Kevin LaCroix, writing in The D&O Diary, discusses a recent scholarly article that takes a detailed look at director and officer claims arising out of allegations of sexual misconduct.

The University of Chicago Law School article examines the potential bases of liability, and considers the relative social utility of this kind of litigation, as well as the practical implications for corporate boards and their organizations.

LaCroix writes: “The authors conclude that ‘in some instances, corporate fiduciaries will indeed be liable to shareholders when workplace-sexual misconduct occurs at companies.’ In light of this conclusion, it would be prudent for companies and their executives to take steps to reduce their potential exposure to these kinds of suits.”

Read the article.

A recent Superior Court of Pennsylvania ruling in a case concerning hydraulic fracturing runs counter to a ruling in a similar case by the Texas Supreme Court, reports John B. McFarland in Graves, Dougherty, Hearon & Moody’s Oil and Gas Lawyer Blog.

The Pennsylvania court held that “hydraulic fracturing may constitute an actionable trespass where subsurface fractures, fracturing fluid and proppant cross boundary lines and extend into the subsurface estate of an adjoining property for which the operator does not have a mineral lease, resulting in the extraction of natural gas from beneath the adjoining landowner’s property.”

In doing so, McFarland explains, the court rejected the reasoning of the Texas Supreme Court when that court held that the rule of capture prevented any such cause of action.

Read the article.

Agreements among companies to not hire each other’s workers are more risky than ever, warns Pepper Hamilton LLP in a post on its website.

“The DOJ’s Assistant Attorney General for the Antitrust Division, Makan Delrahim, stated on January 19 that the division has criminal cases targeting these agreements in the works,” the post says. “Meanwhile, lawsuits challenging no-poach agreements in technology, entertainment, health care and other industries have settled, sometimes for hundreds of millions of dollars. The DOJ announced its latest settlement, a civil settlement with two rail equipment suppliers, on April 3, underscoring that it did not bring criminal charges only because the suppliers ended their agreements before the FTC and DOJ issued guidance on ‘no-poach’ agreements in October 2016.”

The article concludes with some actions that firms should take to identify and limit their exposure.

Read the article.

Business News Daily talked to business owners, attorneys and other experts to find out what common contract “gotchas” you should be on the lookout for.

The article, by Adam C. Uzialko, starts by warning about the use of terms like “notwithstanding,” which can contradict a party’s previously stated obligations.

Other topics include intellectual property clauses, last-minute revisions, specific accounting practices, automatic-renewal clauses, financial obligations, forum selection clauses, foreign laws, at-will clauses, and client acquisitions.

Read the article.

Image by NY Photographic

Sinclair Broadcast Group, a company that owns local news stations across the country, is itself in the news for requiring its newscasters to read a script about “one-sided news stories plaguing our country.”

The Conversation reports that some Sinclair employees have said that their employment contracts made it prohibitively expensive to walk away.

Elizabeth C. Tippett, associate professor of law at the University of Oregon and author of the article, offers her take on the issue: “A Los Angeles Times journalist posted an excerpt of a contract that he claims to have received from a Sinclair employee. After reviewing it, I agree with other attorneys who noted that the legality of the provision depends on whether the fine is similar to the costs Sinclair would incur if the employee leaves prematurely.”

Read the article.

Fox Rothschild LLP has posted its Federal Contractors’ Guide to Small Business Administration Set-Aside Contracts, Size Standards, Size Protests, and Affiliation.

The federal government sets aside a significant portion of its procurement dollars each year for purchasing goods and services from small businesses. Small business set-aside procurements and small business contract awards (“Set-Aside Procurements” and “Set-Aside Contracts,” respectively) provide substantial opportunities for a certified small business concern (SBC) to compete for and perform federal contract work. However, SBCs awarded Set-Aside Contracts are frequently subjected to size protests filed with the U.S. Small Business Administration (SBA) by disappointed competitors looking to challenge the awardee’s size, and if successful, to disqualify the awardee from the procurement.

The Fox Rothschild LLP Guide advises federal contractors on the following issues and concepts:

●SBA Set-Aside Procurements, Set-Aside Contracts, and Size Standards;
●The parameters and purposes for SBA size protests, how they are filed, and how contractors can avoid and defend against such protests; and
●The parameters of SBA affiliation, which contractors can use to challenge Large Businesses masquerading as small business concerns, and, as importantly, must understand to protect themselves from being adversely affected by a finding of affiliation at the hands of a size protest.

Download the guide.

Above the Law has published its latest Power 100 law firm firm ranking, which measures firms’ reputations and their appeal as potential employers for  talented lawyers.

Editor Elie Mystal focuses on results for Jones Day, which fell 33 spots in the rankings, from number 18 to number 58.

“Jones Day declined in every objective data point we measured. But the objective points are only half of the methodology,” Mystal writes. “The other half is a reputation survey, and that’s where Jones Day got stuffed in a locker and ridiculed by all the cool kids.”

He posits that the firm’s association with President Donald Trump may have led to the sharp decline. Partner Don McGahn took on the job as White House Counsel, and the firm was quick to associate itself with the new administration in 2017.

Read the Above the Law article.

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Reuters reports that Wells Fargo & Co. has been offered a penalty of $1 billion by regulators to resolve outstanding investigations related to auto insurance and mortgage lending abuses, the third-largest U.S. bank by assets said on Friday.

The news agency previously had reported that the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency were preparing a fine of up to $1 billion for Wells Fargo’s auto insurance and mortgage lending abuses.

“The U.S. Federal Reserve has also imposed restrictions on the bank’s growth, forbidding it to expand its balance sheet beyond 2017 levels until it makes internal changes that addressed its board and risk management,” according to the latest Reuters report.

Read the Reuters article.

The Washington Post is reporting that booming stock market and bulging equity awards propelled the median 2017 compensation for CEOs of the 100 largest companies to the highest figure in 11 years, according to a new analysis by executive compensation and governance research firm Equilar.

“While the median pay increase for CEOs was slightly lower than the year prior, at 5 percent instead of 6 percent, the median CEO pay package was valued at $15.7 million, the first time it notched above 2016’s previous high of $15 million,” writes Jena McGregor.

The highest-paid CEO in this year’s study is Broadcom’s Hock Tan, with a 2017 compensation package valued at $103.2 million. That figure includes a new stock grant valued at $98.3 million that will pay out over a period of several years only if Broadcom meets certain total shareholder return performance thresholds.

Read the Post article.

Buchalter announced that a team of attorneys, Evelyn Kahl, Michael Alcantar, Nora Sheriff, Donald Brookhyser, and Katherine “Katy” Morsony, have joined the firm as members of its Energy & Natural Resources Group in the San Francisco office.

Joining the firm from Alcantar & Kahl, the team, including two analysts and a legal administrator, provides regulatory and corporate counsel to private companies engaged in energy matters, the firm said. The group’s experience includes matters relating to climate change, electricity, natural gas, clean energy, and demand response.

“Enhancing the firm’s energy expertise has been a high priority for us, and we are thrilled to welcome this talented team of attorneys to Buchalter,” said President and Chief Executive Officer Adam J. Bass.

With more than three decades of experience in the energy industry, Kahl advises electricity and natural gas infrastructure owners, transporters, and end-users on the integration of California energy laws and regulations. She also has experience representing the regulated industries of water, telecommunications and transportation, most recently on the topic of passenger transportation using autonomous vehicles. Kahl earned her J.D., magna cum laude, from the University of California, Hastings School of Law and her B.A., magna cum laude, from Concordia College.

“We are delighted to join Buchalter. With the firm’s well-established reputation and full service platform, our team will be able to service our clients on a larger scale,” said Kahl.

Alcantar’s experience includes energy policy and infrastructure development, legislative actions, administrative and judicial litigation, agency and regulatory compliance, engagement, and advocacy. He represents large industrial customers, conventional and renewable project developers, generation operations and procurement entities. Specifically, Alcantar handles solicitations, compliance, and the negotiation and development of successful agreements in support of new or repowered projects. Further, a significant part of his practice addresses project development, ongoing operations and regulatory compliance for large cogeneration or combined heat and power (CHP) resources under the Public Utility Regulatory Policies Act (PURPA). He earned his J.D. from the University of Southern California, Gould School of Law and his B.A. from the University of Southern California.

“Buchalter’s growth and commitment to the future is remarkable,” added Alcantar. “I am excited to be joining lawyers that provide clients with outstanding service and effective business solutions.”

Sheriff focuses her practice on electric and natural gas regulatory and administrative litigation, legislative efforts, and end-use contractual transactions; she works to ensure clean energy tools are available for large end-use customers to help mitigate the impacts of the high cost of California power on California manufacturing. She received her J.D. from the University of California, Hastings College of Law, her B.A. in International Affairs at George Washington University, and her M.A. in International Affairs from California State University, Sacramento.

“I am so excited to continue to represent our clients at Buchalter and for the opportunity to grow our practice with the impressive platform Buchalter provides,” said Sheriff.

As a civil litigator and a utility law specialist, Brookhyser represents independent generators. He earned his J.D. from Georgetown Law and his B.A. from the University of Oregon. Morsony’s experience includes California’s energy efficiency and greenhouse gas programs. She earned her J.D. with honors from The University of Texas School of Law and her B.A. from Emory University where she was a member of Phi Beta Kappa.

Lui Chambers, an international business attorney and shareholder with Langley & Banack, Inc., has earned the ANSI-accredited Certified Information Privacy Professional/United States (CIPP/US) credential through the International Association of Privacy Professionals (IAPP).

The CIPP is the global standard in privacy certification. Developed and launched by the IAPP with leading subject matter experts, the CIPP is the world’s first broad-based global privacy and data protection credentialing program.

In a release, the firm said Chambers counsels clients on privacy and data protection, data breach response, cybersecurity and general cyber-contracting matters. Chambers has experience in crisis management, both in information privacy matters, as well as in general disaster response. Prior to joining Langley & Banack, she served as regional general counsel for a large multi-national corporation and was alternate incident commander of the regional incident response team.

In addition to crisis management, Chambers assists clients with drafting and implementation of cyber-security and general incident response plans and structures, enhanced compliance, and governance policies and protocols, the firm said. She also advises financial institutions and industry clients in the drafting and negotiation of their website development, website hosting, SaaS agreements and other internet and data-based service agreements.

“Unfortunately, laws and their communication are not keeping up with the rapid advances of technology. As a result, corporations, business owners, financial institutions and others in private and public industries are not adequately prepared when a data breach occurs,” said Chambers.

“A breach can involve the unauthorized access of personal information or otherwise confidential data, such as trade secrets, confidential business processes, corporate structures and more,” Chambers said.

“The challenge is that laws vary on state and federal levels as to what is considered confidential information in the first place and how to handle a breach or theft of such information or access to any system containing such confidential information,” she continued.

“That is why it is imperative for organizations, small and large, to have protective provisions and procedures in place both in their contracts, on their websites and in internal policies,” added Chambers.

Lui Chambers holds the following academic degrees: Juris Doctor, University of Houston Law Center, cum laude, 2008; Master of Business Administration, University of Chicago, 2000; M.Sc. (Econs), London School of Economics, 1993; and a B.A. with Joint Honors, 1989, Leeds University. She is fluent in German and Spanish.

Kim Technologies will present a complimentary webinar, “Automating with a Legal Ops Platform vs Siloed Product Solutions,” on May 3, 2018, beginning at 1 p.m. EDT.

“The benefits of a unified software platform over multiple siloed products are clear,” the company says on its website. “Who wouldn’t want to keep all their data in one place; search and report on anything at the click of a button; provide a seamless user experience across the entire department or organization? Traditionally, this ‘holy grail’ has taken huge amounts of time and money to implement and maintain, and has rarely been an option for Legal. Instead, most law departments and law firms have organically grown a hodge-podge of software siloes that create an obstacle to innovation, efficiency and transparency.”

This webinar will cover:

• Global AI market update
• Preparing for the Age of Data
• Platform vs Product and why it matters
• To code or not to code, that is the question
• Automating workflows, documents and dashboards in hours, with no IT support!
• Q&A session

Register for the webinar.

Bloomberg Tax will present a live event designed to help business owners, tax, finance directors, in-house counsel, bankers and investment professionals including PE & hedge fund managers to learn how employee stock ownership plans (ESOPs) can provide more than just an exit strategy. They may be an opportunity for a growing business and its employees, the company says.

The event will be Thursday, May 3, 2018, 2:30-6 p.m., at Bloomberg L.P., 120 Park Avenue, New York 10165.

“New Era of Material Wealth Creation With ESOPs” will look at all the benefits associated with ESOPs, including top performer retention, growing capital, and future planning.

Presenters will move past theory into the practical implementation of an ESOP. Through a case study, thought leaders will explore all of the stages of the process, including crafting the right design, securing employee buy-in, and more, Bloomberg says on its website.

Register for the event.

Former Federal Trade Commission officials have been pulling out their calculators in recent weeks trying to figure out just how big a fine the commission could levy against Facebook for its latest privacy mishaps, The Washington Post reports.

White former FTC chairman William Kovacic joked that the potential fine could total “more money than there is on the planet,” it’s unlikely the FTC would levy a fine so large that it would imperil the future of Facebook, report Craig Timberg and Tony Romm.

They write that David Vladeck, a former FTC director of consumer protection who oversaw the consent decree with Facebook, says he expects the commission to find new violations in light of the company’s revelations last week. Vladeck estimates the probable fines in the vicinity of $1 billion, a record for FTC privacy fines.

Read the Post report.

Image by Aliman Senai

In the 135 days since the Trump administration took control of the nation’s consumer watchdog agency, it has not recorded a single enforcement action against banks, credit card companies, debt collectors or any finance companies whatsoever, according to an Associated Press review.

Reporter Ken Sweet writes that’s likely no fluke: “Mick Mulvaney, appointed acting director of the Consumer Financial Protection Bureau in late November, promised to shrink the bureau’s mandate and take a much softer approach to enforcement, and records reviewed by The Associated Press indicate he has kept his word.”

Tthe bureau issued an average of two to four enforcement actions a month under former Director Richard Cordray, President Obama’s appointee. But the database shows zero enforcement actions have been taken since Nov. 21, 2017, three days before Cordray resigned.

Read the AP article.

When Michigan State University head lawyer Robert Noto — under fire for his leadership in the Larry Nassar sexual assaults scandal — retired in February, he did so with a generous payout worth more than $430,000, reports the Detroit Free Press. That’s more than a year’s salary for Noto.

Noto, who had been with the university since 1995, resigned about a month after MSU Trustee Brian Mosallam called for his immediate resignation.

Reporter David Jesse writes that Noto received:

• Six months of his $403,100 annual salary. That’s $201,550.
• Payment for 151 unused vacation days. That’s $234,110.
• The use of an university-owned car through Sept. 5. He also gets computer support from the university for the same time period.

Read the Free Press article.

An article published by Zapproved breaks down the results and explains the benefits of replacing an existing system — or lack thereof — with automated, cloud-based legal hold software.

The article can be downloaded at no charge.

Research results demonstrate a real rate of return on investment generated by automated cloud-based legal hold software, the company says on its website.

“E-discovery is expensive, but the risks of not handling it are even more costly,” Zapproved says on its website. “Many legal teams tend to focus their cost-reduction efforts on later phases of discovery, such as processing and review, overlooking the benefits of optimizing the preservation process. Yet putting in the effort to preserve and collect the right data has a trickle-down effect, saving money and time in every step that follows while minimizing potential spoliation. The question is, just how much can you save with effective preservation?”

Download the article.

The National Association of Corporate Directors recently convened a meeting of Fortune 500 audit and compensation committee chairs to discuss the key issues and challenges the board faces in the selection and use of nonfinancial metrics. A free report on the results of that meeting is available from NACD.

Three key takeaways emerged from the meeting.

• Boards should link nonfinancial metrics to strategic and cultural objectives.
• Audit committees should leverage internal audits to meet the challenge of nonfinancial data quality oversight.
• Compensation committees are focusing on the role nonfinancial metrics play in compensation-plan design and in eventual payouts.

The full report from the meeting includes:

• key questions for boards to ask about nonfinancial metrics
• the four critical roles for internal audit in support of governance over nonfinancial reporting
• special considerations for the compensation committee

Download the report.

Stephen M. Loftin, a founding member of Houston-based commercial litigation boutique Hicks Thomas LLP, has been accepted into the American Board of Trial Advocates (ABOTA).

In a release, the firm said Loftin, whose commercial litigation practice involves energy, insurance coverage, product liability and personal injury matters, values being admitted into the invitation-only ABOTA organization. ABOTA’s guiding principle is to foster improvement in the ethical and technical standards of practice in the field of trial advocacy as well as the protection of the constitutional vision of equal justice for all Americans and the civil justice system.

“Civility and professionalism, hallmarks of ABOTA, are important to me and I’m honored to be part of this organization that seeks to preserve the right to trial by jury that is central to the American judicial system,” he said.

A graduate of the University of Houston Law Center, with a B.A. from the University of Texas, Loftin is a Life Fellow of the Texas Bar Foundation and the Houston Bar Association. He has earned recognition among the top business litigation attorneys in Texas Super Lawyers. He is a member of both the State Bar of Texas and the Oklahoma Bar Association.

Composed of lawyers who have tried a minimum of 10 civil jury trials to conclusion, ABOTA dedicates itself to the preservation and promotion of the Seventh Amendment of the U.S. Constitution, which guarantees the right to civil jury trials. The Texas chapter, known as TEX-ABOTA, is composed of 16 local chapters and serves as a consolidated voice of more than 1,300 members.

Jeffrey J. Catalano has joined Freeborn & Peters LLP as a partner in the Litigation and Intellectual Property (IP) practice groups.

“We are thrilled to welcome Jeff to the firm,” said Jennifer L. Fitzgerald, a Partner and Leader of Freeborn’s Intellectual Property Practice Group. “With his experience and successes in high-stakes litigation and licensing matters, Jeff will further expand the depth and scope of both our trial and IP teams as we continue to focus on helping our clients achieve their business goals.”

Based in Freeborn’s Chicago office, Catalano focuses his practice on intellectual property litigation as well as IP-adjacent commercial litigation. His experience includes patent, copyright, trade secret, trademark and unfair competition disputes before federal courts, arbitrators, the U.S. Patent and Trademark Office, and the International Trade Commission. He has in-depth experience related to patent licensing, including the licensing of standards-essential patents on fair, reasonable and non-discriminatory (FRAND) terms.

Prior to joining Freeborn, Catalano was a shareholder at Brinks, Gilson & Lione in Chicago.

Catalano received his J.D. from Georgetown University Law Center and his Bachelor of Arts from Miami University.