“Simpson Thacher & Bartlett has filed a lawsuit contending that it is entitled to return of rent on unoccupied New York City offices during the COVID-19 pandemic,” reports Debra Cassens Weiss in ABA Journal.

“The breach of contract suit, filed Monday in state court in New York, seeks $8 million in damages, Law.com reports. The suit also seeks a declaratory judgment that the law firm is entitled to rent abatement while the pandemic continues or government mandates continue.”

“According to the suit, Simpson Thacher’s lease has a ‘relatively unique clause’ in the lease for its offices at 425 Lexington Ave.”

Read the article.

“The recently enacted Small Business Reorganization Act (‘SBRA’) is available to help ‘small business debtors’ with debts of no more than $2,725,625 (temporarily increased to $7,500,000 for one year by the CARES Act). Although there are several requirements that must be satisfied in order to qualify as a ‘small business debtor’ under the Bankruptcy Code, courts have recently considered whether an individual debtor must be engaged in “commercial or business activities” at the time of his or her bankruptcy filing. Both courts which have considered the question have answered ‘no,'” reports Megan R. I. Baxter-Labut, Ronald A. Spinner and Marc N. Swanson in Miller Canfield’s resources.

“Two recent bankruptcy cases, one from South Carolina and another from Louisiana, construe this phrase broadly, holding that a person is ‘engaged in commercial or business activities’ for the purposes of the SBRA if the person’s debts arose primarily from business activities (including guaranties of business debt). This is true regardless of whether the person seeks to reorganize an ongoing business or currently conducts business of any kind. If other courts follow suit, more debtors will qualify to file under the SBRA than creditors may have originally expected, making it more important than ever for creditors to fully understand this new ‘subchapter V of chapter 11’ of the Bankruptcy Code.”

Read the article.

“The COVID-19 pandemic has caused cost overruns and project delays that construction owners and contractors could have never imagined before 2020,” write
Elizabeth D. Charnowski and Carl R. Pebworth in Faegre Drinker’s Insights.

“These unanticipated circumstances can create contract application and interpretation challenges for the unwary construction partner. For example, even if a prime contract expressly requires a specific notice period for change orders, parties can waive or circumvent these requirements in a range of ways. Now, more than ever, prudent construction partners must act carefully to avoid unforeseen impacts. That is especially true when project sites shut down due to executive orders and as work later restarts. Many contractors may now be seeking extra time or compensation for these project delays. How do prudent owners and contractors navigate these uncertain circumstances?”

They provide some considerations to bear in mind.

Read the article.

“Although many companies are already revisiting contractual provisions relating to nonperformance, like force majeure clauses, as the coronavirus (COVID-19) pandemic continues to wreak havoc on public health and the economy, other proactive (but less publicized) contractual measures can facilitate early discovery and mitigation of potential nonperformance,” discuss Barbara Murphy Melby and A. Benjamin Klaber in Morgan Lewis’ Tech & Sourcing.

“As part of third-party vendor management or sourcing procedures, it is common practice for many companies to vet their vendors prior to contract signing for financial viability and wherewithal. In some cases, like contracts for critical products or services or larger vendor relationships, companies include contractual provisions that provide for regular information sharing regarding a vendor’s financial status and specific rights, including step-in and termination, if the financial status materially adversely changes. While these types of provisions are not new, in light of the impact of COVID-19 on supply and demand for certain products and services and the corresponding potential impact on certain critical or strategic vendors, they are gaining more attention from third-party vendor management and sourcing organizations. Companies, which previously looked to rights and remedies such as non-exclusivity and early termination without penalty as sufficient to address the potential risk, increasingly are focused on financial viability provisions to allow for early warning of a potential problem and early action, if necessary, to avoid disruption.”

Read the article.

“Recently, the National Labor Relations Board (NLRB), overruling an important Obama-era decision, held that employers do not have a pre first-contract duty to bargain before disciplining employees in a manner consistent with an existing policy or practice. The Board’s Care One at New Milford unanimously overruled Total Security Management Illinois 1, LLC, and will be applied retroactively to all cases pending before the NLRB,” write Anne Marie Buethe and Matthew C. Tews in Stinson’s News & Insights.

“In Care One, an employer suspended three employees and discharged another pursuant to its disciplinary policy. The employees were newly union-represented, but not yet covered by a collective bargaining agreement (CBA). The employer did not provide the union with prior notice or an opportunity to bargain. The union brought an unfair labor practice charge claiming that the employer violated the Total Security rule. The Board’s 2016 Total Security decision had held that an employer must provide a newly certified union with notice and an opportunity to bargain before imposing serious discipline (i.e., suspension, demotion, discharge), during the time after the union was certified but before the parties had entered a first CBA if the imposition of such discipline involved any discretion.”

Read the article.

“A Ninth Circuit opinion handed down in January affirmed the First Amendment principle that the right of public access to new court filings attaches as soon as the clerk receives them,” writes Bill Girdner in Courthouse News Service.

“But during the preceding oral argument at the Ninth Circuit’s Pasadena courthouse, Judge Mary Murguia asked a natural question: ‘Doesn’t Ventura County have to docket those physical files first?'”

“Those procedures are part of intake, the actual filing of a legal document, not the later work of putting that filing into the court’s docket. Rulings in both cases — one against a clerk in California, the other against two clerks in Virginia – affirmed a First Amendment right of access at the point of the clerk’s receipt. But both cases also involved courts based on paper, a medium that is fast disappearing in the rearview mirror of history.”

“So the same question will be asked by a judge in the future about a digital court: ‘Doesn’t the court need to docket those electronic files first?’”

Read the article.

“Prenuptial agreements get litigated all the time in probate proceedings,” warns Juan C. Antúnez  in Stokes McMillan Antúnez Martinez-Lejarza P.A.’s Blog.

“The challenge in these cases (as in all inheritance litigation) is to not let yourself get caught up in your client’s wishful thinking. Just because a certain outcome seems really unfair doesn’t mean your probate judge will (or should) rule in your favor. This may seem like an obvious point, but you’d be surprised how hard it can be to not fall into this trap in real life.”

Read the article.

“As is common with a blockbuster drug, AbbVie’s Humira faced an antitrust challenge from third-party payers,” writes Richard D. Kelly in Oblon’s Publications.

“The third-party payers filed an antitrust action claiming AbbVie’s patent strategy stifled competition by forcing prospective competitors to settle on terms allowing Humira to enjoy a monopoly long after patent protection should have ended. The complaint alleges that AbbVie cornered the market for Humira and its biosimilars by obtaining a thicket of patents which allowed it to gain the market power it needed to prevent competitors from entering the U.S. market (violation of Sherman Act section 2). It used this market power to enter into settlement agreements with potential competitors to keep their products out of the U.S. market in return for early launch dates in Europe, also an important market which they termed a pay-for delay and market division (violation of Sherman Act section 1). ”

Read the article.

There are some nuanced—and frequently sticky—issues regarding third-party products and how they can be resolved, discuss Barbara Murphy Melby and A. Benjamin Klaber in Morgan Lewis’ Tech & Sourcing.

“The indemnifying party commonly takes the position that it should not be responsible for infringement arising from combinations with other products or services. But what if the indemnifying party delivers or provides access to third-party products (e.g., software) as part of the overall design or relationship? Or what if certain ‘third party’ products are produced or distributed by one of the indemnifying party’s affiliates? Or what if the indemnifying party provides documentation or instructions that specifically recommend third-party products as compatible with the underlying technology? Or what if specific third-party products are necessary for the operation of the underlying technology? Under these circumstances, the indemnifying party’s core argument—that it has no control over third-party products or services—requires careful consideration.”

Read the article.

“The first reported substantive ruling by a judge sitting in Illinois on the legal implications of whether COVID-19 and the resulting governmental shelter-in-place orders relieve a tenant’s obligation to pay rent pursuant to a force majeure provision in a commercial lease agreement was entered by U.S. Bankruptcy Judge Donald Cassling on June 3, 2020,” write Paul W. Carroll and Daniel E. Crowley in Gould + Ratner’s Publications.

“The ruling in In re Hitz Restaurant Group, LLC, (N.D. Ill., Case No. 20-05012) came in response to a landlord’s motion to force a restaurant tenant to come current on unpaid post-petition rent. The court sided with the tenant and reduced its post-petition rent obligation by 75%.”

“The ruling already has garnered widespread attention as a potential bellwether on the applicability of force majeure clauses in commercial leases.”

This article provides five to know about this decision.

Read the article.

“The US Court of Appeals for the Fifth Circuit held that, under Texas law, a plaintiff can sustain an action for trade secret misappropriation even if the plaintiff voluntarily communicated the alleged trade secrets to the defendant,” writes David Mlaver in McDermott Will & Emery’s IP Update Trade Secrets.

“HAT Contract hired Hoover Panel Systems to design and manufacture a power beam for desks in an open office environment. The parties engaged in oral negotiations that culminated in a written contract, which provided that ‘any . . . proprietary information shall be considered confidential and shall be retained in confidence by the other party.’ The contract also provided that the ‘parties agree to keep in confidence . . . all information disclosed by the other party, which the disclosing party indicates is confidential or proprietary or marked with words of similar import.’ Hoover developed a prototype and forwarded it to HAT, but never marked any information as confidential. HAT approved the prototype and placed several orders, although far fewer than Hoover expected. Hoover discovered that HAT had sent the prototype to at least one overseas manufacturer and was using it to manufacture products similar to those Hoover manufactured.”

“Hoover sued HAT in state court. HAT removed to federal court. Hoover then amended its complaint to recite causes of action for breach of contract, trade secret misappropriation, promissory estoppel, quantum meruit and unjust enrichment. HAT asserted affirmative defenses of waiver and ratification and a counterclaim of bad faith, but the district court declined to consider the counterclaim as untimely filed. HAT moved for summary judgment on all of Hoover’s claims and its waiver and ratification defenses, which the district court granted. Both parties appealed.”

Read the article.

“Once parties agree to arbitrate, courts generally defer to the arbitrator’s judgment regarding resolution of a dispute,” discuss Jim Archibald, Amandeep S. Kahlon & Luke D. Martin in Bradley’s BuildSmart Arbitration. “The prevailing approach in many states is to not set aside an arbitration award unless the arbitrator clearly exceeded his or her authority and to exercise every reasonable assumption in favor of the validity of an award. The Minnesota Court of Appeals recently confirmed this view in Faith Technologies, Inc. v. Aurora Distributed Solar LLC.”

“In that case, the court upheld the arbitrator’s award for equitable relief, despite the parties’ contract prohibiting the arbitrator from providing any equitable remedy. The court found the parties’ stipulation to arbitrate all disputes effectively waived the contractual prohibition on equitable relief, especially where the equitable claim for abandonment was pled and not objected to until after the final award.”

“In 2016, Aurora hired Biosar to design and construct solar-power generators for a project in Minnesota. Biosar hired Faith Technologies to provide labor, materials, and services for the project. The EPC contract between Aurora and Biosar permitted arbitration to resolve disputes arising out of the contract but prohibited the arbitrator from ‘awarding nonmonetary, injunctive, or equitable relief.'”

Read the article.

“E-commerce and tech behemoth, Amazon, has filed a lawsuit against the former vice president of marketing for its Amazon Web Services division, Brian Hall, alleging that his new role at Google Cloud violates the terms of his non-compete agreement,” report Peter S. Lubin and Patrick Austermuehle in Lubin Austermuehle’s Chicago Business Litigation Lawyer Blog.

“In its complaint, Amazon alleges that Hall’s employment with Google threatens to cause irreparable harm and risks exposing valuable competitive information to one of its biggest rivals. Amazon seeks both money damages and injunctive relief, requesting that the court enjoin Hall from working for Google for the remainder of the 18-month non-compete period set forth in the agreement.”

“This lawsuit is the latest in a series of lawsuits filed by Amazon to enforce non-compete clauses in employment contracts. In 2017, Amazon sued another former vice president who left Amazon Web Services to take a job with a Seattle-area software company but dropped the suit shortly after filing it. In 2019, Amazon filed a similar suit against a former Amazon Web Services sales executive after he too left the company to take a job with Google Cloud. A judge ultimately agreed to partially limit certain aspects of that employee’s role at Google but did strike down certain portions of the restrictive covenant as ‘unreasonable’ and took Amazon to task for taking a one-size-fits-all approach to its non-compete agreement. This latest lawsuit comes after Washington state enacted a new law last year that severely restricted the use of non-compete agreements within the state.”

Read the article.

“In Lun v. Lun 2020 BCSC 871 the court considered whether the sale of the family insurance business, as ordered by the court, provided the court with jurisdiction to order the husband to sign a Non-Compete Agreement, as part of the sales contract, in circumstances where the husband resisted signing,” reports Georgialee Lang in Lawdiva’s Blog.

“The parties owned a business that sold commercial insurance products and motor vehicle insurance. The wife brought an application to court for the sale of the business, which was contested. The court granted the order sought, with joint conduct of sale to the parties.”

“A condition of the sale was that Mr. Lun sign a non-competition agreement that would prevent him from being involved in the insurance industry for a period of two years.”

“Mrs. Lun brought an application asking the court to order Mr. Lun to agree to the non-compete term in the contract. Mr. Lun opposed the application as he had been in the insurance industry for 20 years and wished to continue in the industry.”

Read the article.

“In recent months, the Food and Drug Administration (FDA) has issued a record number of Emergency Use Authorizations (EUAs) under Section 564 of the Federal, Food, Drug, and Cosmetic Act (FDCA). With a large number also pending, this review pathway is becoming almost common for a wide range of products, predominantly devices, although drugs and biologics are also eligible,” reports Jeffrey K. Shapiro in Hyman, Phelps & McNamara’s FDA Law Blog.

“In this light, some questions of law and policy already settled regarding 510(k) submissions or premarket approval (PMA) applications may need to be re‑analyzed to determine if the answer is the same in the EUA context. With the COVID emergency likely to continue for some time, these questions will not soon disappear.”

“The question of whether a company may lawfully advertise a device with an EUA pending (prior to issuance of the EUA)? For more than 40 years, FDA’s policy has been that a device with a 510(k) pending may be advertised (promoted) prior to clearance.”

Read the article.

“Government solutions provider Akima has named Barbara Doherty vice president of contracts and procurement to oversee the company’s corporate contracts, subcontracts and purchasing operations,” reports Ryann England in Washington Exec’s Exec Moves.

“Doherty previously served as corporate vice president of contracts for PAE, where she was responsible for contracts corporatewide as well as the day-to-day management of the National Security Solutions business unit. She also led the Global Supply Chain operation for PAE, responsible for $1 billion in subcontracts and procurement.”

Read the article.

“The Huffington Post’s recent article entitled ‘A Guide To Estate Planning During The Coronavirus Pandemic’ says that almost everyone should have an estate plan—even if there’s no major health threat.” If your clients don’t have one, right now is a great time to put it together, posted by Law Office of Janet L. Brewer’s blog.

“In the COVID-19 pandemic, the two most critical documents to have are medical and financial powers of attorney.” You should name someone to do the banking or make medical decisions, if they are quarantined in their home, admitted to the hospital, or become incapacitated. When these are in place, the next step is to create a comprehensive estate plan. This article lists the required documents.

Read the article.

“We’ve all seen, or perhaps been assaulted by, a surfeit of articles about force majeure clauses and how all of our agreements should include one. Other pundits have gotten way ahead of this one by explaining how we will have a better world if the advice to include such clauses would be taken by all. They’ve noted that very few agreements with a force majeure provision have covered the kind of closures we have experienced and are still experiencing. But, what we’ve not seen is much understanding that there is nothing special about a ‘force majeure’ clause: it is no more than another risk-shifting device,” writes Ira Meislik in Meislik & Meislik’s Retail Real Estate Law blog.

At the beginning of this month, a Bankruptcy Court for the Northern District of Illinois published an opinion about one such force majeure clause in a restaurant lease. Consistent with the advice we are seeing from all corners of our industry, the clause (according to the court, and correctly so) covered the restaurant’s closing because of COVID-19 restrictions imposed by Illinois’ governor. Read the lease’s clause for yourself:

Read the article.

“The Fourth Court of Appeals of Texas overturned a jury verdict awarding HouseCanary, Inc. (“HouseCanary”) $740 million in damages for trade secret theft and fraud against Title Source, Inc., now known as Amrock,” reports Mena Gaballah, PharmD and Joshua M. Rychlinski in Crowell Moring’s Trade Secrets Trends.

“Amrock and HouseCanary are competitors in the real estate sector. Amrock provides title insurance, property valuations, and settlement services in real estate transactions. HouseCanary is a real estate analytics company that developed software to determine property values. HouseCanary agreed to provide this software to Amrock, and, according to HouseCanary, Amrock reversed engineered it. After the relationship between the two broke down, Amrock sued HouseCanary for breach of contract and fraud, and HouseCanary counterclaimed for breach of contract, fraud, misappropriation of trade secrets, among other claims. The jury found for HouseCanary, awarding it compensatory and punitive damages as well as attorney’s fees.”

Read the article.

“Now, more than ever, clients and their advisors need to revisit contract forms on which they may have been relying for years. While many of us have lived through times that required certain adjustments in how we viewed contractual obligations — recessions, wars, oil embargoes, natural disasters, 9/11 — none of these events had the widespread and long-lasting impact that the current COVID-19 pandemic is having. None of these events shut down the U.S. economy and impacted global supply chains across every industry in the manner we are now experiencing,” warns Lori S. Smith in Taking Care of Business’s Contracts.

“With this in mind, there is a need to figure out what the ‘new normal’ will look like for contract negotiations in a post-pandemic world. Business professionals need to now anticipate more widespread disruption than we could have ever before imagined. It isn’t just force majeure clauses or material adverse effect provisions, as these will likely add pandemics and government shutdowns to their ever-growing list of contemplated risks, if they were not already expressly covered. And it is not clear, at least in the near-term, whether a resurgence or mutation of COVID-19 or the emergence of another virus can truly be seen as unforeseeable in a post-COVID world. The issues are much more fundamental to the approach that parties may take in negotiating contracts. Commercial contracts between purchasers, vendors, distributors, licensors and licensees will need to evaluate allocation of risk from both sides and come to a new happy medium that all can live with in an ever-evolving world. While parties should review their standard contracts in their entirety,” he provides some key provisions to think about.

Read the article.