The Lawletter Blog

CORPORATIONS: Does the Business Judgment Rule Apply to Corporate Officers?

Posted by Gale Burns on Wed, Jan 28, 2015 @ 09:01 AM

The Lawletter Vol 39 No 11

Paul Ferrer, Senior Attorney, National Legal Research Group

     In a classic formulation, the "business judgment rule" is defined as "a presumption that in making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company." Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984) (emphasis added), overruled on other grounds by Brehm v. Eisner, 746 A.2d 244 (Del. 2000). The business judgment rule plays a crucial role in protecting corporate directors from liability for business decisions, because "[a]bsent an abuse of discretion, th[eir] judgment will be respected by the courts" and the burden to establish facts rebutting the presumption is on the party challenging the decision in question. Id.

    The question of whether the business judgment rule should also apply to protect business decisions made by corporate officers has been the subject of much academic debate. See generally Amitai Aviram, Officers' Fiduciary Duties and the Nature of Corporate Organs, 2013 U. Ill. L. Rev. 763, 766 & n.15 (2013) (collecting articles). However, the issue has not been addressed in many cases. In those cases in which the question has been presented, the courts have given the issue little attention in consistently holding that the business judgment rule does not apply to corporate officers.

Read More

Topics: business law, corporations, corporate officers, business judgment rule

ATTORNEY-CLIENT: Attorney's Fees Awards for Prevailing Civil Rights Plaintiffs Under 42 U.S.C. § 1988—The Special Circumstances Exception...

Posted by Gale Burns on Wed, Jan 28, 2015 @ 09:01 AM

The Lawletter Vol 39 No 11

John Stone, Senior Attorney, National Legal Research Group

     "Occupy Wall Street" protestors brought an action under 42 U.S.C. § 1983 against the City of Austin, Texas, challenging on First Amendment and Due Process grounds the City's policy of issuing criminal trespass notices to protestors on city property. They sought nominal damages and declaratory and injunctive relief. After a bench trial, the U.S. District Court for the Western District of Texas granted declaratory and injunctive relief to the protestors but denied their motion for attorney's fees and expenses under 42 U.S.C. § 1988. The protestors appealed the attorney's fees ruling to the Fifth Circuit.

     The Fifth Circuit reversed and remanded for entry of an order awarding the protestors fees in an appropriate amount. Sanchez v. City of Austin, No. 13-50916, 2014 WL 7234728 (5th Cir. Dec. 18, 2014). The error leading to the reversal was the district court's having used the allegedly limited nature and scope of the injunctive relief obtained by protestors and the allegedly limited injury to their rights as relevant factors when determining whether "special circumstances" warranted denial of § 1988 attorney's fees, even though the protestors had been prevailing parties.

Read More

Topics: attorney’s fees, criminal trespass, 42 U.S.C. § 1988, Occupy Wall Street

EMPLOYMENT LAW: Keeping Employment Policies Apace with Developments in Same-Sex Marriage and Gender Identity Discrimination

Posted by Gale Burns on Mon, Dec 29, 2014 @ 13:12 PM

The Lawletter Vol 39 No 10

John Buckley, Senior Attorney, National Legal Research Group

     A periodic review of employment policies for changes in the law is always prudent. In light of the rapidity of recent developments, however, including marriage rights of same-sex couples and prohibitions against discrimination based on sexual orientation and gender identity, counsel for employers face an unprecedented challenge keeping workplace policies compliant in a changing legal landscape.

     Same-sex marriage rights. Recent legislative and judicial developments related to same-sex marriage rights impact workplace rights involving benefits, leave time, and related issues. An employee's same-sex spouse may be entitled to coverage under employer-provided health insurance plans and have rights as the alternate payee, beneficiary, and/or survivor in employee pensions and other retirement benefits. Upon divorce, an employee's spouse may recover an interest in the portion of the employee's pension or other retirement benefit that accrued during the marriage. Upon an employee's death, the surviving spouse may be entitled to receive any wages due the employee. Similarly, under federal and many state laws, an employee is entitled to paid or unpaid leave time to care for a spouse with a serious medical condition or a spouse who is a military servicemember or veteran. Thus, it is essential for employment policies to reflect the current legal definition of "spouse" under federal law and in the employer's particular state(s) of operation.

Read More

Topics: employment law, employment policies, compliance

CIVIL PROCEDURE: Notice—Use of the Internet

Posted by Gale Burns on Mon, Dec 29, 2014 @ 13:12 PM

The Lawletter Vol 39 No 10

Charlene Hicks, Senior Attorney, National Legal Research Group

     The provision of notice solely by publication of an impending legal proceeding affecting an individual's property rights has long been unpopular with the public and disfavored by the courts. To ameliorate the harshness of publication notices and to comply with the intended recipient's right of due process, state and federal courts generally require the party charged with giving notice to first take reasonable steps or make diligent efforts to locate the intended recipient's current address. The question then arises as to what type of investigation is legally required to fulfill the sending party's notice obligations. In this regard, some courts have recently been asked whether such investigatory obligations include the performance of an Internet search for the intended recipient's current address.

     This question is clouded by the admonition of the U.S. Supreme Court in Jones v. Flowers, 547 U.S. 220 (2006), that a party charged with providing notice need not conduct an open-ended search to locate the intended recipient's current whereabouts. It is unclear whether an Internet search amounts to an open-ended search rejected by Jones.

Read More

Topics: civil procedure, investigatory obligations, Internet search, notice by publication

TORTS: Defamation—Absolute Privilege—Statements to Media

Posted by Gale Burns on Mon, Dec 29, 2014 @ 12:12 PM

The Lawletter Vol 39 No 10

Fred Shackelford, Senior Attorney, National Legal Research Group

     Joining numerous other courts that have addressed the issue, the Nevada Supreme Court has considered for the first time whether a litigant's statements to the media regarding litigation are protected by an absolute privilege. In Jacobs v. Adelson, 325 P.3d 1282 (Nev. 2014), a wrongful termination claim was brought against a former employer and its chief executive officer, Sheldon Adelson. The case attracted widespread media attention, and during its course, Adelson was quoted in a Wall Street Journal article as follows: "We have a substantial list of reasons why Steve Jacobs was fired for cause and interestingly he has not refuted a single one of them. Instead, he has attempted to explain his termination by using outright lies and fabrications which seem to have their origins in delusion." Id. at 1284.

Read More

Topics: torts, defamation, absolute privilege, statements to media

PENSIONS: What Severance Contracts Are Subject to Federal ERISA Law?

Posted by Gale Burns on Wed, Dec 24, 2014 @ 10:12 AM

The Lawletter Vol 39 No 10

Matt McDavitt, Senior Attorney, National Legal Research Group

    While many employers create severance contracts as incentives for employees to remain during mergers or sales of the company, few employers realize that some severance agreements are governed by the Employee Retirement Income Security Act ("ERISA") and that federal ERISA law preempts state law when such severance contracts are introduced during litigation.

     However, not all employer severance contracts are subject to preemption by federal ERISA law. The ERISA statutes do not define which severance agreements are governed by federal law; fortunately, a line of federal case law has clarified how this determination is made.

Read More

Topics: ERISA, pensions, severance contracts

CRIMINAL LAW: Search and Seizure—Cell Phone Location Tracking

Posted by Gale Burns on Wed, Dec 24, 2014 @ 10:12 AM

The Lawletter Vol 39 No 10

Doug Plank, Senior Attorney, National Legal Research Group

     The Florida Supreme Court recently held that the warrantless tracking of an individual through the use of real-time cell site location information was a violation of that individual's rights under the Fourth Amendment. In Tracey v. State, No. SC11-2254, 2014 WL 5285929 (Fla. Oct. 16, 2014), the defendant had been convicted of possession of cocaine and other offenses after police officers apprehended him while he was transporting the cocaine by automobile. The evidence showed that the officers had been able to monitor the movements of the defendant and his accomplice, who was located in another city, by following the cell site location information given off by their cell phones as the defendant placed calls to the accomplice. By using the information showing the location of the accomplice, the officers were able to establish where to set up surveillance for the moment that the defendant would meet the accomplice and exchange the cocaine.

Read More

Topics: search and seziure, cell phone, tracking

IMMIGRATION LAW: Standard for Evaluating Criminal Conviction in Removal Proceedings Based on Conviction

Posted by Gale Burns on Thu, Dec 4, 2014 @ 15:12 PM

The Lawletter Vol 39 No 9

Suzanne Bailey, Senior Attorney, National Legal Research Group

     Section 237(a)(2)(B)(i) of the Immigration and Nationality Act ("INA"), 8 U.S.C. § 1227(a)(2)(B)(i), provides that an alien is deportable if s/he has been convicted of any law "relating to a controlled substance . . . other than a single offense involving possession for one's own use of 30 grams or less of marijuana." (Emphasis added.) What approach should an Immigration Judge ("IJ") take in determining whether the alien's conviction fits within this "personal use" exception? Should the IJ be limited to a categorical inquiry, which does not permit a review of the facts underlying the particular offense but requires a comparison of the elements of the "generic" offense listed in the INA with the elements of the statutory offense of which the alien was convicted? Or should the IJ be allowed to conduct a circumstance-specific inquiry into the alien's conduct leading to the conviction?

Read More

Topics: immigration, removal proceedings, personal-use exception, criminal conviction

BANKRUPTCY: Chapter 13

Posted by Gale Burns on Tue, Dec 2, 2014 @ 17:12 PM

The Lawletter Vol 39 No 9

Anne Hemenway, Senior Attorney, National Legal Research Group

     If you have ever wondered why above-median-income Chapter 13 debtors continue to enjoy ownership of luxury items, the answer is in the 2005 amendments to the U.S. Bankruptcy Code. Prior to the significant amendments to the Code in 2005, a Chapter 13 debtor's disposable income, necessary for the viability of a Chapter 13 plan, was determined by the court reviewing an individual debtor's ability to pay a Chapter 13 plan based on the individual circumstances of the debtor. As part of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA"), Congress amended 11 U.S.C. § 1325(b) and replaced the court's discretionary analysis of a debtor's disposable income and expenses with a statutory and mechanical means test.

Read More

Topics: bankruptcy, Chapter 13, 11 U.S.C. § 1325, BAPCPA

CIVIL PROCEDURE: Electing Between Legal and Equitable Remedies

Posted by Gale Burns on Mon, Dec 1, 2014 @ 13:12 PM

Paul Ferrer, Senior Attorney, National Legal Research Group

      The Federal Rules of Civil Procedure specifically provide that a plaintiff stating a claim for relief must include in his or her complaint, among other things, "a demand for the relief sought, which may include relief in the alternative or different types of relief." Fed. R. Civ. P. 8(a)(3). Many states, including Oregon, have included an identical or substantially similar provision in their own Rules of Civil Procedure. See Or. R. Civ. P. 16(C) ("Inconsistent claims or defenses are not objectionable . . . . A party may . . . state as many separate claims or defenses as the party has, regardless of consistency and whether based upon legal or equitable grounds or upon both."). Despite the rules permitting pleading of alternative claims for relief, plaintiffs who request both legal and equitable remedies based on the same conduct by the defendant often face an early motion to dismiss the equitable claim on the theory that equitable relief ordinarily is not available when the claimant has an adequate legal remedy. The Oregon Supreme Court, sitting en banc, considered this "shibboleth" in a thoughtful opinion rendered in Evergreen West Business Center, LLC v. Emmert, 323 P.3d 250, 252 (Or. 2014) (en banc).

Read More

Topics: civil procedure, eqitable remedies

Seven ways outsourcing your legal research can empower your practice

Subscribe to The Lawletter