A federal judge in the Eastern District of Oklahoma has dismissed a poultry grower’s breach of contract claim against OK Foods Inc. of Fort Smith, Arkansas, after the company severed ties with the grower amid concerns over animal welfare standards.

The company terminated its grower’s agreement with Earl Oldham of Stigler, Oklahoma, just over a year into the three-year agreement following the drowning deaths of an estimated 19,000 broiler chickens during a May 2015 rainstorm. It was the second mass die-off in five years blamed on groundwater flooding at the farm.

In a release, the firm said:

After realizing the water was rising in his three poultry houses, Oldham requested the company remove all chickens from his property. Upon arrival, a company representative discovered that many of the chickens had already died. OK Foods took immediate steps to relocate the surviving chickens to a nearby poultry farm. After OK Foods notified Oldham that his contract would be terminated, the grower filed a breach of contract suit.

The lawsuit dismissal follows a summary judgment motion filed by OK Foods’ attorney Clayton Bailey of Dallas’ Bailey Brauer PLLC. In granting the summary judgment, the court threw out  Oldham’s claims seeking nearly $330,000 in lost-profit damages.

“Mr. Oldham in essence moved to terminate the contract with his demands to remove the broilers from the farm, something OK Foods was more than willing to oblige,” says Bailey.

He noted that the swift termination of the contract was in accordance with animal welfare policies implemented by OK Foods CEO and President Trent Goins, Vice President of Live Operations Gary Hogue and Director of Broiler and Hatchery Operations Kelly Garris.

“OK Foods did not agree with the conditions found at this farm, and it was not something that could be tolerated. The operator’s own words, actions and inactions in effect invalidated his grower agreement. OK Foods simply formalized that termination,” says Mr. Bailey. “Animal welfare is something OK Foods takes seriously. OK Foods’ live operations team is ensuring that OK Foods’ chickens are raised ethically and efficiently, and that the company’s customers receive top-quality products.”

In addition to Bailey, OK Foods was represented in Earl Oldham v. OK Foods, Inc. f/k/a OK Foods, Inc., 6:15-cv-00384-RAW by Niki Cung of Kutak Rock LLP, Fayetteville, Arkansas.

DLA Piper represented private equity firm Guardian Capital Partners in the acquisition of Carson-Dellosa Publishing, LLC, a provider of K-8 supplemental education content.

The firm announced in a release:

Partnering with Guardian, Carson-Dellosa’s executive management team will continue to operate the company, which provides products to more than 1,000 schools. Carson-Dellosa provides workbooks, critical-needs resources, and test-prep and hands-on learning materials, for parents, teachers and students.

The acquisition will help position Carson-Dellosa, which has more than 35 years experience in digital and print consumer educational products, for continued growth and will bolster the company’s operating and financial capabilities.

The DLA Piper team representing Guardian was led by partners Jay Coogan, Lisa Jacobs and Darius Gambino, and associates Michael Bushey, Alvin Johnson, Priya Narahari (all of Philadelphia), of counsel Cathryn Le Regulski (Northern Virginia), partner Julia Kovacs, and associate Brittany Ann McCants (all of Washington, DC), partner Frank Mugabi and associate Witold Jurewicz (both of New York), partner Nate McKitterick (Silicon Valley) and associate Nelson Lam (San Francisco).

Elizabeth Holmes

Photo by Max Morse for TechCrunch

Fox Business is reporting that Theranos Inc. has withdrawn its request for emergency clearance of a Zika-virus blood test after federal regulators found that the company didn’t include proper patient safeguards in a study of the new test.

“The move is another setback for the Palo Alto, Calif., company as it tries to recover from crippling regulatory sanctions that followed revelations by The Wall Street Journal of shortcomings in Theranos’s technology and operations,” Fox Business reports. “Theranos has said it is appealing.”

Elizabeth Holmes, founder of the troubled company, recently announced development of a new blood-testing device that she said was designed for use outside a clinical laboratory and could run accurate tests from a few drops of blood.

Read the article.

Apple’s $14.5 billion EU tax fine may take a bigger bite out of the iPhone maker than shareholders are acknowledging, reports Fortune.

A European tax commission said Apple more than $14.5 billion in back taxes and interest that it had avoided paying European governments for years because of a sweetheart deal with Ireland. They said Apple was paying a tax rate of 0.5 percent, when it should have been paying 12.5% under Ireland’s tax rules.

Reporter Stephen Gandel explains that “the company made $39 billion in its fiscal 2014, which ended in September and the last year covered by the tax deal. That represents about 20% of the profits it made during the 11-year period covered by the $14.5 billion tax fine. So if Apple had paid its full taxes, it would have owed nearly $3 billion in extra taxes.”

If Apple has to pay those taxes in the future, the company’s earnings could drop to $41 billion. That would translate into a market cap of $482 million, or roughly $88 billion less than where the stock trades today, Gandel writes.

Read the article.

As the risk of cyber threats to all businesses grows, there is a corresponding interest in managing and shifting cyber risks by contract and through cyber insurance, write Branwen Buckley and Corby J. Baumann of Thompson Hine.

“Insurance requirements are common in commercial contracts, and many contracts now include a sub-clause regarding cyber insurance. Whether a company is asking for a contracting party to provide cyber insurance or is on the receiving end of such a request, there are some important background considerations to remember,” the authors explain in their article.

They list some issues to consider when evaluating contractual requirements for cyber coverage: cyber insurance can never be a substitute for proper preventive measures, keep cyber insurance provisions specific, consider asking to see the policy, and be realistic in your expectations.

Read the article.

There are six questions that an owner can ask to evaluate what rights and obligations it will have upon entering into a construction contract, writes Daniel Bradfield, a partner in Arnall Golden Gregory LLP.

“Quite often owners simply verify the economic terms for the project, set a completion date, possibly include references to drawings or plans, and then sign a construction contract with little regard to the various provisions that will impact the amount of leverage available in the event a problem occurs with the project,” Bradfield writes in the article.

He discusses the six questions:

• What is being signed?
• What actions can an owner take if the contractor does not finish the work on time?
• What does the contractor need to provide the owner in order to receive payment?
• How are disputes to be resolved?
• What does the owner owe the contractor if the owner terminates the construction contract?
• What, if any, roles will the architect play in the project under the terms of the construction contract?

Read the article.

Dan Harris of China Law Blog has published a sample email that addresses many of the key points a company should be thinking about if it is contemplating selling into China.

The sample is an email (with identifiers removed) from a China attorney to a client, written to gather sufficient information to create a first draft of a product sales agreement for the sale of a product from an American company to a host of Chinese automobile companies.

The email covers such issues as the product, price terms, payments terms, shipping terms, scheduling and timing, facility, subcontractors and component suppliers, packaging and labeling, molds and tooling, quality contrl, warranty, general service, intellectual property, dispute resolution, and other special matters.

Read the article.

Barbara Melby and Glen Rectenwald of Morgan, Lewis & Bockius address the question of what robotics and automation really mean in the context of an IT outsourcing contract.

“At least for now, they are not about robots rolling around the data center floor or application development center,” they write in the article. “Robotics and automation are about software and tools that allow for automated processing, monitoring, and reporting, which provides real-time data and data analysis and a reduced need for manual (read—’human’) intervention. Many vendors are touting proprietary tools and solutions that enable more automation, resulting in more accurate and timely information and services and lower costs.”

They address five key contract considerations for outsourcing customers considering automation, including costs of automation, documented benefits (upfront and ongoing), sharing of reduced costs, ownership of the output, and back-end considerations.

Read the article.

CLE Luncheon, Sept. 26, 12 p.m. CDT
Belo Mansion, Dallas

Scott & Scott, LLP will present a complimentary CLE luncheon titled “Data Privacy and Security Issues in Cloud Contracts” at the Belo Mansion in Dallas on Monday, Sept. 26, from noon to 1 p.m. CDT. The event will be hosted by the Computer Law Section of the Dallas Bar Association.

Robert J. Scott, managing partner of Scott & Scott, will share suggestions on how each party can mitigate, balance or transfer the privacy and security risks in cloud computing.

On the surface, cloud agreements are similar to traditional technology licensing and services agreements; however, cloud computing engagements expose both the client and the service provider to risks not present in more traditional technology service or software transactions, Scott says. The transformation from on-premises software deployments to cloud based models has widespread implication for data privacy, security, and regulatory compliance.

Scott will address each element that contributes to privacy and security risk in cloud computing, including:
• GLBA Rules Affecting Cloud Contracts
• Using Cloud Services in Healthcare
• Due Diligence Obligations in Selecting Cloud Vendors
• Negotiating Key Provisions including insurance, indemnity, and limitations of liability
• How to Comply with Oversight Regulations involving Cloud Service Providers

Attendance for registrants is free, and lunch will be provided.

Register for the CLE luncheon.

Fugitive ex-CEO Jacob (Kobi) Alexander, who is scheduled to return to the U.S. from Namibia on Wednesday to plead guilty to securities fraud after leaving America more than 10 years ago, will try to convince a Brooklyn judge to release him on $25 million bail, reports the New York Daily News.

The 64-year-old ex-CEO of Comverse Technology Inc. moved to Namibia before he was formally charged in 2006 in a scheme involving the backdating of stock options at Comverse. He faces up to 10 years in prison, writes John Marzulli.

The Wall Street Journal explains how the alleged scheme worked:

Prosecutors allege Mr. Alexander, along with Comverse’s general counsel and its finance chief, for years would look for low-price trading days in the past on which to pretend they and other employees had been awarded stock options at that day’s price. Since an option grants its holder the right to buy shares at a fixed price, the alleged manipulation scored them instant gains. The backdating added millions to Mr. Alexander’s compensation.

Read the article.

Ernst & Young LLP cannot require its employees to give up their rights to pursue work-related claims together, a federal appeals court has ruled, giving a major boost to the U.S. National Labor Relations Board’s campaign against so-called class action waivers, reports Reuters.

“Companies have increasingly included provisions in employment contracts forcing workers to arbitrate claims individually as a way to avoid the cost of litigating class actions,” writes Robert Iafolla. “The NLRB has struck down such requirements imposed by dozens of companies, including American Express Co, Citigroup Inc and Domino’s Pizza Inc.”

The court found that the arbitration agreement violated the National Labor Relations Act by making workers arbitrate work-related claims as individuals in separate proceedings.

Read the article.

eSignLive by Vasco has compiled a collection of its five most popular white papers on the subject of using e-signatures in business and law.

The papers include:

Beginner’s Guide to Electronic Signatures: A comprehensive 38-page beginner’s guide to electronic signatures introduces key concepts and considerations when creating digital business processes with this technology.

Why ESIGN is Not Enough to Keep You Out of Court: To help secure the enforceability of your electronically signed contracts and agreements, this article presents recommendations from three legal experts.

Electronic Signature Security: This whitepaper presents a holistic view of security to help identify the requirements against which you should evaluate e-signature solutions.

Key Evaluation Criteria for E-Signature Software: In this report, analyst firm Technology Evaluation Centers (TEC) outlines six key e-signature selection criteria and their importance to the success of a digitization strategy.

G2 Crowd’s Electronic Signature Software Rankings: In their winter 2016 e-Signature Grid, business software review site G2 Crowd analyzed over 1,900 e-signature reviews written by business professionals.

Download the white papers.

Susan M. Hartman of Buchanan Ingersoll & Rooney writes that most commercial contracts contain what is called an “indemnification” provision.

She explains in her article published by JD Supra Business Advisor that indemnification is an obligation to be responsible for  losses another party might suffer if certain events occur, possibly including legal fees to defend against a third-party claim and damages awarded to the third party as a result of the claim.

“Indemnification is often one of the last issues to resolve in contract negotiations. However, it is important to take the time to think through each party’s obligations under the contract, and consider what type of indemnification is appropriate based on the deal. A broad indemnification that may have been reasonable for a startup company to provide will not be viewed favorably when the applicable contract is assigned to an acquiring company that has more assets at risk if there is an indemnification claim.

Read the article.

Whether you are leasing real estate or buying or selling a business or real estate, the letter of intent (LOI) is the usual and practical initial step, writes Bernard B. Kolodner for Kleinbard LLC.

“An LOI or term sheet is how you find out if you are likely to have a deal before you spend a lot of time or legal fees on the deal. The details included in an LOI will be largely dependent on whether the deal proposed is a lease, sale or purchase of real estate or a business,” he writes.

“For a lease, an LOI will often specify the space, rent, security deposit, term, extensions, and commencement. In addition it might include provisions covering work to be done on the space, who will be responsible for the work (landlord or tenant) and the amount of any tenant improvement allowance. Reviewing the LOI is the quick and easy way to gauge the interest of the person on the other side of the deal as well as identifying whether there are unbridgeable business issues that need to be addressed prior to drafting the lease.”

Read the article.

If your job includes reviewing, drafting or negotiating contracts, you’ve probably seen  provisions relating to insurance, indemnification, and limitation of liability, writes Kenneth Gorenberg of Barnes & Thornburg LLP.

“Are they boilerplate that you spend little time on? Do you fully understand exactly what they do? Do you negotiate or revise them?” he asks.

“Fundamentally, the purpose of insurance, indemnification, and limitation clauses is to allocate risks,” Gorenberg explains. “In general, insurance transfers risk from the contracting parties to a third party—an insurance company. Indemnification usually transfers risk between the parties to the contract. Limitation of liability prevents or limits the transfer of risk between the parties.”

Read the article.

CNN is reporting that Kentucky’s attorney general is suing health-care giant Johnson & Johnson for millions of dollars, saying the company “concealed and misrepresented” the risk of its transvaginal mesh products to doctors and patients.

In the lawsuit, AG Andy Beshear alleged Johnson & Johnson’s medical device company, Ethicon, didn’t provide enough information about possible adverse effects to more than 15,000 women in Kentucky who had the transvaginal mesh implanted.

The company called the suit justified.

“The lawsuit says women have reported chronic pelvic pain, pain associated with intercourse and/or the loss sexual function, and other health problems,” according to the report by Steve Almasy.

Read the article.

An increase in revenue for law firms in the first half of this year came largely from higher lawyer billing rates rather than greater demand for services, The New York Times reports, citing Citi Private Bank’s quarterly report on the legal industry.

Reporter Elizabeth Olson wrote that “the 4.1 percent average revenue increase was surprisingly strong, considering the continuing consolidation among law firms and the sharper scrutiny that corporations are giving the customary high levels of legal billing. It compares with the 3.3 percent growth for the first half of 2015, according to the report by Dan DiPietro, the chairman of Citi Private Bank’s law firm group, and Lauren Harsha, an analyst with the group.”

The Citi report attributed much of the growth to an average billing rate increase of 3.2 percent. “The results so far are similar to four out of the last five years, when law firms experienced modest growth in demand, revenues and single-digit profit growth,” DiPietro said.

Read the article.

By Christopher Barnett
Scott & Scott LLP

On July 28, Oracle announced that it had entered into an agreement to acquire NetSuite for approximately $9.3 billion. NetSuite was founded in 1998 and is one of the very first, enterprise-level, cloud-services providers, delivering various, hosted enterprise resource planning (ERP), customer relationship management (CRM), e-commerce and professional services automation (PSA) solutions to its customers.

Oracle and NetSuite have a long relationship, though that relationship in the past may not have been apparent to NetSuite’s customers. Early in its history, NetSuite received $125 million in initial financial backing from Oracle founder Larry Ellison, and the Ellison family owned nearly half of NetSuite’s common stock as of 2014. NetSuite also traditionally has been based on an infrastructure that is reliant on Oracle Database.

However, with Oracle now set to formally acquire the company, NetSuite’s customers soon may notice some pretty significant changes, at least on the purchasing and contracting side. Oracle sells its existing cloud services generally subject either to its standard-form Cloud Services Agreement (CSA) or to a cloud-services schedule to its standard-form Master Agreement (OMA). Both the CSA and the OMA contain terms that are notoriously pro-Oracle in many important respects, including confidentiality protections, limitations of liability and audits. By contrast, NetSuite’s current Terms of Service document takes a more balanced approach, including:

• Identifying all electronic data or information submitted to and stored in the NetSuite service as “Confidential Information,” subject to the agreement’s non-disclosure provisions.
• Excluding indemnification obligations from the agreement’s limitation of liability and subjecting confidentiality claims to double the monetary liability cap applied to other kinds of claims.
• No audit rights in favor of NetSuite.

Once NetSuite’s formal assimilation into Oracle’s cloud services business is complete, we would expect to see Oracle insist on applying the standard-form CSA or OMA to new or extended NetSuite service orders.

Current NetSuite customers therefore should work closely with their legal counsel to scrutinize the terms of their current NetSuite agreements in advance of any new or renewal NetSuite orders. Those efforts will better equip them to seek appropriate amendments to the CSA or the OMA in the event that Oracle refuses to process the orders under the legacy agreements. In addition, companies that may be considering getting started with NetSuite in the future may want to consider saving a copy of the current NetSuite Terms of Service (available publicly with other, service-specific terms at the above link), so that they can remain mindful of the terms that have historically applied to NetSuite’s offerings.

Houston trial law boutique Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing P.C., or AZA, once again is being recognized as one of Texas’ top commercial litigation firms after earning a spot in the 2016 edition of Chambers USA: America’s Leading Lawyers for Business.

In addition to being ranked as a top Texas firm, AZA partners Joseph Ahmad, Demetrios Anaipakos, John Zavitsanos and Todd Mensing received individual recognition from Chambers USA.

In the firm’s Chambers USA profile, AZA lawyers are described as, “Robust litigation specialists with a fast-growing reputation as a feared opponent for established national firms. Especially strong experience in representing clients in the technology and energy arenas.”

Published by London-based Chambers and Partners, Chambers USA is known worldwide for its thorough guides to the legal profession.

Read more about the announcement.

Gilead Sciences Inc. is entitled to receive the attorney fees it incurred related to hepatitis C patent litigation with drugmaker Merck & Co Inc., a U.S. district judge has ruled, reports Reuters.

“In June, Gilead was freed from paying up $200 million in damages for infringing two Merck patents related to Gilead’s blockbuster drugs Sovaldi and Harvoni, after a U.S. judge found a pattern of misconduct by Merck including lying under oath and other unethical practices,” writes Anya George Tharakan.

The court found that Giliead could receive relief from the cost of its legal fees in defending against the Merck challenge.

Read the story.