A recent post on the  Farrell Fritz website describes the uses and possible pitfalls of using fixed price buy-sell agreements.

Author Peter Mahler explains:

“A fixed price buy-sell agreement is one in which co-owners of a business select a specific dollar amount, expressed either as enterprise or per-share value, for calculation of the future buyout price to be paid an exiting owner or his or her estate upon the happening of specified trigger events such as death, disability, retirement, or termination of employment.”

Fixed price buy-sell agreements in theory offer two main advantages over pricing mechanisms that utilize formulas or appraisals at the time of the trigger event: certainty and the avoidance of transactional costs.

Read the article.

A post on Foley & Lardner’s Labor & Employment Law Perspectives blog discusses negotiation styles for employers when the time comes for a new labor contract.

“There isn’t a one-size-fits-all answer as to what works best,” writes Thomas C. Pence. “Some people yell a lot and are very effective with it. Others try yelling and come off sounding cartoonish (never a good thing in negotiations). The best advice is to be true to yourself.”

Pence advises contract negotiators to be self-assured and determined in arguing their positions.

Read the article.

Above the Law  and Concord will present a complimentary webinar titled “The Process of Negotiating: Focusing on the Business Processes of Contract Management for Successful Negotiation.”

The event will be Wednesday, Jan. 31, 2019, at 1 p.m. Eastern time.

The webinar will be moderated by Brad Blickstein, consultant, speaker and writer on law department operations. He will be joined by Travis Bickham, VP of sales and marketing at Concord, and Jeff Barlow, co-founder at Nimble Services.

The webinar will explore how to reimagine the negotiation process as a business process:

• How to rethink contract processes to increase efficiency and effectiveness
• Negotiation processes, best practices, and how to avoid an adversarial tone
• Tools and technology that will help create repeatable, scalable processes

Register for the webinar.

The Association of Corporate Counsel is accepting registrations for Xchange 2019, The Mid-Year Meeting for Advancing Legal Executives.

General Counsel News readers who register by Jan. 30 will receive a $100 discount when using the code GCNEWS19.

The event is scheduled for April 28-30, 2019, at the Hotel Minneapolis in Minneapolis, MN.

ACC has arranged for four curricula addresses in the areas of contracts, leadership, legal operations, and litigation.

More information may be found here:

• Program agenda
• Rates and registration
• Hotel and travel

Register for the event.

Justice Neil Gorsuch

The U.S. Supreme Court on Tuesday sided with a long-haul truck driver who sued his employer for failing to pay him a minimum wage, handing down a decision that could have broad ramifications on the transportation sector and the economy as a whole, reports CNBC.

CNBC reporter Tucker Higgins explains:

“In an opinion delivered for a unanimous court, Justice Neil Gorsuch held that courts must decide whether an exception in the Federal Arbitration Act, or FAA, for transportation workers applies before requiring arbitration. And, he wrote, that exception applies not just to traditional employees but also to independent contractors.”

The U.S. Chamber of Commerce had urged the court to rule in favor of the employer.

Read the CNBC article.

Steven P. Gallagher of Akerman LLP offers some tips on what to do — and not do — when considering arbitration agreements for new hires.

He discusses some of the advantages and potential disadvantages to having arbitration agreements in place for employees.

“Because arbitrations are private, the proceedings, claims, and ultimate outcomes are ordinarily confidential. Most interesting to employers is that arbitrators tend to award lower damages than juries,” Gallagher writes.

But sometimes arbitration is “neither quicker nor less expensive than litigation, and arbitrators are sometimes inclined to ‘split the baby,’ even if the law is clearly on your side.”

Read the article.

Even an informal email can constitute acceptance of a contractual offer, warns The In-House Advisor.

“Moreover, just a few months ago, Judge Timothy Hillman took this principle one step further by ruling, in Witt v. American Airlines, that an exchange of emails can form a binding settlement agreement, even if the parties have not agreed to all of the terms of that settlement,” explains author Shepard Davidson, a Burns Levinson partner.

The judge found that both sides had agreed to a settlement in an email exchange. When the plaintiff later tried to reopen discussions, American Airlines filed a motion to enforce settlement agreement. The court allowed the motion.

Read the article.

The Texas Supreme Court recently heard oral argument in Barrow-Shaver Res. Co v. Carrizo Oil & Gas, Inc., on the interpretation of a farmout agreement providing that an assignment could not be made “without the express written consent,” according to a post on the website of Porter Hedges.

“The issue—whether the provision means consent can be withheld arbitrarily or only reasonably,” the post states. “Regardless how the Texas Supreme Court rules, there are three lessons in Barrow-Shaver for contract drafters: (1) be precise in contractual language; (2) address the use of non-final drafts in interpretation disputes; and (3) consider other provisions that may be impacted by the implied reasonableness issue.”

The post offers some pointers on each of those three points.

Read the article.

Many of the recent U.S. Supreme Court rulings on arbitration agreements cases have been decided by narrow 5-4 majorities, which has raised the possibility that the replacement of Justice Anthony Kennedy by Brett Kavanaugh might lead to some softening of the court’s position in those cases.

But as Ronald Mann, writing in the SCOTUSblog points out, the latest such ruling will shed no light on that broader question, because even the justices more skeptical about arbitration saw no merit in the arguments against arbitration here.

Kavanaugh wrote the opinion for the unanimous court. In this case anyway, none of the justices saw any merit in a process calling for collateral litigation over the gateway question of arbitrability.

“At bottom, the question is whether a court or an arbitrator decides whether an arbitration agreement governs a particular dispute,” writes Mann.

Read the article.

A new U.S. Postal Service change to the standard terms and conditions that apply to its newly awarded Highway Contract Route (HCR) and Contract Delivery Service (CDS) contracts could be unenforceable, according to David P. Hendel, writing in the Husch Blackwell Contractor’s Perspective blog.

The changes apply to existing CDS contracts as well as newly awarded ones. In an email, the Postal Service asked contractors to sign, without any “alterations or additions,” a contract modification that incorporated the new terms. If the contractor did not so, the Postal Service’s email threatened contract termination, Hendel writes.

He cited problems with the way the changes are presented, including lack of consideration, violation of the implied covenant of good faith and fair dealing, and the legal theory of coercion and duress.

Read the article.

Cleveland.com reports that Emily McNeeley, general counsel for Cuyahoga County’s troubled IT Department and one of several people named in subpoenas related to an ongoing corruption investigation, has resigned from her $95,000-a-year job,

The county reported the resignation Tuesday, according to Cleveland.com’s Courtney Astolfi.

McNeeley was placed on unpaid leave in April after corruption investigators repeatedly named her, and her boss, IT Director Scot Rourke, in subpoenas served on the county. The cases refer to potential conflicts of interest, the report says.

Read the Cleveland.com article.

Reuters reports that U.S. District Judge John Lungstrum of Kansas City has set aside individual contingency fee contracts that some plaintiffs’ lawyers had in place for clients in a multidistrict litigation.

The ruling rejected the claims of Watts Guerra, a Texas firm that had signed up tens of thousands of farmers to bring individual cases in state court, accusing the agricultural giant Syngenta of peddling genetically modified seeds that produced corn China refused to import. The case led to a $1.5 billion global settlement for the U.S. farmers, according to Reuters’ Alison Frankel.

“This court has the authority and duty to determine the amount of reasonable fees paid to attorneys from the settlement fund, and because any further contingent fee payments would necessarily come from proceeds from the settlement fund, the court can and does prohibit any such additional payments,” Lungstrum wrote in the opinion.

Read the Reuters article.

Employees are the engine that drives a manufacturer’s innovations, but employees’ potentially patentable innovations only become the employer’s intellectual property if the proper patent assignment language is used, warns Foley & Lardner in its Manufacturing Industry Advisor blog.

Authors Christopher King and Richard Dancy explain:

“All employees that may develop potentially patentable innovations during the course of their employment should be required to sign contracts transferring ownership of all intellectual property rights to their employer. This may even include factory employees who submit ideas for product improvements through an employee suggestion program. However, if employee patent assignments are not carefully crafted, manufacturers may end up in a nightmare situation – believing they own a valuable patent invented by an employee when, in reality, it belongs to the employee.”

Read the article.

Non-compete agreements are subject to state law, and states vary in their treatment of them. There is no one-size-fits-all non-compete agreement, and the enforceability of a non-compete agreement turns upon the state law under which it is construed, points out a blog post from Knobbe Martens.

A case in point involves two high-end, off-price fashion brands are duking it out over an employee jumping ship, write authors Alexander D. Zeng and Mark Kachner.

“Generally, states that are more willing to enforce non-compete provisions do so for countervailing policy reasons: to prevent trade secret misuse, reduce the cost of trade secret litigation, protect employers’ investments in employees, and favor freedom of contract. The outcome of this lawsuit will be heavily impacted by the state law governing Arcuri’s non-compete agreement.”

 Read the article.

Kilpatrick Townsend & Stockton has published a structured guide to outsourcing in the USA.

The guide covers contract forms, due diligence, duration and renewal, supplier selection, service specifications, charging methods, warranties and indemnities, and ending the agreement.

Authors of the guide, which is published at Lexology.com, are James Steinberg, Joshua M. Benson, Farah F. Cook, Joshua S. Ganz, Julie C. Grundman, Maha Khalaj, Lance McCord, Michelle Tyde, Amanda M. Witt and Vita Zeltser.

Read the article.

An Ohio appellate court has addressed an issue that arose when an arbitrator specified in a contract is no longer available.

Pepper Hamilton’s Constructlaw blog covers the case in which a homeowner sued a contractor, alleging unjust enrichment and fraud. The contractor moved to compel arbitration under the agreement arbitration provision. But the specified arbitrator, the Ohio Arbitration and Mediation Center, appeared to be defunct.

“Because it was still possible to arbitrate the issues, the Court determined the agreement was not unenforceable due to impossibility,” writes Ryan R. Deroo. “The Court explained that this conclusion was consistent with the intent of the parties as they agreed to arbitrate disputes, and a change in forum should not override the fundamental purpose of the arbitration provision.”

The appellate court directed the trial court to appoint another arbitrator.

Read the article.

Trial lawyers with Jordan, Lynch & Cancienne PLLC scored big defense wins recently for two separate clients, securing a quick summary judgment for The Dow Chemical Company in Texas and prevailing in a jury trial for Union Carbide Corporation in New Orleans.

In the Texas case, MMR Constructors Inc. tried to claim an additional $17 million from Dow after it had already paid MMR for work on its plant in Freeport, Texas. That case ended with a summary judgment for the defense.

And in the New Orleans case, jurors heard three weeks of testimony related to the death of an oil field worker who died of mesothelioma. The jury found Union Carbide and Montello were not responsible.

Read details of the cases.

Image by NY Photographic

Squire Patton Boggs warns that a recent decision by the Fifth Circuit Court of Appeals in In re Provider Meds, L.L.C. is a stark reminder to chapter 7 trustees that they have an affirmative obligation to examine a debtor’s assets.

A trustee’s failure to conduct a sufficient and timely examination may deprive the estate of significant value, writes Mark Salzberg.

“The issue before the Court in Provider Meds was whether the assumption and assignment of an intellectual property license agreement . . . conveyed any intellectual property rights since the Agreement had not been timely assumed by the trustee,” Salzberg explains.

Read the article.

A California appellate panel determined that a law firm’s arbitration agreement with a partner was unconscionable, reversing a trial court’s grant of a motion to compel arbitration in an employment dispute, according to a post on the website of Manatt, Phelps & Phillips.

In the case, a litigator who had been employed at Winston & Strawn sued the firm, asserting claims of discrimination, retaliation and wrongful termination. A trial court granted the firm’s motion to compel arbitration.

“The arbitration provision in the employment agreement signed by [the plaintiff] failed to meet the standard of Armendariz v. Foundation Health Psychcare Services, Inc., the court said, and was unconscionable. Further, the taint of illegality could not be removed by severing the unlawful provisions without altering the nature of the parties’ agreement, leading the panel to void the entire agreement and send the case back to Superior Court.”

Read the article.

In contracts about complicated services, the hardest terms to draft appear in statements of work, according to a post on the website of Tech Contracts Academy.

“SoW’s for large projects demand long lists of duties from the vendor,” explains author David W. Tollen. “And usually they’re interwoven with supporting tasks from the customer, along with countless contingencies, assumptions, and exceptions. Putting all those pieces into an effective contract challenges the best drafters. The result is often hundreds of pages of baffling mess. Yet the path to good drafting is surprisingly simple: write outcome-driven descriptions. In other words, describe the technology the vendor will create or run or both, and then stop typing.”

The most effective statements of work, Tollen writes, will focus on the outcome — on specifications for the technology to be built or run — and minimize restrictions on how.

Read the article.