Virtual Law Day Creditor Options: Involuntary Bankruptcy Vs

Dallas Bar Association HEADNOTESHEADNOTES June 2021 | Volume 46 | Number 6 Focus | Antitrust & Trade/Bankruptcy & Commercial Law Virtual Law Day

Bar None 2021 Presents Remotely

On May 3, the DBA hosted a Virtual Law Day program, at which Louis J. Freeh, former FBI Director, was the Entertaining This Summer keynote speaker. Mr. Freeh was interviewed by DBA President Aaron Tobin on the topic of “Advancing the Rule its responsibility for finding deserving of Law Now.” The program was supported by 11 Bar Associations around the state. BY MICHELLE M. ALDEN recipients seriously. If you have ever Join the cast and crew of Bar None met a Hughes Scholar, you know how this summer as they present Bar None impressive these students are. The 2021: Remotely Entertaining. Bar scholarships continue during the pan- None’s annual variety show promises demic, so the show must go on! Focus Bankruptcy & Commercial Law to be a great one, although it will be Many volunteer hours go into put- virtual and shorter than usual. Watch ting on this production each year. The Dallas area lawyers and judges sing, hours come from lawyers all over the dance, and make you laugh so hard metroplex including 35-year veteran your sides hurt. Director Martha Hardwick Hofmeis- Creditor Options: Involuntary As much as the cast and crew love ter and Producer Tom Mighell, as performing and making people laugh, well as the choreographers, script writ- their real motivation is to support the ers, committee members, actors, and Bankruptcy vs. Receivership Sarah T. Hughes Diversity Scholar- numerous behind-the-scenes staff. ship program. Show your support for the Dal- creditors must show that (a) the debtor is generally BY LYNDEL ANNE VARGAS AND EMILY WALL The scholarship program was las legal community and the Hughes not paying its debts as they become due; or (b) a cus- established in honor of U.S. District Scholars by becoming a Friend of Bar Clients want results. Creditors in Texas have todian was appointed or took possession of the debt- Judge Sarah T. Hughes, a former None or purchasing another sponsor- several options to collect significant business debts or’s property within 120-days before the involuntary trustee of the Dallas Bar Foundation, ship opportunity. from individuals or entities holding non-exempt petition was filed. The second option can present a who devoted herself to improving the To learn more, visit www.bar- assets. This article is a brief overview of two types scenario where bankruptcy law trumps a state law rights of women and minorities. The noneshow.com; for sponsorship of remedies that can bring results when collecting receivership or similar proceeding. Hughes Scholarship provides tuition and information, contact Eliza- business debts. Involuntary bankruptcies are only available and fees for deserving minority stu- beth Philipp at (214) 220-7487 or Although involuntary bankruptcies make up under chapter 7 (liquidation) and chapter 11 dents each year. Students at SMU [email protected]. HN less than 1 percent of total bankruptcy filings, they (reorganization), and the debtor must be eligible Dedman School of Law, UNT Dal- can be a useful tool for creditors interested in ben- to be a debtor under the designated chapter. Typi- las College of Law, and Texas A&M Michelle Alden is the Director of the Dallas Volunteer Attorney efitting from the collective bankruptcy process. A cally, chapter 11 debtors remain in control of their School of Law are eligible to apply for Program and a Member of the Marketing Committee of bankruptcy case and oversight can minimize a loss operations and assets—although a trustee could be the scholarship. the Bar None Production Company. She can be reached at or transfer of assets available to pay debts. appointed—whereas chapter 7 results in the auto- The Dallas Bar Foundation takes [email protected]. The requirements for filing an involuntary bank- matic appointment of a trustee to oversee the liqui- ruptcy differ depending on how many creditors a dation process and make distributions to creditors. debtor has and how much the creditors are owed. Creditors considering an involuntary filing should If the debtor has more than 12 creditors, three or be aware that all creditors of the debtor (not just more creditors can commence an involuntary bank- those that initiate the petition) will benefit and ruptcy if the creditors (a) each hold a non-contin- share pro-rata in distributions, subject to priorities. gent, undisputed, unsecured claim and (b) are col- Any creditor considering filing an involuntary lectively owed at least $16,750. If the debtor has bankruptcy petition should proceed with caution. fewer than 12 creditors, only one petitioning credi- In the event the court dismisses the petition (unless tor is required, so long as the creditor holds a non- all parties consent to dismissal) the court can enter contingent, undisputed, and unsecured claim of at judgment against the petitioning creditors for the least $16,750. debtor’s costs and attorney fees. Additionally, credi- A debtor has 21 days to respond to an involun- tors who are found to have filed an involuntary peti- tary petition, and absent consent, the bankruptcy tion in bad faith could be liable for damages caused court will then hold a hearing to determine whether by the filing or even punitive damages. to grant the involuntary petition and enter an order for bankruptcy relief. At the hearing, petitioning continued on page 12

Inside Need Help? You’re Not Alone.

6 Even During A Pandemic, Bankruptcy Courts “Do Equity” Texas Lawyers’ Assistance Program…………...(800) 343-8527 Alcoholics Anonymous…………………………...(214) 887-6699 First Criminal Charges for Wage-Fixing & No-Poach Agreements Narcotics Anonymous…………………………….(972) 699-9306 14 Al Anon…………………………………………..…..(214) 363-0461 Mental Health Assoc…………………………….…(214) 828-4192 19 Avoiding Stay Violations in a Bankruptcy Case Crisis Hotline………………………………………..1-800-SUICIDE Suicide Crisis Ctr SMU.…………………………...(214) 828-1000 21 DBA Golf Tournament Metrocare Services………………………………...(214) 743-1200 More resources available online at www.dallasbar.org/content/peer-assistance-committee 2 Headnotes l Dallas Bar Association June 2021

All programs are presented virtually. Check the DBA Online Calendar (www.dallasbar.org) for webinar links and the most up-to-date information.

Calendar June Events Visit www.dallasbar.org for updates on Friday Clinics and other CLEs.

Saedra Pinkerton, and Aaron Tobin. (MCLE Committee. Questions? Contact mgarcia@ LGBTQ PRIDE MONTH 1.00)* To register, email [email protected]. dallasbar.org. (MCLE 6.00, Ethics 2.00)* June is LGBTQ Pride Month. For additional resources, visit www.americanbar.org/groups/diversity/ Trial Skills Section Noon Friday Clinic “Topic Not Yet Available,” Tom Melsheimer and “New Civil Jurisdictional Limits of $20,000 for sexual_orientation or www.lgbtbar.org. To find out more about the Dallas LGBT Bar Association, Dan Webb. (MCLE 1.00)* JP Courts,” Hon. Paul Raleeh. (MCLE 1.00)* visit https://dlgbtba.org. For more on the DBA’s Diversity Initiatives, log on to www.dallasbar.org. MONDAY, JUNE 14 MONDAY, JUNE 21 Noon Alternative Dispute Resolution Section Noon Labor & Employment Law Section FRIDAY CLINICS “Keeping the Peace During Times of Racial, “Agency Roundtable: Government Insights on JUNE 4 Political, Cultural and Social Strife,” Lisbeth Labor & Employment Law,” Robert Canino and Bulmash and Sharmeen Ladhani. (MCLE 1.00)* Christopher Lopez. (MCLE 1.00)* Noon “Zoom 2.0: Beyond the Basics,” Bill Richmond. (MCLE 1.00)* Real Property Law Section Science & Technology Law Section JUNE 18 “Art Commissions, Art Collections and Artist’s Noon “New Civil Jurisdictional Limits of $20,000 for JP Courts,” Hon. Paul Raleeh. (MCLE 1.00)* “Cryptocurrency Enforcement: Past, Present, Rights: The Intersection of Art Law and Real Future,” Jessie K. Liu. (MCLE 1.00)* Estate,” Sammetria L. Goodson. (MCLE 1.00, TUESDAY, JUNE 1 MONDAY, JUNE 7 Ethics 0.50)* Noon Corporate Counsel Section Noon Tax Law Section Peer Assistance Committee TUESDAY, JUNE 22 “Lawyers as (Ethical) Leaders,” Jane McBride “Tax Considerations in SPAC Transactions,” Noon Criminal Law Section and Sterling Miller. (MCLE 1.00, Ethics 0.50)* Mark Melton. (MCLE 1.00)* “Crimmigration: What to Keep in Mind When TUESDAY, JUNE 15 Handling Criminal Cases of Immigrants and Tort & Insurance Practice Section TUESDAY, JUNE 8 Noon Franchise & Distribution Law Section Non-US Citizens,” Haim Vasquez. (MCLE 1.00)* “Understanding the Pending Changes to Noon Legal Ethics Committee “Pivot Pitfalls and Successes – the Legal the Texas Disciplinary Rules: How Will Law Impact on System Changes During Covid-19,” Practice Change in Texas?” Claude Ducloux. Trish MacAskill. (MCLE 1.00)* WEDNESDAY, JUNE 23 (Ethics 1.00)* Noon Entertainment, Art & Sports Law Section WEDNESDAY, JUNE 9 International Law Section Topic Not Yet Available Noon Bankruptcy & Commercial Law Section “Basics of Blockchain and its Use in the Future WEDNESDAY, JUNE 2 “Bankruptcy Code Deadlines: Don’t Push Your Including in International Transactions,” Taylor Judiciary Committee Noon Employee Benefits & Executive Luck,” Jane Gerber, Audrey Hornisher, Dylan Rex Robertson. (MCLE 1.00)* Compensation Law Section Ross, and Grayson Williams. (MCLE 1.00, Community Involvement Committee 4:00 p.m. LegalLine E-Clinic. Volunteers needed. Contact “Compensation Considerations for Traditional Ethics 0.50)* [email protected]. IPOs & SPAC Acquisitions,” Allison Hoeinghaus. (MCLE 1.00)* Family Law Section “How to Effectively Try Your Case Within the WEDNESDAY, JUNE 16 Solo & Small Firm Section Court’s Time Limits,” Rebecca Armstrong and Noon Energy Law Section THURSDAY, JUNE 24 “The Property Tax Explosion and what you Reagan Riddle. (MCLE 1.00)* “The Commingling Doctrine & Horizontal Wells: Noon Government Law Section should know about Property Taxes,” John Whose Burden is it Anyway?” Ricardo Morales. Topic Not Yet Available Brusniak, Jr. (MCLE 1.00)* Blockchain Law Study Group (MCLE 1.00)* “Update on Quantum Computing and the Environmental Law Section Juvenile Justice Committee Future of Blockchain,” Harold Heard. Health Law Section Topic Not Yet Available “Protecting the Gift of Life: Organ and Tissue Public Forum/Media Relations Committee Dallas LGBT Bar Association Donation in Texas,” Bradley Adams. (MCLE 1.00)* Intellectual Property Law Section

4:00 p.m. LegalLine E-Clinic. Volunteers needed. Contact How to be an Ally: The Vocabulary and Why “Assessing the Impact of Defend Trade Secrets Act Dallas LGBT Bar Association [email protected]. It Matters from a Mental Health Perspective,” on Trade Secrets Litigation 5 Years After It Went Jennifer Gay. (MCLE 1.00)* “How to be an Ally: For Your Client,” Kyle Velte. into Effect,” Elisaveta (Leiza) Dolghih. (MCLE 1.00)* 4:30 p.m. Equality Committee (MCLE 1.00)* Bench Bar Conference Committee Law in the Schools & Community Committee FRIDAY, JUNE 25 4:00 p.m. LegalLine E-Clinic. Volunteers needed. Contact THURSDAY, JUNE 3 Pro Bono Activities Committee Noon Minority Clerkship Webinar [email protected]. Noon Construction Law Section “Navigating Transition: Practice and Professionalism “Contracting Through a Supply Chain Crisis,” 4:00 p.m. LegalLine E-Clinic. Volunteers needed. Contact During Reopening,” Vicki Blanton, Kelly Chen, Rocio Kimber Davison. (MCLE 1.00)* [email protected]. Cristina Garcia Espinoza, Neil Issar, and moderator THURSDAY, JUNE 10 Tamara Baggett. (Ethics 1.00)* Admissions & Membership Committee Noon Living Legends Program “Nina Cortell, interviewed by Michelle Jacobs 6:00 p.m. Dallas LGBT Bar Association Social THURSDAY, JUNE 17 and Laura Whitley.” Pre-recorded program. JR’s Bar and Grill, 3923 Cedar Springs Road. For Noon Appellate Law Section (MCLE 1.00)* MONDAY, JUNE 28 more information log on to https://dlgbtba.org. “Business Litigation in the Dallas Court of Noon Securities Section Criminal Justice Committee Appeals, June 2020-2021,” David Coale. Topic Not Yet Available (MCLE 1.00)* Publications Committee FRIDAY, JUNE 4 Minority Participation Committee Noon Friday Clinic 2:00 p.m. CLE Committee TUESDAY, JUNE 29 “Zoom 2.0: Beyond the Basics,” Bill Richmond. 3:30 p.m. DBA Board of Directors No DBA Events Scheduled (MCLE 1.00)* FRIDAY, JUNE 11 Noon DVAP Summer Associates Pro Bono Webinar FRIDAY, JUNE 18 WEDNESDAY, JUNE 30 Patrick Lewis, Hon. Lela Lawrence Mays, 9:00 a.m. Virtual Child Welfare Conference 4:00 p.m. LegalLine E-Clinic. Volunteers needed. Contact Presented by the DBA Juvenile Justice [email protected]. EXCITED TO Living Legends SEE YOU SOON

The DBA plans to open to smaller meetings such as committees in July, and to reopen for all meetings in September. Keep your eye on DBA Online and Headnotes for reopening information.

On April 30, the DBA presented the second in the Living Legends series featuring Judge Maricela Moore, interviewed by Maria “Marifer” Aceves and Kandace Walter (left).

If special arrangements are required for a person with disabilities to attend a particular seminar, please contact Alicia Hernandez at (214) 220-7401 as soon as possible and no later than two business days before the seminar. All Continuing Legal Education Programs Co-Sponsored by the DALLAS BAR FOUNDATION. *For confirmation of State Bar of Texas MCLE approval, please call the DBA office at (214) 220-7447. **For information on the location of this month’s North Dallas Friday Clinic, contact [email protected]. June 2021 Dallas Bar Association l Headnotes 3 4 Headnotes l Dallas Bar Association June 2021

President’s Column Headnotes Published by: DALLAS BAR ASSOCIATION

2101 Ross Avenue Dallas, Texas 75201 Before Transitioning Back to “Normal,” Phone: (214) 220-7400 Fax: (214) 220-7465 Website: www.dallasbar.org Established 1873 Ask the Important Questions The DBA’s purpose is to serve and support the legal profession in Dallas and to promote good relations among lawyers, the judiciary, and the community. Our profession had to pivot on a dime last spring. Think about how BY AARON TOBIN firms that were already in the cloud were able to transition much OFFICERS President: Aaron Z. Tobin We have a rule in our firm. When asked why something was done more quickly just by having cloud-based technology. Will firms need President-Elect: Krisi Kastl a particular way, it is never acceptable to respond, “Because, that’s to spend less of their budgets on real estate and travel for business First Vice President: Cheryl Camin Murray Second Vice President: Bill Mateja what the form said”, or “That’s the way we always do it.” Just because development and more on technology in order to be able to keep up? Secretary-Treasurer: Ebony Rivon one practice was used in a different case at a different time does not Will clients demand more virtual meetings? Will they stop paying for Immediate Past President: Robert L. Tobey mean that same approach makes sense for the case at hand. Many of lawyer travel when, with proper technology depositions, hearing and us are focusing on transition and trying to predict what the new nor- even trials can be taken effectively remotely? I just finished a two- Directors: Vicki D. Blanton (Chair), Rob Cañas, Jonathan Childers (Vice Chair), Stephanie G. Culpepper, mal will look like. Some will go back to a work environment that is week bench trial in New York City that our team handled from our Whitney Keltch Green (President, Dallas Association similar to what was in place pre-pandemic. Others will never return conference room, and I cannot say that much was lost by conducting of Young Lawyers), Marissa Hatchett (President, J.L. Turner Legal Association), Stacey Cho Hernandez to the office. But for most of us, the answer will lie somewhere in the proceedings remotely. (President, Dallas Asian American Bar Association), between. No matter where you fall on this spectrum, I would suggest Hon. Martin Hoffman, Kate Kilanowski, Jennifer King that you base your decisions on something other than, “That’s the (President, Dallas Women Lawyers Association), Hon. Client Development Audrey Moorehead, Javier Perez (President, Dallas way we have always done it.” Hispanic Bar Association), Hon. Monica Purdy, Lindsey Gradual transitions will make sense for many of us. But, when will We have been forced to be more creative in our efforts to stay Rames, Kelly Rentzel, Bill Richmond, Sarah Rogers, we know the transition is over? What will the new norm be? In order in touch with our clients and to stay top of mind. Are some of the Mary Scott, Amy M. Stewart, and Mary Walters to get to the new normal, it is important to examine the past and ask methods employed during the pandemic actually more comfortable and less intrusive for clients? Did our clients feel just as connected to Advisory Directors: Ashlei Gradney (President-Elect, the important “why” questions. Why did it make sense for support J.L. Turner Legal Association), Andy Jones (President- staff to be in the office Monday through Friday from 8:30 to 5:30 fifty- our firms without the scheduling challenges that go with the quar- Elect, Dallas Association of Young Lawyers), Jonathan terly lunch? Did marketing budgets go down while client satisfaction Koh (President-Elect, Dallas Asian American Bar two weeks a year? Why did it make sense to travel across the country Association), Elsa Manzanares (President-Elect, Dallas for every court appearance and deposition? Why did it make sense to and retention remain the same? But if we do opt for less facetime, will Hispanic Bar Association), Derek Mergele-Rust be in business formal or even business casual attire while in the office? this make us vulnerable to competitors who are able to get in front (President, Dallas LGBT Bar Association), and Marisa of our clients? O’Sullivan (President-Elect, Dallas Women Lawyers No doubt there was a basis for each and every one of these rituals, but Association) does that basis still hold water today? Does the stability and certainty of having 95 percent of the workforce show up and leave in the same Delegates, American Bar Association: All Organizations Should Evaluate These Rhonda Hunter, Mark Sales window of time every day all dressed similarly override the value and productivity the organization receives by having a possibly happier Questions Directors, State Bar of Texas: Chad Baruch, Rebekah workforce that is more productive with some portion of their day/ It is not just law firms that are trying to achieve the new nor- Brooker, Rob Crain, Michael K. Hurst, Mary Scott week being remote. Every aspect of an organization should be reex- mal. Governmental agencies, corporate America, courts, and even bar associations are all asking what is the new normal and how do HEADNOTES amined as we navigate through transition. Executive Director/Executive Editor: Alicia Hernandez we get there? Communications/Media Director & Headnotes Editor: Courts are considering what aspects of remote practice are here Jessica D. Smith Recruiting, Training and Managing Personnel In the News: Judi Smalling to stay. Will there continue to be virtual motion dockets? Courts are Display Advertising: Annette Planey, Jessica Smith Will reverting to old form help you attract and retain the best resuming jury trials, but how long will it be before George Allen, for talent? Will firms that offer a more flexible work schedule for lawyers instance, can accommodate over 1,000 people in the central jury PUBLICATIONS COMMITTEE and support personnel recruit talent away from you? Will employees room to safely conduct a full slate of jury trials. How long will it be Co-Chairs: James Deets and Beth Johnson be able to give more quality time to the organization if they are not Vice-Chairs: Elisaveta (Leiza) Dolghih and Joshua before all of our community can safely travel to the courthouses to Smeltzer spending 2-3 hours a day on the road commuting? Do some lawyers participate in our jury system? Members: Logan Adcock, Benjamin Agree, Dallas and support staff need to be in the office more than others? Jimmy Andersen, Andrew Botts, David Brickman, Catherine Like all organizations, the Dallas Bar Association is asking the Bright Haws, Ian Brown, Srinivasan Chakravarthi, Johnson, the legendary football coach used to maintain that there tough questions when examining a return to normal. Thanks to the Lindsay Drennan, Alexander Farr, Dawn Fowler, should be different rules for different players. He would argue why DBA’s visionary leaders who in the seventies bought a dilapidated Candace Groth, Ted Huffman, Neil Issar, Alexandra should Emmitt Smith and Charles Haley live by the same rules, pro- Jones, Krisi Kastl, Katherine Kim, Brian King, Jared home in a challenging section of town that had at one time func- Knight, John Koetter, Margaret Lyle, Majed Nachawati, cedures and rituals when they have different needs to be able to per- tioned as a funeral parlor, for over 40 years our membership has had Keith Pillers, David Ritter, Carl Roberts, John Shipp, form at their best. Both were great players who had to be managed Jared Slade, Sarah Spires, Jay Spring, Sarah-Michelle the benefit of a centralized location to collaborate, educate, and train. Stearns, Scott Stolley, Robert Tarleton, Paul Tipton, very differently. Does a single parent lawyer who lives in Frisco need Thanks to the mansion expansion in the early part of the century it Anastasia Triantafillis, Pryce Tucker, Kathleen Turton, a different arrangement than a lawyer who has been practicing the will be a long time before the DBA struggles for space. Our building Peter Vogel, Benton Williams, Jason Winford same amount of time in the same field but who happens to be single has long been considered a strategic advantage for our Bar Associa- and living in uptown, 3 blocks from the office? Do they need to be DBA & DBF STAFF tion. Members appreciate and welcome the opportunity to train, net- Executive Director: Alicia Hernandez managed differently to be able to perform at their best? work, and develop relationships in person in our downtown home. Accounting Assistant: Shawna Bush On the other hand, will too much flexibility cause you to lose Communications/Media Director: Jessica D. Smith Yet, what does it say when our association turned on a dime and piv- Controller: Sherri Evans your organizational identity and culture? How will you train young oted from almost exclusively in-person meetings to entirely virtual, Events Director: Rhonda Thornton lawyers and new hires without some semblance of the traditional and our attendance and participation levels actually increased. It Executive Assistant: Liz Hayden office environment? Will personnel remain as loyal to the organiza- Executive Director, DBF: Elizabeth Philipp probably means there is a need for virtual programming for our mem- LRS Director: Biridiana Avina tion without that inherent bond that can only come from consistent bers. That is why when we return to the building, we will continue to LRS Program Assistant: Marcela Mejia in-person collaboration? How will younger employees, in particular LRS Interviewer: Viridiana Rodriguez offer virtual programming as an option for our members. Law-Related Education & Programs younger lawyers, advance within an organization if they do not have All organizations are about to embark on a transition back to the Coordinator: Melissa Garcia the opportunity to collaborate with the partners who are making new normal. This journey will take some time before we understand Marketing Coordinator: Mary Ellen Johnson those decisions? These questions certainly were present before the Membership Director: Kimberly Watson what will truly work best for each of our organizations. If the right Director of Legal Education: Kathryn Zack pandemic, but the difference is now firms can no longer afford to questions are raised and analyzed, then transition could be an oppor- Publications Coordinator: Judi Smalling avoid analyzing what the best solutions are. Receptionist: Araceli Rodriguez tunity to achieve more efficiency and productivity, and thus more Staff Assistant: Yedenia Hinojos value for our respective organizations and for the profession going Technology forward. Good luck, my friends. DALLAS VOLUNTEER ATTORNEY PROGRAM Director: Michelle Alden Organizations must evaluate the value they receive from invest- Managing Attorney: Holly Griffin ing in technology. The best evidence of this is the pandemic itself. Aaron Mentor Attorneys: Kristen Salas, Katherine Saldana Paralegals: Whitney Breheny, Miriam Caporal, Star Cole, Tina Douglas, Carolyn Johnson, Andrew Musquiz, Alicia Perkins M I N O R I T Y Community Engagement Coordinator: Marísela Martin C L E R K S H I P Copyright Dallas Bar Association 2021. All rights W E B I N A R reserved. No reproduction of any portion of this publication is allowed without written permission from publisher. NAVIGATING TRANSITION: Headnotes serves the membership of the DBA and, PRACTICE AND PROFESSIONALISM as such, editorial submissions from members are welcome. The Executive Editor, Editor, and Publications DURING REOPENING Committee reserve the right to select editorial content Thursday, June 10 | Noon | MCLE: 1.00 to be published. Please submit article text via e-mail to F R I D A Y , J U N E 2 5 , N O O N [email protected] (Communications Director) at least 45 days in advance of publication. Feature articles Hosted virtually on Zoom. Register at Dallasbar.org. O N L I N E W E B I N A R | E T H I C S 1 . 0 0 should be no longer than 750 words. DISCLAIMER: All legal content appearing in Headnotes is for informational and educational purposes and is not Vicki Blanton, AT&T intended as legal advice. Opinions expressed in articles Kelly Chen, Toyota Motor North America, Inc. are not necessarily those of the Dallas Bar Association. Rocío Cristina García Espinoza, Rosewood Property Company All advertising shall be placed in Dallas Bar Association Headnotes at the Dallas Bar Association’s sole discretion. Nina Cortell Neil Issar, Haynes and Boone, LLP Haynes and Boone, LLP Moderator: Tamara D. Baggett, Baker Hostetler Headnotes (ISSN 1057-0144) is published monthly by the Dallas Bar Association, 2101 Ross Ave., Dallas, TX 75201. Non-member subscription rate is $30 per Interviewed by Lindsey Hughes, year. Single copy price is $2.50, including handling. Register at www.dallasbar.org Michelle Jacobs and Laura Whitley Periodicals postage paid at Dallas, Texas 75260. Questions? with Haynes and Boone, LLP Email [email protected] POSTMASTER: Send address changes to Headnotes, 2101 Ross Ave., Dallas, TX 75201. June 2021 Dallas Bar Association l Headnotes 5 6 Headnotes l Dallas Bar Association June 2021

Focus Antitrust & Trade Regulation/Bankruptcy & Commercial Law Even During A Pandemic, Bankruptcy Courts “Do Equity” the very benefits that these new Bank- intended to be streamlined in compari- have used their equitable powers to find BY LIZ BOYDSTON AND TRINITEE G. GREEN ruptcy Code statutes were intended to son to traditional Chapter 11 cases, in favor of debtors where the facts and provide small business debtors. Subchapter V of the Bankruptcy Code circumstances warranted. Similarly, a U.S. bankruptcy courts have equi- The Small Business Reorganization imposes certain mandatory deadlines majority of the bankruptcy courts that table powers and, as a result, are often Act of 2019 (SBRA), which amended on small business debtors that, gener- have declined to permit a “retroac- described as courts of equity. Courts of the Bankruptcy Code to include new ally speaking, must be satisfied within tive” election have done so where the equity, such as the English Courts of Subchapter V, became effective on the first 90 days of the case. Specifi- debtors had unclean hands (because of Chancery, originated as a solution to February 19, 2020 and was designed to cally, a status conference must be con- negligence, bad faith, or the mere fail- a problem. Simply put, the common- enable small business debtors to reor- ducted within 60 days from the date ure to show that the request was made law system, if strictly applied under ganize their financial affairs in a more of entry of the order for relief, which for reasons that were outside of the certain circumstances, would result in efficient and cost-effective manner is typically the petition date, and the debtor’s control or that should not be injustice. Like these English Courts while also maintaining control over debtor must file its plan not later than attributed to the debtor). For instance, of Chancery, U.S. bankruptcy courts their businesses and, ultimately, own- 90 days after the date of entry of the a court did not permit a debtor to make have long possessed—and used—equi- ership interests. In retrospect, it is order for relief. However, Subchap- a retroactive Subchapter V election table powers where the facts and cir- clear that the SBRA could not have ter V does not include a provision to because it found that the debtor made cumstances justify particular results gone into effect at a better time, given adjust or waive these deadlines if an the election in bad faith only after fail- and where nothing in the Bankruptcy that on March 11, 2020, the COVID- existing non-Subchapter V case is con- ing to confirm its Chapter 11 Plan. Code or applicable law would oth- 19 crisis was declared a pandemic. verted to Subchapter V. Thus, the most In short, there is nothing under the erwise prevent such equitable relief. Many small business debtors that had frequently addressed SBRA issue that Bankruptcy Code or any other law that During the COVID-19 pandemic, a commenced their bankruptcy cases Bankruptcy Courts have grappled with prevents bankruptcy courts from reset- number of U.S. bankruptcy courts were prior to February 19, 2020 sought to to date is whether small business debtor ting or extending Subchapter V statu- asked to apply new procedural statutes “retroactively elect” to proceed under cases that commenced prior to SBRA’s tory deadlines in order to provide due that, if strictly applied, would have the SBRA’s new Subchapter V of the effective date could be converted to process for pre-SBRA effective date deprived small business debtors (as Bankruptcy Code. and proceed under Subchapter V even debtors, so long as such equitable relief defined under the Bankruptcy Code) of Because Subchapter V cases are though Subchapter V deadlines would is warranted. And, as time passes, this technically already have expired. particular issue will necessarily become Indeed, this issue was addressed in a historic one. Therefore, the rule of the first published SBRA opinion from law that permits pre-SBRA effective Spanish for a California bankruptcy court, wherein date debtors to convert their cases to the debtor was permitted to proceed Subchapter V cases is not one that Lawyers under Subchapter V even though its bankruptcy lawyers must commit to 2021 Fall Session: case had been pending for approxi- memory. Nevertheless, all lawyers August 10-October 13 mately 15 months. To illustrate the would be well served (and perhaps procedural predicament in that case, comforted) to note that even during a Held online via all of the Subchapter V statutory dead- pandemic, and, perhaps especially dur- Google Meet/Video conference. lines would technically have expired ing a pandemic, bankruptcy courts still Learn how to read, write, and speak Spanish roughly one year before the request to “do equity.” HN at an adult continuing education level, convert and designation to proceed with emphasis on legal terminology at the under Subchapter V were made. Liz Boydston is a Shareholder at Polsinelli PC, and can be intermediate and advanced levels. Like the California court above, the reached at [email protected]. Trinitee Green is Register online at overwhelming majority of bankruptcy an Associate at the firm and can be reached at tggreen@ www.dallasbar.org/spanishforlawyers courts that have considered this issue polsinelli.com.

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Emotional intelligence means identifying and understanding If this sounds like a bunch of therapy talk, make no emotions in ourselves and others. It correlates with better mistake. Calabrese Budner attorneys have the credentials communication, faster assessment of risk, and sharper and experience to stand toe-to-toe with any family lawyer identification of an unbiased strategy to achieve the desired in the most complex and contentious of property and outcome. You want a lawyer who possesses emotional custody matters. With Emotionally Intelligent Divorce®, intelligence to guide you through turbulent times—without Calabrese Budner provides an additional set of tools and skills riding the emotional waves along with you. to protect your interests without the unnecessary damage that results from emotionally reactive lawyering. We believe that Calabrese Budner offers Emotionally Intelligent Divorce® gives you the best chance at not only surviving your divorce, because divorce is more than just a legal document. By but thriving.

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Focus Antitrust & Trade Regulation/Bankruptcy & Commercial Law Proofs of Claims: Essentials & Pitfalls 12, or chapter 13 of the Bankruptcy Code the creditor previously filed a motion or BY HON. HARLIN D. HALE, What Happens if you Miss ANDREW G. EDSON, to receive any payment. Filing a proof of response, asserting its claim and includ- AND BRAXTON MARKLE claim in a chapter 11 case is required if the a Claim Deadline? ing exhibits that substantiate the claim. debtor’s bankruptcy schedules omit the Failure to file by the claim deadline, In most bankruptcy cases, a proof of creditor’s claim, improperly list the amount except in Chapter 11 cases when the claim claim is the required filing for a creditor Other Claim Considerations owed, or list it as contingent or disputed. is correctly scheduled and not contingent to receive payment from the debtor. The The Official Form 410 allows the or disputed, will prevent the creditor from proof of claim provides the legal basis for claim to be executed by an agent or coun- receiving any payment through the bank- repayment with supporting documen- What are the Deadlines sel to the creditor. However, the better ruptcy case. However, certain exceptions tation. The “Official Form 410” is filed practice is for an officer or director of the exist: excusable neglect, an additional with the bankruptcy court where the for Filing? client to execute the claim because it is 30-day window for a debtor, and the doc- debtor’s case was filed. However, credi- The proof of claim bar date, or dead- signed under penalty of perjury. Counsel trine of the informal proof of claim. tors beware: strict deadlines exist for fil- line, is set by the Federal Rules of Bank- can put themselves in a precarious posi- In limited circumstances, bankruptcy ing a proof of claim. A creditor’s missed ruptcy Procedure. A creditor must file a tion when simply relying on claims cal- courts will extend the bar date to file a filing likely means the creditor has proof of claim no later than 70 days from culations from clients when the amount proof of claim if excusable neglect is pres- waived any right to payment. the filing date in a voluntary chapter 7, of the claim is incorrect or simply false. chapter 12, or chapter 13 case. For an ent. Excusable neglect is allowed in chapter Creditors should also be aware that involuntary chapter 7 case, the creditor 11 cases but prohibited in chapter 7, chap- filing a proof of claim will likely submit When is a Proof of Claim must file their proof of claim no later than ter 12, and chapter 13 cases. To utilize this it and its claims to the jurisdiction of the 90 days after entry of the order of relief. exception, a creditor must demonstrate that bankruptcy court, including any coun- Required? The bar date for filing a proof of claim in its failure to file before the bar date was the terclaims by the debtor. Most often, that Creditors are required to file a proof a chapter 11 case is set by the bankruptcy result of excusable neglect, such as acts out- is not a concern for a creditor looking of claim in cases under chapter 7, chapter judge via a filed notice on the docket. side of the filer’s control, or confusing notice for payment, but occasionally, a creditor language. Bankruptcy courts will then weigh wants to preserve its right to a jury trial the equities to determine if the creditor is on claims that may involve co-defen- entitled to additional time to file a claim. dants and may want those claims to be The second exception occurs when decided by a non-bankruptcy court. In the debtor or trustee files a proof of those instances, the creditor may inten- claim on behalf of the creditor within 30 tionally forgo filing a claim. June Friday Clinics days of the expiration of the bar date. A The authors hope this brief primer on debtor may want to file a proof of claim proofs of claim will be helpful, particularly Friday, June 4, Noon on behalf of the creditor if the claim is to lawyers who do not practice bankruptcy “Zoom 2.0: Beyond the Basics,” a priority claim or a secured claim that law. Proofs of claim in a bankruptcy case the debtor wants to address in the bank- can be tricky, require a lot of documen- Bill Richmond | MCLE 1.00 ruptcy case. Mortgage claims or non-dis- tation, and have rather fixed deadlines. chargeable claims are examples of when However, as mentioned above, if a prob- Friday, June 18, Noon a debtor may want to file a claim. lem arises in the proof of claim process, “New Civil Jurisdictional Limits of $20,000 for JP Courts” A creditor’s last chance of saving there are sometimes fixes available. HN its claim rests with the doctrine of the Hon. Paul Raleeh | MCLE 1.00 “informal proof of claim.” This doc- Judge Hale serves as a bankruptcy judge in the Northern trine creates a safe harbor for creditors District of Texas. Andrew G. Edson is a member in the firm of Register online at www.dallasbar.org. whereby the bankruptcy court takes into Clark Hill Strasburger. Braxton Markle is a law student at UNT consideration filed documents that satisfy Dallas and an extern for Judge Hale. They can be reached at the information requested on an Official [email protected], [email protected], Form 410. This situation can occur when and [email protected], respectively. Guess what’s back, Let's Keep it Social. Follow us!

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DBA Bench Bar Conference is back in the Hill Country! DALLAS LGBT BAR ASSOCIATION EVENTS Thursday, June 3 | 6:00-9:00 p.m. Pride Kick-off & Rob Ruhlin Law Student Scholarship Benefit JR’s Bar and Grill, 3923 Cedar Springs Rd., Dallas November 3-5, 2021 $30 for DLGBTBA Members | $50 for Non-members Door fee waived if you join the LGBTBA that evening HORSESHOE BAY RESORT Wednesday, June 9 | Noon | MCLE 1.00 How to be an Ally: The Vocabulary and Why It Matters Up to 7 Hours MCLE including Ethics from a Mental Health Perspective Presenter: Jennifer Gay, LMFT-S Meet your Judges Wednesday, June 16 | Noon | MCLE 1.00 Awesome networking How to be an Ally: For Your Client Trial Lawyer of the Year Award Presenter: Kyle Velte, University of Kansas School of Law

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RATED BY 10 Headnotes l Dallas Bar Association June 2021

Column Ethics Is it Ethical to Threaten Bankruptcy on Behalf of a Client? in conduct involving dishonesty, fraud, present, substantial truth might still not be (1). Moreover, the issue of credibility may BY HERSHEL R. CHAPIN deceit or misrepresentation”. To discern as simple as a binary “true or false” in a rap- be relevant in the future for advocate and Threatening Bankruptcy, i.e., saying truth from lie in this context, one must idly evolving, dynamic situation. Before client. If the lawyer makes a statement on “My client demands X, or else my client have, at minimum, a working understand- making such a statement, it is incumbent behalf of a client that later turns out not will seek bankruptcy relief,” usually in the ing of the terminology involved. Here, on the attorney objectively to consider to be true, it could impugn the integrity of context of a negotiation, can have advan- bankruptcy is generally understood to the actual likelihood of bankruptcy if the both lawyer and client. This could create tages. It can be an expedient way to com- have a specific meaning and set of laws, condition is or is not satisfied. This will problems later when either of their testi- municate an impending reality. It can be rules, and constraints that govern this legal require an understanding and examination mony becomes necessary. a useful enticement to reach a “workout process. “Filing bankruptcy” means liter- of the client’s economic situation, which Another major issue is that this phrase deal” outside of a formal bankruptcy pro- ally submitting a “petition” to a United will require the counselor to “poke his/her could introduce evidentiary-related com- cess. And in the “pre-packaged” bank- States Bankruptcy Court of competent nose” in the client’s financial affairs. plications into the lawyer’s relationship. ruptcy, it is necessary to forecast bank- jurisdiction and venue to initiate a process What if the prediction turns out to be TDRPC Rule 3.08’s “Lawyer as Witness” ruptcy. But predictions can be danger- (“a case”) under Chapter 7, 11, 12, 13, or wrong—for whatever reason? Before cast- responsibilities and limitations could be ous business. The mere act of forecasting 15 of Title 11 of the United States Code ing the die, the lawyer ideally should con- triggered by the lawyer’s statement, espe- bankruptcy during the course of advocacy (a.k.a. the “Federal Bankruptcy Code”). sider the consequences of the other party cially in a context where insolvency or might be unethical or create grounds for Alternatively, the phrases “to be bank- relying on the lawyer’s statement and later breach has not previously been declared/ disciplinary action when done in an inap- rupt” or “to go bankrupt” could be suscep- finding out that it was false—including reli- discovered. If the lawyer finds him or her- propriate manner. Here are a few of the tible of having alternative meanings, such ance damages-based types of claims against self in the center of a controversy over ways this position can introduce complica- as to be insolvent or to dissolve under state the client and/or a grievance against the whether the lawyer’s statement formed the tions into the Advocate’s professional role: law proceedings, although playing seman- lawyer. Threatening bankruptcy is likely element of breach or insolvency to a cause A threshold concern is confidentiality. tics with the word “bankruptcy” is likely a to be interpreted as a declaration of insol- of action, it could place the lawyer in a TDRPC 1.05 essentially requires that the recipe for confusion. vency or breach by a creditor, and this position where he or she might no longer lawyer have been pre-authorized to reveal If federal bankruptcy is contemplated, can have adverse consequences for a cli- be able to defend/represent the client in a the client’s intention to file bankruptcy it will probably be necessary to have con- ent if, for instance, the bankruptcy filing is legal proceeding over such issues. based on informed consent. sulted with competent bankruptcy counsel stalled, delayed, or does not occur. Addi- As Yogi Berra once said, “It’s tough Another consideration must be the prior to deciding if such a process would be tionally, the mention of bankruptcy or to make predictions, especially about the utterance’s truthfulness. TDRPC 8.04(a) desirable or even applicable. Assuming the anything adjacent to insolvency to a credi- future.” Threatening “the B-word” is a (3) provides: “A lawyer shall not… engage factors of eligibility/ability/intention are tor could trigger fiduciary duties on the gambit that should never be done casu- part of the client to creditors. See Beware ally—strategic and ethical considerations the Zone of Insolvency and Unexpected might take overriding priority. For these Fiduciary Duties for more information reasons, many experienced Texas bank- Need Help? You’re Not Alone. about the Texas lawyer’s responsibilities to ruptcy lawyers frequently opt not to make inform the client of such risks. Thus, pre- bankruptcy threats. HN Texas Lawyers’ Assistance Program…………...(800) 343-8527 maturely signaling bankruptcy could be Alcoholics Anonymous…………………………...(214) 887-6699 an instance of disregard toward a client’s Hershel Chapin is the managing attorney of H. R. Chapin, Attorney Narcotics Anonymous…………………………….(972) 699-9306 best interests in violation of Rule 1.01(b) & Counselor, PLLC. He may be reached at [email protected]. Al Anon…………………………………………..…..(214) 363-0461 Mental Health Assoc…………………………….…(214) 828-4192 Crisis Hotline………………………………………..1-800-SUICIDE SUPPORT THE Suicide Crisis Ctr SMU.…………………………...(214) 828-1000 Metrocare Services………………………………...(214) 743-1200 DBA HOME PROJECT More resources available online at www.dallasbar.org/content/peer-assistance-committee Help us reach our goal of $90,000 to build our 31st house for Habitat for Humanity.

For more information, log on to www.facebook.com/DBAHomeProject or contact David Fisk ([email protected]) or Mike Bielby ([email protected]).

Make checks payable to Dallas Area Habitat for Humanity and mail to: c/o Araceli Rodriguez Dallas Bar Association, 2101 Ross Avenue, Dallas, TX 75201 Interested in opening your own practice and bringing justice to everyday people? APPLY NOW! Visit www.dallasbar.org/incubatorprogram to apply. Application deadline: Friday, July 16, 2021

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PARTICIPANTS RECEIVE: • Extensive training on establishing a successful practice • Coaching by dedicated solo/small firm practitioner • Mentoring by lawyers in successful specialized practices • Access to practice management resources • Networking/business development opportunities • Use of a professional office space for mail and client meetings June 2021 Dallas Bar Association l Headnotes 11

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214.252.1888 • paynemitchell.com AVIATION CRASHES • PRODUCT DEFECTS • MEDICAL MALPRACTICE • NEGLIGENCE • VEHICLE COLLISIONS 12 Headnotes l Dallas Bar Association June 2021

Focus Antitrust & Trade Regulation/Bankruptcy & Commercial Law Dividend Recaps Can be Lucrative for Bankruptcy Lawyers return cash to investors, without selling the increase of the debtor’s secured debt burden First, dividend recaps should typically only BY MICHAEL S. HELD AND J. MACHIR STULL company. from $382 million in 2012 to $838 million be considered for companies without exces- But the strategy is controversial. when the bankruptcy was commenced in sive debt and with a strong track record and The utilization of dividend recapital- Dividend recaps incur debt to pay inves- April 2017. After what was likely much the ability to weather downturns. Second, izations—recaps, for short—surged in late- tors and owners, rather than to position a behind-the-scenes negotiating, the Payless a solvency opinion from an outside advisor 2020 and into 2021, particularly among company for growth or to stockpile cash for plan of reorganization ultimately incorpo- is arguably the most important step a com- private equity-owned businesses. Gener- emergencies. When a business is high-per- rated a $21.19 million contribution from pany can take. This will demonstrate that ally, a dividend recap is when a company forming with relatively little debt, a recap certain sponsor entities. The plan described the business has sufficient capital to service takes on new debt to pay a special dividend may be inconsequential. But in other situ- the contribution as follows: its debt after the recap. Third, a clear record to investors or shareholders. It is a popular ations, recaps can saddle businesses with [A] settlement, without admitting any of the decision-making process in approv- tool among private equity firms, as it allows unnecessary (and sometimes unsustainable) wrongdoing of any kind, of any poten- ing the dividend recap can also be help- them to extract value from a business before debt, while proving ripe for potential fraud- tial claims, including without limitation ful. Directors and officers should be able to selling it. ulent-transfer litigation. claims for breach of fiduciary duty arising demonstrate that they engaged in a thor- Dividend recaps from high-yield bonds From the perspective of a bankruptcy in connection with the authorization and ough and careful process—with the input and leveraged loans for North America practitioner, the latter can be lucrative. payment of certain dividends in 2013 and of outside advisors—before approving the and Western and Southern Europe totaled It is no secret that many recent corporate 2014[.] dividend. Finally, plaintiffs asserting causes about $21 billion in Q4 2020—a volume bankruptcies featured businesses that strug- When not settled prior to litigation, of action related to dividend recaps—such not seen since 2016, according to data pro- gled with unsustainable debt loads after div- dividend recaps may be challenged as con- as breaches of fiduciary duty—could poten- vided by White & Case in partnership with idend recaps. One of the most high-profile structively fraudulent under section 548 tially argue the claims include personal Debtwire. Among the most active indus- recaps dates back to 2005, when a group of of the Bankruptcy Code and correspond- liability. As a result, directors and officers tries were financial services, healthcare, and three private equity firms purchased Hertz ing state laws. Specifically, it will likely be should consider if they have adequate D&O technology. And, all signs point to the fren- from Ford Motor Company. Six months argued that the company received less than insurance. zied pace continuing through 2021. after the purchase, Hertz completed a $1 reasonably equivalent value in exchange for The popularity of dividend recaps will To be sure, much of the uptick in divi- billion dividend recap. While Hertz did not taking on the debt to pay dividends. To the surely continue through much of 2021 and dend recaps can arguably be traced to the fail in the immediate aftermath of the trans- extent the plaintiff—often a creditors’ com- likely beyond. While these recaps can be economic fallout from the pandemic. action, the recap was highly publicized, and mittee or trustee—can prove that the sub- lucrative for private equity firms, they also The M&A markets were rattled as most the company arguably suffered. It filed its ject company became insolvent or was left provide fertile ground for potential litiga- businesses focused on asset preservation chapter-11 petition on May 22, 2020. with unreasonably small capital as a result tion in a subsequently-filed bankruptcy in the face of the unknown. However, the Dividend recaps were also a point of of the dividend recap, litigation is likely to proceeding. HN ensuing rock-bottom interest rates provided contention in the (first) Payless Shoe- advance beyond the motion to dismiss or a tailwind for leveraged finance. Dividend Source bankruptcy in 2017. There, the summary judgment stage. Michael S. Held is a Partner at Jackson Walker LLP and may be recaps were relied upon to provide many creditors’ committee alleged that the cumu- From a company perspective, however, reached at [email protected]. J. Machir Stull is Senior Counsel at the private equity-owned businesses a means to lative effect of two dividend recaps was an there are ways to lessen the risk of litigation. firm and may be reached at [email protected]. Creditor Options: Involuntary Bankruptcy vs. Receivership receiver to assist in collecting a debt is one Texas receivership options can be for a party to the controversy. The initial CONTINUED FROM PAGE 1 of the oldest remedies and may be a swift viewed in three broad categories: 1) pre- cost to seek receivership includes the legal Alternatively, the appointment of a and effective collection option for creditors. suit appointment of a receiver often in fees to prepare the requisite motion and connection with an injunction order; attend the hearing plus the bond amount. 2) receivership over a particular asset in Bonds are set based on the value of the which a creditor holds an interest; and 3) property coming under the receiver’s con- appointment of a receiver over a judgment trol. Although the receiver posts her bond, debtor, his business, or a specific asset post- the creditor usually agrees to cover that judgment to reach and potentially liqui- expense. The receiver is then paid from date non-exempt assets. the income of the assets that she adminis- Putting assets in the hands of a receiver ters, usually at an hourly rate set forth in to preserve the status quo while litigation the appointment order. Receivers may seek is pending can ensure that the asset will be assurance from the creditor that the fees available to pay the creditor once litiga- will be paid. The biggest downside to this tion is complete. Although a pre-judgment collection option is that the receiver’s fees injunction is often considered sufficient and expenses come ahead of recovery by protection, the appointment of a receiver the creditor and may eat into the ultimate to run the business may be warranted to recovery more than anticipated. maintain the status quo. One example of Receiverships and involuntary bank- this is a divorce proceeding in which both ruptcy each have associated risks, but when parties claim interest in a business operated used effectively, they can be utilized to cap- by one party. A receiver overseeing opera- ture assets before a debtor takes action to tions, with controls on expenditures, can transfer them out of reach. HN be critical to preserving value prior to sale or other division. Lyndel Anne Vargas is a Shareholder at Cavazos Hendricks Poirot, Statutorily, the receiver is a citizen, a P.C. She can be reached at [email protected]. Emily Wall is an Texas resident, and not a party or attorney Associate at the firm and can be reached at [email protected].

When you cannot help a prospective client, remember... THE DBA LAWYER REFERRAL SERVICE! (214) 220-7444 | www.dallasbar.org/lawyerreferralservice • Qualified panel of lawyers in all areas of practice and most areas of town. • $20 fee to the client for a 30-minute consultation with a lawyer. • All lawyers carry professional malpractice insurance. June 2021 Dallas Bar Association l Headnotes 13 14 Headnotes l Dallas Bar Association June 2021

Focus Antitrust & Trade Regulation/Bankruptcy & Commercial Law First Criminal Charges for Wage-Fixing & No-Poach Agreements Wage-fixing agreements are a type of price- solicit or hire employees and, where prudent, duct remains subject to civil challenge by BY TOM YORK AND JUAN ANTONIO SOLIS fixing, in which DOJ analogizes wages to the pursue criminal charges against culpable the antitrust agencies or private plaintiffs. “price” of labor. individuals and companies. Indeed, civil cases have already been filed in In recent years, the Department of Jus- No-poach and non-solicit agreements are both the Jindal and SCA cases. tice (DOJ) has promised aggressive enforce- related, typically when executives from dif- ment of anticompetitive agreements affect- ferent companies agree not to solicit or hire Wage-Fixing and No-Poach ing American labor markets. Now, in two each other’s employees. No-poach and non- What You Need to Know first-of-their-kind enforcement actions, DOJ solicit agreements can sometimes appear as Indictments These are DOJ’s first criminal enforce- has brought criminal indictments against part of a larger legitimate business agreement It took DOJ a little more than four years ment actions in the labor context, and rein- North Texas individuals and companies for between companies, such as a joint venture, to file its first criminal charges for antitrust force three key points. wage-fixing and “no-poach” agreements. and can be lawful when they are reasonably violations involving labor, but filed two in Expect continued antitrust scrutiny Both actions reaffirm DOJ’s commitment related to a pro-competitive collaboration. short order—and both involve North Texas in employment issues. DOJ has reiterated to prosecuting anticompetitive agreements However, when no-poach and non-solicit individuals. First, in December 2020, DOJ in recent years that it intends to prosecute involving employment-related issues. agreements are not necessary to any legiti- indicted Neeraj Jindal, the owner of a North anticompetitive conduct in labor markets, mate business collaboration, they are viewed Texas therapist staffing company, for conspir- which these latest actions demonstrate. This by DOJ as per se unlawful. ing with competitors to fix prices by decreas- is unlikely to change in the Biden adminis- Background to DOJ’s In the past, both DOJ and the Fed- ing “pay rates” paid to their physical thera- tration. DOJ’s recent enforcement actions eral Trade Commission have brought civil pists. According to the indictment, Jindal underscore the need for inside counsel to be Enforcement Actions actions challenging wage-fixing and “naked” and owners of competing therapist staffing attentive to decisions made by the human The federal Sherman Act prohibits no-poach agreements. That changed in companies communicated through text mes- resources department, which in the past may price-fixing, bid-rigging, and market allo- 2016, when DOJ made clear that it will sages, and it quoted statements by Jindal to not have been a priority. cation. Individuals convicted face up to 10 criminally investigate charges that employ- owners of four competitors urging them to DOJ will criminally prosecute wage-fix- years’ imprisonment and a fine of $1 million. ers have agreed to fix compensation or not “collectively … move together” to lower pay ing, no-poach, and non-solicit agreements. rates for their employees. DOJ will criminally prosecute “naked” wage- Second, and just one month later, DOJ fixing and related agreements between com- brought a criminal indictment against Sur- petitors that courts today treat as inherently gical Care Affiliates LLC (SCA), an out- anticompetitive. Similar restrictions that are patient medical care center operator. DOJ’s part of otherwise pro-competitive collabora- indictment charges SCA for conspiring with tions will continue to be assessed under the two competing outpatient medical center rule of reason, a more lenient standard that operators not to solicit each other’s senior balances the agreement’s potential anticom- level employees. The indictment further petitive harm with its procompetitive ben- quotes internal emails and other commu- efits. nications from senior executives of SCA Criminal cases require strong evidence. and its competitors that describe an “agree- DOJ brought both indictments with strong ment to not poach” each other’s employees, evidence, including explicit text messages including instructions to third-party recruit- and emails that reflect undisguised attempts ers that such employees were “off limits.” to fix wages and control hiring. Any anti- Criminal antitrust prosecution often trust investigation, criminal or civil, will rely leads to private plaintiffs challenging the heavily on ordinary-course documents by same conduct in civil litigation seeking the alleged participants in the conspiracy. A damages; even companies or executives careless approach to communication always that cooperate with DOJ and obtain “leni- creates risk. HN ency” from criminal prosecution face this civil risk. And even if the government does Tom York is a Partner at Jones Day, and Juan Antonio Solis is an not criminally enforce wage-fixing or other Associate at the firm. They can be reached at [email protected] employment-related collusion, such con- and [email protected], respectively. More than

Texas Criminal Codes & Rules Annotated 2020

(Statutes current through the 2019 Legislative sessions) annotations!1,900 DON TITTLE and DEBBIE BRANSCUM

That’s what you’ll find in the 2020 TX Criminal Codes_Cover.indd 1 9/27/2019 1:39:14 PM Texas Criminal Codes & Rules.

Plus : • New Legislative Amendments, Cases and Annotations • Court of Criminal Appeals cases of first impression interpreting the Code of Criminal Procedure, Penal Code and Rules of Evidence and Appellate Procedure • Code of Criminal Procedure and Penal Code • Selected portions of the Health & Safety • Code and Transportation Code • Updated Rules of Evidence and • Rules of Appellate Procedure • Controlled Substances Act • Chart Regarding Legal and Factual Sufficiency • A Glossary of Spanish Legal Terms for Texas Criminal Practice • Comprehensive index

To order, call 800-756-8993 or visit www.TexasLawyerBooks.com. June 2021 Dallas Bar Association l Headnotes 15 16 Headnotes l Dallas Bar Association June 2021 Tales from a First-Time Poll Worker

4:00 p.m.—I just could not make it I worked alongside an incred- tion about 25 minutes before the polls BY TERAH MOXLEY the whole day). With the politically ible team of poll workers during our closed. Though he had been eligible to I spent Election Day 2020 in charged year we have had, that was a 14-hour shift on Election Day. There vote in prior elections (he was 38 years the happiest place on earth. Not in little disorienting. But it was also won- were three lawyers in the group—our old), he was a first-time voter. He did Orlando. Not in Anaheim. But in a rec derful. Regardless of which candidates election judge, our official Spanish- not have his identification with him, center gymnasium in East Dallas serv- the voters supported, we treated them speaking poll worker, and me. Like though. Undeterred, he physically ran ing as a poll worker for the first time. I all the same. We thanked them for most of our crew, the three of us were home and back to the polling station, never imagined that walking into that coming out to vote. They thanked us first-time poll workers. We had two ID in hand, in time to cast his ballot rec center gym would be like traveling for our service. In the little down time student workers, both of whom had with three minutes to spare. Maegan through the wardrobe, Narnia-style, we had, the poll workers had discus- worked as poll workers for most of and her fellow poll workers gave him a into a magical bubble devoid of par- sions about non-partisan things. Res- early voting and, as the veterans of the standing ovation. tisanship and divisiveness. But it was. taurants we liked—I found out about a group, very ably showed us newbies the I know I am biased, but I think Everyone was just so happy to be there. great, family-owned diner in my neigh- ins and outs of the voting equipment lawyers are especially suited to be poll All the poll workers. All the voters— borhood. TV shows we were binging— and helped us troubleshoot the few workers. As lawyers, we are professional all 360 we checked in that day. I got the push I needed to finally watch issues that arose during the day. Two communicators. We are trained to take Discussion of the candidates and Schitt’s Creek. In a year as far removed more lawyers joined us throughout the confusing and sometimes scary issues partisan issues were off limits that day. from normal as anyone could imagine, day as official poll watchers—politely and explain them to clients in under- And, I embarked on a media blackout we had extremely normal human inter- and professionally observing our inter- standable terms, conveying as much for the day (which lasted until about actions that day. actions with the voters and conversing reassurance as the situation demands. with the election judges as appropriate. Those skills came in very handy on In addition to being a politics-free Election Day. Many voters expressed zone, the polling station was filled with some nervousness with the process, lovely examples of the best our commu- especially first-time voters. We were P nity has to offer. Applause for frontline able to provide them guidance and workers coming in after long shifts to help them get comfortable with the cast their ballots. Cheers for first time process. Other voters had questions SUMMER CLERKSHI voters. Grandchildren assisting their about various forms they needed to fill ROGRAMS grandparents into and around the poll- out to remedy certain issues before we P ing station. Mothers teaching their chil- could issue them a ballot (e.g., updat- www.dallasbar.org dren the importance of voting by bringing an address, surrendering an absen- ing them into the polling station. We tee ballot). We were able to walk them even had a voter bring an acoustic guitar through those forms step-by-step to with him and enjoyed the sounds of him ensure they were completed properly. June 11, Noon June 25, Noon July 23, Noon serenading us as he exited the building. In addition to feeling civically use- Summer Associates Minority Clerkship Law Student First-time voters were definitely a ful (especially during a pandemic), Pro Bono Webinar Webinar Professionalism Program highlight of the day. One of my favor- serving as a poll worker was incredibly MCLE 1.00 MCLE 1.00 MCLE 1.00 ite stories of a first-time voter, though, rewarding. Reach out to your county comes courtesy of another first-time elections officials to find out how you Learn about the broad range of opportunities in Dallas and poll worker—Maegan Whitehead, can serve. I highly recommend it. HN what the DBA & DVAP have to offer. another Dallas attorney. Maegan served as a poll worker at Solar Pre- Terah Moxley is Partner at Estes Thorne & Carr. She is Board paratory School for Girls. Maegan Certified in Labor & Employment Law by the Texas Board recounted a story of their very last of Legal Specialization and can be reached at tmoxley@ voter who came into the polling sta- estesthornecarr.com. DVAP’s Finest BELINDA BOLING DBA/DAYL Moms in Law Belinda Boling is an Assistant Vice President and Senior Legal Counsel at AT&T. She is also the Co-Chair of the AT&T Legal Department’s Pro Bono Committee. Being a working mom can be challenging. Being a working lawyer mom can be a different ballgame with its own unique challenges. Moms in 1. What types of cases have you accepted? I have accepted a variety of matters, including divorces, a Law is a no pressure, no commitment, informal, fun, support group for guardianship of an incapacitated person, a veteran’s dis- lawyer moms. charge upgrade application, asylum cases, DACA applica- tions, and U-visa petitions. Email [email protected] to join 2. Which clinics have you assisted with? I have assisted with the DVAP virtual clinics, the Veterans legal clinics, and the legal the Moms in Law email listserv. clinics held in East, South, and West Dallas.

3. Why do you do pro bono? I do pro bono because I am thankful for the many blessings I have received throughout my life, including the good fortune and privilege of holding a law degree that allows TURLEY LAW CENTER me help those who desperately need access to lawyers. Providing pro bono services is a two-way street—not only does it benefit those trying desperately to get back on Legal Research Access - Group Rates their feet, but I also gain immense satisfaction as a contributor to the public good. I am On-Site Security thankful that the AT&T Legal Department supports my colleagues and me in these On Site Management efforts. 24-hour Cardkey Access

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KOONSFULLER NORTH TEXAS TEAM

ROW 1: Heather King,* Rick Robertson,* Ike Vanden Eykel,* Charla Bradshaw,* Liz Porter*

ROW 2: Jessica Janicek,* Brian Loughmiller,* Neda Garrett,* Julie Crawford*

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ROW 4: Jonathan Bailey, James Logue, Courtney Walker, Richard Gray, Jessica Perroni, Tom Daley, Paul Leopold, Lauren Shaw

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KOONSFULLER: DIVORCE, CHILD CUSTODY, POST-DIVORCE MODIFICATIONS, CHILD SUPPORT, MARITAL PROPERTY AGREEMENTS, ENFORCEMENTS, GRANDPARENT’S RIGHTS, PATERNITY, COLLABORATIVE LAW, AND APPEALS 18 Headnotes l Dallas Bar Association June 2021 2021 DBA 100 CLUB – GET ON THE LIST The Dallas Bar Association would like to recognize the following firms, government agencies, organizations/schools and corporate legal departments for their support of the DBA along with their commitment to the advancement of the legal profession and the betterment of the community. The DBA 100 Club is a distinguished membership recognition category that consists of Firms, Law Schools, Organizations, and Government agencies with two or more attorneys, as well as corporate legal departments that have 100% membership in the DBA. Recognition is given to the 2021 DBA 100 Club members in our June, July, and August Headnotes, and at our Annual Meeting.

Not a DBA 100 Club member yet? This is the perfect time to encourage your newly hired attorneys to join the DBA and take advantage of our many member benefits—such as 350+ FREE CLE programs including 6 hours of online CLE access each year, networking opportunities, community projects and many other member benefits as well as the opportunity to qualify for the DBA 100 Club.

Please note that the DBA 100 Club is open for renewal annually to every firm. We do not automatically renew a firm’s membership due to changes in firm rosters from year to year.

How do you get on the list? To become a 2021 DBA 100 Club member, please submit your request via email and include a list of all lawyers in your Dallas office to Kim Watson, [email protected]. We will verify the list with our member records and, if eligible, we will add your firm to the 2021 DBA 100 Club!

If we receive your qualifying list by June 4, your firm will be included on the July and August DBA 100 Club recognition list in Headnotes. Send in your list TODAY! DBA 100 Club Members Prager & Miller, P.C. Guida, Slavich & Flores, P.C. Corporate Legal Departments as of May 13, 2021 Quaid Farish, LLC Hall Render Killian Heath & Lyman Arcosa, Inc. RegitzMauck PLLC Harper & Bates LLP Borden Dairy Company Law Firms with 2 to 5 Attorneys Russell & Wright, PLLC JAMS Capital Senior Living, Inc. Adair, Morris & Osborn, P.C. Sawicki Law Johnston Clem Gifford PLLC Compatriot Capitol Inc. Adam L. Seidel, P.C. Sheils Winnubst, PC K&L Gates LLP Dunhill Partners, Inc. Albert & Stobaugh, PLLC Skierski Jain PLLC Kilgore & Kilgore, PLLC El Rancho Inc. Anderson & Riddle, LLP Smith, Stern & Friedman, P.C. KoonsFuller Gaedeke Energy Arnold & Freeman Turton & Pinkerton, PLLC Meadows, Collier, Reed, Cousins, GFR Holdings, LP Atwood Gameros LLP Voge Rohe PLLC Crouch & Ungerman, L.L.P. LALA U.S., Inc. Blankenship, Wiland & O’Connor, P.C. Walker & Long Parsons McEntire McCleary PLLC North Texas Tollway Authority Booth Albanesi Schroeder PLLC Waranch & Nunn PLLC Passman & Jones, P.C. Rosewood Resources, Inc. Bower PLLC Woolley <> Wilson, LLP. Payne Mitchell Ramsey Law Group L.L.P. Tenaska, Inc. Chris Lewis & Associates, P.C. Yarbrough & Elliott, P.C. Peckar & Abramson, P.C. The Rosewood Corporation Crain Brogdon Rogers, LLP Sargent Law, P.C. Fisher & Welch, P.C. Law Firms with 6 or More Attorneys Shackelford, Bowen, McKinley & Government Agencies, Fuller Mediations Bradley Arant Boult Cummings, LLP Norton, LLP Organizations & Law Schools FurgesonMalouf Law PLLC Burford & Ryburn, L.L.P. Stacy Conder Allen LLP CitySquare LAW Gauntt Koen Binney & Kidd, LLP Calabrese Budner LLP Staubus & Randall, L.L.P. Dallas County Probate Courts Horton & Archibald, P.C. Canterbury, PC Steed Dunnill Reynolds Bailey Federal Reserve Bank of Dallas Stephenson LLP Hosch & Morris, PLLC Cavazos Hendricks Poirot, P.C. Mosaic Family Services Inc. Tollefson Bradley Mitchell Johnston Tobey Baruch, P.C. Cobb Martinez Woodward PLLC UNT Dallas College of Law & Melendi, LLP Kastl Law, P.C. Cooper & Scully, P.C. Touchstone Bernays Langley LLP Cowles & Thompson, P.C. Special Recognition Winstead PC Lawrence Law PLLC Cozen O’Connor Students of the UNT Dallas Zelle LLP Marshall & Kellow, LLP DeHay & Elliston, L.L.P. College of Law Mincey-Carter, PC Durham, Pittard & Spalding, LLP Murchison Law Firm Estes Thorne & Carr PLLC Peeples & Kohler, P.C. Godwin Bowman PC

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Focus Antitrust & Trade Regulation/Bankruptcy & Commercial Law Avoiding Stay Violations in a Bankruptcy Case erty of the debtor. The stay is suffi- against the non-debtor would essen- alter ego claims are property of the BY JASON ENRIGHT ciently broad to cover a wide variety of tially be an action against the debtor, estate—so an alter ego action against When the specter of bankruptcy routine and informal collection activi- or when an action against the non- a non-debtor can violate the stay. And arises, if there is one thing most non- ties, including telephone calls, demand debtor would detrimentally impact the with insurance claims, suing a non- bankruptcy practitioners know, it letters, and other forms of “dunning” debtor’s ability to reorganize. Ordinar- debtor when insurance proceeds are is that they do not want to violate the debtor. It even goes so far as to ily, a non-debtor must take affirmative payable to the debtor (and are there- the automatic stay. This fear is well preclude offset of debts owing to the steps to obtain stay protection, such as fore property of the estate) can vio- founded. In addition to actual dam- debtor with claims against the debtor. filing a motion to extend the stay, but late the stay. The key here is to make ages, violations of the stay can result Section 362(b) contains 29 excep- such motions are not often granted. sure the property subject to the action in a finding of contempt by the bank- tions to the stay, which include the Even though the stay does not usu- is not property of the estate or even ruptcy court and an award of sanctions commencement of criminal actions, ally cover actions against non-debtors, “arguable” property of the estate. if the violator had actual notice of the divorce actions, actions by a govern- counsel should still exercise caution So, after carefully reading through bankruptcy case and the stay. Let’s mental unit to enforce police or reg- against non-debtors. The Fifth Circuit section 362, what should you do if examine the scope of the stay and how ulatory powers, and actions involving has held that even attempting to exer- there is any doubt the stay applies? to avoid becoming ensnared in a trou- setoff in connection with securities, cise control over “arguable” property of Out of an abundance of caution, file blesome stay violation. commodities and forward contracts, the estate violates the stay. Thus, while a motion with the bankruptcy court Two very important things imme- among many other exceptions. taking action against a non-debtor, you to lift or modify the stay to take the diately happen when a bankruptcy Does the automatic stay extend may unwittingly be attempting to exer- desired action. If there is one thing to case is filed. First, everything that the to non-debtor parties, such as princi- cise control over property of the estate. remember with respect to the auto- debtor owns, whether by legal or equi- pals or guarantors of the debtor? Gen- For example, if you are suing a non- matic stay—it is always best to ask the table title—including intangible prop- erally, no. In the Fifth Circuit, the debtor for property fraudulently trans- court for permission rather than for- erty, such as causes of action—becomes stay may extend to non-debtors only ferred by the debtor, even though you giveness. HN property of the bankruptcy estate (sub- under unusual circumstances, such as are not suing the debtor, if the property ject to exemption from the estate by when the debtor and non-debtor have is subject to clawback, it is property of Jason Enright is an Associate at Winstead PC and can be individual debtors under state or fed- interests so intertwined that an action the estate. Also, in the Fifth Circuit, reached at [email protected]. eral exemption laws). Second, the automatic stay arises under section 362 of the Bankruptcy Code. The automatic stay is a statutory injunction, which effectively stays all actions against the debtor and property AT THE HEART OF DALLAS of the estate. The purpose of the stay is to preserve the status quo in order to protect the debtor’s assets, provide temporary relief from creditors, and THE RIGHT MOVE help further an equitable distribution among creditors by preventing a race Thomas Haskins to the courthouse to collect on unpaid Litigation Partner debts. With the status quo preserved, the bankruptcy court and creditors have an opportunity to evaluate the Tommy Haskins knows quality when he sees it. “I came debtor’s financial condition, and the from a very large firm and was immediately impressed court can adjudicate creditors’ claims with the people at Barnes & Thornburg,” he says. “We in the case. have former U.S. attorneys and in-house counsel, and The scope of the automatic stay is other outstanding lawyers, plus a talented and supportive back-office team. broad. Formal service of process is not required to effectuate the stay and no “We also represent some of the most sophisticated particular notice need be given to sub- companies and individuals in the world, handling their ject a party to the stay. Generally, the most critical legal needs. Yes, our rates are competitive, stay precludes any act to obtain posses- but that doesn’t come at the expense of quality.” sion of, or exercise control over, prop- As for his transition to the firm, Tommy says the erty of the estate, as well as any act to emphasis on lateral integration “is like nothing collect, assess, or recover any claim I’ve ever seen. I was given the resources needed from the debtor that arose prior to the to make personal connections in our offices filing of the bankruptcy case. All pro- across the country. Within a few months, I had ceedings that could have been com- established relationships with someone in every menced at the time of the filing are office, and years later I work on matters with stayed, including arbitration, adminis- those same individuals. trative, and judicial proceedings. The “Here we truly think and act as one firm, all stay also prohibits the enforcement dedicated to the same goal: delivering the of pre-petition judgments and any act highest quality service to our clients. And to create, perfect, or enforce a lien our deep bench across the country provides against property of the estate or prop- incredible opportunities for me and my clients. “That’s been a huge ignitor for my practice and book of business,” Tommy says. He’s also been impressed with Barnes & Thornburg’s deep commitment to diversity, equity and inclusion. “Early on, one of our highly successful partners converted full- time to developing and implementing market-leading DEI policy and programming. I think that puts us ahead of the pack and demonstrates a commitment beyond lip service. “Importantly, it’s not simply because our clients and communities demand it, but because it’s the right thing to do, which NEED TO REFER is why we have been committed to these efforts for years. I am very proud of that, and it solidifies why Barnes & Thornburg is A CASE? the right firm — for me and my clients.”

The DBA Lawyer Referral Service Can Help.

Tommy Haskins is a proud partner in the Dallas office of Log on to www.dallasbar.org/ Barnes & Thornburg, one of the largest law firms in the country, with more than 700 attorneys and other legal professionals See what sets us apart in Dallas lawyerreferralservice serving clients worldwide. at btlaw.com or call (214) 220-7444. 20 Headnotes l Dallas Bar Association June 2021 29th Annual DBA Golf Tournament Though it was a rainy day, spirits Club, the tournament raised funds who serve clients of modest means. ported and sponsored the tourna- were bright at the 2021 socially for the Entrepreneurs in Commu- Congratulations to the ment, and a big thank you to our distanced DBA Golf Tournament, nity Lawyering program, which Winstead PC team—the 2021 Golf Committee and Co-Chairs benefiting Access to Justice. Held provides resources and mentoring Law Firm Challenge winner! Steven Aldous and Brad Monk. at the new Texas Rangers Golf to new attorneys in the Dallas area Thank you to everyone who sup- We appreciate you! June 2021 Dallas Bar Association l Headnotes 21 29th Annual DBA Golf Tournament 22 Headnotes l Dallas Bar Association June 2021 Foundation’s Virtual “Evening With” Fundraiser Surpasses Goal

Texas. as much profit as we had in prior years, hundreds of lawyers. BY TALMAGE BOSTON We started the series with David though we expected the number of spon- After covering our reduced costs, the Among its many charitable endeav- Brooks in 2011, and in the years follow- sors to decline because of the program’s net return to the Foundation from the ors, the Dallas Bar Foundation raises ing, the DBF has featured being virtual instead of Isaacson event was the highest in Eve- funds for the Sarah T. Hughes Scholar- Doris Kearns Goodwin, live. ning With history. The Foundation has ships, which are awarded annually to out- Bill Bradley, Ken Burns, A key factor in the now presented 10 events in the series standing minority students at the three David McCullough, decision was whether since 2011, and they have netted a total North Texas law schools. Prior to 2011, Bob Woodward, Jon Walter Isaacson would of $722,000, thereby ensuring the con- the Foundation raised scholarship funds Meacham, Ron Cher- reduce his honorarium tinuation of the Sarah T. Hughes Diver- entirely from Bar None performances, now, and Evan Thomas. if the program was vir- sity Scholarships, while also increasing which have awarded almost $2.2 million And everything was in tual. There we got lucky. the number of Hughes Scholarships to in Hughes Scholarships since its incep- place to host historian Walter’s new book now include students attending all three tion in 1986. Entering 2011, Founda- Walter Isaacson in the The Code Breaker was area law schools. tion leaders Rob Roby and Mark Shank fall of 2020 when the to come out March 9, U.S. District Judge Barbara M.G. knew that because of consistently rising pandemic hit, requiring the cancellation 2021, and he said that if the Foundation Lynn and her husband Mike have been law school tuition, in order to maintain of the dinner, and, thus, losing a critical purchased a large quantity of it upon its major supporters of the Evening With the scholarship program, the Founda- source of revenue to fund the scholar- release, then he would waive the hono- program since its inception. Here is tion would have to come up with a new ships. rarium. He also said he would sign all Judge Lynn’s take on why she and Mike source of revenue. They had an idea: host With the uncertainty of COVID still the books we purchased, and we hoped support the program every year: “The an annual fundraising dinner, and attract in place entering 2021, the Foundation’s having autographed books would help event is fabulous. The interviews are law firm, business, and law school table- board had a decision to make: Should we attract sponsors since The Code Breaker always insightful. The speakers are at the buying sponsors by building the evening schedule a live dinner in the fall, hoping was expected to be a #1 bestseller like his top of the literacy world, and the cause around a nationally-renowned speaker. we could fill the ballroom without cre- prior books. is mission critical. Mike and I have been The title for the dinner would be “An ating a health risk? Or should we try a Like magic, everything fell into thrilled to be part of it for so many years.” Evening With …,” and they asked me virtual fundraiser, knowing that without place. Toyota Financial Services/Toy- On behalf of the Foundation board, to get the speakers, knowing that I had the food, beverage, and AV costs at the ota Motor North America, Inc. and the I want to say “Thank You” to all our done it many times for the State Bar of prior Evening With events, we might net ever-generous Leon Carter stepped up 2021 Evening With sponsors. You have as $10,000 presenting sponsors. Dozens again provided the resources that allow of Dallas law firms maintained their past the Sarah T. Hughes Scholarships to commitments, and seemed not bothered continue at SMU, UNT, and Texas by the shift from live to virtual. Elizabeth A&M Law Schools, thereby enriching Philipp, the Foundation’s longtime Exec- the Hughes Scholars’ lives and greatly ADVERTISE HERE! utive Director, did her usual great job of enhancing our legal community. HN organizing every aspect of the event, and Walter Isaacson made a terrific presenta- Talmage Boston is the 2021 Chair of the Dallas Bar Foundation’s Don’t miss your opportunity to tion on April 28, which was viewed by Board of Trustees. advertise (print & online) in the #1 “Legal Resource & Expert Witness Guide” in Dallas County. DBA 100 Club

For more information, contact (214) 321-3238 or [email protected] WHAT IS THE DBA 100 CLUB? The DBA 100 Club is a special membership category that recognizes firms, agencies, law schools, and organizations that give 100% membership support to the DBA!

WHAT IS THE COST TO JOIN THE DBA 100 CLUB? IT’S FREE! The Dallas Bar Foundation thanks the following sponsors for their support of A Conversation with HOW DO YOU JOIN? Firms, government agencies, and law schools with two or more lawyers as well as Walter Isaacson benefitting the corporate legal departments can qualify if all of their Dallas office attorneys are DBA members. To join the 2021 DBA 100 Club, please submit a list of all lawyers Sarah T. Hughes Diversity Scholarships. in your Dallas office to Kim Watson, [email protected]. Once approved, we will add your organization to the 2021 DBA 100 Club member recognition list!

Presenting Sponsors WHAT ARE THE PERKS? Our 2021 DBA 100 Club members will be recognized in Headnotes, the 2022 DBA Pictorial Directory, and at our Annual Meeting.

Join today!

Gold Sponsors

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Silver Sponsors June 2021 Dallas Bar Association l Headnotes 23

Focus Antitrust & Trade Regulation/Bankruptcy & Commercial Law The Intersection of Antitrust and the False Claims Act ceedings or news reports. The public-dis- rately, the district court raised serious public for years before the plaintiff filed BY M. SEAN ROYALL AND RACHAEL A. REZABEK closure bar applied because the fraud had concerns about the plaintiff’s role as a his complaint. Admitting it was a “dif- already been disclosed through prior pat- relator, citing the plaintiff’s involvement ficult” issue, the district court neverthe- In recent years, there have been sev- ent litigation. Moreover, the plaintiff did as an attorney in the underlying patent less rejected this argument on the basis eral cases filed in federal courts where a not establish that the “original source” proceedings, which also raised ethical that the patent prosecution files did not plaintiff and purported “whistleblower” exception to the public-disclosure bar questions. expressly fall into one of “public sources” asserted that the federal government applied. In particular, Amphastar failed Similarly, in the other of the two recognized by the FCA. The district was overcharged for pharmaceutical pur- to show both (1) that it had direct, first- pending Ninth Circuit cases, the plain- court subsequently granted the defen- chases reimbursed through various gov- hand knowledge of the alleged fraud, tiff alleged that the defendants fraudu- dants’ motion to certify the order for an ernment programs. While the claims arise and (2) that it obtained such knowl- lently procured patents for their demen- immediate appeal. under the False Claims Act, these cases edge before the evidence of the fraud was tia products, which served to artificially While the outcome of these appeals are based on a variant of well-established made public. The Ninth Circuit subse- inflate the prices charged for such prod- remains to be seen, both cases raise antitrust theories, usually involving quently affirmed the dismissal. ucts. In turn, the plaintiff alleged that interesting questions and could, depend- claims that branded pharmaceutical man- Two more recent FCA cases, each this rendered false the defendants’ cer- ing on their resolution, influence the ufacturers took improper actions to delay brought by former patent attorney Zach- tifications to a government agency that degree to which these types of case the- market entry of generic drug products. ary Silbersher as the named plaintiff, are such prices were “fair and reasonable.” ories may be viable in the False Claims One of the first such cases was now pending on appeal before the Ninth The defendants moved to dismiss, argu- Act context. HN brought in 2009 by generic manufac- Circuit. ing (among other things) that the public- turer Amphastar Pharmaceuticals Inc. In one of these two cases, the plaintiff disclosure bar applied because the alle- Sean Royall and Rachael Rezabek are Partners at Kirkland & (Amphastar) against brand manufacturer alleged that the defendant drug manufac- gations in the complaint were obtained Ellis. They can be reached at [email protected] and Aventis Pharma S.A. (Aventis). Ampha- turers, Valeant Pharmaceuticals Int’l, Inc., from patent prosecution files that were [email protected], respectively. star alleged that Aventis had committed fraudulently obtained a follow-on patent fraud on the United States Patent and that allowed them to maintain a monop- Trademark Office (PTO) in connection oly on the sale of Apriso, an anti-inflam- Office Space, Position Wanted, with the prosecution of its patent appli- matory drug used to treat ulcers. The Positions Available, Services cation for the anticoagulant medication plaintiff contended that the defendants enoxaparin. Amphastar further alleged violated the FCA by certifying to the that by committing such fraud, Aventis United States government that the prices obtained an illegal monopoly over the the defendants were charging for Apriso Classified drug and, thus, knowingly overcharged were “fair and reasonable,” when allegedly the United States for its branded enoxa- the defendants were knowingly charging Ads parin purchases, which (but for the artificially high prices for the drug as a fraud) would have been substituted with result of their alleged patent fraud. available cheaper generic drugs. As in Amphastar, the district court in This suit was never litigated on the Valeant dismissed the complaint based merits. Instead, the district court dis- on the public disclosure bar, concluding Online missed the complaint for lack of subject- that the facts underlying the complaint’s matter jurisdiction based on the FCA’s allegations of fraud had all been previ- Contact Judi Smalling “public disclosure bar,” which prohib- ously disclosed in public proceedings [email protected] its relators from bringing suits based on before the Patent Trial and Appeal Board 214-220-7452 fraud that has already been disclosed and by various news outlets years before publicly, including through judicial pro- plaintiff brought his complaint. Sepa- www.dallasbar.org 24 Headnotes l Dallas Bar Association June 2021