“The COVID-19 pandemic has disrupted supply chains around the world requiring many companies to adjust operations and their business,” writes Laura K. Veith in The National Law Review.

“Supply chain litigation has not erupted as companies have largely been forced to find commercial solutions, recognizing that there is little to gain from litigation when they are still dependent on those same suppliers to help them tread water and stay afloat. However, as the wake expands and losses are crystalized, companies should re-evaluate their contractual rights and defenses in the event litigation becomes more common or appealing. Now is also a good time for companies to evaluate their contracts to ensure they contain adequate protections for future supply chain shortages or disruptions.”

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“In M&A transactions, the definitive purchase agreement (whether asset purchase agreement, stock purchase agreement, or merger agreement) typically contains representations, warranties, and covenants, along with related indemnification obligations,” writes Daniel R. Avery in Goulston & Storrs’ What’s Market blog.

“A common representation that the seller makes is that the target has operated its business in accordance with applicable laws (often referred to a “compliance with laws” representation). While sellers generally do not object to making a representation that addresses legal compliance, they usually seek to include certain limitations that narrow the representation’s scope.”

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“One of the most important characteristics of LLCs under most or all jurisdiction’s LLC acts is the freedom of contract,” writes James Landon in Offit Kurman’s blog.

“The most famous expression of LLC freedom of contract is § 18-1101(b) of the Delaware LLC Act. Section 18-1101(b) provides that ‘it is the policy of this [Act] to give the maximum effect to the principle of freedom of contract and the enforceability of LLC agreements.’ The Delaware LLC Act has deeply influenced the drafting of many other LLC acts across the country, and at least 17 other acts contain a provision identical to Delaware’s § 18-1101(b). But even LLC acts that don’t contain such a provision are characterized, like the Delaware LLC Act, by the fact that virtually all of their provisions relevant to LLC formations are default provisions. In other words, provisions whose very terms expressly permit LLC members to contractually alter them as they wish in their operating agreements to meet their specific and unique needs and interests.”

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“Where plaintiff alleged that defendant attorney fraudulently charged a higher hourly rate than what was agreed upon, the trial court should have engaged in a three-factor analysis to determine whether the written fee agreement could be used to defeat the fraud claim,” writes The Law Offices of John Day, P.C. in Day on Torts.

“In Vazeen v. Sir, No. M2019-01395-COA-R3-CV (Tenn. Ct. App. Mar. 4, 2021), plaintiff filed a fraud claim against defendant attorney who had represented him for a portion of plaintiff’s previous divorce case. Plaintiff asserted that defendant had engaged in fraudulent billing and that defendant had ‘charged a higher hourly rate than agreed.’ After an initial appeal and remand, the trial court held a bench trial where plaintiff and defendant were the only witnesses. The trial court ultimately ruled for defendant on all claims, and this ruling was affirmed in part and reversed in part on appeal.”

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“Enacted on December 4, 2020, the Internet of Things Cybersecurity Improvement Act of 2020 (the ‘IoT Act’) is expected to dramatically improve the cybersecurity of the ubiquitous IoT devices,” write Brian G. Cesaratto & Alexander J. Franchilli in Epstein Becker Green’s Cyber Security.

“With IoT devices on track to exceed 21.5 billion by 2025, the IoT Act mandates cybersecurity standards and guidelines for the acquisition and use by the federal government of IoT devices capable of connecting to the Internet. The IoT Act, and the accompanying standards and guidance being developed by the National Institute of Standards and Technology (NIST) will directly affect government contractors who manufacture IoT devices for federal government use, or who provide services, software or information systems using IoT devices to the federal government.”

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“If you have ever signed a contract of any kind, you have probably asked, ‘Should I sign an arbitration agreement?’ The most common place that people may see an arbitration agreement that gives them pause is in an employment agreement. Many companies have been begun to include arbitration agreements in their contracts with employees because it may make dispute resolution cheaper and faster; however, some employees question the efficacy and the fairness of requiring an agreement as part of the employment. This article will quickly discuss what an arbitration agreement is and then move into a discussion of the benefits and drawbacks of signing an arbitration agreement with an employer. Finally, this article will discuss the considerations that an employee should make when choosing whether to sign an arbitration agreement,” posts ADR Times in their blog.

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“The False Claims Act, a Civil War-era law, encourages private individuals, such as whistleblowers, to come forward and file suit against unscrupulous government contractors, and share in the government’s recovery. The passage of the law was inspired by contractors selling the Union Army bags of sand as flour, lame mules as cavalry horses, and glued-together rags as uniforms,” posts Constantine Cannon in their Whistleblower Group Blog.

“The main purpose of the law is, of course, to encourage private individuals with knowledge of fraud to help the government recover ill-gotten money from fraudsters. The government recovers billions under the law annually. But the law benefits more than just taxpayers and the public—it could also help keep patients safe, help keep workers from being exploited, and help stave off environmental degradation.”

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“The cardinal change doctrine has become a popular doctrine for a contractor to argue under but remains an extremely difficult doctrine to support and prove. Arguing cardinal change is one thing. Proving cardinal change is entirely different. … this is a doctrine with its origins under federal government contract law with arguments extending outside of the federal government contract arena. For this reason, the cases referenced … are not federal government contract law cases, but are cases where the cardinal change doctrine has been argued (even though these cases cite to federal government contract law cases),” writes David Adelstein in Florida Construction Legal Update’s blog.

“A party argues cardinal change to demonstrate that the other party (generally, the owner) materially breached the contract based on the cardinal change. In reality, a party argues cardinal change because they have cost overruns they are looking to recover and this doctrine may give them an argument to do so. But it is important to recognize the distinction between raising it as an argument and the expectation that this (difficult doctrine to prove) will carry the day.”

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“A recent enforcement action from the Federal Trade Commission (FTC) drives home the importance of being proactive about vendors and data security,” writes Odia Kagan for Fox Rothschild’s Franchise Law Update.

“Specifically, the FTC recently entered into an enforcement action with an analytics company for breaching the FTC’s Safeguards Rule issued pursuant to the Gramm-Leach-Bliley Act (GLBA) by failing to properly vet a third-party vendor it engaged. The vendor stored personal information in cleartext in an unprotected cloud-based location that could be accessed by anyone with the relevant URL. The information was exposed for a year and was accessed by 52 unauthorized IP addresses.”

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During the pandemic there was an “increased focus on earn-out provisions as a method to mitigate the risk of a target’s post-closing under-performance and to bridge any valuation gap between the purchaser and seller,” writes Kiri Buchanan in Norton Rose Fulbright’s Deal Law Wire.

In this post they focus on “(i) reverse earn-out provisions and (ii) a review of the use of earn-outs in 2020 M&A deals.”

“…a ‘classic earn-out’ refers to a post-closing increase in the purchase price based on the achieving of certain performance targets, while a ‘reverse earn-out’ refers to a decrease in the purchase price if the performance targets are not achieved. For greater clarity, in a reverse earn-out scenario, the purchaser pays the maximum amount for the target at closing and if the agreed upon performance targets are not met, the vendor must re-pay an agreed portion of the purchase price, reducing the overall price of the target. Reverse earn-outs are used less often because the risk resides with the buyer, rather than the seller.”

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“Personal injury-related COVID-19 cases are on the upswing around the world, and there are other lawsuits centering on entertainment and travel refunds, employment issues, failed business contracts, medical negligence, business interruptions, pandemic avoidance, and much more. If you’re curious as to what types of lawsuits can come from exposure to COVID-19, this is for you. We’ll list the biggest ones happening right now,” posts in Kuzyk Law’s blog.

1. Workplace Safety Lawsuits
2. Discrimination Lawsuits
3. Employee Benefits or Leave Lawsuits
4. Negligent Security Lawsuits
5. Whistleblower and Retaliation Lawsuits
6. Breach of Contract Lawsuits
7. Unpaid Benefits Lawsuits
8. Price Gouging Lawsuits
9. False Advertising Lawsuits
10. Workers’ Compensation Lawsuits
11. Wrongful Death and Personal Injury Lawsuits
12. Insurance Lawsuits
13. Collections for Unpaid Bills Lawsuits
14. State or Federal WARN Act Lawsuits

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“Companies grow by investing time and money in various resources, including their employees,” writes Cari Rincker in Rincker Law’s blog.

“Yet business owners are often anxious about losing their investment, i.e., the time they spend training new hires and the confidential information they share with their new employees. Once confidential information is shared, there is a risk that an employee will leak the company’s trade secrets to a competitor, or quit and create a competing business using the confidential information. To help guard against this, many companies have employees sign a noncompete agreement when they are hired.”

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“First year teachers of common law subjects describe the common law system with a little bit of romanticism,” post Samuel Issacharoff & Florencia Marotta-Wurgler, in Contracts Jotwell’s blog.

“Through the aggregation of many court opinions, and through learning from variant approaches in different states’ jurisdictions, a process of reflective equilibrium finds legal rules that make sense as applied to diverse fact patterns and that reflect ongoing changes in technology and social mores. The status of each state’s supreme court as the final arbiter of questions of common law features keenly in Louis Brandeis’s oft-quoted characterization of the states as ‘laboratories of democracy.’ Writing with Samuel Warren, Louis Brandeis famously declared that ‘the common law, in its eternal youth, grows to meet the new demands of society.'”

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“Construction disputes face additional challenges compared to other commercial disputes for various reasons,” post James Ebert and Steven W. Fleming in Jones Day’s Insights, “including:

• projects involve a multitude of participants and stakeholders, including principals, contractors and subcontractors with a range of different interfaces and interests;
  the disputes concern complex technical matters in addition to legal issues;
• huge volumes of documentation from many sources are generated during projects, including technical documents, correspondence and emails; and
• participants are required to balance the legal and commercial aspects of claims and timely resolution of disputes with good project execution and the maintenance of ongoing relationships.”

“To overcome these challenges in major projects, parties often agree to adopt independent expert determination for disputes that may arise. This is a process in which an independent expert is appointed to decide disputes. The types of dispute that can be determined, the relief that can be awarded and whether the expert’s decision is binding will depend on the terms of the expert determination clause.”

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OPINION
“Contracts and data governance go hand-in-hand. In the absence of regulation, parties engage in private ordering – at least in theory. But even when there is regulation, contracts often play a pivotal role,” posts Jeremy Telman in ContractsProf Blog.

” In most cases, data governance laws are essentially laws regulating contracts. California recently passed the country’s first real sweeping privacy law. Although it is a giant step in the right direction, it would be better if the opt-out had been an opt-in to the sale of personal information. I was delighted and surprised when blogmeister Jeremy Telman passed along information about another state that may pass legislation that may be even more proactive and protective of consumers privacy than California’s sweeping new law. That state? Oklahoma. The bi-partisan House Technology Committee unanimously passed the Oklahoma Computer Data Privacy Act, House Bill 1602, which requires technology companies to obtain ‘explicit’ permission to collect and sell consumer data. The bill now goes to the House floor.”

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“The Buy American Act includes a preference for ‘domestic end products’ and ‘domestic construction materials’ on federal projects absent a waiver. Prior to recent revisions, domestic end products and domestic construction materials were those that were: 1) manufactured in the U.S.; and 2) made up of at least 50% domestic components or, alternatively, were Commercially Available Off-The-Shelf (COTS) items,” writes Casey J. McKinnon in Cohen Seglias’ blog.

“The FAR Council recently issued a final rule that makes substantial changes to the FAR’s Buy American requirements (FAR 52.225-1, 52.225-3, 52.225-9 and 52.225-11) in accordance with Executive Order 13881, ‘Maximizing Use of American-Made Goods, Products, and Materials.’ The revised FAR clauses became effective January 21, 2021, and are to be inserted in all new contracts beginning February 22, 2021. The final rule made three key changes to the FAR’s Buy American requirements:

• The domestic content requirement was increased from 50% to 55% for most products.
• The FAR will now impose a separate and more strict set of rules for any product that ‘consists wholly or predominantly’ of iron and/or steel. For such products, no COTS exception will apply, and costs for foreign iron and steel must be less than 5% of the total component costs (excluding costs for COTS fasteners).
• The price preferences for domestic products were increased from 6% to 20% for large businesses, and from 12% to 30% for small businesses.
• Contractors can use this flowchart to determine whether a product or material is ‘domestic’ under the revised FAR provisions.”

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“In 2020, the Fifth Circuit Court of Appeals issued its decision in Soaring Wind Energy LLC (SWE) v. CATIS USA Inc., et al. In that case, the various members of a limited liability company (LLC) entered into an agreement to provide worldwide marketing of wind energy equipment and services. The agreement contained an arbitration clause that required all disputes between the parties to be arbitrated,” writes Allison J. Snyder in Porter Hedges’ Texas Construction Law Blog.

“The arbitration clause contained the following language:”

“17.10 No Consequential or Punitive Damages. IN NO EVENT SHALL ANY MEMBER OR ANY OF ITS RESPECTIVE REPRESENTATIVES OR AFFILIATES BE LIABLE TO THE COMPANY OR TO ANY OTHER MEMBER OR ITS REPRESENTATIVES OR AFFILIATES FOR ANY EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT, CONSEQUENTIAL, REMOTE OR SPECULATIVE DAMAGES.”

“After an evidentiary hearing lasting several days, the Arbitration Panel awarded SWE $62.9 million in lost profits. The losing party sought to overturn the Award arguing that the Panel exceeded its powers by awarding lost profits damages. Arbitration awards are difficult to overturn and only a few narrow grounds exist to ask a court to vacate an award. However, one of the most powerful grounds is a showing that the Arbitration Panel exceeded the authority granted to them by the arbitration clause.”

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“As the ever-evolving COVID-19 pandemic is no longer considered ‘unprecedented’ and the restrictions associated with the pandemic have become a part of ‘the new abnormal,’ district courts nationwide are beginning to grapple with the business fears that came to life in March 2020: ‘Will my contract’s force majeure provision protect me when COVID-19 and its consequent regulations prevent me from doing business as usual?'” posts Eversheds Sutherland in their News/Commentary.

“For those in the Southern District of New York, the answer may be ‘yes,’ which brings relief to contractual obligors and dread to contractual obligees. The Southern District’s December 2020 ruling in JN Contemporary Art, LLC v. Phillips Auctioneers LLC sheds light on how COVID-19 could be classified as a ‘natural disaster’ that triggers a force majeure clause. The decision also provides insight into the Southern District’s shift in what constitutes a force majeure, which, for some, could become a contractual quandary.”

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“For nearly a year, the world has battled a pandemic defined as Coronavirus-19 or COVID-19. This virus has caused enormous damage worldwide in terms of human life, health, and economic devastation. This destruction has been acutely felt here in the United States, with the death of hundreds of thousands of Americans and the long-term illness of millions, as well as severe economic loss due to factors beyond the control of those who have been affected,” writes RBR-TVBR in their Washington Beat.

“The COVID-19 pandemic also has had a significant effect on the U.S. legal system.”

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“January 2021 may well be remembered in the independent contractor area of law as the ‘not so fast’ month. The Fifth Circuit Court of Appeals told lower courts ‘not so fast’ when it comes to certifying collective actions,” writes Richard Reibstein Esq. in Locke Lord’s Independent Contract Misclassification & Comlpiance blog.

“That appellate court imposed a new and more rigorous standard that plaintiffs will have to meet to attain certification of their collective actions under the Fair Labor Standards Act. GrubHub and other companies that engage couriers to deliver food from restaurants have generally succeeded in compelling arbitration of courier claims for independent contractor misclassification. These companies have avoided application of the arbitration exemption in the Federal Arbitration Act for interstate transportation workers. As we reported here on September 18, 2020, the United States Court of Appeals for the Seventh Circuit held that couriers providing deliveries for customers of GrubHub were not involved in interstate commerce. But only last week, as reported below, a Massachusetts court essentially said, ‘not so fast,’ reaching the opposite conclusion when it held that couriers providing deliveries to GrubHub customers of pre-packaged and non-food items originating outside of Massachusetts (such as soft drinks, chips, toilet paper, cleaning products, and flowers) were exempt from arbitration under the interstate transportation worker exemption. This area of the law is evolving with new arguments by plaintiffs’ class action lawyers seeking to circumvent arbitration agreements.”

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