Image by William Munoz

New York will seek to question top Exxon Mobil Corp. executives under oath as part of a probe into the accuracy of the company’s statements about climate change after discovering an email alias used by former Chief Executive Officer Rex Tillerson, according to a Bloomberg report.

“Tillerson, now U.S. Secretary of State, used the name Wayne Tracker for his secondary internal email account at Exxon, created for sending the most sensitive messages to and from company board members, including communications about the risks associated with climate change, New York Attorney General Eric Schneiderman said Monday,” writes reporter Erik Larson.

Carl Barnes, a former corporate general counsel who’s a lawyer at Morse, Barnes-Brown & Pendleton PC, told Larson that someone in Exxon’s general counsel’s office knew or should have known about the alias account.

Read the Bloomberg article.

Join Our LinkedIn Group

Image by Mike Mozart

Employees of Monsanto ghostwrote scientific reports that U.S. regulators relied on to determine that a chemical in its Roundup weed killer does not cause cancer, farmers and others suing the company claimed in court filings, according to a Reuters report.

Monsanto is involved in a mass litigation in federal court in San Francisco claiming the company failed to warn that exposure to Roundup could cause non-Hodgkin’s lymphoma, a type of cancer, writes Reuters’ Brendan Pierson.

“Plaintiffs claim that Monsanto’s toxicology manager ghostwrote parts of a scientific report in 2013 that was published under the names of several academic scientists, and his boss ghostwrote parts of another in 2000,” Pierson reports.

Read the Reuters article.

Join Our LinkedIn Group

Diane Sawyer
Image by David Shankbone

ABC News moved closer to a jury trial in South Dakota after a judge there moved along a lawsuit alleging that the network defamed Beef Products Inc. in its coverage of a meat product called lean, finely textured beef, which critics have dubbed “pink slime,” reports The Hollywood Reporter.

“BPI claims $1.9 billion in damage with the possibility the amount could be tripled if the plaintiff can prove ABC News knowingly lied about the safety of a food product,” writes reporter Eriq Gardner. “The plaintiff has previously scored wins in keeping the case in a state court and then prevailing against First Amendment arguments on a motion to dismiss.”

A jury “could determine that there is clear and convincing evidence that ABC Broadcasting and [reporter Jim] Avila were reckless,” the judge ruled.

The judge provided ABC News, a unit of Disney, with one piece of good news: the court dismissed claims against anchor Diane Sawyer, Gardner reports.

Read the Hollywood Reporter article.

Join Our LinkedIn Group

By Christopher Barnett
Scott & Scott LLP

Image by Peter Kaminski

Oracle maintains what I consider to be the most aggressive audit program of any major software publisher. Its licensing rules can be extremely difficult to understand, and they frequently are not clearly stated in the applicable license agreements. Moreover, Oracle’s License Management Services (LMS) team typically is unforgiving when it comes time to apply those rules, and it often uses Oracle’s ambiguous license terms and confusingly constructed contracts to prepare audit findings that can cause heart palpitations for business owners.

Companies that have been audited by Oracle can (and sometimes do) attest to its distinctiveness in this regard. Among other publishers, Microsoft is similarly inflexible in the application of its license rules, but those rules generally are more clearly stated and accessible for software asset management teams. Conversely, IBM’s licensing rules can be even more byzantine than Oracle’s, but my experience is that it often is more willing to work toward a fairer compromise when an audited company can point to mitigating factors that resulted in audit shortfalls. In contrast, Oracle really does seem to be unique in insisting on rigid and uncompromising application of unreasonably complex licensing rules and metrics.

Oracle’s audit practice also is noteworthy for the fact that it usually conducts all of its audit in-house, through LMS. By contrast, Microsoft, IBM and many other publishers often work with officially impartial, third-party accounting firms, such as Deloitte, KPMG, PwC and E&Y, to conduct their reviews. Participation of such external fact-finders typically affords a better opportunity to provide meaningful clarification and comment before the publishers receive the audit findings.

Given those facts, business and IT leaders of companies that have invested in any quantity of Oracle software products need to pay special attention to their usage of those products, and they also need to be mindful of what to expect when Oracle eventually pulls their number eventually for an audit by LMS. Here are some of the most important audit risks to keep in mind when using Oracle products:

Tread Carefully When Virtualizing – Oracle’s requirements when using its products in virtualized environments can be daunting, depending on the hardware where the Oracle solutions are to be deployed. Oracle allows its licensees to us “Hard Partitioning” to limit the number of software licenses required for a server or a cluster of servers. However, while Hard Partitioning may mean different things to different IT administrators, it means a set of specific requirements for Oracle, all of which must be carefully controlled in order to avoid unpleasant licensing surprises. In particular, Oracle does not recognize any VMware technology as a satisfactory “Hard Partitioning” technology, even though VMware is a recognized market leader for virtualization solutions.

Here are the requirements set forth in Oracle’s current Partitioning Policy:

1. You must use Oracle-approved technologies to hard-partition your servers. Those technologies currently include the following:
   • Physical Domains (also known as PDomains, Dynamic Domains, or Dynamic System Domains),
   • IBM’s LPAR (adds DLPAR with AIX 5.2),
   • IBM’s Micro-Partitions (capped partitions only),
   • vPar,
   • nPar,
   • Integrity Virtual Machine (capped partitions only),
   • Secure Resource Partitions (capped partitions only),
   • Fujitsu’s PPAR,
   • Solaris Zones (also known as Solaris Containers, capped Zones/Containers only) (provided additional requirements are satisfied), and
   • Oracle VM Server (provided additional requirements are satisfied)
2. If the software is to be deployed on certain Oracle Engineered Systems, then the licensee needs to use Oracle VM Server and Oracle Enterprise Manager (OEM) to set up and report on “Trusted Partitions” where the software will be running. OEM can be deployed in either “Connected” or “Disconnected” mode: in the former, OEM reports on software usage directly to My Oracle Support, while in the latter the licensee is required to generate quarterly usage reports and to retain those reports for at least two years.
3. In every case where an Oracle technology is to be used as a Hard Partitioning technology, it is necessary to follow Oracle’s technical instructions for the use of that technology:
   • Oracle Solaris Zones
   • Oracle VM Server for x86
   • Oracle VM Server for SPARC

Failure to adhere to Oracle’s requirements can result in the virtualized environment being licensed for installed Oracle products based on all physical cores used to support the infrastructure, even if there is only one VM running the product on a single host in a virtualization cluster. Never mind the fact that this effective prohibition on the use of VMware with Oracle products may not be mentioned anywhere in the applicable license agreements or in any document incorporated in those agreements. In effect, LMS merely applies the assumption that since VMware makes it so easy for VMs to migrate to other hosts, the processors on those hosts must be licensed for the Oracle software.

Know What is Installed and Running – Another favorite tactic is to surprise customers with licensing fees associated with product options that the company never actually used. Many Oracle products – such as its ubiquitous Database software – are deployed from installation files that include a catalog of added-cost options and packs. Those options sometimes inadvertently may be enabled during the installation process or at some point thereafter and then turned off without ever having been used. However, the software’s usage logs record the enabling of the options, and that log data often is among the information demanded by LMS during an audit. If LMS determines that the options were enabled at any time – even if only once, seven years or more before the audit data were collected – it is common for those options to be included among the audit findings.

Companies using Oracle Database products therefore are well-advised to work with knowledgeable consultants when setting up their systems, to ensure that only those product features licensed and intended to be used are enabled on the company’s computers. To the extent that Oracle products have been running in the environment for some time, it may be worthwhile to undertake an initiative to confirm what is currently enabled and what the logging date say about the options that may have been enabled in the past.

Know How to Scan – Finally, Oracle audits also are noteworthy for the limited set of tools that LMS will accept as sources of audit data. The auditors’ first choice is always a set of proprietary LMS scripts and other tools that it will make available to the company at the outset of the review. However, those tools do not generate outputs in a format that is easy for anyone other than Oracle to review, so companies that use them may not know what they are telling LMS about the environment. We typically do not recommend that our clients share any deployment information with any auditor without first reviewing that information internally for accuracy and completeness.

Fortunately, LMS also accepts outputs from a limited number of third-party tool providers, as follows:

• Easytrust
• Flexera Software
• Hewlett Packard Enterprise
• iQuate
• Lime Software
• Nova Ratio

However, the tools published by those vendors typically are not free for larger organizations to use. Furthermore, even though they may gather information that LMS is willing to accept, they may not gather all of the information that LMS says it requires to complete an audit.

Therefore, it is a wise practice for companies using Oracle products to consider engaging and periodically working with a knowledgeable, third-party Oracle licensing consultant as a necessary cost of business for using Oracle’s products. Many consultants have experience working within LMS, and they typically can provide insights regarding the best tools and methodologies for staying on top of how many Oracle products require licensing within an environment.

All companies are susceptible to claims based on workplace violence, writes Natalie Lynch of Lynch Law Firm in Austin. Due to deeply-rooted legal principles, employers can be held liable for the acts of their employees, even when such acts are intentional and not within the scope of employment. Workplace violence can take on many forms, making it essential for employers and HR professionals to know how to identify it and prevent it.

In an article posted on her website, she covers topics such as defining workplace violence, effects of workplace violence, risk factors.

She also offers some suggestions to prevent violence in the workplace, including: implement an anti-workplace violence program, encourage reporting, assess the worksite, provide safety training, provide communication devices, maintain work vehicles, and consider security.

Read the article.

Join Our LinkedIn Group

The 8th U.S. Circuit Court of Appeals issued an opinion reminding employers that they cannot contract out of the Worker Adjustment and Retraining Notification Act (WARN) obligations requiring employers to provide 60 days’ written notice to employees of a plant closing or mass layoff, according to a post on the website of Winston & Strawn LLP.

In Day v. Celadon Trucking Services, Inc., the circuit court held that the purchaser of a business, Celadon Trucking Services Inc., was responsible under the WARN Act for providing notice of a mass layoff to more than 400 employees, even though Celadon never hired or fired those employees, the sales agreement characterized the transaction as a sale of assets, and stated that the seller, Continental Express Inc., was solely responsible for providing the WARN notices.

Steve Sheinfeld and Jeffrey Salomon wrote the article.

Read the article.

With Donald Trump in the White House, pro-business groups see an opening for a series of bills moving through the House that would discourage class actions and generally make it harder to sue businesses, reports Bloomberg Businessweek.

One bill would restrict plaintiffs’ attorneys’ fees to a percentage of the amount actually distributed to the class, writes Paul Barrett. “That could effectively kill off suits that seek a change in corporate behavior and pay class members little or nothing in damages.”

Professor John Coffee Jr. of Columbia Law School wrote on his Blue Sky Blog that a proposed restriction barring plaintiffs’ firms from repeatedly representing the same client in class actions “seems either a death sentence for the large plaintiffs’ firm or the end of large public pension funds serving as lead plaintiff.”

Read the Bloomberg article.

Join Our LinkedIn Group

The owners of a Washington, D.C., wine bar have filed suit against President Trump and the Trump International Hotel, claiming that the hotel’s restaurants enjoy an illegal advantage in the city’s restaurant market because of their association with Trump.

The New York Times reports that the owners of  the popular Cork Wine Bar claim that their business has suffered as a result of that association.

Niraj Chokshi writes that the bar’s owners are not seeking monetary damages. “But the suit, filed in District of Columbia Superior Court, offers a few improbable ways to resolve the issue: The hotel can stop operating; Mr. Trump and his family can fully divest from the business; or Mr. Trump can resign from office,” according to the article.

Read the NYT article.

Join Our LinkedIn Group

In a recent client alert, Reed Smith offers tips for dealing with audit provisions involving payment of a license fee or royalty.

Audit provisions are commonly found in commercial contracts, write Carolyn E. Pepper and Matthew Y. Kane.

“They are often not the clauses which attract the most attention during contract negotiations. However, they are important clauses which warrant careful consideration,” according to the authors.

They then list 10 points that need to be considered when dealing with such clauses.

Read the article.

Join Our LinkedIn Group

Barry Moltz, writing in Nextiva’s blog, warns that too many small business owners gloss over important terms in contracts they sign.

This can cause a problem later in the relationship if they are not properly negotiated, Moltz writes. He discusses the areas that all companies should look for to protect themselves before signing any agreement.

The areas involve: dollars and timing of payments, non-competes, ownership of work, actual contracted parties, penalties if things go wrong, and liability and indemnity.

Read the article.

Join Our LinkedIn Group

Much Shelist, P.C. has published an article reviewing the three most commonly used payment mechanisms in construction contracts and the benefits and drawbacks of each.

David A. Eisenberg discusses at length the benefits and drawbacks of fixed price, or lump sum payments, which he calls “perhaps the simplest and most commonly used payment mechanism.” Then he examines cost-plus contracts, in which the owner agrees to pay the contractor for its actual costs incurred in performing the work, plus a predetermined fee.

Finally, the covers the guaranteed maximum price, in which the owner is responsible for paying the contractor’s costs up to a certain cap. It is essentially a cost-plus contract with a cap.

Read the article.

The House is poised to pass three bills this week championed by industry that may tilt the civil litigation process in favor of business in thousands of cases each year, reports Bloomberg BNA.

The far-reaching bills address class actions, asbestos cases and attorneys who file “frivolous” suits, writes Bruce Kaufman.

The fast-track approach is deemed essential to give the bills time to advance in the more-deliberative Senate, where 60 votes are needed to overcome an almost certain filibuster.

The bill rewrites class-action practice, aids defendants striving to keep cases out of plaintiff-friendly state courts, punishes attorneys who file dubious claims, and seek to put new limits on settlements entered into by the Department of Justice and the EPA. They also would require more disclosures by asbestos victims who seek compensation from bankruptcy trusts.

Read the Bloomberg article.

Join Our LinkedIn Group

Reuters is reporting that Chinese telecom equipment maker ZTE Corp has agreed to pay $892 million and plead guilty to criminal charges for violating U.S. laws that restrict the sale of American-made technology to Iran and North Korea.

“A five-year investigation found ZTE conspired to evade U.S. embargoes by buying U.S. components, incorporating them into ZTE equipment and illegally shipping them to Iran,” explains reporter Karen Freifeld. “In addition, it was charged in connection with 283 shipments of telecommunications equipment to North Korea.”

“With this action, we are putting the world on notice. Improper trade games are over with,” Commerce Secretary Wilbur Ross told reporters Tuesday. According to a CNBC report, he called ZTE’s actions “a brazen disregard for our laws.”

Read the Reuters article.

Join Our LinkedIn Group

Speakers from Black Duck Software and Wolters Kluwer will be presenters in a webinar addressing key open source security and management questions.

The complimentary event will be Wednesday, March 22, at 11 a.m. Eastern time.

Speakers will be Bob Genshaft, Director Strategic Programs at Wolters Kluwer, and Black Duck’s VP and General Manager On-Demand Audits Phil Odence.

“Companies are constantly seeking ways to ensure their application code is secure and effectively managed. For example, M&A acquirers conduct one-time code audits on companies they are buying to avoid legal, operational or security pitfalls. Other organizations are proactive, using an an ongoing solution to make sure their application code is secure and well managed on a day-to-day basis. Increasingly, many companies are opting to use both approaches,” Black Duck says in a release.

Topics will include:

• When is it appropriate to conduct an audit?
• When should your company consider an ongoing solution?
• What are the benefits of doing both?

Register for the webinar.

McKool Smith has announced that Frank Vecella, the former associate general counsel of litigation at Ericsson Inc., has joined the firm as a principal in its Dallas office. Vecella was with Ericsson for 16 years and managed and supervised all of the company’s significant litigation in the United States and Canada, and often provided guidance with respect to Ericsson’s major disputes around the world.

“Ericsson is a long-time client and Frank has been a very dear friend of the firm for many years,” said McKool Smith managing principal David Sochia. “We couldn’t be more excited to have Frank with us. He has significant litigation and industry expertise, and his in-house counsel perspective will be invaluable to the firm as we continue to strengthen our client service initiatives.”

Prior to joining Ericsson, Vecella was a senior partner at Jackson Walker L.L.P., where he worked for 18 years.

Read details about Vecella’s career move.

Successful law firm marketing in today’s electronic environment can include everything from online banner ads to Twitter feeds to Facebook pages and more, writes Bruce Vincent in a blog post for Muse Communications.

Amid the many available options, one of the most effective tools for attracting the attention of referral sources can be found in a well-orchestrated email campaign, he says.

In a question-and-answer format, Vincent’s post recounts a discussion he had with Dennis Weber , founder of General Counsel News.

Some of the questions they discussed included: What makes email marketing effective fo the legal industry? Aren’t people so buried in email that they might simply tune out? What are the key elements of a solid email marketing campaign?

Read the Muse Communications article.

Navex Global will present a complimentary webinar on the company’s annual Ethics & Compliance Hotline Benchmark Report, a tool compliance professionals around the globe reference every year to help measure their program and highlight areas for improvement.

The event will be Tuesday, March 21, 2017, beginning at 10 a.m. Eastern time. Anyone who registers but can’t attend the live event will receive a link that will provide access to the recording at a later date.

Navex studied more than 936,000 anonymized reports from their clients’ intake systems, analyzed the data and interpreted the trends.

This webinar will address questions such as:

• Are the number of reports increasing or decreasing?
• What’s happening with case closure times?
• Are retaliation reports being substantiated within the organization at higher rates?
• How do open door reports impact the data?

Register for the webinar.

Image by firedoglakedotcom

Reuters is reporting that a U.S. Justice Department probe into a phony accounts scandal at Wells Fargo & Co. is asking whether executives hid details from the company board and regulators as the problem grew over years, sources familiar with the review said.

Patrick Rucker reports that the move could result in criminal charges against bank employees involved.

“Officials are seeking to find out if executives shared everything they knew about the phony accounts to the Wells Fargo board of directors and the Office of the Comptroller of the Currency, the lead regulator for national banks,” Rucker reports. “Even if executives are not charged with criminal misconduct, they could face civil penalties including fines or a ban from the banking industry. Wells has already fired some executives and clawed back portions of their pay.”

Read the Reuters article.

Join Our LinkedIn Group

The 8th U.S. U.S. Circuit Court of Appeals considered who was the actual “party” to a contract where one of the original parties assigned all of its economic benefits arising from the contract to another entity (without that entity becoming a substituted or an additional party), and the contract was thereafter terminated by the other party to the contract.

In an article in Weil, Gotshal & Manges’ Global Private Equity Watch, Glenn West writes that there are definite lessons to be derived from this case by deal professionals and their counsel.

He explores the case of ACI Worldwide Corp. v. Churchill Lane Associates, LLC, No.16-1736 (8th Cir. Jan. 27, 2017), which involved a licensing agreement between Nestor Inc. and ACI Worldwide Corp.

“When obtaining an assignment of rights under a contract, it is imperative that the contract, with respect to which those rights are assigned, is carefully reviewed to determine any amendments that may be necessary so that the assignee is the ‘party’ that matters for any subsequent modification or termination of that contract that could in anyway impact those assigned rights,” West writes.

Read the article.

Image by NY Photographic

Companies looking to waive class action rights of employees may instead be waving goodbye to provisions in their employment contracts, warns David Heck in Proskauer Rose’s Minding Your Business blog.

He discusses two recent decisions in California — one administrative and one in the 9th Circuit — that recently found that class action waivers in employment contracts were unenforceable as a matter of law and public policy, resulting in the removal of entire or partial contractual provisions.

“Together, these rulings make clear that class action waivers in employment agreements are subject to a high level of scrutiny, even if such waivers are not explicit and signing of the agreement was voluntary,” Heck writes.

Read the article.

Join Our LinkedIn Group