When negotiating a construction contract with a general contractor, the owner/developer should be aware of, and address, a number of issues to attempt to mitigate or limit the risk of construction defect litigation for a residential project, including multi-family and for-rent residential apartment and senior housing projects, advises Rebecca W. Dow in Holland & Hart’s Construction Law Blog.

She explains that tandard forms of construction contract — such as the American Institute of Architects (AIA) or ConsensusDocs — are more beneficial to the contractor than the owner in many respects.

A construction contract will need to be reviewed thoroughly and revised to better protect the owner, and in the case of residential construction, should in particular, address 10 key issues.

She discusses those issues, which include: scope of work, change orders, indemnification, warranties, subcontracts, insurance, dispute resolution, compliance with laws/environmental matters, construction lender, damages/attorneys’ fees.

Read the article.

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Reuters is reporting that the U.S. Department of Justice has begun a criminal investigation into Uber Technologies Inc.’s use of a software tool that helped its drivers evade local transportation regulators, two sources familiar with the situation said.

Reporters Dan Levine and Joseph Menn write that Uber has acknowledged the software, known as “Greyball,” helped it identify and circumvent government officials who were trying to clamp down on Uber in areas where its service had not yet been approved, such as Portland, Oregon.

“The criminal probe could become a significant problem facing the company that is already struggling with an array of recent business and legal issues,” they explain.

Some Uber employees told Reuters that the Greyball technique was used against suspected local officials who could have been looking to fine drivers, impound cars or otherwise prevent Uber from operating.

Read the Reuters article.

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Bloomberg BNA, PKF O’Connor Davies LLP, Prairie Capital Advisors, and Sadis & Goldberg LLP will present an exclusive live event on using employee stock ownership plans (ESOPs) to support growth and ownership transition strategies.

The event will be Thursday, June 1, 2017, 3-5:15 p.m., with a reception to follow. The location will be at Bloomberg LP, 120 Park Ave., New York, NY 10017.

On its website, Bloomberg says this program will explore all of the ways in which a business can utilize ESOPs to create favorable conditions for financing, allow for acquisitions, attract top talent, and generate wealth for both owners and employees.

ESOPs are commonly used by an owner seeking to retire, however, in today’s business market of successful start-ups, there’s an opportunity to consider them earlier in the lifecycle of the company. ESOPs, when done properly, may position the company for financing, allow for acquisitions, help attract and retain top talent in a competitive environment, and create wealth for owners and employees.

Register for the event.

Bloomberg is reporting that Kimberly-Clark Corp. sued its spinoff Halyard Health Inc., claiming it wrongfully refused to pick up the entire tab for a $454 million verdict against the companies over the safety of some of their surgical gowns.

The plaintiff claims Halyard agreed to indemnify Kimberly-Clark for all costs tied to a lawsuit that accused the companies of misleading consumers about the safety of their MicroCool surgical gowns.

In its suit, Kimberly-Clark claims that Halyard must pay its $350 million punitive-damages portion of the jury verdict in the class-action case, reports Jef Feeley.

Halyard Health, which makes surgical masks, gloves and pain-pump accessories, filed its own suit in California, claiming it’s not obligated to cover litigation costs.

Read the Bloomberg article.

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The U.S. Justice Department has accused UnitedHealth Group Inc. of obtaining inflated payments from the government based on inaccurate information about the health status of patients enrolled in its largest Medicare Advantage Plan, Reuters is reporting.

The accusation against the company is the latest, following separate lawsuits in two separate whistleblower lawsuits against the country’s largest health insurer.

“Medicare Advantage, an alternative to the standard fee-for-service Medicare in which private insurers manage health benefits, is the fastest growing form of government healthcare, with enrollment of 18 million people last year,” writes reporter Nate Raymond.

A UnitedHealth spokesman said the company rejects the claims and will contest them vigorously.

Read the Reuters article.

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Veteran energy company in-house counsel Todd L. Grimmett has joined The Lanier Law Firm as a member of the commercial litigation team. His hiring bolsters the firm’s growing focus on lawsuits affecting the oil and gas industry, the firm said in a news release.

Grimmett most recently served as an in-house counsel for Oklahoma City-based Chesapeake Energy Corp., one of the nation’s largest natural gas producers. For the past six years, Grimmett represented Chesapeake in a number of civil litigation matters and provided legal counsel for the company’s upstream and midstream divisions. In addition, he directed responses to regulatory inquiries and investigations and was responsible for managing the company’s e-discovery department.

Before joining Chesapeake in 2011, he served as a trial lawyer with several Oklahoma-based law firms and tried cases in jurisdictions throughout the Southwest.

“Todd is an exceptional young lawyer with a deep understanding of the energy sector as well as a wealth of practical experience in the courtroom,” said Mark Lanier, who founded the firm nearly 25 years ago. “This combination of skills will be a great asset as we take on an increasing number of cases related to oil and gas disputes, as well as other civil ligation matters.”

In his new role, Grimmett is reunited with Regan E. Bradford, former Deputy General Counsel and Assistant Corporate Secretary for Chesapeake, who joined the Lanier Law Firm in 2016.

Grimmett earned his law degree in 2006 from the University of Oklahoma College of Law, and served as an intern in the office of the Oklahoma Attorney General while in law school. He received his undergraduate degree in business administration from Oklahoma State University in 2001.

The firm has offices in Houston, Los Angeles, and New York.

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Sometimes a temporary restraining order, or TRO, can provide immediate relief from the court system when a party can show irreparable harm will be caused if someone is allowed to remain in control of assets that belong to the company, according to an article posted on the website of Mehendru P.C.

“It may be that a competitor has interfered with a business contract, an employee has stolen your trade secrets or breached a non-compete agreement, or a business partner has stolen from your company.  You have to go to court to protect the company though you’d rather not,” the post reads.

A judge can grant a TRO to stop an individual’s actions even without that person or his lawyer being in court. And a TRO provides immediate relief from the court system when a party can show irreparable harm will be caused if someone is allowed to remain in control of assets that belong to the company.

Read the article.

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Zapproved has published a free whitepaper revealing e-discovery insights on cases involving Volkswagen, Apple, Samsung and Takata. The paper can be downloaded.

• Apple
• Samsung
• Volkswagen AG
• Takata

While these cases paint a portrait of what not to do, they also illustrate why building a culture of compliance is so vital, Zapproved says on its website. The paper reveals three key takeaways:

• First, create and maintain a culture of compliance that champions ethical practices.
• Second, know the rules that apply to cross-border litigation, particularly discovery, and ensure that all participants understand those multinational rules.
• Finally, adopt smart, automated and secure e-discovery processes.

Download the white paper.

Jared Butcher, writing in the Steptoe Blockchain Blog, says it is no secret that smart contracts have vulnerabilities, but he suggests a mix of best practices to limit potential liabilities that may arise when vulnerabilities interfere with smart contract performance.

“There is potential for manipulation by insiders, which is of particular concern for smart contracts that operate based on ‘proof of stake’ protocols, given the ongoing concerns that those protocols will not be effective in ensuring that the parties play by the rules,” Butcher writes. “Even without intentional interference by hackers or insiders, smart contracts may have software bugs that disrupt performance, and there is the possibility of unintended outcomes if the smart contract’s code fails to anticipate an unusual situation.”

In the post, he offers six best practices to consider when implementing a smart contract.

Read the article.

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Employers have been using restrictive covenant agreements – contracts that contain non-compete, customer non-solicitation, employee non-solicitation, or non-disclosure of confidential information – with increasing frequency in recent times, writes Michael Elkon with Fisher Phillips.

“Increased media attention on the practice of forcing lower-level employees to sign non-compete covenants, combined with the widely publicized report on non-compete restrictions issued by the Obama White House in its waning days, has led to an increase in the number of reported cases. Further, several states are passing new laws or considering changes to existing laws on the subject,” he explains.

He describes three basic steps a company can take to reduce the chances of a lawsuit from a competitor, or at least put the company in a favorable position if litigation is threatened.

These include “Ask questions on the front end,” “Structure the job on the front end to ensure compliance,” and “Emphasize the importance of purging all former employer materials.”

Read the article.

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Reuters tells the story of how two analysts who liked to swap notes on numbers they thought looked odd took a fateful step and tipped off U.S. regulators about a company that one of them had watched for months.

The story is illustrated with the case of Orthofix International NV, a Texas-based medical device maker that kept hitting ambitious earnings targets and many analysts had “buy” recommendations for the stock.

One of the analysts had a feeling about the company, noticing its earnings reports showed it was taking longer than usual for the company to get paid by wholesale customers, invoices were piling up and executives struggled to offer a convincing explanation, saying logistical problems at foreign offices were partly to blame.

Reporter Sarah N. Lynch tells how that analyst spent months tracking quarterly reports and earning calls, using algorithms to compare Orthofix’s ratios and patterns of sales and inventory turnover with financial data of its peers.

“By entering the SEC whistleblower program the duo showed how outsiders with analytical skills and tools and time to spare can accomplish what is typically done by those with inside access to confidential information,” Lynch writes.

The two could win as much as $2.5 million for their whistleblowing.

Read the Reuters article.

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Bloomberg Big Law Business will host its 3rd annual Summit in Manhattan.

The event will be Wednesday, May 24, 2017, at Bloomberg LP, 731 Lexington Ave., New York, NY 10022, from noon until 6 p.m. A networking lunch and cocktail reception will be included.

Attendance is by invitation only. Anyone interested in an invitation may submit a request.

The agenda is available online.

Some of the speakers will include:

• Peter Beshar, Executive Vice President and General Counsel, Marsh & McLennan Companies
• Matthew Cooper, Executive Vice President, Head of Legal, Capital One Financial
• Stephen Cutler, Vice Chairman, JPMorgan Chase
• Eric Grossman, Chief Legal Officer and Managing Director, Morgan Stanley
• Deborah Kaback, Chief Legal Officer, Oppenheimer Asset Management
• Aristedes Mahairas, FBI Special Agent in Charge, Special Operations/Cyber Division, New York Office
• Manisha Sheth, Executive Deputy Attorney General for Economic Justice Division, Office of the New York State Attorney General
• Patrick Speice, Assistant General Counsel, Regulatory and Compliance, United States Steel Corporation
• Mary Jo White, Senior Chair, Debevoise & Plimpton

Request an invitation here.

Michael I. Goldberg, the SEC appointed receiver in charge of the Jay Peak Resort and Burke Mountain Hotel in Vermont, reached a settlement agreement with Raymond James that will significantly benefit the defrauded investors and creditors of the receivership estate, according to a news release from Akerman LLP.

Under the terms of the settlement, which must be approved by the U.S. District Court for the Southern District of Florida, Raymond James will pay $150 million to the receivership estate and the funds will be used to satisfy the claims of numerous investors and creditors while at the same time allowing the receiver to complete construction of the Jay Peak Resort. The settlement was achieved exactly one year from the date the case began.

The Akerman release continues:

The Jay Peak case involves the largest fraud in the history of the federal EB-5 Immigrant Investor Visa Program. Raymond James allegedly assisted Ariel Quiros, owner of Q Resorts and William Stenger, president and CEO of Jay Peak, a Vermont ski resort owner by Q Resorts, in stealing and misusing millions of dollars raised from hundreds of investors. Raymond James vehemently denied any liability whatsoever. Since July 2016, Goldberg and Raymond James have been engaged in good faith, arm’s-length settlement negotiations. Upon court approval, the settlement will resolve all claims brought against Raymond James and bar any future claims that may arise from the activities associated with the Jay Peak Resort and Burke Mountain Hotel.

Goldberg said, “This settlement would not have been possible without Raymond James stepping up to the plate from the very beginning of this case in an effort to do the right thing. At all times throughout our negotiations, Raymond James acted professionally and honorably in a good faith effort to resolve the litigation. The way Raymond James approached this case is a benchmark for how other firms in a similar situation should handle such a case. I want to further thank my counsel, Jeffrey Schneider of Levine Kellogg and lead class counsel, Harley Tropin and Tucker Ronzetti of the Kozyak Tropin firm for their tireless work in helping me resolve this case and benefitting hundreds of investors and creditors. Finally, I want to thank the officials at the SEC and the State of Vermont for their unwavering commitment to protecting the defrauded investors and creditors since the very beginning of the case and helping us structure a settlement that is in the best interest of the receivership estate and the investors. The SEC’s investigation and lawsuit was the catalyst for this settlement.”

The settlement amount will be utilized as follows:

• $15.3 million will be used to satisfy the promissory notes payable to the investors of Jay Peak Hotel Suites L.P.
• $5.1 million will benefit Jay Peak Hotel Suites Phase II L.P., Jay Peak Penthouse Suites L.P., Jay Peak Golf and Mountain Suites L.P., Jay Peak Lodge and Townhouses L.P., Jay Peak Hotel Suites Stateside L.P. and Q Burke Mountain Hotel and Conference Center, L.P. by satisfying past due trade debt on the Jay Peak Resort and the Burke Mountain Hotel.
• $19.6 million will be used to complete the construction of the Stateside Phase VI project of which up to $2.2 million will be used to satisfy existing contractor liens.
• $67 million will be used to return the $500,000 principal investment each investor made in the Jay Peak Biomedical Research Park L.P.
• $6.6 million will be used to satisfy contractor claims against the Q Burke Phase VIII project and to repay other debt on the Burke Mountain Hotel.
• $10 million will be posted in a separate interest-bearing escrow account and be used if needed to repay up to twenty Q Burke Phase VIII Investors who may not be eligible to apply for permanent residency through the United States Citizenship and Immigration Services’ EB-5 Immigrant Investor Program.
• $1 million will be used to refund the $500,000 investment of two investors in the Q Burke phase VIII whose I-526 petitions were denied prior to the date of the SEC Action.
• $25 million will be set aside to pay the fees of class counsel and other attorneys who brought suits on behalf of individual victims.

Goldberg is co-chair of the Fraud & Recovery Practice Group at top 100 U.S. law firm Akerman LLP. The case of Jay Peak is the largest EB-5 fraud scheme in U.S. history and the $150 million settlement represents the largest recovery of EB-5 investor losses.

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In his Petes’ Take blog for  Porzio, Bromberg & Newman,  Peter J. Gallagher describes a New Jersey case in which a court ruled that a clear arbitration provision, negotiated by a sophisticated party while represented by counsel, is enforceable.

In Columbus Circle NJ LLC v. Island Construction Co., LLC, the appellate court held that the arbitration provision in the AIA contract used in this case satisfied the requirements to explain to the signer the possible consequences of giving up the right to adjudication in a court of law, Gallagher explains.

“By its terms, the provision required plaintiff to choose between arbitration and ‘litigation in a court of competent jurisdiction,’ therefore, when plaintiff chose ‘arbitration,’ it did so ‘with full knowledge that arbitration [was] a substitute for the right to have [its] claim adjudicated in court.’ Moreover, the Appellate Division noted that neither the LLC nor its sole member was ‘an average member of the public,'” according to Gallagher.

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A post by Liskow & Lewis on the website of JD Supra discusses a breach of contract case involving the overlay of intellectual property and contract law.

In the case, Luv n’ care, Ltd, a global leader in the design and sale of baby products, filed suit against its former distributor, Groupo Rimar, a.k.a. Suavinex, S.A., for breach of Suavinex’s contractual obligation not to copy any of Luv n’ care’s product designs.

“In defense, Suavinex asserted that the pertinent contract provisions were unenforceable illegal restraints of trade, that patent law precluded Luv n’ care from obtaining patent-like protections over unpatented products offered for public sale, and that the parties’ contract protected only confidential, proprietary designs in which Luv n’ care had a ‘protectable interest,'” according to the post.

The Fifth Circuit rejected Suavinex’s argument that patent law precluded Luv n’ care from protecting unpatented designs available in the public domain.

Read the article.

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E-commerce players, led by the industry giant Amazon, have made it so easy and fast for people to shop online that traditional retailers, shackled by fading real estate and a culture of selling in stores, are struggling to compete, reports The New York Times.

Reporter Michael Corkery says the shift has been building gradually for years. But economists, retail workers and real estate investors say it appears that it has sped up in recent months.

“Between 2010 and 2014, e-commerce grew by an average of $30 billion annually. Over the past three years, average annual growth has increased to $40 billion,” writes Corkery.

While the retail industry has always had its ups and downs, but even to many experienced retail workers, who are used to losing their jobs based on the seasons, this downturn feels different, the Times reports.

Read the NYT article.

A recent decision of the Arizona Court of Appeals provides guidance for evaluation of the enforceability of arbitration agreements in the health care field, reports Snell & Wilmer in its Health Law Checkup blog.

Andrew Sniegowski explains that Gullett v. Kindred Nursing Centers West, LLC arose out of the plaintiff’s claims that a rehabilitation center had abused and neglected his father, who lived there for the last month of his life. The plaintiff argued that the arbitration agreement was substantively and procedurally unconscionable.

The court determined that the agreement was substantively valid, but it remanded the case for further proceedings in the trial court limited to the issue of procedural unconscionability.

Read the article.

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A company that has always sold widgets can be expected to rely on time-tested terms of sale/purchase in its contracts. But, according to a post in the Tech & Sourcing @ Morgan Lewis blog, a company that now uses an online portal or provides other electronic access to counterparties should update those trusty standard terms.

“Have you been utilizing e-commerce to significantly improve convenience and efficiency? If an online platform were your product, rather than just a logistical tool, you would carefully craft end user terms that protect your rights and limit your liabilities associated with the platform,” write Barbara Murphy Melby and A. Benjamin Klaber.

The authors discuss the steps to take to make sure standard contract terms will more closely reflect the hybrid physical/digital nature of transactions and commercial relationships.

Read the article.

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The general counsel of Dewey & LeBoeuf while the now-defunct law firm collapsed has experience with crises, so Bloomberg Law asked her to explain the likely legal ramifications of United Airlines’ botched handling of an overbooked flight and what the company may do to mitigate the fallout.

Janis Meyer, now a partner at Hinshaw & Culbertson, focuses her practice on professional responsibility, writes Jason Booth.

She discusses what the airline’s general counsel likely is doing this week to deal with the crisis, who he will speak to, who ultimately bears responsibility, whether apologies serve any legal purpose, and whether the incident would play out differently if phones to capture the event were not available.

Read the Bloomberg article.

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A Florida appellate court rejected Trump National Doral’s attempt to get out of paying a Miami paint store chain over $315,000 — based on an unpaid bill for $32,535, reports The Miami Herald.

“Trump’s company argued last summer and to the appellate court that The Paint Stop hadn’t followed certain Florida statutes to the letter and the Notice to Owner from The Paint Stop identified the wrong contractor. Both [the trial court] and the appellate court slapped those arguments down,” writes reporter David J. Neal.

The bill was for renovations on Donald Trump’s golf resort. Attorneys’ fees accounted for $282,949 in the judgment.

Read the Miami Herald article.