Protecting the Identity of LLC Members, LP Partners, Part II: Strategies for Discovery

You want to protect the identity of your business’ owners, but your opponent issued discovery requesting a copy of your organizational chart and/or information on the identities of your LLC members or LP partners. You are probably left wondering: How does my company get through this lawsuit without disclosing information on our ownership structure?

Christina Berish, a partner in Thompson Coburn’s Business Litigation Practice Group, says that while the rules of discovery in most jurisdictions are broad – most require not only the production of admissible evidence, but also the production of documents and information which could lead to the discovery of admissible evidence – there are a few strategies for safeguarding the identities of your owners.

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Northwestern Mutual to Pay $84 Million to Settle Annuities Suit

Reuters is reporting that Northwestern Mutual Life Insurance Co. has agreed to pay $84 million to settle a lawsuit claiming that it illegally reduced potential payouts on annuities it sold at least 30 years ago, cheating investors who used them as retirement investments.

The settlement , announced in a Milwaukee federal court, covers about 4,000 current and 29,000 former owners of the annuities pursuing a class action.

“They claimed Northwestern Mutual breached its contractual obligations when in 1985 it quietly changed how it calculated dividends on deferred, fixed annuities it had sold, costing them millions of dollars annually,” the report says.

 

 




Duke Energy to Pay $146M to Settle Suit Over CEO Ouster

America’s largest electric company announced that it is settling a lawsuit that claimed shareholders lost millions of dollars when Duke Energy fired its CEO hours after a long-anticipated buyout of its smaller neighbor, reports the Greensboro News & Record.

“Charlotte-based Duke Energy said its insurers and shareholders would pay $146 million to end the lawsuit filed after the company completed its July 2012 buyout of Raleigh-based Progress Energy Inc. The company set aside $26 million for the amount not covered by insurance and said consumers would not pay the cost,” the report says.

The litigation claimed shareholders suffered when Duke Energy directors suddenly fired new chief executive Bill Johnson, who was supposed to head the combined company after holding the same post at Progress Energy.

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Insurer Conduct Can Lead Policyholders Into Suit Limitation Traps

A white paper posted by Jones Day partner Tara Kowalski on the firm’s Insurance Policy Advocate site says a recent string of cases addressing suit limitation provisions serves as a reminder of the numerous traps that surround such provisions and how insurer conduct can be misleading in those situations.

The article points out that suit limitation provisions are the contractual equivalent of statutes of limitations.

“They require policyholders to file coverage lawsuits within a specified period of time or risk forfeiting coverage for the claim at issue. The most common time period is one or two years – which is often shorter than the otherwise applicable statute of limitations,” Kowalski writes. “Despite the potential for Draconian results, suit limitation provisions are generally enforceable, subject to certain limitations. And, some jurisdictions don’t require a showing of prejudice from the insurer. Suit limitation provisions are often found in first-party policies and only rarely in liability policies.”She offers a summary of some recent cases addressing suit limitation provisions, as well as some practice pointers based on the rulings in those cases.

Read the white paper.




Labor Department Lawyers Can Shift Loan Officer Policy, Court Rules

U.S. Supreme CourtThe Obama administration had the authority to make a 180-degree shift in labor policy and declare thousands of mortgage loan officers subject to wage-and-hour laws, the U.S. Supreme Court ruled, according to a report by Forbes.

In concurrences, the court’s most conservative justices complains that such deference to regulatory agencies threatens the constitutional balance of powers.

“The high court, in Perez vs. Mortgage Bankers Association, unanimously upheld the Labor Department’s 2010 determination that mortgage loan officers were mere salespeople, not administrators, and therefore entitled to a 40-hour work week and overtime wages.” Forbes says. “That was a reversal of the same agency’s 2006 decision that loan officers weren’t entitled to overtime. But the court ruled the Administrative Procedure Act governing how agencies promulgate rules and regulations clearly allows them to issue “interpretive rules” without going through the lengthy notice-and-comment procedure required for regulations that have the effect of law.”

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Microsoft Hits Kyocera for Alleged Phone Patent Infringement

In a complaint Friday in Seattle federal court, Microsoft claims Kyocera infringes its patents with three of Kyocera’s lower-cost Android phones, reports ArsTechnica. The accused models include the Duraforce, Hydro, and Brigadier.

The three models use the Android operating system and are “ruggedized,” meaning they include features like waterproofing and thick rubbery exteriors.

“Microsoft has long maintained that Android device makers must pay royalties for use of its patents,” reports Ars Technica. “Most Android device-makers pay a royalty to Microsoft for each phone, and estimates of the Redmond company’s patent-licensing revenue ranges up to $2 billion per year.”

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Avoid Misrepresentation Claims Through Contractual Exculpatory Clauses

As a part of its Homebuilder Series, Bilzin Sumberg has posted a free on-demand webinar that discusses protecting your company from misrepresentation claims through contractual exculpatory clauses.

This seminar discusses the case of Duggan, LLC v. Peacock Point, LLC, which held that under an “as is” contract containing disclaimers of warranty, a sophisticated purchaser is not entitled to recovery when the seller unintentionally misrepresented entitlements on the property.

Bilzin Sumberg litigation attorneys Mitch Widom and Wendy Polit are presenters in the webinar.

On its website, the firm says the webinar discusses the application of the Duggan decision to: i) the 2013 trial in Lennar v. Olivia’s Savannah, where the Second District Court of Appeals upheld the enforcement of the written contract against a purchaser who sued Lennar for negligent and fraudulent misrepresentations and ii) the potential benefits of the use of exculpatory clauses in purchase and sale contracts.

Watch the on-demand webinar.

 




Launching Site or Other Advertising Alone is Not Service Mark ‘Use’

Service markFor the first time, the Federal Circuit directly addressed whether the advertising or offering of a service, without the actual provision of the service, constitutes use in commerce for a service mark, reports McCarter & English in a paper written by Jonathan Short and Carissa L. Rodrigue.

The case is Couture v. Playdom, Inc., No. 2014-1480 (Fed. Cir. Mar. 2, 2015).

“In affirming the Trademark Trial and Appeal Board’s (TTAB) cancellation of the service mark PLAYDOM, the court held that the mark was void ab initio because the associated services were not rendered as of the use-based application’s filing date even though the mark owner had used the mark to advertise the services by launching a website, and that such advertising alone does not constitute use in commerce,” the report says.

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Texas Jury Returns $58.7 Million Trade Secret, Exemplary Damages Verdict for TAOS Inc.

The Dallas technology-focused law firm Munck Wilson Mandala announced a $58.7 million trade secret misappropriation, breach of contract, patent infringement and tortious interference verdict for firm client Texas Advanced Optoelectronic Solutions Inc. (TAOS) in the U.S. District Court for the Eastern District of Texas.

Following the four-week trial, federal jurors on Friday found that Milpitas, Calif.-based Intersil Corp. used TAOS’ patented technology for dual-diode ambient light sensors without consent, according to a release from the law firm. The jury also found that Intersil misappropriated TAOS’ trade secrets in order to obtain a competitive advantage. TAOS prevailed in all the company’s claims against Intersil, including misappropriation of trade secrets, breach of contract, tortious interference and patent infringement.

The verdict includes $48.7 million in damages for trade secret misappropriation and $10 million in punitive damages for both trade secret misappropriation and for tortious interference.

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Simon Greenstone Panatier Bartlett Adds Trial Lawyer Ron McCallum

Ron C. McCallum of Simon Greenstone Panatier Bartlett

Ron C. McCallum of Simon Greenstone Panatier Bartlett

Dallas-based Simon Greenstone Panatier Bartlett, PC, a nationally recognized trial law firm, is announcing the addition of trial attorney Ron C. McCallum in the firm’s Catastrophic Personal Injury & Wrongful Death section.

McCallum joins Simon Greenstone as an associate from The Law Firm of Ted B. Lyon & Associates in Mesquite. His lengthy trial record includes significant verdicts and settlements in a variety of cases involving serious injuries and wrongful death.

“Ron is the ideal person to help us build on our work representing the victims of catastrophic injury,” says attorney David C. Greenstone, a founding shareholder at the firm. “We will, of course, continue representing clients in asbestos and products liability cases, but we believe Ron has to skill set to help us grow our work on behalf of those who have been seriously injured in aviation, truck and bus accidents, refinery explosions and other catastrophes.”

McCallum earned his bachelor of arts in 1997 from the University of Oklahoma, where he also trained as a professional pilot. He received his law degree from the South Texas College of Law where he was a member of Currents, the school’s international trade law journal.

“Simon Greenstone is one of the premier trial law firms in the country, and I’m excited to have the opportunity to work with such a nationally prominent team of attorneys,” McCallum says. “Working for individuals and families who have experienced a tragedy is both challenging and rewarding. But I know the firm shares my passion for helping those with the greatest need.”

In addition to his legal work, McCallum is an experienced pilot and flight instructor. He also regularly volunteers with Challenge Air, SPCA of Texas, Operation Kindness and Feral Friends.

Simon Greenstone Panatier Bartlett is a nationally recognized trial law firm with a reputation for creative and aggressive representation of clients in a wide variety of catastrophic personal injury matters nationwide.

For more information, visit http://www.sgpblaw.com/ron-mccallum.html




Texas Supreme Court Marries Contractual Limitations to Insurance Policies

In a case that has been closely watched by the oil and gas industry and its insurers, the Supreme Court of Texas issued its opinion in In re Deepwater Horizon on Feb. 13, 2015, and settled the debate concerning whether a company’s insurance policies stood alone or were married to and dependent upon an insured’s limited obligation in a separate contract to insure and indemnify a third party, according to a white paper published by Baker Hostetler.

The article says the court found that Transocean’s $750 million primary and excess insurance policies did not offer unrestricted coverage to BP as an additional insured, but instead incorporated and were bound by the limitations placed on Transocean’s liability under the parties’ drilling contract.

The major takeaways, acording to the firm’s report: know your partner, know your risks, and know your insurer.

Read the white paper.

 




Protecting the Identity of LLC Members and LP Partners in Litigation

Thompson CoburnThompson Coburn LLP has published an analysis of handling a request for disclosure of the identity of members/partners in an LLC or LP during litigations. In “Part I: Motions to Remand,” the firm examines the best approach.

The firm describes the situation counsel may face: “You represent a LLC or LP and file suit in state court to avoid disclosing the identity of your members/partners. But then the identity of those members/partners becomes an issue when the defendant removes your state court case to federal court claiming diversity jurisdiction. The contentions of the removal petition may allege diversity of the parties “upon information and belief” and then you are left to admit or refute the allegations and/or address the issue in the jurisdictional statement of your counterclaim. For privacy reasons though, your LLC or LP may not want to divulge the identity of its members/partners.”

The analysis continues with a description of the best approach.

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Man Claims to Own Bluetooth, Scores $15.7M Verdict Against Samsung

Smart phoneA federal court jury in Marshall, Texas, found in favor of Rembrandt IP in a patent infringement case, finding that Samsung’s Bluetooth-enabled products, including its most popular cell phones, tablets, and televisions, infringe Gordon Bremer’s patents.

The patents relate to compatibility between different types of modems, and connect to a string of applications going back to 1997. The first version of Bluetooth was invented by Swedish cell phone company Ericsson in 1994.

Bremer stands to get 2.5 percent of the $15.7 million verdict [PDF] won by his employer, Rembrandt IP, one of the oldest and most successful “patent trolls,” reports Ars Technica.

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17 Reasons to Fire Your PR Person

Thumb downDigital Music News has posted a list of 17 mistakes your public relations person could make that would give you good cause to order that person’s dismissal.

The list starts with “They aren’t creating a compelling, heartwarming story that works.” From that relatively mild complaint the list gets into more egregious sins, such as “They threaten journalists” and “They let you sue journalists.”

Some of the reasons are aimed at the music industry, but most of them have application in the broader world of business.

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The Executive Guide to Depositions

Question mark magnifierAhmad, Zavitsanos, Anaipakos, Alavi & Mensing offers a free guide to aid with preparation of business executives for depositions, titled “The Executive Guide to Depositions.”

The guide offers such practial tips as number three: “Steer Clear of Innuendo.” On that tip, the guide says, “Executives might be tempted t0 aim disparaging comments at the opposing side during a deposition. Avoiding this urge can be difficult when opposing counsel is peppering an executive with questions designed to impugn his or her credibility, competency and intellect. But resisting the temptation can prevent depositions from careening into chaos.”

Some of the other tips include how to handle ego, the importance of practicing, the lesson that depositions are not normal conversation, and more.

Download the guide

 




High-Power Line Easement Dispute Wins Texas Landowner $445,000

High power - electric- gridA North Texas landowner has won a $445,365 judgment against an electric power delivery company after his land lost value when an easement was taken for a high-voltage electric transmission line.

The judgment signals a win for other Texas landowners whose properties are being targeted as power line companies flood the Public Utility Commission (PUC) with applications seeking approval for similar transmission lines, the firm said in a release.

The release continues:

The recent dispute represents a fundamental debate: How much does a high-voltage power line easement, with its tall towers and unsightly appearance, reduce the value of property it crosses? A Wichita County jury agreed that an entire parcel was worth less, not just the land taken for the easement.

“This judgment sends a clear message. Texas landowners should understand that they have a constitutional right to collect fair damages when power lines lower the value of their land. Landowners only get one opportunity to recover, but the easements remain forever,” says Austin-based eminent domain attorney Luke Ellis of Johns Marrs Ellis & Hodge LLP, lead trial counsel for the property owner.

The dispute began in 2011 when Oncor Electric Delivery Co. LLC sued Edward Clack to gain 33.6 acres of easement on his Burkburnett property for a 345,000-volt power line, the highest-voltage lines built in Texas. The Oncor easement, 160 feet by 1.7 miles, bisected Clack’s property. Oncor initially offered him less than $55,000 before raising the offer to nearly $140,000.

After a three-day trial in Wichita County Court at Law No. 1, jurors awarded Clack $393,165, the full amount he requested. On Feb. 12, Judge Gary Butler entered a judgment of $445,365, which includes interest and court costs. Oncor may appeal.

The case is Oncor Electric Delivery Company, LLC v. Edward Clack, No. C-330-E.

Over the past year, the PUC has received new power line applications affecting Dallas-Fort Worth, Houston, South Texas, San Antonio and the Texas Hill Country.

Johns Marrs Ellis & Hodge LLP, a trial and appellate boutique with offices in Austin and Houston, focuses on representing landowners in eminent domain proceedings, commercial litigation, probate and appeals.




GM Names LyondellBassell Exec Its New GC

General Motors GMGeneral Motors Co. on Thursday named Craig Glidden its new top lawyer, after earlier saying general counsel Michael Milikin would retire in July, reports The Detroit News.

Glidden’s appointment will be effective March 1.

The position puts him at the head of a team of staff attorneys who are integrated into all of GM’s regional and functional teams in more than 30 countries.

“The legal job is highly important to the Detroit automaker as it faces investigations by the U.S. Justice Department, 49 state attorneys general, the U.S. Securities and Exchange Commission and Canadian officials,” The News reports. “It also faces hundreds of lawsuits tied to the ignition switch defect.”

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Colt’s Manufacturing Settles With Two Top Execs

Colt’s Manufacturing has settled multi-million claims by the company’s former general counsel and an ex-vice president who said they were wrongly dismissed during a fierce fight among stockholders for control of the company, according to a report in the Hartford Courant.

The settlement headed off a trial that was set to begin on wrongful termination suits against the gun manufacturer and two stockholders by former Colt’s Manufacturing Co. Vice President Merrick Alpert of and General Counsel Carleton Chen.

Alpert and Chen won a succession of pretrial victories over the last year, The Courant said, including a court order in April that told Colt’s to set aside $3.8 million to pay the two, had a jury ruled in their favor.

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Boston Scientific and J&J Settle Suit Over Guidant Deal

Test tubesIn an agreement Tuesday that settled an 11-year-old deal gone awry, Boston Scientific agreed to pay Johnson & Johnson $600 million, an amount far less than the more than $7 billion in damages that Johnson & Johnson sought in relation to its botched acquisition of Guidant, a medical device company, in 2004, reports The New York Times.

The case resurfaced last year after nearly a decade of inaction on the issue with Johnson & Johnson suing the smaller Boston Scientific, seeking damages that would have equaled nearly half of Boston’s Scientific’s market value.

The Times says the legal wrangling dates back to 2004, when Johnson & Johnson agreed to acquire Guidant for $25.4 billion.

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Chesapeake Alleges Founder McClendon Stole ‘Trade Secrets’ to Start New Firm

Chesapeake Energy Corp. filed suit Tuesday alleging that its founder and former chief executive, Aubrey K. McClendon, stole confidential company data during his last months on the job in order to launch his new oil and gas empire, Reuters reports.

The suit says McClendon “misappropriated highly sensitive trade secrets from Chesapeake” and “subsequently used these trade secrets for the benefit of” a company he founded in 2013, American Energy Partners LP. Chesapeake filed the civil complaint in Oklahoma County District Court.

“In the suit, Chesapeake claims McClendon asked his assistant to print maps and data about unleased acreage and that McClendon also sent himself blind copies of the same documents at a personal email address during his last months at the company,” the report says. “The company says it discovered McClendon’s actions through a forensic analysis of his Chesapeake email account.”

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