SERVICES TO BRAZILIAN USERS

Tomás Filipe Schoeller Paiva Mundie e Advogados

Since 2010, Brazil has been discussing turned out to be controversial, and numer- Briefly, the Brazilian Government in- the enactment of an Internet Law. ous competing interests have made it diffi- tended to require Internet players (such as In fact, in 2010, the Brazilian Ministry cult to forge a consensus on the matter. Google, Facebook, Twitter and the like) to of Justice submitted a draft of Bill of Law for That is the reason why the Bill was stalled maintain within the Brazilian territory any public consultation, so as to receive contri- in the House of Representative for at least data related to Brazilian users. The butions on a proposal of a “civil framework” two years. Brazilian Government considered that the for the Internet. More than 2,000 contribu- After Edward Snowden’s NSA spying storage of Brazilian users’ data in Brazil tions were presented. Once the Ministry revelations broke, the Bill was resurrected, would confer on the Brazilian Government consolidated a final text, the proposal was as President Rousseff engaged herself in ob- more control over Internet data in general, forwarded to Brazilian President Dilma taining the political consensus needed to and would subject such data to Brazilian Rousseff, who sent the Bill to the National pass the proposal. In fact, the Brazilian laws and courts, thus allowing an easier Congress in August 2011. Government had stated that the approval of path for the issuance of orders and access The main purpose of the proposal was the Internet Bill of Law would be an ade- to that information. to create a legal framework for the use of quate response to U.S. spying and surveil- On Sept. 11, 2013, President Dilma the Internet in Brazil, providing users with lance policies. Going further on the issue, Rousseff published a note in the Federal specific rights in cyberspace, and setting the Brazilian Government not only ap- Gazette urging approval of the Bill. Under forth duties and responsibilities for all sorts proved the Bill as first proposed by the the Brazilian Constitution, when the of Internet players, such as ISPs and OTT Ministry of Justice and sent to Congress by President asks for a fast track procedure (Over-the-Top) companies. the President, but also sponsored a new (‘constitutional urgency’) for a Bill of Law, From the very beginning, when first draft, proposing a so-called “in-country data the House of Representative must take up drafted by the Ministry of Justice, the Bill centers” amendment. the given proposal within 45 days. RM7996_MAGAZINE_Layout 1 8/26/14 4:42 PM Page 39

USLAW www.uslaw.org 3 9

Although processed on a constitutional justify its gathering, which shall be specified mentation until further regulation to be en- urgency basis, the Government was unable in the Internet service agreements or in the acted by the Brazilian President. to overcome the political dispute over the Internet application terms of service. Both The new Law imposes on all telecom- Bill, and to strike an agreement among Brazilian legislation and jurisdiction are munication operators responsible for the competing interest groups lobbying the deemed applicable to the operation of gath- transmission, switching, or routing of data issue, especially with respect to controversial ering, storage, custody, and treatment of packages a general obligation of equal treat- topics such as the “in-country data centers” logs and personal data on the Internet, even ment, without any distinction based on con- language. to operations performed by companies tent, origin, or destination, service, On March 25, 2014, after disputes be- based abroad, as long as they offer their terminal, or application. It also forbids tween the Government and Congressmen services to Brazilian users. telecommunication operators from block- from the Government’s major coalition Furthermore, as to specific addressees, ing, monitoring, filtering, or analyzing the party (PMDB) were resolved by mutual con- such as Internet connection providers – data-packages content. cessions, a final version of the Bill passed in meaning those who are responsible for the There are some exceptions to those ob- the House, without the controversial “in- authentication of terminals for sending and ligations, particularly those related to (i) country data centers” obligation. receiving data packages through the technical requirements deemed necessary On April 24, 2014, the Federal Senate Internet, by means of the attribution of an for the adequate provision of services and passed the Internet Bill with no amend- IP address – there is an obligation of storage applications, and (ii) prioritization of emer- ments. Even though the opposition high- of connection logs, which shall be main- gency services. In such cases, the operator lighted that more time was needed to tained in secured and controlled servers for must act with proportionality, transparency discuss the matter, a procedural maneuver a one-year period. Such log is made only of and isonomy, refraining from causing dam- by the Government allowed the tables to be meta-data, i.e., only the IP address, the du- age to users. turned, making the bill the highest priority ration and the date/time of the connection According to Paragraph 1 of Article 9 on the Congressional Agenda, as it was in are required to be maintained by the of the Internet Law Framework, traffic shap- the Government interest to sign the provider. There is no obligation to store this ing or degradation will be regulated by a Internet Law at the time of the NET information in Brazil. Presidential Decree, which shall only be en- Mundial conference, that would take place As to Internet application providers – acted after both the Brazilian Internet in São Paulo on April 25, 2014. meaning those that provide functionalities Steering Committee (Comitê Gestor da During the opening speech of the NET that can be accessed by a terminal con- Internet) and the Brazilian National Mundial conference, attended by represen- nected to the Internet – there is a similar Telecommunications Authority (Anatel) tatives from more than 80 countries, obligation of storage, for a six-month term, have expressed their opinion. President Rousseff signed the Internet Bill, of information referring to the date and Besides the provisions on data protec- enacting Federal Law No. 12,965/2014. time of use of a specific Internet application tion and net neutrality, the Brazilian Federal Law No. 12,965/2014 sets forth given a certain IP address. Such obligation Internet Law also provides several rules several guidelines and rules to be observed must be complied with by any Internet ap- about the liability of content providers for in the use of the Internet in Brazil, among plication provider that is organized as a content from third parties, confirming the which the protection of privacy, the protec- legal entity and that performs its activities general understanding of Brazilian courts tion of personal data, and the preservation in an organized and professional way, and that (i) Internet connection providers may and guarantee of net neutrality. It also pro- for financial purposes, even if such provider not be considered liable for damages vides for several rights of Internet users. is based abroad, as long as it offers its serv- caused by content generated by third par- According to Article 2 of the Federal ices in Brazil. ties and (ii) Internet application providers’ Law, the regulation of the use of the It is noteworthy that the provisions of liability shall only accrue in cases of non- Internet in Brazil is grounded on respect for the Brazilian Internet Law on data protec- compliance with a specific judicial order to freedom of speech, recognition of the net- tion are subject to an implementing Decree make the reputedly infringing content un- work’s global scale, plurality and diversity, (executive order), to be enacted by the available. openness and collaboration on the web, as Brazilian President. Such Decree is still Considering how recent the Law is and well as on the free enterprise, free competi- under discussion by the Brazilian the fact that an implementing Decree has tion and consumer protection. Government. Thus, although the Internet yet to be enacted, there are several issues Article 3 defines the principles that Law has already entered into force (on June that remain dubious and will doubtless be govern the regulation on use of the Internet 23, 2014, 60 days after its publication in the the subject of further discussions. in Brazil, including protection of privacy, Federal Gazette), there is some discussion protection of personal data, and the guar- on whether or not the provisions on privacy antee of net neutrality. and data protection are enforceable, since As to the protection of personal data their enforceability would depend on the Tomás Filipe Schoeller provisions – the most controversial aspect of enactment of a Presidential Decree to reg- Paiva is an associate attor- the Law, together with the net neutrality ulate the procedures for investigating the vi- ney at Mundie e issue – the Internet Law aims at covering a olations of such rules. Advogados. PhD candidate gap in Brazilian legislation on the subject. The second controversial aspect – net in Constitutional Law at Under the Law as approved, any oper- neutrality – was considered as a point of no both the Universities of São ation of gathering, use, storage, or treat- compromise by the Government, who man- Paulo, Brazil, and Paris, ment of personal data that takes place on aged to keep it in the draft approved by the France. Main areas of work the Internet is subject to the express opt-in Congress. Although rewritten, the provi- are Internet, infrastructure and regulated in- consent of the user. The information gath- sions on the issue stress the importance of dustries, and antitrust. ered may only be used for the purposes that the principle, however postponing imple- RM7996_MAGAZINE_Layout 1 8/26/14 4:44 PM Page 40

4 0 www.uslaw.org U S LAW

One of the main procedures by which decisions of English government may be challenged is known as Judicial Review. As the name suggests the challenge is through the Court. This also applies to decisions of other entities carrying out public law functions. The procedure has grown up over a number of years. In addition, judicial review can sometimes be the only way of making a challenge to legislation made at the EU level, with a realistic prospect of success. With the growth of the powers of the Executive and an increase in regulation, Judicial Review has increased in importance and the volume of such claims has grown considerably. This among other matters has led to calls for reform. It will be appreciated that often the subject matter of the decisions in question are of major effect and in some cases business critical. For example, the writer acted for a number of claimants regarding the EU REACH Regulation governing the regime for import, production, registration and distribution of chemicals within the EU. The clients included a U.S. corporation and a multinational. In brief, decisions can be challenged by way of judicial review on the following grounds: • Irrationality: the decision was one that no reasonable authority would have made (known as the Wednesbury test following the case of that name);

• Illegality: the decision was made by the exercise of a power wrongly or the decision was ultra vires (beyond the powers of the body);

• Procedural unfairness: the executive or body did not follow the correct procedure, for example failing to consult or give reasons; and

• That there was a legitimate expectation the executive or entity would act in another way: it would be unusual to rely on or succeed on this basis.

The claim for judicial review has to be issued at Court within a very short time period of REFORM OF the decision being made. The usual rule is that the Court proceedings are issued promptly and in any event within three months from when the CHALLENGES TO grounds of claim arose. The Court takes a strict approach. There are cases in which the Court has decided that issuing proceedings within the ENGLISH three-month time period was too late. In 2013, the time limit was shortened for GOVERNMENT planning matters to within six weeks. Claims regarding procurement decisions follow a different procedure and have to be made within 30 DECISIONS days. Once issued, Judicial Review claims can only be pursued with the permission of the Court. Jeremy Lederman Wedlake Bell LLP The first stage is that the Court considers if there is an arguable case on the claim documents on RM7996_MAGAZINE_Layout 1 8/26/14 4:44 PM Page 41

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their own. This is designed to filter out the make their Claim documents longer to try tached parties (such as trade associa- weaker cases. If the Court does not give per- and avoid any problem arising from the tions) can often assist the Court, but it is mission, a party can request a hearing to ask above. This will add to the work and cost in- felt this step will discourage this. the Court for permission again. volved. Once permission to pursue the claim is A further proposed change is that a 4. A large increase in Court fees to com- granted, the case proceeds as normal with party will not be able to apply for permis- mence judicial review claims (which has the defendant being allowed to serve a de- sion for judicial review at a hearing, if on already been brought into effect); fence and the parties serving such further the documents at the preliminary permis- documents and taking part in a substantive sion stage the Court decides that the appli- As a result of the prior consultation the hearing as the Court directs. The Court re- cation is totally without merit. Government did not include in the Bill pro- tains a wide discretion as to how each case Other suggested measures include: posed changes to limit the judicial review is managed and for example may dispense 1. Changing the current rules so that on a procedure to those who could show suffi- with disclosure of documents or limit it. second application for permission to pur- cient legal standing (i.e. that they were af- The Government expressed unhappi- sue a claim at a hearing, a defendant can fected) as opposed to being part of a ness about the great increase in the number seek its costs of its defence. campaign, for example, in order to raise of judicial review claims in recent years. The their profile. general consensus is that much of this in- Amongst all the reform activity the crease was due to claims in connection with ...if the changes are Government did not take an opportunity to immigration and those seeking asylum. clarify one of the areas of uncertainty in the Those claims are now dealt with in other brought about, law, on when the time for bringing a claim ways including by other tribunals. starts to run, which as mentioned above can Following a consultation process, the pursuing judicial be very short. Government proposed further changes to As at the end of July 2014 the Bill has the judicial review procedure in its Criminal passed through the House of Commons un- Justice and Courts Bill. The Bill also pro- review claims changed in this respect. It has reached the poses a number of changes to the British House of Lords where there has been some justice system not connected to Judicial will become debate and detailed scrutiny has com- Review. menced. A number of criticisms have been The Bill proposes changes to limit difficult, more made by the House of Lords (including by the scope of judicial review including the former Judges, now sitting as Lords). The following: costly and expose Bill will undergo further detailed examina- 1. On an application for permission to pur- tion by the House of Lords later this year. sue judicial review proceedings, the Court those bringing If the reforms are voted through, it is must refuse permission if it appears said much will depend on how they are im- “highly likely” that the outcome for the plemented in the Court rules and by the applicant would not have been substan- them to greater Judges themselves. However, from the above tially different if the conduct complained it will be seen that if the changes are of had not occurred. risk of a costs brought about, pursuing judicial review claims will become difficult, more costly and 2. When dealing with the substantive judi- order being made expose those bringing them to greater risk cial review application and deciding of a costs order being made against them if whether any remedy should be granted, against them they are unsuccessful. the Court should refuse to make an order This makes it more important for if it appears the outcome for the party clients and advisers to continue to keep making a claim would not have been sub- if they are ahead of relevant proposed decisions to be stantially different if the conduct com- taken by public bodies or those exercising a plained of had not occurred. unsuccessful. public function and devote greater input into consultations, as this is likely to be the The aim is to try and filter out claims best way to avoid adverse decisions and have where there was what might be regarded as 2. Details of financial backers of claims are account taken of their views. a minor technical breach and to save costs. to be provided, so that the Court has The proposals have attracted substan- these when deciding whether costs orders tial criticism from a broad spectrum, includ- should be made. ing former leading judges and leading Jeremy Lederman is a part- Queens’ Counsel. It is feared that the 3. Parties joining in others’ claims (quite a ner and head of the changes will encourage decision makers not frequent occurrence) will not have their Commercial Litigation team to act fairly, reasonably or comply with the costs paid by other parties and risk costs at London UK firm rule of law. Further it allows the Court to im- orders being made against them if they Wedlake Bell LLP pose its view on what would have been if the cause others to incur greater costs. It is Solicitors. He and his team claim had not arisen. This will necessarily suggested this will discourage a number act on judicial review and involve the Court in speculating on what of smaller parties grouping together to regulatory matters and have might have happened. challenge a decision and affect the qual- a wide range of experience in this area. It is felt this will mean that parties will ity of the process. Affected but more de- RM7996_MAGAZINE_Layout 1 8/26/14 4:44 PM Page 42

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DATA PRIVACY AND DATA RETENTION IN EUROPE

Rainer Kaspar and Hermann Hansmann • PHH Prochaska Havranek Rechtsanwälte GmbH

THE BEGINNING AND THE END ular organized crime and terrorism. With With the Wikileaks and Snowden inci- The issuance of the EU Directive RL the conflict between freedom and security dents having raised enormous public inter- 2006/24/EC (Directive) by the EU legislator always having stood at the heart of the est and opposition, it came as no real was triggered, in addition to the 9/11 at- Directive, the stringent and comprehen- surprise that the European Court of Justice tacks, by the terrorist attacks in Madrid 2004 sive rules of the Directive on data retention (ECJ) struck down the Directive with its de- and London 2005. was from the outset heavily criticized and cision of April 8, 2014, on cases C-293/12 The objective of the Directive was to opposed. and C-594/12, thus repealing the Directive improve the fight against crime, in partic- with retroactive effect. RM7996_MAGAZINE_Layout 1 8/26/14 4:44 PM Page 43

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WHAT DOES DATA ference” with the mentioned fundamental for persons with “privileged” communica- RETENTION MEAN? rights. The data collected enables the draw- tion, as e.g. physicians or lawyers. Data Retention within the meaning of ing of very accurate conclusions on citizens’ The ECJ took this up and argued that the Directive meant the storage of all call habits of daily life. Among citizens, the data the Directive was too far-reaching targeting data (communication data), and thus en- retention may result in the feeling “that also people not even remotely connected to compassed for example the following: Who their private life is the object of permanent crime and in particular had not provided called whom for how long and from where? supervision” because they are not given infor any exceptions, so that it covered also Who sent whom an e-mail? Which IP ad- formation on the retention itself and in par- persons whose communications are subject dress was used for browsing the Internet ticular on how the information retained will to professional secrecy according to na- and how long did that browsing take place? be used. tional laws. Retention of data was to be done without This general failure to define restric- any particular cause, and thus “for reten- The data was to be tions and exceptions resulted in the fact tion.” However, the content of the commu- that in issuing the Directive EU legislation nication was not retained. kept available on exceeded the admissible limits which it was The required data was collected by pri- to comply with in order to ensure the prin- vate telecommunication companies, which their servers for a ciple of proportionality. were subjected by the Directive to a duty to “second step,” the retain. The data was to be kept available on IS THERE A POSSIBILITY FOR A NEW their servers for a “second step,” the access by access by public EU DIRECTIVE ON DATA RETENTION public authorities. However, such right of ac- TO BE ISSUED? cess was limited and only to be granted under authorities. However, It may be the end of European data re- certain conditions, for example for the pur- such right of access tention regulations for the time being, but pose of investigating criminal allegations. not necessarily forever as the ECJ did not de- Nonetheless, in theory, the aggregate was limited and clare data retention per se to be inadmissi- volume of the information collected allowed ble and rejected only the directive as it was. very accurate conclusions regarding the pri- only to be granted If future EU legislation took into account vate life of persons whose data was retained, under certain the legal prerequisites set forth in the deci- such as habits of daily life, preferred loca- sion, the European legislator would be free, tions and activities and social relationships. conditions, for assuming respective political willingness, to issue a new regulation on data retention. IS THERE A DIFFERENCE BETWEEN EU example for the However, as current public opinion stands, DATA RETENTION RULES AND THE purpose of such new directive will likely not be on the ACTIVITIES OF THE NSA? immediate to-do list of European legislators. It appears that the main difference is investigating that while in the case of European data retention where access through the public au- criminal allegations. thorities took place only in a second step on Rainer Kaspar, a graduate the basis of certain conditions being ful- of University of Michigan filled, the activities of the U.S. authorities REGARDING THE OBJECTIVE Law School, advises private focus(ed) from the outset on the collection TO FIGHT SERIOUS CRIME AND and corporate clients, pri- of data for direct access by public authori- TERRORISM vate equity firms and finan- ties. Further, data collected for purposes of The ECJ admitted on the one hand that cial institutions in a wide European data retention was collected by fighting serious crime, in particular organ- range of matters. He partic- private companies and encompassed “EU- ized crime and terrorism, is of utmost impor- ularly focuses on cross-bor- domestic” data only. As was made clear from tance for warranting public safety and that der M&A, Financing and Capital Markets media reports, the NSA itself collects data its effectiveness can to a high degree depend transactions. Rainer is a regular lecturer at sem- and (also) focuses on data from foreign on the use of up-to-date investigation tech- inars and conferences, including thoses spon- countries. In addition, the NSA allegedly niques. However, such objective serving the sored by the IBA and AIJA and speaks German, saves the content of the communication common well-being, can, fundamental as it English and French. and also specifically tapped the phone of may be, in itself not justify the need for a re- high-ranking foreign officials, such as tention policy – as was provided for by the Hermann Hansmann, a German Chancellor Merkel. Directive – serving to fight crime. graduate of University of Thus, the NSA’s data collection pro- Protecting the fundamental right of pri- Vienna, works in the field of gram goes far beyond the European data re- vacy requires in any case constant decision public law, where he regu- tention according to the Directive. practice of courts to the effect that excep- larly advises clients regard- tions of protection of personal data and its ing questions of WHY HAS THE ECJ STRUCK DOWN limits are restricted to the absolute mini- environmental and facility THE DIRECTIVE? mum necessary. The Directive, however, cov- law. He further focuses on The ECJ held the Directive to infringe ered comprehensively all persons using Life Sciences. Among his other areas of activity upon the fundamental rights of respect of electronic communication services, irrespec- are Data Protection/IT, Energy, PPP, privacy and protection of personal data. tive of whether such persons were involved Environment and Public Procurements. He The Court has deemed the obligation to re- in serious crime or not. Furthermore, the speaks German and English. tain data to be a “particularly serious inter- Directive did not provide for any exceptions RM7996_MAGAZINE_Layout 1 8/26/14 4:46 PM Page 44

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TELFA CONTINUES EUROPEAN EXPANSION

Further to an extensive Membership form multidisciplinary working parties to TELFA also has more and more indi- Review exercise TELFA is proud to an- see complex transactions through to a suc- viduals and firms recognized in the legal nounce that three new firms have joined cessful conclusion. For more detailed infor- market (eg Dirkzwager recognized as being the network. mation: www.delsolavocats.com the third best firm in the Netherlands and Urmas Ustav, from Lextal, nominated the BUSE HEBERER FROMM, GERMANY PHH, AUSTRIA best lawyer in Estonia). Buse Heberer Fromm will be your part- PHH Attorneys at Law is one of the All this reflects a readiness to perform ner for all kinds of litigious proceedings and leading commercial law firms in Austria and to excellence and to service international for commercial and tax law issues. As a “full as such holds multiple international awards. clients to their best interests. service“ law firm with more than 100 special- They offer the highest level of comprehen- TELFA is proud of all its members and ized attorneys, auditors and tax consultants, sive legal and economic services. This allows it keeps on securing its position as the lead- they can assist you in all court cases and them to find solutions which are tailored to ing legal Alliance in Europe. transactions as well as in day-to-day legal ad- their clients in content and structure. In TELFA will hold its next General visory work. With six offices in the major doing so, they are breaking new grounds Meeting in Berlin on 14-16 November 2014 German cities and eight foreign representa- and finding proactive responses. on which occasion its 25th anniversary will tive offices, Buse Heberer Fromm provides Committed, courageous, precise. also be celebrated. outstanding legal services, tailored individ- Customer satisfaction is the highest pri- ually to your clients’ needs. For more de- ority at PHH. Experts from a wide range of ABOUT TELFA tailed information: www.buse.de specialist areas are available to the clients. • Website: http://www.telfa.org This team guarantees not only the highest • Tel. +32 (0)2 644 02 42 DELSOL AVOCATS, FRANCE levels of comprehensive legal services, but • President of TELFA: Frans Knüppe, DELSOL Avocats is a law firm with also flexibility and personal partner sup- Dirkzwager advocaten & notarissen, lawyers practising at the French Bars of port. Thus, their clients benefit from solu- [email protected] Paris and Lyon. tions which are tailored in content and • Executive Consultant of TELFA: Their aim is to meet their clients’ legal structure. Giancarlo Agace, [email protected] needs relating to disputes and transactional For more detailed information: projects. Driven by strong convictions, the www.phh.at firm advises and defends a wide range of clients, including industrial corporations, These new memberships bring TELFA to service companies, financial institutions, a new dimension. TELFA now has very strong not-for-profit organisations, public bodies partners in key European jurisdiction bringing and professional practices. The nine special- the total number of attorneys practicing in ist departments of DELSOL Avocats often Europe to approximately 1,000 professionals. RM7996_MAGAZINE_Layout 1 8/26/14 4:47 PM Page 45 RM7996_MAGAZINE_Layout 1 8/26/14 4:48 PM Page 46

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Bingham Greenebaum Doll LLP The Court found that the acquisition violated § 7 (Indianapolis, IN) of the Clayton Act and the Idaho Competition Act, Successful In 2011, Heritage Recycling, LLC, entered an and permanently enjoined the transaction. St. agreement to purchase two carpet recycling sys- Luke’s was ordered to fully divest itself of Saltzer’s tems and license technology related thereto for the physicians and assets and to take any further action purpose of sublicensing it to third parties. The sys- needed to unwind the acquisition. Recent tems never performed as promised, and Heritage This matter is currently on appeal to the 9th later learned that the seller did not own all of the Circuit. rights to the intellectual property at issue. The Saint Alphonsus plaintiffs were repre- Arbitration ensued, with Heritage seeking rescis- sented at trial by Keely Duke of Duke Scanlan & USLAW sion of the contract based on the seller’s breach of Hall (Boise, ID) and David Ettinger of Honigman its representations and warranties. The seller filed Miller Schwartz & Cohn (Detroit, MI). counterclaims alleging breach of contract and other claims and seeking approximately $70 mil- Franklin & Prokopik (Wilmington, DE) Law Firm lion in damages. Following a 6-day arbitration hear- William (“Skip”) Crawford and Krista Shevlin re- ing in January 2014, the arbitrator issued an award cently obtained a favorable damages verdict for the that rescinded the contract, ordered the seller to firm’s client following a three-day jury trial in the return the purchase price for the systems ($3 mil- Superior Court, New Castle County, Delaware. The Verdicts lion) to Heritage, and denied the seller’s counter- case involved a negligence claim filed by Plaintiff aris- claims in full. The arbitrator also ordered the seller ing out of a ‘chain-reaction’ rear end automobile ac- to pay Heritage’s share of the arbitrator’s fee. cident. Plaintiff was stopped in traffic with a second Bingham Greenebaum Doll (Indiana) attorneys in- vehicle stopped behind her (“the middle vehicle”). cluded Phil Fowler, Bri Clark and Ashley Paynter. The firm’s client – an insured driver – was unable to stop his tractor-trailer before striking the middle ve- Duke Scanlan & Hall, PLLC (Boise, ID) hicle, and forcing it into the rear of Plaintiff’s vehicle. Following a four-week federal antitrust trial, the Plaintiff was 25 weeks pregnant at the time of the ac- largest hospital system in Idaho was ordered to un- cident. Following depositions, firm’s client conceded wind a transaction in which it had acquired the responsibility for the accident. largest independent physician practice group in Plaintiff alleged $162,000 in special damages. Idaho. Over the past several years, St. Luke’s Her treatment included two surgeries to address a Health System of Boise, Idaho, had acquired more herniated disc at C6-C7. The defense countered than 20 physician practices, five hospitals and four the allegations with the testimony from Dr. Scott outpatient surgery centers. St. Luke’s was the dom- Rushton, a spinal surgeon, and Dr. Sandra Metzler, inant provider in several markets. In December Ph.D., a biomechanical engineer. Defense experts 2012, St. Luke’s acquired the Saltzer Medical conceded the plaintiff sustained a cervical Group, the largest independent multispecialty sprain/strain in the accident and causally related physician group in Idaho. Saltzer’s main office is approximately $15,000 of medical bills to injuries located in the city of Nampa, Idaho, and sits across resultant from the accident. The defense experts the street from a hospital operated by our client, also testified the spinal surgeries and extensive Saint Alphonsus Health System. treatment were not related to the accident. Saint Alphonsus and physician-owned Prior to trial, plaintiff filed a Motion in Treasure Valley Hospital filed a lawsuit as private Limine to exclude the testimony from the defense plaintiffs seeking to prevent the St. Luke’s/Saltzer biomechanical expert, Dr. Metzler. The Court held transaction on grounds that the acquisition vio- a hearing and denied the Motion in Limine. The lated state and federal antitrust laws. The Federal Judge advised the parties it was the first time a bio- Trade Commission and the Idaho Attorney mechanical engineer was permitted to testify in the General’s Office later filed a similar lawsuit and the State of Delaware. two cases were consolidated. The private and gov- Plaintiff’s settlement demand was $400,000. ernment plaintiffs claimed that St. Luke’s actions Defendants countered with an Offer of Judgment harmed competition, would increase health care in the amount of $85,000. The offer was rejected. prices, and would provide St. Luke’s with a domi- Following the three-day trial, the jury re- nant position in the Nampa market for adult pri- turned its verdict and only awarded plaintiff mary care physician services. $48,000 in damages. St. Luke’s and Saltzer defended the acquisition primarily on efficiency grounds, claiming that Goldberg Segalla (Syracuse, NY) the transaction was a critical element of St. Luke’s Kenneth M. Alweis and Lisa M. Robinson, mem- plan to create a clinically integrated health care de- bers of Goldberg Segalla’s Retail, Hospitality, and livery system. The Defendants argued that the pur- Development and Product Liability Practice pose of the transaction was to improve quality and Groups, obtained a defense verdict for a national implement a reimbursement system that would retail sporting goods chain in a multimillion-dollar compensate medical providers based upon quality product liability trial involving an all-terrain vehi- outcomes rather than volume of procedures per- cle/utility task vehicle (ATV/UTV) rollover. formed. The 47-year-old plaintiff in this federal court U.S. District Judge B. Lynn Winmill con- case was driving a UTV on a public road with her cluded that, while St. Luke’s and Saltzer may have 10-year-old daughter as a passenger at the time of intended to improve patient outcomes, the trans- the incident. The plaintiff sustained a tibia/fibula action created too great a risk of increasing costs fracture that required five surgeries. She brought and therefore violated antitrust laws. Judge a product liability action against the manufacturer Winmill’s ruling said it appeared “highly likely” of the UTV and the distributor, our client, asserting that the acquisition would allow St. Luke’s to “ne- improper and misleading instruction in the use of gotiate higher reimbursement rates from health in- the product. surance plans that will be passed on to the After discovery, motions to preclude the consumer” and “raise rates for ancillary services plaintiff’s’ expert and motions for summary judg- (like x-rays) to the higher hospital-billing rates.” ment were filed. The U.S. District Court for the RM7996_MAGAZINE_Layout 1 8/26/14 4:48 PM Page 47

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Northern District of New York granted the motions restraining order and preliminary injunction to only $3 million. Defendants contended (and to preclude the expert witness and dismissed all of against the defendant enjoining him from using a proved) that plaintiff was just plain nuts, and that the causes of action except the plaintiff’s failure-to- design on his real estate signs that was confusingly they had fully complied with all the construction warn cause of action. similar to plaintiff’s service mark. Martin Tate sub- requirements of L.A. City, and reasonable construc- The jury trial was held in Binghamton, New sequently obtained an order of contempt against tion practices. York. In his closing argument, the plaintiff’s coun- the defendant for violating the preliminary injunc- Plaintiff had once offered to settle for sel asked the jury for several millions of dollars in tion. The jury awarded plaintiff damages under the $950,000, but asked for over $9 million in damages damages, as well as punitive damages. Following a Tennessee Consumer Protection Act. The Court in final argument. After two days of deliberations, seven-day trial, and after less than four hours of de- doubled the award under the Tennessee Consumer the jury rejected each of the six separate Special liberation, the jury returned a verdict of no cause Protection Act and also awarded plaintiff damages Verdicts request by plaintiff, as well as any claim for against both defendants. under the Lanham Act, attorneys’ fees, and costs, punitive damages. for a total verdict in the amount of $371,752.01. Huddleston Bolen (Huntington, WV) Finally, the Court permanently enjoined the defen- Pierce Couch Hendrickson Baysinger In a decision that has far-reaching implications for dant from using the plaintiff’s intellectual property & Green, L.L.P. (Oklahoma City, OK) the companies who publish Internet content, the or anything likely to cause confusion with the plain- J. Chris Condren and Benjamin S. Saunier of U. S. Court of Appeals for the 6th Circuit over- tiff’s intellectual property. Taylor v. Thomas, No. Pierce Couch Hendrickson Baysinger & Green, turned a lower court ruling and found in favor of 2:12-2309-JPM-cgc (W.D. Tenn. April 28, 2014). L.L.P. in Oklahoma City, Okla., successfully de- Huddleston Bolen’s client, the operator of a pop- fended an oilfield drilling rig moving company and ular gossip website – TheDirty.com. McCranie Sistrunk Anzelmo Hardy gin pole truck driver in a significant injury accident The case, Jones v. Dirty World L.L.C., was a mat- McDaniel & Welch LLC case in Alva, Okla. After a three -day trial, the jury ter of first impression for the Sixth Circuit. The ap- (New Orleans, LA) returned a verdict awarding no damages to the peal required the Court to analyze and construe an Thomas Anzelmo, Kyle Kirsch, and Craig Canizaro Plaintiff who had suffered a below-the-knee ampu- important federal statute known as the obtained summary judgment on behalf of tation of his leg in an accident which occurred at a Communications Decency Act of 1996 (CDA), CorrectHealth Jefferson, LLC and two of its nurses. drilling location in northwest Oklahoma. which was created to protect companies that pub- Plaintiff brought claims of medical negligence The Plaintiff had incurred $200,000 in out-of- lish Internet content from legal actions resulting against the nurses and CorrectHealth arising out pocket expenses including lost wages and medical from content created by third parties. of the treatment he received following an alleged care and treatment. Plaintiff also presented a life- “The 6th Circuit’s decision protects the chemical exposure to his eye. Plaintiff developed a care plan for prosthetic limb replacement costs Internet as a medium to freely share information,” corneal ulcer that lead to a recommended corneal and medical treatment exceeding $300,000. said Huddleston Bolen Partner, Alex Ward, who transplant. The defense submitted evidence and Plaintiff’s total economic losses presented at trial represented the website’s owner, Dirty World, and expert testimony that showed that CorrectHealth were nearly $1,000,000. its founder Mr. Richie. “We rely on information and its nurses did not breach the applicable stan- The case involved safety and industry practice provided by third parties to help us make informed dard of care in their treatment of plaintiff’s eye, issues related to the tear down, transportation and decisions when we make purchases and for infor- but instead responded appropriately to plaintiff’s rig up of land-based oil and gas drilling rigs. The mation about our government officials and others. medical complaints and condition. Additionally, case also involved issues of liability and immunities All of this was in peril with the lower court’s rul- the evidence established that plaintiff’s corneal of multiple companies that are involved in the rig ing,” Ward said. “We are pleased that the rights of ulcer did not result from the treatment he received moving process. our client were upheld and that the right for all of from CorrectHealth and its nurses. Accordingly, The defense presented expert witness testi- us to read and share legal content on the Internet the Court granted summary judgment in favor of mony as to oilfield practices and the necessity for has been preserved,” he said. the defense, dismissing all of plaintiff’s claims. workers on the ground to stay clear of the blind In the case, Ms. Sarah Jones, a member of the spots of large trucking equipment that is used for Cincinnati Bengals, BenGals, cheerleading squad, Murchison & Cumming LLP the purposes of moving the rig. accused the firm’s client of defamation, libel, “false (Los Angeles, CA) The Plaintiff’s request to the jury was for light,” and intentional inflection of emotional dis- $3,000,000. The jury deliberated approximately On March 19, 2014, William T. DelHagen of tress resulting from unflattering posts made by a two hours before arriving at its verdict denying Murchison & Cumming, LLP, received not just one third party to the website, thedirty.com. Plaintiff any recovery. The jury verdict assigned but six separate defense verdicts in a hotly con- The three judge panel unanimously over- 55% of the fault to the injured Plaintiff, 35% of the tested battle between adjoining landowners in the turned a lower court ruling in favor of Ms. Jones. fault to the Plaintiff’s truck driver and 10% of the pricey Los Angeles community of Bel Air. In 2009, In doing so, it affirmed the “material contribution fault to the defendant driver represented by Mr. British diamond heiress Zeta Graff filed suit against test” used by other Circuit Courts to determine Condren and Mr. Saunier. whether a website actually developed the improper Ukranian-American businessman Alex Blyumkin and his construction contractor Newform content or simply published content created by Sweeny, Wingate & Barrow, P.A. others. Construction over a series of alleged transgressions during the construction of the new Blyumkin resi- (Columbia, SC) Sweeny, Wingate & Barrow, P.A saved a client from Martin, Tate, Morrow & Marston, P.C. dence adjoining the Graff property. That case was settled in 2011, with a modest payment, but within a $3.5 million dollar verdict for bad faith. On May (Memphis, TN) four months Graff filed the second suit that went to 12, 2008, before a new business owner procured li- On September 26, 2013, after a three-day trial, a trial this year on multiple claims of breach of con- ability insurance, an employee killed an elderly jury in the U.S. District Court of the Western tract, false promises, intentional infliction of emo- woman in an automobile accident. For several rea- District of Tennessee rendered a verdict that defen- tional distress, trespass, private and public nuisance, sons, he should not have been driving. After the dant infringed plaintiff’s service mark in violation negligence, and a claim for punitive damages. jury returned a verdict against the at-fault driver, of the Lanham Act, 15 U.S.C. § 1125(a), and the At its core, plaintiff’s case contended that the the decedent’s personal representative brought an Tennessee Consumer Protection Act, Tenn. Code defendants had never intended to live up to the action against an insurance carrier for bad faith Ann. § 47-18-109(a). Shea Sisk Wellford and Adam prior settlement agreement and had continued failure to pay pursuant to its insurance policy. J. Eckstein of Martin, Tate, Morrow & Marston, P.C. with construction in violation of that agreement In an abundance of caution, the insurance represented the plaintiff, an individual who owned and certain construction rules. During the 21-day company initiated a declaratory action to establish and operated a real estate brokerage firm for more trial, Graff adorned her case with claims of obscene that the driver was not covered under the policy be- than 25 years. After plaintiff ceased her business gestures, deliberate harassment, a trespassing mis- cause the driver was not an employee. The court operations and associated with another broker, tress of one of the defendants, and claims of considered faxes from the local insurance agent to plaintiff engaged Martin Tate to stop a real estate Russian mafia death threats against her, her family, the insurer’s agent stating that “[the named in- agent who had previously been associated with and her dogs. She claimed the actions by defen- sured] is no longer the owner of this company,” plaintiff’s brokerage firm from using plaintiff’s in- dants had not only caused her severe post-trau- and requesting coverage beginning May 23, 2008. tellectual property, which consisted of, among matic stress disorder, but had depressed the resale The trial court held that the insurer was equitably other things, the service mark that she used on her value of her award-winning house from $8 million estopped – by its silence – from denying that the real estate signs. Martin Tate obtained a temporary policy was transferred from the named insured to RM7996_MAGAZINE_Layout 1 8/26/14 4:48 PM Page 48

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that Texas law applied requiring the claim’s dis- Speakman led the Clark Wilson deal team. missal because MSIC could not prove intentional DDS Wireless International Inc., a world Successful misrepresentation. MSIC argued that Mississippi leader in providing wireless data solutions for fleet law, which does not require intent, applied dictat- management, announced the successful comple- ing policy rescission. The court agreed with MSIC tion of its going private transaction, pursuant to and applied Mississippi law. The court held Signal’s which a company owned by Vari Ghai, the Chief Recent omissions material, given MSIC’s underwriter’s tes- Executive Officer and a director of the Company, timony that the policy would not have been issued acquired all of the outstanding securities of the had Signal disclosed the withheld information. The Company that the Purchaser and its affiliates did court voided the policy ab initio and awarded MSIC not previously own by way of a plan of arrangement USLAW summary judgment on its recoupment claim, total- (the “Arrangement”). The Arrangement was coming approximately $4 million including interest. pleted following the approval of the Supreme Court Fireman’s Fund Ins. Co. v. Great Am. Ins. Co., 2014 of British Columbia and the satisfaction of various U.S. Dist. LEXIS 45843. conditions precedent to the Arrangement. Total Law Firm value of the transaction exceeded $30,000,000. Wicker Smith O’Hara McCoy & Ford Clark Wilson’s Bernard Pinsky and Stewart Muglich P.A. (Coral Gables, FL) acted for Vari Ghai and his company to complete Verdicts Orlando Partner, Raymond E. Watts, Jr., and the transaction. Associate, Patrick L. Mixson, received a defense verdict in the Marteny, Diane (E/O) v. Irma Alves, Quattlebaum, Grooms, Tull & Burrow Continued M.D. case. The Plaintiff contended that the PLLC (Little Rock, Ark.) Defendant hospitalist improperly ordered Lovenox Timothy W. Grooms served as local counsel for the new proprietorship. This ruling was immedi- after a renal biopsy, contingent upon approval KfW IPEX-Bank Gmbh in connection with the sen- ately appealed. from interventional radiology, which performed ior secured financing of Big River Steel LLC for the Mark Barrow presented oral argument before the biopsy. Lovenox was given contrary to the terms construction, start-up and operation and mainte- the Fourth Circuit Court of Appeals on behalf of of the hospitalist’s order. Discovery revealed that nance of a flat-rolled steel mini mill to be con- First Financial Insurance Company. Applying the hospital pharmacist failed to accurately tran- structed on land located in Osceola, Mississippi South Carolina law, the Appeals Court held in favor scribe the medication order and that the nurses County, Arkansas. The approximately $1.5 billion of the insurer, holding that the insurer could rely did not identify the pharmacy error. The project, which includes senior and mezzanine on the terms of its policy. Fourth Circuit Opinion Defendants obtained a directed verdict on Fabre loans, equity investments, and direct loans, grants No.12-2452. negligence as to the non-party hospital, but the and other incentives from the State of Arkansas, The result is that estoppel cannot be used to jury returned a complete defense verdict. Mississippi County, Arkansas, and the City of create insurance coverage; equity was not served by Osceola, Arkansas, will create more than 500 full requiring the insurer to provide coverage which time jobs, each with an average annual salary of was not contemplated at the inception of the con- $75,000. The Big River Steel project is expected to tract and for which no premium was paid; and the have a tremendous economic impact on the State personal representative could not claim to have Successful of Arkansas. been misled because she and the agent had the means to learn the truth. Thus, the verdict from the bad faith action could not be satisfied by the Stenger LLP (Germany) proceeds from the insurance policy. The solar park Jocksdorf qualifies as one of the Recent largest parks in Europe with a total capacity of 82 Traub Lieberman Straus & megawatt and investments amounting to 120 million Euros. The investment house AB Shrewsberry LLP (Hawthorne, NY) Unternehmensberatung und Beteiligungs Signal International, LLC (“Signal”) owned dry- USLAW gesellschaft purchased the solar park consisting of dock AFDB-5, located in Port Arthur, Texas. After three legally and economically independent sub- AFDB-5 sank, Signal tendered claims to certain in- projects during its deployment phase in the sum- surers. The primary property insurer paid its mer of 2012. The entire park was connected to the $10,000,000 limit. TLSS’s client, Max Specialty Law Firm grid as early as in the end of 2012. UniCredit Bank Insurance Company (“MSIC”) paid the remaining AG and Bayerische Landesbank provided the fund- $3,600,000 for the drydock’s represented value and ing for two subareas (with a total capacity of 55 for lost rental equipment under an excess property MW) with a volume of 70 million Euros running policy. Signal’s marine liability insurer commenced Transactions for a period of 18 Years. suit seeking contribution from MSIC and Signal’s The banking consortium was extensively ad- pollution liability insurer for wreck removal costs. vised by Stenger LLP. The firm executed not only Signal filed a cross-claim against MSIC for alleged Clark Wilson LLP the Legal Due Diligence but also negotiated the business interruption losses. (Vancouver, BC, Canada) project agreements and drafted and negotiated all Discovery revealed that AFDB-5 was danger- financing agreements. ously dilapidated. In its underwriting submission, Clark Wilson acted for Vancouver’s Anthem Properties Group in its recent acquisition of United Besides its sheer size, the transaction stood out Signal provided a property condition report indi- especially for its corporate complexity. Further chal- cating AFDB-5 was in good repair. There were mul- Communities, a Calgary-based residential land de- veloper with operations in Calgary, Edmonton and lenges were the significant regulatory changes in tar- tiple withheld additional engineers’ reports iffs for solar power under the German Renewable indicating that AFDB-5 faced catastrophic failure Sacramento, California, in a $200 million transaction. Alex Petrenko, James Speakman, Adam Dlin Energy Sources Act during the structuring phase absent extensive repairs. and the fact that the site is a former military airbase Upon learning the true condition of AFDB-5, and Rachelle Mezzarobba acted in respect of the purchase transactions, with David Kington, with related pollution issues. MSIC sought to void the policy ab initio based on Stenger’s energy team has advised market Signal’s material misrepresentations and to recoup Rosemary John and Jyotika Reddy acting in respect of the transaction financing. participants on more than 100 renewable energy payments made. In an earlier ruling, the court held projects with a total capacity exceeding 2,500 MW that maritime law did not apply to the MSIC policy Clark Wilson LLP acted for Pure Industrial Real Estate Trust (PIRET) (TSX: AAR.UN) in clos- in Germany as well as in other European countries. because AFDB-5 was not a “vessel.” MSIC’s rescission For Stenger LLP the transaction was the most com- claim would thus be adjudicated under state law. ing its public offering of 38,755,000 trust units, on a bought deal basis, at a price of $4.60 per trust plex and prominent transaction in the renewables Signal and MSIC filed summary judgment sector in Germany in 2013. motions on MSIC’s rescission claim. Signal argued unit for total gross proceeds of $178,273,000.Vikram Dhir, Victor Dudas and James RM7996_MAGAZINE_Layout 1 8/26/14 4:49 PM Page 49

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Lea Richmond, IV, a shareholder in Carr Allison’s from across the United States and Canada who de- Firms Birmingham, Alabama, office has been appointed fend railroads in litigation. Throughout her legal ca- to the Alabama Pattern Jury Instructions Committee reer, Ms. Konrad has been a tireless advocate for her on theMove – Civil for a three-year term. This committee is clients and the railroad industry. She has successfully charged with drafting the language of the pattern defended clients in personal injury cases resulting jury instructions that are used across the state of from automobile/train collisions, cumulative trauma Alabama in all state courts. Richmond was selected disorders, occupational disease and emotional dis- by the Alabama Supreme Court in recognition of his tress claims, as well as cases involving property dam- superior skills and intellect in his legal practice. age, premises liability, and natural resource law. OTC Markets Group Inc. (the “OTC Group”) has At a meeting of its Board of Trustees today in Los appointed Clark Wilson LLP it as the first Angeles, the State Bar of California elected Canadian Designated Advisor for Disclosure Klinedinst PC Shareholder and CFO Heather L. (“DAD”) for companies incorporated in the Rosing to serve as Vice President of the organiza- United States, and a Principal American Liaison tion in 2014-2015. (“PAL”) for companies incorporated outside of the Michael D. McEvoy, Jr. and Mary C. Trinh, partner United States. Until this appointment, the OTC and senior associate, respectively at Murchison & Group had only appointed DAD/PALs if they were Cumming, LLP, domiciled in the United States. participated in the 11th Annual Law Day held on May 10, 2014, in Arcadia, Calif. In April 2014, Lyall D. Knott, Q.C. of Clark Wilson The annual event included a panel of attorney vol- LLP was appointed as a Member of the Advisory unteers who provided free one-on-one legal con- Board to the Canada Institute of The Woodrow sultations to local San Gabriel residents on a wide Wilson International Center for Scholars. The range of legal matters, including landlord-tenant Institute is dedicated exclusively to exploring emerg- issues, insurance problems, workers’ compensa- ing policy issues between Canada and the U.S. The tion, business disputes, real estate litigation, con- Wilson Center was chartered by Congress as the of- sumer rights, personal injury and medical ficial memorial to President Woodrow Wilson. malpractice. Murchison & Cumming, LLP attorneys have participated in Law Day since 2009. Karen Painter Randall, a Connell Foley partner, has been appointed by the Supreme Court of New Wendell Large of Richardson, Whitman, Large Jersey to serve on the Board on Attorney and Badger in Maine has been elected to serve a Certification for a three-year term starting January three-year term on the Board of Governors for the 1, 2014 through December 31, 2016. American Bar Association. The American Bar Association is one of the world’s largest voluntary pro- Cox Smith Jesse Barba, an attorney for fessional organizations, with nearly 400,000 members. Matthews Inc., in McAllen, Texas, was one of Gov. Rick Perry’s four appointees to the Texas Roger W. Stone and Robert S. Hatala of Simmons Appraiser Licensing and Certification Board for Perrine Moyer Bergman PLC have been ap- terms to expire on Jan. 31, 2016. pointed to serve on the Iowa State Bar Association’s Construction Law Section Council. The section ap- Goldberg Segalla’s Workers’ Compensation pointments are for a three-year term appointed by Practice Group launched the Workers’ Compensation the President-Elect of the State Bar Association. Quarterly newsletter to provide news and analysis regarding workers’ compensation litigation across Matt Horn, attorney at SmithAmundsen, has New York and other states. Each issue includes been appointed by the Associated General timely summaries of the latest decisions, along with Contractors of America (AGC) to their National featured articles, to provide practical takeaways Committees on Highway Work Zone Safety and from each decision, insight on the impact of MAASTO Reg AASHTO-AGC-ARTBA Jt. Dennis emerging trends, examination of changes in inter- Cotter, Chair of the Construction Practice Group pretive language used by the courts, and more. To at SmithAmundsen, has been reappointed to serve learn more and to subscribe, visit www.goldberg another term on the Committee. segalla.com/resources/newsletters. SmithAmundsen’s Labor & Employment Brad Carver, a partner at Hall Booth Smith, P.C., Practice Group and the Illinois Chamber of has been appointed to the Atlanta Commission on Commerce partnered to author and edit the Veteran Affairs by the Atlanta City Council Illinois Employment Forms 2014 Ed. President Ceasar C. Mitchell. During his active duty Thomas, Thomas & Hafer military career, Mr. Carver deployed to Bosnia, R. Burke McLemore, Kuwait, Iraq, Afghanistan and was awarded the LLP partner, was named Chairman of the Bronze Star Medal for exceptionally meritorious Disciplinary Board of the Supreme Court of service during combat operations in Afghanistan Pennsylvania, elected to the Board of Directors of and Iraq during Operations Enduring Freedom the Pennsylvania Bar Institute and named a “Life RWLB and Iraqi Freedom. He actively continues to serve Fellow” of the Pennsylvania Bar Foundation. in the U.S. Army Reserves in the rank of Major as Traub Lieberman Straus & Shrewsberry LLP the Senior Legal Opinions Attorney for the 213th announces the creation of the TLSS Cyber Law Legal Support Organization headquartered in Blog. This Blog provides coverage and analysis of Decatur, Georgia. the emerging legal issues in the cyber-risk context. The blog provides those in the cyber-risk world a Angela Konrad, a partner at Huddleston Bolen forum to gain additional insight into the many is- LLP, the West Virginia member of the USLAW sues of cyber law including data breach and privacy Network, was named president of the National issues, regulatory issues, first and third party cyber Association of Railroad Trial Counsel on July 28, claim analysis and cyber insurance coverage is- 2014. She will serve in this role for a one-year term. sues. The blog is accessible via www.traublieber- The National Association of Railroad Trial Counsel man.com/blog/cyber-law. is a 60-year-old organization made up of approximately 1,100 outstanding railroad trial attorneys RM7996_MAGAZINE_Layout 1 8/26/14 4:49 PM Page 50 RM7996_MAGAZINE_Layout 1 8/26/14 5:03 PM Page 51

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USLAW showcases Network with a Heart If we could implement a virtual high-five right now, we would. Nearly 50 USLAW member Supporting champions firms and affiliated companies as well as hundreds and hundreds of individuals donated in communities and volunteered in support of USLAW's national beneficiary. and in sport

Adler Pollock & Sheehan P.C. 2014 USA GAMES • USLAW NETWORK • SPECIAL OLYMPICS Ahmuty, Demers & McManus

Baird Holm LLP With the 2014 Special Olympics USA In total, USLAW’s collective support Carr Allison Games recently completed, it is perhaps a raised more than $200,000 for the Games. Connell Foley LLP most fitting time to pause and reflect on one We also served as presenting sponsor of the Copeland, Cook, Taylor & Bush, P.A. of the most inspirational events that took triathlon and supported the golf competi- place during this past summer. tion during the Games. Fee, Smith, Sharp & Vitullo, L.LP. For the nearly four years leading up to “As I look back on our partnership with Gallagher, Callahan & Gartrell the 2014 USA Games, promises were made the 2014 Special Olympics USA Games, I am Goldberg Segalla LLP to reveal America’s Champions. In June immensely proud of the commitment, volun- Huddleston Bolen LLP 2014, America’s Champions were not only teer time and financial support USLAW revealed but revered and celebrated in a way members, their clients, family, friends and Johnson, Trent, West & Taylor, L.L.P. that was unparalleled for a Special Olympics our corporate partners have given to the Jones, Skelton & Hochuli, P.L.C. event in the United States. The success of the Games, USA athletes and their families,” said Klinedinst PC 2014 USA Games, a progression of what Bradley A. Wright, Chair of USLAW Board of Larson • King, LLP Eunice Kennedy Shriver originally started in Directors, and partner of USLAW member the early 1960s as a summer camp for indi- firm Roetzel & Andress, LPA in Ohio. “As Lashly & Baer, P.C. viduals with intellectual disabilities at her the athletes and everyone involved with the LeClairRyan Maryland home, will provide an even greater Games reflect on that special week back in Lewis Roca Rothgerber LLP foundation for the 2018 USA Games, the June, I certainly hope they will recall a mem- Life Time Fitness, Inc. Special Olympics organization and beyond. orable week of competition and camaraderie The true impact of the 2014 USA that had the support of all of us behind Magna Legal Services LLC Games remains to be seen. Over the course them.” Marshall Investigative Group of the week, nearly 4,600 gold, silver and The 2014 USA Games featured the most Martin, Tate, Morrow & Marston, P.C. bronze medals were awarded to the more inclusive sport offerings in the history of the McCranie, Sistrunk, Anzelmo, Hardy, than 3,500 athletes who trained and com- Special Olympics movement, with Special McDaniel & Welch LLC peted in front of a national audience. But Olympics Unified Sports (athletes with and perhaps even more significant is that mil- without intellectual disabilities competing as Modrall Sperling lions upon millions of people learned of teammates) competition offered in 10 of the Murchison & Cumming, LLP Special Olympics’ life-changing effects, the 16 sports. These 2014 Special Olympics USA Picadio Sneath Miller & Norton, P.C. importance of respecting the athletes’ abili- New Jersey Games in New Jersey were the Pierce Couch Hendrickson Baysinger & Green, L.L.P. ties and highlighting all that these remark- games of welcome and acceptance – and able individuals can do as a result of these each person who took part, in any form or Pion, Nerone, Girman, Winslow & Smith, P.C. Games. fashion, is now asked to carry home this mes- Poyner Spruill LLP Since 2011, USLAW has actively part- sage of acceptance, friendship, and excel- Quality Distribution nered with Special Olympics and the 2014 lence that permeated this competition. Richmond & Quinn USA Games, USLAW’s national benefiting USLAW – a Network with a Heart – charity, in support of its athletes and their stands together in support of Special Roetzel & Andress, LPA families. In that time, USLAW NETWORK, Olympics and its athletes around the world S-E-A, LTD. its members, their clients, families and and we eagerly look forward to future oppor- SmithAmundsen LLC friends as well as several USLAW corporate tunities to support and cheer them on in Sweeney & Sheehan, P.C. partners showed their support of the 2014 USLAW communities from coast to coast USA Games and the athletes by making fi- and around the world. For more informa- Sweeny, Wingate & Barrow, P.A. nancial contributions, volunteering their tion about how you can support Special Thorndal Armstrong Delk Balkenbush & Eisinger time as well as creating fundraising events in- Olympics, visit www.specialolympics.org. Traub Lieberman Straus & Shrewsberry LLP office and in the communities in which they live. USLAW demonstrated boldly what so John Beisser, 2014 Special Olympics USA U.S. Legal Support, Inc. many of us already know: USLAW is a Games contributed to the article. Wicker Smith O’Hara McCoy & Ford P.A. Network with a Heart. Williams Kastner RM7996_MAGAZINE_Layout 1 8/26/14 5:03 PM Page 52

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NETWORK Wicker Smith O’Hara McCoy & Ford P.A. in Florida activated several in-office programs that raised WITH A in excess of $12,000 for Special Olympics. From designated “jeans days” during which employees made a $5 HEART: contribution that was matched by the firm to individual MEMBERS donations throughout the year, Wicker Smith staff em- braced and supported the firm’s and USLAW’s commitment MAKING A to help Special Olympics. In total, the firm raised nearly DIFFERENCE $23,000 for the cause.

How were member firms involved with and supportive of Special Olympics and the 2014 USA Games? Here’s what a few of them had to say and images of some of their tremendous efforts. This is just a sample of how USLAW member firms supported Special Olympics, the 2014 Special Olympics USA Games and state programs.

USLAW KEY Martin Tate ACHIEVEMENTS partnered with • Collectively, USLAW the local Special Olympics chapter in NETWORK through the multi- Memphis, Tennessee. year initiative raised more than On Saturday, May 3, 2014, $200,000 for the 2014 Special Special Olympics Greater Olympics USA Games. Memphis hosted its annual Track • USLAW Corporate Partners & Field Event, which provided Mid- South adult and child athletes the chance U.S. Legal Support and S-E-A, to compete against one another in a variety of Ltd. made donations of $28,200 Olympic-type sports. Several of the athletes at this local and $20,900, respectively, a di- event advanced on to compete in the New Jersey Games this summer. rect result of their work within These Memphis Games aimed to create a party-like atmosphere by setting the NETWORK. up food stations and carnival games for athletes, families and friends along with a DJ playing music all afternoon. Our Martin Tate volunteers buddied- • USLAW member firms Wicker up with athletes for their races, helped cheer on athletes during the sporting Smith O’Hara McCoy & Ford events, and ran the carnival games for families and supporters. Martin Tate P.A. (Florida) donated $22,943 further displayed our support by proudly wearing our custom Special and Larson • King, LLP Olympics “Volunteer” t-shirts. (Minnesota) donated $15,000. We most enjoyed getting to visit with the local Special Olympics athletes one-on-one and hearing their stories of how they arrived at the Memphis • USLAW was represented among Games. The determination of these athletes – young and old – inspired us the 2014 USA Games leader- all. Martin Tate thanks USLAW for sponsoring the 2014 Special Olympics USA ship. Jeff O’Hara of USLAW Games because this encouraged our firm not only to accept the $2014 CHAL- member firm LeClairRyan LENGE but to donate our time and energy by volunteering at the Special served as the first vice chairman Olympics Greater Memphis’ Track & Field Event. of the 2014 USA Games Board of Directors and USLAW CEO Roger Yaffe also served on the Through its charitable foundation, USLAW member Board. firm Larson • King, LLP in Minnesota raised $15,000 in support of Special Olympics and the 2014 USA Games. RM7996_MAGAZINE_Layout 1 8/26/14 5:04 PM Page 53

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Traub Lieberman Straus & Shrewsberry, Hawthorne, N.Y., participated through various fundraising efforts and raised $9,427. In addition to personal fundraising, six firm employees – along with several other USLAW members – participated in the “Battle of the Beach” 5k obstacle Lashly & Baer is proud to be a run in Wildwood, N.J. The USLAW part of USLAW and their partner- team led all event participants by raising ship with the 2014 Special more than $7,500 for Special Olympics New Jersey Olympics USA Games and we’ve through that event. It was a great time for an excellent cause! really enjoyed taking part in this initiative over the last few years. Two of our members already serve on the board of Special Olympics – Missouri but the USLAW initia- In Ottawa, Canada, USLAW mem- tive allowed us to expand our in- ber Kelly Santini LLP has been volvement with Special Olympics supporting Special Olympics since to a national level, and it inspired 2005. Each year the firm organizes new opportunities to involve and hosts a Festival of Champions friends and family members in our Breakfast to honor the accom- fundraising efforts. In addition to plishments of local athletes, Lashly & Baer’s monetary contri- coaches and volunteers and their bution to the USLAW Challenge, love of sport, competition and ac- L&B supported the fundraising ef- ceptance. To date, the breakfasts forts of attorneys and staff through Goldberg have raised more than $250,000. casual days, gift basket raffles, and Segalla, The event continues to draws hun- a Dodgeball Tournament. Buffalo, N.Y., dreds of attendees from the local The Dodgeball Tournament is a proud sup- business community and was a big success and it gave us an porter of the Parliament Hill. The parade of opportunity to showcase one of Special Olympics, champions, presentation of our local athletes, Lindsey and we were honored awards and keynote speech make Hawkins, who is competing in the to cheer on the more than the breakfast an inspiration for 2014 Games. Lindsey and her 3,500 athletes from around the everyone in attendance. This year mom, Pat, joined us for the tour- country who competed in the 2014 the breakfast celebrates its 10th nament and shared with us what Special Olympics USA Games. We anniversary on October 16th. competing in the Special Olympic recognize the importance of sup- Former Olympic gold medalist, Games has meant to them. porting the communities in which author and humanitarian Mark Hearing Lindsey’s story inspired we serve, and we take great pride Tewksbury will deliver the keynote several of the dodgeball tourna- in these endeavors. For the 2014 address. Business partner Don ment participants to join the effort games, we made a donation on be- Burke and ligation partner Lisa and the son of one of our staff half of the firm and several of our Langevin have been co-chairing colleagues also made personal do- members even signed up for the the event for the firm since its in- nations. We also will once again be Over the Edge campaign to sup- ception. In 2013, Burke was participating in the Battle the port our local Special Olympics named the Special Olympics Beach 5k in New Jersey (Sept. 20, chapter. We are also thrilled to re- Festival Volunteer of the Year for 2014) that benefits Special port that Lindsey brought home Canada. the bronze in Bowling at the 2014 Olympics. Games! RM7996_MAGAZINE_Layout 1 8/26/14 4:49 PM Page 54

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ABOUT USLAW NETWORK

2001. The Start Jurisdictional awareness is a key ingredient to How is USLAW NETWORK of Something Better... successfully operating throughout the United Membership Determined. States and abroad. Knowing the local rules, the Firms are admitted to the Network by invita- Mega-firms...big, impersonal bastions of judge, and the local business and legal envi- tion only and only after they are fully vetted ronment provides our firms’ clients this advan- legal tradition, encumbered by bureaucracy through a rigorous review process. Many firms tage. The strength and power of an have been reviewed over the years, but only a and often slow to react. The need for an al- international presence combined with the un- small percentage were eventually invited to derstanding of a respected local firm makes join. The search for quality member firms is a ternative was obvious. A vision of a network for a winning line-up. continuous and ongoing effort. Firms admit- of smaller, regionally based, independent ted must possess broad commercial legal capa- A Legal Network Not for Its Member bilities and have substantial litigation and trial firms with the capability to respond quickly, Lawyers. Instead a Legal Network experience. In addition, USLAW NETWORK for Purchasers of Legal Services. members must subscribe to a high level of serv- efficiently and economically to client needs USLAW NETWORK firms go way beyond pro- ice standards and are continuously evaluated from Atlantic City to Pacific Grove was born. viding quality legal services to their clients. to ensure these standards of quality and ex- Unlike other legal networks, USLAW is organ- pertise are met. In its infancy, it was little more than a possi- ized around client expectations, not around the member law firms. Clients receive ongoing USLAW in Review. bility, discussed around a small table and educational opportunities, online resources • All vetted firms with demonstrated, robust dreamed about by a handful of visionaries. including webinars, jurisdictional updates, and practices and specialties resource libraries. We also provide a semi-an- • Efficient use of legal budgets, providing But the idea proved too good to leave on the nual USLAW Magazine, webinars, compendi- maximum return on legal services invest- ums of law, as well as annual membership ments drawing board. Instead, with the support of directories and practice group directories. To • Seamless, cross-jurisdictional service some of the country's brightest legal minds, ensure our goals are the same as the clients • Responsive and flexible our member firms serve, our 45-member • Multitude of educational opportunities and USLAW NETWORK became a reality. Client Leadership Council is directly involved online resources in the development of our programs and serv- • Team approach to legal services Fast-forward to today. ices. This communication pipeline is vital to The commitment remains the same as origi- our success and allows us to better monitor The USLAW Success Story. nally envisioned. To provide the highest qual- and meet client needs and expectations. The reality of our success is simple: we succeed ity legal representation and seamless because our firms' clients succeed. Our mem- cross-jurisdictional service to major corpora- USLAW Abroad. ber firms provide high-quality legal results tions, insurance carriers, and to both large and Just as legal issues seldom follow state borders, through the efficient use of legal budgets. We small businesses alike, through a network of they often extend beyond U.S. boundaries as provide cross-jurisdictional services eliminat- professional, innovative law firms dedicated to well. In 2007, USLAW established a relation- ing the time and expense of securing adequate their client's legal success. Now as a network ship with the Trans-European Law Firms representation in different regions. We pro- with more than 7,000 attorneys from more Alliance (TELFA), a network of 25 independ- vide trusted and experienced specialists than 100 defense-based law firms, spanning ent law firms representing more than 700 quickly. the United States, Canada, Latin America, lawyers through Europe. Subsequently, in Europe, Asia and Africa, USLAW NETWORK 2010 we entered a similar affiliation with the When a difficult legal matter emerges – remains a responsive, agile legal alternative to ALN (formerly the Africa Legal Network) to whether it’s in a single jurisdiction, nationwide the mega-firms. further our service and reach. Additional, or internationally – USLAW is there. Success. USLAW member firms are located throughout Homefield Advantage. Canada, Latin America, and Asia. For more information, please contact Roger USLAW NETWORK offers what it calls The M. Yaffe, USLAW CEO, at (800) 231-9110 or Homefield Advantage which comes from [email protected] knowing and understanding the venue in a way that allows a competitive advantage – a tru- ism in both sports and business.

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USLAW NETWORK: YOUR HOMEFIELD ADVANTAGE

Edmonton, AB

Vancouver, BC Calgary, AB BRAZIL .. . Brossard,.. QC . Ottawa, ON ...... ARGENTINA ...... SOUTH .. . . . AMERICA ...... Ethiopia . ..

Uganda Kenya Rwanda Burundi

Tanzania

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Latvia . Denmark . Russia Ireland Lithuania South Africa . Netherlands England. .. . CHINA .. . . . Poland Belgium Germany Luxembourg . . Czech Rep. France Slovakia Switzerland Austria . . . Hungary Dalian . Portugal Italy Indicates Beijing. . Member . . Primary Office CHINA Spain . . . Location Shanghai . Greece Indicates Member . . Satellite Office Kunming . Location Shenzhen. Taiwan. Hong Kong Malta RM7996_MAGAZINE_Layout 1 8/28/14 1:57 PM Page 56

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ALABAMA | BIRMINGHAM MAINE | PORTLAND PENNSYLVANIA | PITTSBURGH Carr Allison Richardson, Whitman, Large & Badger Picadio Sneath Miller & Norton, P.C. Charles F. Carr...... (251) 626-9340 Wendell G. Large ...... (207) 774-7474 Henry M. Sneath ...... (412) 288-4013 [email protected] [email protected] [email protected] ALASKA | ANCHORAGE MARYLAND | BALTIMORE PENNSYLVANIA | PITTSBURGH Richmond & Quinn Franklin & Prokopik, PC Pion, Nerone, Girman, Winslow & Smith, P.C. Robert L. Richmond ...... (907) 276-5727 Albert B. Randall, Jr...... (410) 230-3622 John T. Pion ...... (412) 667-6200 [email protected] [email protected] [email protected] ARIZONA | PHOENIX MASSACHUSETTS | BOSTON RHODE ISLAND | PROVIDENCE Jones, Skelton & Hochuli, P.L.C. Adler Pollock & Sheehan P.C. Adler Pollock & Sheehan P.C. Phillip H. Stanfield ...... (602) 263-1745 Michael D. Riseberg...... (617) 603-0519 Richard R. Beretta, Jr...... (401) 427-6228 [email protected] [email protected] [email protected] ARKANSAS | LITTLE ROCK MINNESOTA | ST. PAUL SOUTH CAROLINA | COLUMBIA Quattlebaum, Grooms, Tull & Burrow PLLC Larson • King, LLP Sweeny, Wingate & Barrow, P.A. John E. Tull, III ...... (501) 379-1705 Mark A. Solheim ...... (651) 312-6503 Mark S. Barrow ...... (803) 256-2233 [email protected] [email protected] [email protected] CALIFORNIA | LOS ANGELES MISSISSIPPI | GULFPORT SOUTH DAKOTA | PIERRE Murchison & Cumming, LLP Carr Allison Riter, Rogers, Wattier & Northrup, LLP Friedrich W. Seitz ...... (213) 630-1000 Douglas Bagwell ...... (228) 864-1060 Robert C. Riter...... (605) 224-5825 [email protected] [email protected] [email protected] CALIFORNIA | SAN DIEGO MISSISSIPPI | RIDGELAND TENNESSEE | MEMPHIS Klinedinst PC Copeland, Cook, Taylor & Bush, P.A. Martin, Tate, Morrow & Marston, P.C. John D. Klinedinst...... (619) 239-8131 Greg Copeland...... (601) 427-1313 Lee L. Piovarcy...... (901) 522-9000 [email protected] [email protected] [email protected] CALIFORNIA | SAN FRANCISCO MISSOURI | ST. LOUIS TEXAS | DALLAS Dillingham & Murphy, LLP Lashly & Baer, P.C. Fee, Smith, Sharp & Vitullo, L.L.P. Patrick J. Hagan ...... (415) 397-2700 Stephen L. Beimdiek...... (314) 436-8303 Michael P. Sharp...... (972) 980-3255 [email protected] [email protected] [email protected] CALIFORNIA | SAN JOSE MONTANA | GREAT FALLS TEXAS | HOUSTON Robinson & Wood, Inc. Davis, Hatley, Haffeman & Tighe, P.C. Johnson, Trent, West & Taylor, L.L.P. Arthur J. Casey ...... (408) 792-5912 Maxon R. Davis...... (406) 761-5243 Brian P. Johnson ...... (713) 860-0509 [email protected] [email protected] [email protected] CALIFORNIA | SANTA BARBARA NEBRASKA | OMAHA TEXAS | SAN ANTONIO Snyder Law, LLP Baird Holm LLP Cox Smith Matthews Incorporated Barry Clifford Snyder ...... (805) 683-7750 Jill Robb Ackerman...... (402) 636-8263 Brett W. Schouest...... (210) 554-5269 [email protected] [email protected] [email protected] COLORADO | DENVER NEVADA | LAS VEGAS UTAH | SALT LAKE CITY Lewis Roca Rothgerber LLP Thorndal Armstrong Delk Balkenbush & Eisinger Strong & Hanni, PC Ben M. Ochoa...... (303) 628-9574 Brian K. Terry...... (702) 366-0622 Stephen J. Trayner ...... (801) 323-2011 [email protected] [email protected] [email protected] CONNECTICUT | HARTFORD NEW HAMPSHIRE | CONCORD VIRGINIA | RICHMOND Hinckley, Allen & Snyder LLP Gallagher, Callahan & Gartrell LeClairRyan Noble F. Allen ...... (860) 725-6237 R. Matthew Cairns ...... (603) 545-3622 Charles G. Meyer, III ...... (804) 783-7535 [email protected] [email protected] [email protected] FLORIDA | MIAMI NEW JERSEY | ROSELAND WASHINGTON | SEATTLE Wicker Smith O’Hara McCoy & Ford P.A. Connell Foley LLP Williams Kastner Nicholas E. Christin ...... (305) 448-3939 Kevin R. Gardner...... (973) 533-4222 Sheryl J. Willert ...... (206) 628-2408 [email protected] [email protected] [email protected] FLORIDA | TALLAHASSEE NEW MEXICO | ALBUQUERQUE WEST VIRGINIA | HUNTINGTON Carr Allison Modrall Sperling Huddleston Bolen LLP Christopher Barkas...... (850) 222-2107 Timothy C. Holm ...... (505) 848-1817 Richard J. Bolen...... (304) 691-8420 [email protected] [email protected] rbolen@huddleston bolen.com GEORGIA | ATLANTA NEW YORK | ALBERTSON WISCONSIN | MADISON Hall Booth Smith, P.C. Ahmuty, Demers & McManus Axley Brynelson, LLP John E. Hall, Jr...... (404) 954-5000 Michael Rabus...... (646) 536-5748 Paul D. Curtis...... (608) 283-6768 [email protected] [email protected] [email protected] HAWAII | HONOLULU NEW YORK | BUFFALO WYOMING | CASPER Goodsill Anderson Quinn & Stifel LLP Goldberg Segalla LLP Williams, Porter, Day and Neville PC Thomas Benedict...... (808) 547-5716 Neil A. Goldberg ...... (716) 566-5475 Scott E. Ortiz ...... (307) 265-0700 [email protected] [email protected] [email protected] IDAHO | BOISE NEW YORK | HAWTHORNE Duke Scanlan & Hall, PLLC Traub Lieberman Straus & Shrewsberry LLP USLAW INTERNATIONAL Richard E. Hall...... (208) 342-3310 Stephen D. Straus...... (914) 347-2600 ARGENTINA | BUENOS AIRES [email protected] [email protected] Rattagan, Macchiavello, Arocena & Peña Robirosa ILLINOIS | CHICAGO NORTH CAROLINA | RALEIGH Abogados SC SmithAmundsen LLC Poyner Spruill LLP Juan Martin Arocena...... +(5411) 4010-5007 Lew R.C. Bricker ...... (312) 894-3224 Thomas K. Lindgren...... (919) 783-2827 [email protected] [email protected] [email protected] BRAZIL | SÃO PAULO INDIANA | INDIANAPOLIS NORTH DAKOTA | DICKINSON Mundie e Advogados Bingham Greenebaum Doll LLP Ebeltoft . Sickler . Lawyers PLLC Rodolpho de Oliveira Franco James M. Hinshaw ...... (317) 968-5385 Randall N. Sickler ...... (701) 225-5297 Protasio...... (55 11) 3040-2923 [email protected] [email protected] [email protected] IOWA | CEDAR RAPIDS OHIO | CLEVELAND CANADA | ALBERTA | CALGARY & EDMONTON Simmons Perrine Moyer Bergman PLC Roetzel & Andress Parlee Mclaws LLP Kevin J. Visser...... (319) 366-7641 Bradley A. Wright ...... (330) 849-6629 Jerri L. Cairns...... (780) 423-8500 [email protected] [email protected] [email protected] KANSAS/WESTERN MISSOURI | KANSAS CITY OKLAHOMA | OKLAHOMA CITY CANADA | BRITISH COLUMBIA | VANCOUVER Dysart Taylor Cotter McMonigle & Montemore, PC Pierce Couch Hendrickson Baysinger & Green, L.L.P. Clark Wilson LLP Patrick K. McMonigle...... 816-714-3039 Gerald P. Green ...... (405) 552-5271 Samantha Ip ...... (604) 643-3172 [email protected] [email protected] [email protected] KENTUCKY | LOUISVILLE OREGON | PORTLAND CANADA | ONTARIO | OTTAWA Bingham Greenebaum Doll LLP Williams Kastner Kelly Santini Mark S. Riddle...... (502) 587-3623 Eric J. Neiman ...... (503) 944-6943 Robert Ford...... (613) 238-6321, ext 295 [email protected] [email protected] [email protected] LOUISIANA | NEW ORLEANS PENNSYLVANIA | HARRISBURG CANADA | QUEBEC | BROSSARD McCranie, Sistrunk, Anzelmo, Hardy, Thomas, Thomas & Hafer LLP Therrien Couture L.L.P. McDaniel & Welch LLC Todd B. Narvol...... (717) 237-7133 Jean-Luc Couture ...... (450) 462-8555 Michael R. Sistrunk ...... (504) 846-8338 [email protected] [email protected] [email protected] PENNSYLVANIA | PHILADELPHIA CHINA | SHANGHAI Sweeney & Sheehan, P.C. Duan&Duan Warren E. Voter ...... (215) 963-2439 George Wang ...... 8621 6219 1103 [email protected] [email protected] RM7996_MAGAZINE_Layout 1 8/26/14 4:50 PM Page 57

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USLAW SOLUTIONS

USLAW NETWORK offers our members' TEAM USLAW expertise. Areas of expertise include forensic engineering, legal project management, out- clients countless products free of charge to as- Corporations and insurers alike need consistent, quality legal services over a broad spec- sourcing and medical legal advisory services; sist with their day-to-day operations and man- trum of legal and geographical areas. The cost, court reporting, jury consultation, e-discovery, medical record analysis, forensic accounting, agement of legal issues. Many of these products time, and expertise required in securing legal representation and negotiating fee schedules structured settlements, investigation and legal are the direct result of concepts and initiatives throughout the region, country and around the animation services. developed by our USLAW Client Leadership world can be overwhelming, requiring constant effort, oversight, frustration and missed oppor- USLAW ON CALL Council. tunity. Team USLAW is the solution to meet What is the value in having individual access to The following listings detail each product these challenges. Team USLAW, a wholly 4-8 highly experienced USLAW member owned subsidiary of USLAW NETWORK, Inc., attorneys from around the country and around which runs the gamut from USLAW Solutions manages a client’s legal needs, providing one the world (if necessary) roundtable specific is- to USLAW Resources and finally to USLAW point of contact to clients ensuring they re- sues you may be facing including actual cases or ceive consistent and quality legal firm choices hypotheticals? USLAW is pleased to provide People. We encourage you to review these and and services no matter where in the world this free consultation which will give you a take advantage of those that are applicable to your needs may arise. Team USLAW eliminates sense of comfort that you are managing a the need to negotiate different fee schedules specific issue/case in an appropriate manner you and your company. for each and every legal need. And clients al- and make you aware of unforeseen roadblocks USLAW is continually seeking ways to en- ways have the option to reject any candidate and variables that may pop up. It never hurts to firm presented. In summary, Team USLAW is a phone a friend! Call Roger Yaffe at sure that your legal outcomes are seamless comprehensive service designed to eliminate (800) 231-9110, ext 1 to schedule a call. and, most importantly, successful and we hope much of the hassle and uncertainty of moving from in-house to outside counsel. USLAW CLAIMS CHALLENGE that these resources can assist in this regard. The Challenge is a one-day, experiential claims Please don't hesitate to send us input on your EDUCATION program that USLAW brings to you and your It’s no secret – USLAW can host a great event. company. Directed to claims personnel, a experience with any of the items listed in the We are very proud of the industry-leading detailed, hypothetical, multi-jurisdictional sce- Sourcebook as well as ideas for the future that educational components of our semi-annual nario is played out with USLAW member would benefit you and your fellow colleagues. client conferences, seminars, and regional attorneys and corporate partner experts meetings. Reaching from national to more working side-by-side with your staff in smaller localized offerings, USLAW member attorneys teams to manage all of the issues and curve- and the clients they serve meet throughout the balls that are sure to come. Do we go to trial, year not only at USLAW hosted events but mediate, or settle? This is just one of the many also at many legal industry conferences. CLE questions at hand as USLAW stages this highly accreditation is provided for most USLAW ed- interactive program customizable for your ucational offerings. specific company and legal staff.

A TEAM OF EXPERTS LAWSUIT MONITORING USLAW NETWORK undoubtedly has the Let USLAW help you be the first to know most knowledgeable attorneys in the world, when your company is facing litigation. With but did you know that we also have the most USLAW’s Lawsuit Monitoring program, we can valuable corporate partners in the legal search for your company on a daily basis and profession? Don’t miss out on an opportunity alert you of any activity we find. If you are inter- to better your legal game plan by taking ested in this service, please contact Roger Yaffe advantage of our corporate partners’ at (800) 231-9110, ext. 1. RM7996_MAGAZINE_Layout 1 8/26/14 4:50 PM Page 58

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USLAW RESOURCES USLAW PEOPLE

COMPENDIUMS OF LAW USLAW MAGAZINE USLAW MEMBER AND USLAW regularly produces new and updates USLAW Magazine is an in-depth publication ATTORNEY DIRECTORIES existing Compendiums providing a multi-state produced twice annually and designed to Several USLAW NETWORK practice groups have resource that permits users to easily access address legal and business issues facing compiled detailed directories of the active attor- state common and statutory law. Compendiums commercial and corporate clients. Released in neys within their group. These directories showcase are easily sourced on a state-by-state basis and Spring and Fall, recent topics have covered the attorneys’ specific areas of experience, educa- are developed by the member firms of USLAW. managing litigation in a tighter economy, tion, industry memberships, published articles, and Just some of the current Compendiums include: changes in M&A strategies, sidestepping legal in some cases representative clients. These directo- Transportation, Construction Law, Surveillance, challenges during a workforce reduction, best ries are available as downloadable PDFs. Retail, Spoliation, Nullum Tempus, Offers of practices in e-discovery policies, and weighing Judgment, and a National Compendium ad- the pros and cons of litigation versus media- RAPID RESPONSE dressing issues that arise prior to the com- tion, social media and the law, patent troll taxes The USLAW NETWORK Rapid Response mencement of litigation through trial and on to and much more. Online Searches secure USLAW attorneys appeal. quickly when timeliness is critical for you and USLAW EDUNET your company. Offered for Transportation, STATE JUDICIAL PROFILES A wealth of knowledge offered on demand, Construction Law and Product Liability, this re- BY COUNTY USLAW EduNet is a regular series of source provides client’s cell and home tele- Jurisdictional awareness of the court and juries interactive webinars produced by several phone numbers along with assurance that on a county-by-county basis is a key ingredient USLAW practice groups. The one-hour USLAW will be available 24/7 with the right to successfully operating legal challenges programs are available live to you right on your person and the right expertise. Please see the throughout the United States. Knowing the desktop and are also archived on USLAW.org sticky bar at the top of the USLAW web site local rules, the judge, and the local business and for viewing at a later date. Topics range from to use the USLAW Rapid Response feature. Medicare to Employment & Labor Law to legal environment provides a unique competi- PRACTICE GROUPS Product Liability Law and beyond. tive advantage. In order to best serve clients, USLAW prides itself on variety. Its 7,000+ USLAW NETWORK offers a judicial profile attorneys study all areas of legal practice and that identifies counties as Conservative, USLAW CONNECTIVITY participate in USLAW’s 18 active groups and Moderate or Liberal and thus provides you an In today’s digital world there are many ways to communities including Banking & Financial important Homefield Advantage. connect, share, communicate, engage, interact Services, Business & Advisory Services, Business and collaborate. Through any one of our various Litigation, Construction Law, E-Discovery, USLAW DIGIKNOW communications channels, sign on, ask a Employment & Labor Law, Healthcare Law, USLAW DigiKnow is USLAW’s digital knowl- question, offer insight, share comments, seek Insurance and Risk Management Services, edge e-newsletter featuring highlights from advice and collaborate with others connected International Business & Trade, Internet, Privacy around the NETWORK. Through USLAW to USLAW. Please check out USLAW on & Media, IP and Technology, Product Liability, DigiKnow, we share legal, legislative and jurisdic- Twitter @uslawnetwork and our LinkedIn Professional Liability, Retail, Transportation, tional news as well promote upcoming USLAW group page. White Collar Defense, Women’s Connection, events, webinars and podcasts that might be of and Workers’ Compensation. Don’t see a interest to you and your colleagues. It is an is an specific practice area listed? No worries as excellent resource to keep abreast of new case USLAW firms cover the gamut of the legal law, important verdicts and other pending legis- profession and we are sure to find a firm that lation and events throughout the NETWORK. has significant experience in the area of need. USLAW MOBILE APPS CLIENT LEADERSHIP COUNCIL We pack light. Take USLAW with you wherever Take advantage of the knowledge of your peers. you go. Get USLAW information fast including USLAW NETWORK’s Client Leadership several practice area Rapid Response teams at Council is a hand-selected, diverse group of USLAW 24/7. We also offer specific Client prestigious USLAW firm clients that provides Conference apps twice a year. USLAW apps expertise and advice to ensure the organization are available on iPhone/iPad, Android and most and its law firms meet the expectations of the Blackberry devices (24/7 only) by typing in key- client community. In addition to the valuable in- word “USLAW.” sights they provide, CLC members also serve as USLAW Ambassadors, utilizing their stature within their various industries to promote the many benefits of USLAW NETWORK. RM7996_MAGAZINE_Layout 1 8/26/14 4:50 PM Page 59

USLAW www.uslaw.org 5 9 2014 USLAW Partners

SEA ★★★★ U.S. Legal Support, Inc ★★★★ Demonstratives, Inc. ★ USLAW ★ USLAW OFFICIAL TECHNICAL PREMIER OFFICIAL COURT REPORTING PREMIER OFFICIAL LEGAL ANIMATION SERVICES PARTNER PARTNER FORENSIC EXPERT PARTNER PARTNER OF USLAW NETWORK PARTNER OF USLAW NETWORK OF USLAW NETWORK www.uslegalsupport.com www.demonstratives.com www.SEAlimited.com 363 N. Sam Houston Pkwy. E., Suite 1200 2321 N Loop Dr., Ste 201 7349 Worthington-Galena Road Houston, TX 77060 Ames, IA 50010 Columbus, OH 43085 Phone:(800) 567-8757 Phone:(515) 296-6930 Phone:(614) 888-4160 Fax: (713) 653-7172 Daniel Kruger, Ph.D., Fax: (614) 885-8014 Charles F. Schugart President J. Kenneth Corwin President & CEO Phone:(515) 296-7175 National Account Executive 363 N. Sam Houston Pkwy. E., Suite 1200 Email: [email protected] 7349 Worthington-Galena Road Houston, TX 77060 Charles Fox, Ph.D. Columbus, OH 43085 Phone:(832) 201-3834 Vice President Phone:(800) 782-6851 Email: [email protected] Phone:(515) 296-6737 Email: [email protected] Jim Cunningham Email: [email protected] Chris Torrens Director of Record Retrieval Mark McGrory, Esq. Vice President Division President, Midwest Vice President / General Counsel 1110 Benfield Boulevard, Suite B 200 West Jackson Boulevard, Suite 600 Phone:(913) 226-5205 Millersville, MD 21108 Chicago, IL 60606 Email: [email protected] Phone:(800) 635-9507 Phone:(312) 236-8352 Email: [email protected] Email: [email protected] Complex ideas and intricate fact patterns are more Jared Henthorn Pete Giammanco easily understood when taught using visual tools. Manager Director of Court Reporting Demonstratives, Inc. (DI) has a rich history of cre- 7349 Worthington-Galena Road ating effective, science-based 2D and 3D computer Division President, Western animations and graphic presentations for attorneys Columbus, OH 43085 15250 Ventura Boulevard, Suite 410 and their clients in over 1500 litigation matters. Phone:(800) 782-6851 Sherman Oaks, CA 91403 Email: [email protected] Phone:(818) 995-0600 DI’s staff includes doctorate-level experts, engi- Email: [email protected] neers, scientists, animators, illustrators, modelers, S-E-A is a multi-disciplined engineering and fire in- Lee Ann Watson and graphic artists who apply sound, scientific prin- vestigation company specializing in failure analysis. Senior VP Sales & Marketing ciples to every presentation, bringing decades of S-E-A also conducts environmental and industrial hy- experience to intellectual property, environmental, Division President, Southwest giene analysis. S-E-A offers complete investigative construction defects, and product liability cases. services including: mechanical engineering, electri- 363 N. Sam Houston Pkwy. E., Suite 1200 This unique blend of scientific and artistic talent al- cal engineering, metallurgical engineering, civil en- Houston, TX 77060 lows DI to create the most visually compelling, gineering, fire investigation, environmental and Phone:(832) 201-3872 technically accurate, and persuasive images. workplace analysis. These disciplines interact to pro- Email: [email protected] Attorneys in law firms and corporate legal depart- vide thorough and independent analysis that will ments rely on DI to create powerful courtroom support any subsequent litigation. In addition, S-E-A U.S. Legal Support has been serving the legal serv- tools and effective catalysts for settlement. has a fully equipped chemical testing laboratory. ices community for nearly two decades. The U.S. Legal Support philosophy brings together special- S-E-A's full-time staff of investigators, engineers and ists located across the country who understand each chemists are licensed/registered professionals who local market. This philosophy has created local serv- are court-qualified experts in their respective fields. ices tailored to each market bound together by a With ten offices located throughout the United company who holds a national presence. States, S-E-A has provided professional services to manufacturers, attorneys and the insurance indus- With over 40 offices located across the country U.S. try – nationally and internationally – for over 40 Legal Support has a diversified service offering in- years. S-E-A also has developed specialized practice cluding Court Reporting, Record Retrieval, groups in construction, marine, trucking, vehicle Litigation & ESI Services and Trial Services. dynamics and quality control laboratory testing. U.S. Legal Support is the proud official Court Reporter Partner of The USLAW NETWORK providing access to over 1200 superior court reporters. U.S. Legal Support court reporters are equipped with state-of-the-art technology creating a system that makes it easy for clients to access information. Client services include a complete online office with 24/7 access which includes online scheduling, calendar access, document repository with access to transcripts and exhibits, invoice review and much more.

U.S. Legal Support prides itself on the ability to create personal relationships and partnerships with firms by creating custom solutions tailored to individual legal needs. For a full service offering visit www.uslegalsupport.com. U.S Legal Support looks forward to showing you their Power of Commitment. RM7996_MAGAZINE_Layout 1 8/26/14 4:50 PM Page 60

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Elevate Services, Inc. Galaher Settlements Granite Legal Systems OFFICIAL MEDICAL LEGAL CONSULTING, LEGAL OFFICIAL STRUCTURED SETTLEMENT OFFICIAL E-DISCOVERY PARTNER PROJECT MANAGEMENT, AND OUTSOURCING PARTNER OF USLAW NETWORK OF USLAW NETWORK PARTNER OF USLAW NETWORK www.galahersettlements.com www.granitelegal.com www.elevateservices.com 39674 North 104th Street 1201 Louisiana Street, Suite 350 201 South Santa Fe Ave. Suite 100 Scottsdale, Az 85262 Houston, TX 77002 Los Angeles, CA 90012 Phone:(630) 718-1213 Phone:(713) 652-0881 Phone:(310) 853-8448 Fax: (630) 339-4413 Jeffrey R. Hewett, JD Fax: (213) 347-0209 Jim Ebel, CPCU, ARM Chief Executive Officer Nancy Fraser Michalski, RN President Phone:(713) 652-0881 Vice President and Founder, Cell: (630) 327-7213 Email: [email protected] Med Legal Services Email: [email protected] Steve Mack Phone:(310) 993-1363 Dave Latz Consultant Email: [email protected] 413 Reserve Court, Joliet, Il 60431 Phone:(713) 240-0634 Nick Sherman Phone:(815) 744-7077 Email: [email protected] Business Development Associate Email: [email protected] Dennis Kiker, JD Phone:(310) 699-3073 Daniel Weberg Consultant Email: [email protected] P.O. Box 660, Alton, NH 03809 Phone:(804) 350-8444 Mark Redmayne Phone:(603) 875-7930 Email: [email protected] VP Business Development Email: [email protected] Phone:(310) 792-0833 Granite Legal Systems proudly supports USLAW Email: [email protected] As one of the largest providers of structured settle- NETWORK firms and their clients throughout the ments, Galaher Settlements offers clients inte- discovery process from legal hold planning Elevate provides corporate law departments and grated claims solutions from a team of industry through trial support, ensuring that they have the law firms with practical ways to improve efficiency, experts supported by leading-edge technology. We information required for timely and cost effective quality, and outcomes through consulting, man- have a staff of more than 50 seasoned professionals client representation. Granite professionals work aged services and technology. located coast-to-coast with more than 600 years of with law firms and corporations to define discovery combined experience. Our team has successfully obligations and plan defensible responses. To these Our specialized medical records and bill analysis closed more than 50,000 structured settlements engagements, Granite offers seasoned industry vet- improves outcomes, expedites settlements, and over the past 30 years. erans with versatile skill sets who understand and lowers costs on bodily injury liability claims and liti- implement technology resource requirements, ad- gation. Using a patent-pending quality control sys- We offer a full range of settlement solutions, dress team structure & responsibilities, and assure tem, Elevate’s Med Legal team leads the industry in including: effective quality control processes for all phases of medical bill audits, life care plans, comprehensive • Convenient, cost-effective single-source inte- the project. Our consultants and project managers claim evaluations, and vocational rehabilitation as- grated claims solutions are attorneys, legal assistants, and experienced sessments. We also provide expert witness testi- • A full suite of powerful claim settlement tools technologists with extensive litigation and technical mony as needed. • Unique expertise in consultative approaches to expertise. resolving claims Bridging the medical and legal worlds, our expert • Local jurisdictional insights and knowledge Our ability to provide comprehensive discovery analysis of medical records help litigation and through our national presence support services to our clients, including investiga- claims teams build stronger cases and ensure the • Multiple settlement options tion, documentation, as well as solution design and most effective use of time and money from the start • Structured Medicare set-aside allocations implementation capabilities distinguishes Granite of each case, for example: • Integrated claims strategies to lower costs and Legal Systems from other eDiscovery companies. • understanding how pre-existing conditions enhance administrative efficiencies Granite’s broad technical skills enable our team to relate to an injury sustained during the incident; identify and implement cost-effective, repeatable • verifying the reasonableness of treatment ren- Additionally, our team is available to attend media- and supportable solutions to recurring discovery is- dered and the past medicals; and tions and pre-trial settlement conferences and to sues. We are uniquely qualified to handle discovery • evaluating claims for future care cost damages. assist in post-settlement services. We review all set- assessment, collection, and production projects in- tlement agreements and work with counsel to en- volving complex data sources, outdated or legacy Elevate’s other services include: sure the appropriate structured settlement systems, and other challenging discovery issues. • Legal project management language is included to guarantee tax-free status. • Document review Granite Legal Systems was founded by industry vet- • Contract management There’s more than just one product, service or area eran Jeffrey Hewett in 2004 to develop an innova- • Back office support for law firms that sets us apart, including our depth of knowl- tive eDiscovery solution (eCollector) and has since edge, experienced team and overall strategic ap- grown to provide complete eDiscovery services, Headquartered in the United States, Elevate serves proach. Our technology – notably the Settlement specializing in solving complex, technically chal- clients worldwide. Processing Information Network (SPIN) structured lenging discovery problems. settlement diary-based file management system – offers integrated modules to facilitate document Online at www.granitelegal.com creation, review and storage, reports, accounting On LinkedIn at www.linkedIn.com/ functions, quoting, license administration and company/granitelegal more for comprehensive management and track- ing of our clients’ cases.

Learn more. Contact Galaher Settlements today. 800-774-4705 | www.galahersettlements.com RM7996_MAGAZINE_Layout 1 8/26/14 4:51 PM Page 61

USLAW www.uslaw.org 6 1 2014 USLAW Partners

Magna Legal Services, LLC Marshall Investigative Group MDD Forensic Accountants OFFICIAL JURY CONSULTANT PARTNER OFFICIAL INVESTIGATIVE PARTNER OFFICIAL FORENSIC ACCOUNTANT OF USLAW NETWORK OF USLAW NETWORK PARTNER OF USLAW NETWORK www.magnals.com www.mi-pi.com www.mdd.com 1635 Market Street, 8th Floor 416 W Talcott Road 750 Hammond Drive NE, Building 14 Philadelphia, PA 19103 Park Ridge, IL 60068 Atlanta, GA 30328 Phone:(866) 624-6221 Phone:(855) 350-6474 (MIPI) Phone:(404) 252-0085 Fax: (866) 579-0819 Fax: (847) 993-2039 Fax: (404) 255-0673 Peter Hecht Doug Marshall Kevin Flaherty Executive Vice President of Sales President 10 High Street, Suite 1000 Phone:(732) 331-2410 Email: [email protected] Boston, MA 02110 Email: [email protected] Adam M. Kabarec Phone:(617) 426-1551 Mark Calzaretta Vice President Fax: (617) 426-6023 Director of Litigation Consulting Email: [email protected] Email: [email protected] Phone:(866) 624-6221 Jack Damico Email: [email protected] Doug Marshall, the founder of Marshall 750 Hammond Drive, Building 14 Jessica Gimbel Investigative Group, has been investigating claims Atlanta, GA 30328 Business Development Manager for over 25 years. Our nationwide firm specializes Phone:(404) 252-0085 in insurance fraud investigations, providing cover- Phone:(267) 815-1602 age throughout the United States. Our private in- Fax: (770) 255-0673 Email: [email protected] vestigators provide the knowledge and skills Email: [email protected] necessary to extract the information you need to Who are the worst and best jurors for your case? Is successfully evaluate your claim. We use investiga- Matson, Driscoll & Damico is a leading forensic ac- your trial story believable? What are the strengths tors from diverse backgrounds like criminal justice, counting firm that specializes in providing eco- of your case you can emphasize, and the weak- information technology and business, who share nomic damage quantification assessments for our nesses that you can eliminate? These are only some their knowledge with others in the firm. Our goal is clients. Our professionals regularly deliver expert, of the questions that Magna Legal Services can to exceed your expectations by providing prompt, consulting and fact witness testimony in courts, ar- help you answer. thorough and accurate information whether that is bitrations and mediations around the world. to establish proper reserves or to document Our consultants can assist in: claimant activities. We have a wide variety of serv- We have been honored to provide our expertise on • Focus Group Research (Online and Traditional ices for Cargo, Disability, Liability and Workmans’ cases of every size and scope, and we would be Live Sessions) Compensation claims such as activity/background pleased to discuss our involvement on these files • Mock Trial Research checks, employment, health history, internet re- while still maintaining our commitment to client • Thematic Development Research search, public records, skip tracing, statements, confidentiality. Briefly, some of these engagements • Perception Studies subrogation and surveillance. We conduct our in- have involved: lost profit calculations; business dis- • Case Risk Assessment vestigative business with the highest degree of in- putes or valuations; commercial lending; fraud; • Change of Venue Studies tegrity, confidentiality and productivity. product liability and construction damages. • Social Media Surveillance However, we have also worked across many other • Jury Selection Assistance At Marshall Investigative Group, we value each and practice areas and, as a result, in virtually every in- • Witness Communication Training every customer. We are confident that our extraor- dustry. • Shadow Jury Studies dinary investigative work, provided on a timely basis, will make a difference in your bottom line. Founded in Chicago in 1933, MDD is now a global By conducting Jury Research, Magna assists you We will be happy to discuss your case and respond entity with 20 U.S. and 19 international locations. and your clients in identifying the best pathway to a to any questions you may have. favorable verdict. Let Magna Legal Services help In the United States, MDD’s partners and senior you see your case through the jurors' eyes. Our new Please contact Doug Marshall to discuss your case staff are Certified Public Accountants; many are enhanced Platform, JuryConfirm 2.0 has many of at (855) 350-6474 or email him at dmarshall@ also Certified Valuation Analysts and Certified the key features found in our traditional live ses- mi-pi.com. Fraud Examiners. Our international partners and sions, while providing an economical and effective professionals possess the appropriate designations way to test your themes in an online environment. and are similarly qualified for their respective countries. In addition to these designations, our Key features of the new system include: forensic accountants speak 30 languages. • Virtual Simulation of Court Room Environment • Live Attorney Presentations Regardless of where our work may take us around • Live Jury Deliberations the world, our exceptional dedication, singularly • Up to Four Deliberation Groups qualified experts and demonstrated results will al- • Up to 40 Total Jurors Per Session ways be the hallmark of our firm. To learn more • Juror Impulse Monitoring System about MDD and the services we provide, we invite • Instant Questionnaire Feedback from Jurors you to visit us at www.mdd.com. You are also wel- • Detailed Reports come to contact John A. Damico, one of MDD’s founding partners, at [email protected] or 404.252.0085. RM7996_MAGAZINE_Layout 1 8/26/14 4:55 PM Page 62

Official eDiscovery Provider

INNOVATIVE SERVICES FOR THE LEGAL INDUSTRY... • Consultative guidance provided Discover all we can do for you by professionals with decades of legal and your clients. To learn more USLAW technology experience contact any of the eDiscovery Team Members • Remote and On-Site Collection listed below or visit us online at • Enterprise System Data Collection granitelegal.com • Discovery Response and Legal Hold Process • Cross Border Discovery • Specialized Litigation Databases and Data Management Systems

Your USLAW eDiscovery Team: Jeffrey Hewett [email protected] • Steve Mack [email protected] • Dennis Kiker [email protected] Granite Legal Systems • 713.652.0881 • www.granitelegal.com RM7996_MAGAZINE_Layout 1 8/26/14 4:55 PM Page 63 NationwideNationwide SpecialistsSpecialists inin InsuranceInsurance FraudFraud InvestigationsInvestigations

Services provided by Marshall Investigative Group Activity Check Doug Marshall and the Marshall Investigative Group, Inc. provide na- Background Check tionwide coverage with a specialization of insurance fraud Cargo Claims Location investigation. With ofﬁ ces and investigators throughout the United Subrogation States, we posses the knowledge, skills, and experience with Public Records Employment blanket-wide national coverage to secure the accurate information Pre-Employment needed to successfully evaluate a claim. Our bottom line objective Wrongful Death Contestable Death is to provide concrete results that allow you to determine with more Decedent Check clarity the merits of each case. We use investigators from various Disability Claims Internet Investigations ﬁ elds including Criminal Justice, Business/Marketing, and IT Worker’s Compensation Engineering. This unique approach is why our investigative product Social Media Monitoring leads the industry in accuracy, attention to detail, and timely delivery. Investigate us at www.mi-pi.com. Then give us a call at 855-350-6474 so we can investigate for you.

Founder Douglas Marshall

Vice President TOLL FREE: (855) 350-6474 Adam M. Kabarec WEB: www.mi-pi.com OUR GOAL IS TO EXCEED YOUR EXPECTATIONS RM7996_MAGAZINE_Layout 1 8/26/14 4:57 PM Page 64 SEEING » IS « BELIEVING.

Our expertly crafted 3D animations help jurors understand.

Proud partner since 2012

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Improve outcomes, expedite settlements and lolowerower costs oon your bodbodilyily injury claclaimsaims and litigation. Elevate your game.

Elevate offers many services to extend and enable your ContactContact us capabilities, including: 213 347 0203 • Legal projectproject management • DocumenDocumentt review Your USLAWUSLAW reps: [email protected]@elevateservices.com • Intellectu Intellectualal property support [email protected]@elevateservices.com • ContractontractContract management [email protected]@elevateservices.com • %DFNRFHVXSSRUWRNFD% WURSSXVHF Visit us at elevateservices.comelevateservices.com Follow us on LinkedIn and Twitter RM7996_MAGAZINE_Layout 1 8/26/14 4:57 PM Page 66

For more information contact Peter Hecht at 732-331-2410 or [email protected] RM7996_MAGAZINE_Layout 1 8/26/14 4:57 PM Page 67 RM7996_MAGAZINE_Layout 1 8/26/14 4:58 PM Page 68

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