Automatic renewals of consumer contracts should be used with care, particularly in light of recent changes to state automatic renewal laws and increased scrutiny from government officials and class action lawyers, warns a recent post on the website of Drinker Biddle & Reath.

The post consists of questions and answers discussed by members of Drinker Biddle’s Class Actions Team and Consumer Contracts Team provide an overview of the laws governing automatic renewals, with a particular focus on California’s ARL.

The questions include such topics as FTC Act requirements, state requirements, how to comply with every ARL, consents, cancellation rights, and more.

Read the article.

One of the key insurance policy provisions that is often included in commercial contracts to transfer risk is the requirement that one contracting party make the other contracting party an additional insured on their insurance policy, according a website post for SandRun Risk.

The authors discuss the 2013 Insurance Services Office revisions to the standard additional insured endorsement form.

The three significant changes are:

• Insurance provided to an additional insured will apply only to the extent permitted by law
• If additional insured coverage is required in a contract or agreement, the additional insured will not be provided coverage that is any broader than required in that contract or agreement with the named insured
• The limits available to an additional insured will be the lesser of the limits required by contract or available under the policy

Read the article.

A lack of precision in responding to an offer can lead to confusion as to whether or not a contract has been formed, warns an article published by Burns & Levinson on JDSupra.com.

The article discusses  APB Realty, Inc. v. Geogia-Pacific LLC, a case involving a contract negotiation for the purchase of 88 rail cars. During the negotiation, Georgia-Pacific offered two options to APB, the buyer. After APB said it was leaning toward one of the options, Georgia-Pacific’s broker told APB that his client had accepted a higher offer.

APB sued for breach of contract.

The article says that “the First Circuit held that because APB might be able to prove that a contract between it and Georgia-Pacific was formed, it would be improper to throw out the lawsuit on a motion to dismiss. Thus, while APB is a long way from winning its suit, at least it is in the fight.”

Read the article.

On construction projects, owners and developers often are familiar with standard contract language and provisions, but the industry is continually evolving, according to a paper published by Zetlin & De Chiara LLP.

The paper discusses 10 key contract provisions and tips to help parties avoid pitfalls.

Those areas include scope of work, compliance with schedule, meeting the owner’s target for the budget, contingency, changes in the work, indemnification, insurance, dispute resolution, general conditions, and subcontract issues.

Read the article.

A post on the Faegre Baker Daniels website asks the question: What does a contractor do when the owner stops making progress payments?

The contractor has two options: it can either continue to perform the work or cease the work, neither of which is a perfect solution.

“The owner’s failure to pay progress payments that are ‘clearly due and owing’ generally entitles the contractor to stop work until the progress payment is made. While this rule seems clear, it is not that simple,” according to the post.

The contractor should look to its contract with the owner to find answers to two questions: Does the contract require the contractor to take a certain action? And, is payment”clearly due and owning?”

Read the article.

Few concepts are as confusing as the “gross up” of operating expenses to those who do not regularly deal with office leases, writes William Hof in a white paper for Husch Blackwell.

“Most tenants understand that in addition to base rent, tenants often directly reimburse their landlords for a portion of the building’s operating expenses (e.g., real estate taxes, casualty insurance, maintenance, utilities, etc.),” explains Hof.

In the paper, he defines “gross up” and explains how it works, and he discusses variable vs. constant expenses and tenant protection.

Read the article.

Arbitration is a creature of contract, and an arbitrator’s powers are in effect defined by the parties’ arbitration agreement, points out a post on the Mintz, Levin, Cohn, Ferris, Glovsky and Popeo blog ADR: Advice From the Trenches.

“Paradoxically, although an arbitration agreement can be written (double-spaced) on one side of a cocktail napkin, in some cases it may grant greater authority to an arbitrator than a judge has,” writes Narges Kakalia.

In the post, she discusses Timegate Studios, Inc. v. Southpeak Interactive, LLC, in which the Fifth Circuit confirmed an arbitration award in which the arbitrator substantially reformed the parties’ commercial agreement by, among other things, awarding one a broad perpetual license to certain of the other’s intellectual property, despite the fact that the original agreement had granted only a more narrowly drawn ten-year license.

Read the article.

The Supreme Court ruled Thursday that states can force retailers to collect state and local sales taxes no matter where the seller operates its business, saying those taxes support local police and fire departments and other services.

“The decision, in South Dakota v. Wayfair Inc., was a victory for brick-and-mortar businesses that have long complained they are put at a disadvantage by having to charge sales taxes while many online competitors do not,” explains The New York Times. “And it was also a victory for states that have said that they are missing out on tens of billions of dollars in annual revenue.”

Justices split 5-4 on the ruling, with Anthony M. Kennedy, Clarence Thomas, Ruth Bader Ginsburg, Samuel A. Alito Jr. and Neil M. Gorsuch in the majority.

Read the Times article.

The number of cases involving consumer data breaches is rapidly growing, points out Ehren M. Fournier in a post on the website of Schoenberg Finkel Newman & Rosenberg LLC. Data breaches inflict additional costs on financial institutions, leading those institutions to turn to litigation to recoup their losses from merchants.

Fournier discusses a recent case in which the United States Court of Appeals for the Seventh Circuit Court dealt a significant blow to attempts by financial institutions to bring negligence claims against merchants for failing to adequately safeguard their customers’ data:

In 2012, hackers infiltrated Schnuck Markets, a large Midwestern grocery chain, and stole the data of about 2.4 million credit and debit cards. Financial losses from the unauthorized purchases and cash withdrawals made with the stolen data reached into the millions. Because federal law requires the consumers’ banks to indemnify the consumers for losses incurred as a result of fraudulent activity, four banks brought a class action lawsuit against Schnucks to recover their losses. The plaintiff banks had no direct contract with Schnucks, and instead resorted to common-law negligence/tort claims, common-law contractual claims, and several claims under Illinois statutes. The Seventh Circuit affirmed the lower court’s decision to dismiss all claims, and its decision on the economic loss doctrine bears some discussion. The federal appellate court anticipated that the high courts of both Illinois and Missouri would reject imposing tort liability under these circumstances.

Read the article.

Bloomberg is reporting that Walmart Inc. sued its former chief tax officer for violating her employment agreement by defecting to online rival Amazon Inc., the latest broadside in the slugfest between the two retail giants.

Walmart, citing contractual terms, is trying to block Lisa Wadlin, Walmart’s senior vice president and top tax executive, from taking the Amazon position until May 2020 and bar her from handing over “sensitive business information obtained at Walmart.”

Reporters Jef Feeley and Matthew Boyle write that Walmart’s suit claims that Wadlin “wrongfully left the Bentonville, Arkansas-based chain last month to move to Amazon’s headquarters in Seattle, Walmart officials said Wednesday in a lawsuit.”

Read the Bloomberg article.

Trademark licensing disputes can present thorny issues at the intersection of contract and trademark law, warns an article in the
Dorsey & Whitney LLP blog TheTMCA.com.

“And when the dispute involves the Trump brand for residential buildings, the adjudication of rights and obligations under a trademark license agreement can become national news,” write Sandra Edelman and Dan Goldberger.

In Residential Committee of the Board of Managers of 200 Riverside Boulevard at Trump Place Condominium v. DJT Holdings LLC, the court held that the 200 Riverside Building was not required to use the Trump name on the façade of the Building.

The court agreed with the Condo Board that there are “no obligations or requirements in the license agreement for the building to carry the name ‘Trump’ on it in perpetuity.”

Read the article.

Perkins Coie has launched Consumer Protection Review, a blog designed to help businesses that market and sell to consumers navigate federal and state legal issues related to advertising, privacy, promotions, products liability, government investigations, unfair competition, class actions and general consumer protection.

Written for traditional retailers, manufacturers, technology companies and other consumer-facing enterprises, the Consumer Protection Review highlights legal developments in unfair or deceptive business practices, product safety claims, data collection, brand protection and more.

According to a release from the firm, the primary authors of “Consumer Protection Review” (listed alphabetically) are:

Amanda Beane counsels and defends clients on matters related to consumer protection and unfair competition, as well as Americans with Disabilities Act, contract trade secret and other commercial matters.

Mark Goodrich advises clients on advertising compliance matters and helps brands navigate complex state, federal and local advertising, promotion and consumer protection laws.

Jason Howell counsels clients on marketing, advertising, brand and consumer protection, and regulatory compliance issues, such as advertising claims and substantiation, sale and discount advertising, marketing and sponsorship agreements, product development, contests and sweepstakes, endorsements and influencers, and promotional offers.

Julie Hussey advises clients in high-exposure claims involving product liability, consumer fraud, and false and misleading advertisements and litigation related to injury and damage claims against manufacturers of dietary supplements, tires, paint, and automotive and aviation products.

Ryan Mrazik focuses on litigating for and counseling communications service providers—social media companies, mobile carriers and other communications and storage platforms—on the full range of legal issues those companies encounter regarding the privacy and security of their users’ information and content.

Eric J. Weiss represents clients in disputes arising under the Federal Trade Commission Act, the Sherman Antitrust Act, the California Cartwright Act, the Washington Consumer Protection Act and other state consumer-protection laws and advocates on behalf of plaintiffs and defendants in federal courts and arbitration forums nationwide.

Perkins Coie’s Consumer Protection practice represents innovative companies and industry leaders that advertise, market and sell products and services to the buying public. The attorneys help clients navigate compliance with the ever-changing field of consumer protection laws, and, when a matter spills into an investigation or active litigation, they resolve the dispute to match the client’s goals and preserve the company’s market reputation.

A federal judge in New Jersey has criticized Samsung Electronics America and its lawyers at Squire Patton Boggs for alleged “poor judgment and a misunderstanding” of their obligations in litigation involving two would-be class actions, reports the ABA Journal.

At a status conference in November, Squire Patton Boggs partner Philip Oliss told the judge that his firm was having “an incredibly difficult time in terms of the turn-around between here and Seoul, Korea.”

U.S. District Judge William Martini said Oliss’ representation is “as if his firm of over 1,500 lawyers (including several located in Seoul) and its client, a giant multinational conglomerate, were restricted to Eighteenth-century lines of communication.”

Read the ABA Journal article.

Contracting in the context of subcontractors, outsourcing, and privacy and security laws can be fast-paced, complex, and onerous, warns Katila Howard in Foster Swift Collins & Smith’s Biztech Law Blog.

“Like most contracts, complications do not typically arise until there is a breach. Furthermore, in the context of cybersecurity and outsourcing, the cost of a contractual breach can increase drastically depending on whether the incident occurred in the context of a security breach and the associated reporting requirements,” she writes. “Accordingly, drafting your own checklist and standard provisions that satisfy your company’s privacy and security requirements in advance can save time and money in the future.”

She provides a list of recommended subjects to cover in vendor agreements.

Read the article.

“Pay when paid” clauses are common in the construction industry, according to Bradley Arant Boult Cummings, but courts generally disfavor conditions precedent (an event that must occur before another party’s performance is due) and will not observe their existence unless they are unambiguously laid out in the contract.

The article, published by JD Supra, states that “subcontractors and general contractors should be aware that if language in a contract clearly establishes that the prime contractor is only obligated to pay the subcontractor if the owner pays the prime contractor for that work, and the contract states that the subcontractor is taking the risk of the owner’s potential insolvency, then courts are likely to enforce the contract as written—condition precedent and all. This language establishes what is known as a pay if paid clause.”

Read the article.

The $1 billion fine levied by federal regulators against Wells Fargo is unlikely to hobble or even slow down the bank, thanks to the massive corporate tax cut passed by Congress last year, reports The Washington Post.

Reporter Renae Merle explains: “Just in the first quarter, Wells Fargo’s effective tax rate fell from about 28 percent to 18 percent, saving it more than $600 million. For the entire year, the tax cut is expected to boost the company’s profits by $3.7 billion, according to the Goldman Sachs report.”

“Despite its regulatory headaches, Wells Fargo remains massively profitable. The bank reported Friday that although the fine drove down its first-quarter profits by $800 million, it still netted $4.7 billion,” Merle writes.

Read the Post article.

Recent case law and enforcement actions have made clear, contractual language addressing the issue of exclusivity, while obviously relevant, is not always determinative, write E. John Steren and Patricia Wagner for Epstein Becker & Green’s Antitrust Byte blog.

The authors explain: “Instead, and regardless of the contractual language between the parties, the courts and enforcement agencies look at whether the parties operate, in practice, as if the relationship is exclusive or not. Regarding network participation, the enforcement agencies will look at whether competing networks exist and whether network members actually participate in those competing arrangements. For payor contracts, the enforcement agencies will look at whether payors actually contract with competing providers—and if not, why not.

Read the article.

PilieroMazza has posted an on-demand webinar discussing compliance with new laws requiring or providing a preference for the purchase of goods, products, or materials produced in the United States.

President Trump signed Executive Order 13788 on April 18, 2017, aimed at tougher enforcement of the “Buy American Laws” which are those laws requiring or providing a preference for the purchase of goods, products, or materials produced in the United States. Given the Trump administration’s intent for stricter enforcement of domestic preference requirements, government contractors need to stay abreast of the relevant laws and regulations, such as the Buy American Act  and the Trade Agreement Act, the firm says on its website.

Webinar topics include:

• The general requirements of the BAA and TAA
• The applicability of the requirements and exceptions to their applicability
• Tests for determining a product’s country of origin
• Relevant FAR clauses and certifications
• The potential penalties for non-compliance
• Practical tips and strategies for compliance

Watch the on-demand webinar.

Despite Facebook’s efforts to appear up-front in its handling of revelations of misuse of users’ data by Cambridge Analytica — using an approach that has worked in the past — this scandal really is different, and everyone in Silicon Valley knows it, according to Vanity Fair.

“Indeed, the repercussions are massive in both immediate and longitudinal ways,” writes Nick Bilton. “Just a couple of days into the Cambridge crisis, Facebook’s stock has dropped by more than 20 points, which has led its market capitalization to fall by tens of billions of dollars.”

The company and CEO Mark Zuckerberg have been called to testify before Congress and the British Parliament. The FTC and shareholders are pressing legal action, and the company’s plan to expand into China are now less likely.

Read the Vanity Fair article.

The success of the sale of a business often hinges on the chosen form and exit strategy, writes Jeremy S. Piccini of Bertone Piccini LLP in an article on the website of NJBiz.

The benefits of pursuing one strategy over another vary depending on the goals of the business owner, but some of the most important factors of each include tax consequences, third-party costs, and the degree of autonomy that the seller has over the future of their business, Piccini explains.

He discusses a few examples of the ideal target purchasers for a sale, including strategic competitors, private equity buyers, and employee stock ownership plans.

Read the article.