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ACC Austin 2015 CLE/Golf/Spa Event

May 8, 2015

Juries, Trials and Tribulations

Patrick Richter

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• Attorney-Client Privilege

• Attorney Work Product

• Internal Investigations

• Jury Trial Myths

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ATTORNEY-CLIENT PRIVILEGE:

Confers a privilege on the client “to refuse to disclose, and to prevent another from disclosing, a confidential communication between client and lawyer…”

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• Safeguard confidential relationship between

clients and attorneys.

• Promote full and open discussion of the facts

and strategies.

Purpose

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• Attaches to a confidential communication

• Generally bars discovery of the primary legal

communication irrespective of whether it

includes unprivileged material.

• Attaches to any legal advice given in the course

of the attorney-client relationship.

• A corporate client can claim the privilege.

Scope

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• The attorney-client privilege does not apply

where the attorney:

• acts as a negotiator for the client,

• gives business advice,

• acts as a business agent.

• Knowledge which is otherwise not privileged

does not become so merely by being

communicated to an attorney

Acting as an Attorney

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• The attorney-client privilege generally applies to

communications by any corporate employee regardless

of position:

• when the communications concern matters within the

scope of the employee’s corporate duties, and

• the employee is aware that the information is being

furnished to enable the attorney to provide legal

advice to the corporation.

• No all-encompassing test has been established for

application of the attorney-client privilege to

corporations.

Preserving Attorney-Client Privilege in the

Context of In-house Counsel

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ATTORNEY WORK

PRODUCT DOCTRINE

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• Not a privilege but a qualified immunity

protecting from discovery documents and

tangible things prepared by a party or his

representative in anticipation of litigation.

• Protects an attorney’s mental impressions and

opinions.

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• Prevents exploitation of a party’s efforts in

preparing for litigation.

• Forces each side to do their own work.

Purpose

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• The doctrine may be applied to documents created by

non-attorneys so long as they are prepared by or for

another party or its representative and they are created

in anticipation of litigation.

• Except where a document would have been generated in

the normal course of business even if no litigation was

anticipated, the work product doctrine can reach

documents prepared because of litigation even if they

were prepared in connection with a business transaction

or also served a business purpose.

Scope

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• In light of the nature of the document and the

factual situation in the particular case, the

document can be fairly said to have been

prepared or obtained because of the prospect of

litigation.

“Prepared in anticipation of litigation”

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• Does not consider whether litigation was a

primary or secondary motive behind the creation

of a document.

• Rather, it considers the totality of the

circumstances and affords protection when it

can fairly be said that the document was created

because of anticipated litigation, and would not

have been created in substantially similar form

“but for” the prospect of that litigation.

“Because of” Standard

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• The principal difference between the attorney-

client privilege and the work product doctrine, in

terms of the protections each provides, is that

the privilege cannot be overcome by a showing

of need, whereas a showing of need may justify

discovery of an attorney’s work product.

Comparison

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• Written Communications (e-mail, memoranda)

• General boilerplate.

• Attorney Communication: “Request for facts

so that legal advice can be given.”

• Employee Communication: “For the purpose

of receiving legal advice.”

• Memoranda: “Counsel is addressing the

following legal issues.”

Best Practices

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• Make a Record

• Legal considerations of subject matter

“created in anticipation of litigation.” (Why?)

• Identify rationale why each recipient needed to

receive memorandum.

• When acting as lawyer don’t use non-legal

component of title.

Best Practices (Cont.)

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• Don’t mix legal/non-legal topics in same

memorandum.

• Don’t assume privilege because attorney copied

on communication or simply in attendance at

meeting.

Best Practices (Cont.)

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Checklist for every communication you initiate,

respond to, or are copied on:

1. Is the primary purpose of communication to

offer or receive legal advice?

2. Who received and responded to

communication?

3. How can privilege be preserved?

Checklist for Communications

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• Many of you serve multiple roles.

• Courts are skeptical of assertions of privilege by

counsel with legal and business responsibilities.

• A company can shelter counsel's advice only

upon a clear showing that the counsel gave

advise in a professional legal capacity. In re

Sealed Case, 737. F.2d 94, 99 (D.C. Cir. 1984).

In-House Counsel with Business and Legal

Responsibilities

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• Make clear statements of privilege on notes and

memos

– To and from, watch cc’s; consider content.

• At the outset whether the attorney will have a

business or legal role (or both).

• Separate business from legal advice.

• Consider the pros and cons of written versus

oral communication.

• Consider content of your internal notes.

Recommendations for Protection of

Communications

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• Consider whether it is important for investigation

to be privileged, impacts who conducts it, even

in-house

• Is there a reason to use outside counsel

• Is there a reason to involve counsel (in-house or

outside) early in the process

• Make sure if an attorney does interviewing,

he/she gives Upjohn warnings – who they

represent and the purpose of the interview

Issues to Consider in Conducting an

Internal Investigation

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• Of course, your employment decisions are not reviewed inadvance by a jury

• Most employment laws provide for jury trials

• Juries decide the facts of a case after listening to competing stories from the parties

• The judge gives them the law to apply to the facts and reach a verdict

• So, when making important employment decisions, especially discharge decisions, prudent in-house counsel and HR professionals must ask themselves

JURY TRIALS AND TRIBULATIONS

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Key Question for Company

HOW MIGHT A JURY VIEW MY

DECISION?

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Fact or Fiction?

1. Jurors are stupid

2. You can count on stereotypes when

selecting a jury

3. Jurors don’t care about the law

4. Jurors are always pro-plaintiff

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Popular Concept #1

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FALSE!

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• We sometimes joke about the central jury room,

but consider:

– Juries, particularly in federal court, come from

broad area

– “education” ≠ smart or common sense

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• Jurors usually Have the Ability to Detect B.S.

– But they can be fooled.

• Overwhelmed by minutia

• Distracted by mudslinging

• The judge affects the case by evidentiary rulings

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YOU CAN COUNT ON STEREOTYPES WHEN SELECTING A JURY

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FALSE!

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Who are the jurors?

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Where do they come from?

• State court - citizens of county where court sits

• Federal court in Austin – citizens from Austin/Travis

County and surrounding counties Bastrop, Blanco,

Burleson, Burnet, Caldwell, Gillespie, Hays, Kimble,

Lampasas, Lee, Llano, Mason, McCulloch, San

Saba, Washington, and Williamson

• Randomly selected from Texas voter registration,

drivers’ license, and state-issued adult identification

records

• All ages and all walks of life

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Popular Concept #3

JURORS DON’T CARE

ABOUT THE LAW

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TRUE!

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What’s the Law?

• How much does it really matter to jury?

• Survey of NJ jurors showed 75% did not pay

any attention to the law the judge read to them

before they began their deliberations

• The juror’s idea of justice is based on juror’s

sense of “fairness”

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Key Question for Jurors

• Jurors ask themselves many questions while

deliberating, but the key question is:

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How did the company treat the plaintiff?

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“Fair” Treatment

• Did the company treat the employee fairly under

the circumstances?

• “Oh, we didn’t think it was age. The man just

wasn’t done right.” (Juror in age case.)

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What’s Fair?

• Clear rules and performance standards

• Communicated to employees

• Prefer written policies

• Chance to turn things around (performance

improvement plans)

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What’s Fair?

• Progressive discipline

• Consistency under similar circumstances

• Respect privacy (investigator, private e-mails,

surveillance)

• More leeway for long-term employees

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What’s Not Fair?

• Discharge without just cause

• Discharge without fair notice

• Discharge without “due process”

– Follow company policies

– Give employee chance to tell his or her side ofstory

• Discharge of long-term employee for pettyoffense

• Ignore company policies (e.g. sexualharassment)

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Other Factors

• Do you have a “golden thread?”

• How credible is your story?

• Company’s reputation.

• Witness demeanor (“Knew all the answers right away.

He was too slick.” )

• How good is your documentation? Complete?

Accurate? (Personnel files are the bible.)

• How credible are your attorneys?

• The McGuffin – What is central focus?

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• Legal theories that may carry weight on summary

judgment will not impress jurors

• Business judgment rule – jurors don’t relate

• Employment-at-will doctrine – Never quote this

• Boorish conduct is not unlawful harassment –

Jurors have a limit

• Equal opportunity harasser – this is a legal

argument; juries expect you to “jettison the jerk”

Legal Theories

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Popular Concept #4

• JURORS ARE ALWAYS

PRO PLAINTIFF

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FALSE– THEY

ARE “PRO-

FAIRNESS”

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Yes, Large Corporations are at a disadvantage.

You must humanize them.

• Individual(s) make the decisions.

– So what can you do to help?

• Make sure he’s not a jerk

• If he’s a jerk, make you or someone else the

screener (unless you’re a jerk)

• Cat’s Paw

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Who Caused

This Mess?

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Should We Find for Plaintiff

or Defendant?

• This is also almost entirely an emotional decision:

– Who caused this mess?

– Who do we like?

– Who is telling the truth?

– Bias.

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Who Caused This Mess?

Advice and Counsel

• Was the plaintiff given every fair chance to

succeed?

• Were expectations fair, reasonable, and

communicated?

• Can we legitimately ask, “What else were we

supposed to do?”

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Trial strategy

• Develop a detailed story that makes sense – do

not just refute the plaintiff’s story

• Stories require logical, believable motivations as

explanations

• Stories must be consistent with the e-mails and

other documents

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Trial Strategy (cont.)• Example:

– The story is not:

• “Why was the plaintiff fired?”

– The story is:

• “Why did the plaintiff behave in a way that gave us

no choice but to fire him?”

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Trial Strategy (cont.)• Warning: While developing this story, trial counsel must

still preempt the plaintiff’s story

• Do not focus on your story only

• Understand the plaintiff’s story too

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Who Is Telling The Truth?

• Two goals of the plaintiff’s cross-examination:

– Develop helpful testimony;

– Show the jury the plaintiff’s story cannot be trusted.

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Who Is Telling The Truth? (cont.)

• Two ways to show the plaintiff cannot be trusted:

– Specific instances of contradictory or false statements;

– Plaintiff’s story is just unbelievable.

Credit Facilities

Reps, Covenants and Breaches – Oh my!Practical pointers for managing on-going credit facility requirements

Sally M. Russell

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Even though a revolving credit facility may

appear to be contently running on auto-

pilot, there is a lot going on underneath the

surface to be managed.

Credit Facility

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• “Bringing down” representations and

warranties.

• Continuous covenant compliance.

• Dealing with defaults.

The Three Dangers

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• After the closing, advances are usually initiated with

a borrowing notice and sometimes even with a

simple phone call followed up in writing.

• As a condition precedent to the advance, generally,

most representations and warranties will be

“brought-down” to the date of any advance or draw-

down.

– The reps & warranties will need to be true and correct as of the

date of the advance to the same extent as on the closing date.

Representations & Warranties

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• Be sure the right hand is talking to the left.

– Officers in charge of requesting advances should be made

aware that the request for an advance includes a deemed (or

explicit) representation that the conditions precedent for the

advance have been satisfied (i.e., reps and warranties are true

and correct and no defaults or events of default have occurred).

• Compliance with covenants doesn’t always mean

reps and warranties are all still true and correct.

Representations & Warranties

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• Information Covenants– i.e., obligation to provide financial statements and notices, etc.

• Affirmative Covenants– i.e., obligation to comply with laws, maintain insurance, preserve

existence, etc.

• Negative Covenants– i.e., prohibitions against certain actions like sale of assets,

creation of liens or incurrence of additional debt, etc.

• Financial Covenants– i.e., ratios calculated periodically based on the company’s

current financial picture as an indicator of its credit strength.

Covenant Compliance

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• Information & Affirmative Covenants

– Consider preparing internal checklists and setting calendar

reminders for obligations that are due periodically, especially for

tasks that do not necessarily occur quarterly.

– Consider making an easily searchable list of events that trigger

additional obligations.

Covenant Compliance

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• Negative Covenants

Check these regularly, but especially when:

– new transactions are being evaluated;

– there are changes in your accounting policies;

– an internal restructure is contemplated.

Covenant Compliance

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• Financial Covenants

– Parties responsible for calculating the financial ratios should pay

careful attention to the definitions of terms involved in the

calculations, including any tailored carve-outs. For example:

• GAAP – as defined under a credit agreement could be “frozen”

(GAAP as it stands on the date of the agreement) or “rolling” (GAAP

as it stands on the date of a determination).

• Capital Expenditure – consider whether the definition includes

acquisitions.

Covenant Compliance

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• Financial Covenants

– The impact to these covenants should be part of the discussion

when new transactions are proposed.

– Communication with financial counterparts for early signs of any

financial covenant default is key.

Covenant Compliance

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• When is a default not a “default”?

– Depending on the nature of the obligation, some defaults will not

trigger an event of default giving rise to the lenders’ rights unless

they remain uncured for a designated period of time or following

notice.

– Lenders may be willing to negotiate a waiver in advance with

respect to a technical default or potential default.

– Although all events of default are treated equally under a credit

agreement, lenders may be willing to waive or enter into a

forbearance agreement with respect to minor infractions in lieu of

exercising their contractual remedies.

Default

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• If any event of default occurs and is continuing…

– Generally, an event or condition that gives rise to an event of

default must be continuing/existing at the time a lender declares

an event of default in order for it to exercise its remedies.

Default

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• A credit facility has on-going requirements that need

to be managed even when you are not the one with

all the information.

• Representations and warranties should be

considered when requesting new advances.

• Covenant compliance should be part of an on-going

conversation.

• Promptly cure defaults that are capable of cure or

negotiate with lenders alternatives to an exercise of

remedies.

Conclusion

Do I Really Have to Pay for That? Understanding Claims for Off-the-Clock Work

Stephanie L. Perkins

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The Workforce in 1980

What is work?

© 2014 Jackson Lewis P.C.

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The Workforce Today

How much are your

employees working?


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Timekeeping Vulnerabilities

• Meals and breaks

• Accurately measuring and recording hours

worked

• Rounding

• Smartphones


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Key Take-Away # 1

You need a complete understanding of

everything that an employee does:

• from the moment he or she arrives at the

work site until that employee is on the clock;

• from the moment the employee is off the

clock until he or she leaves the premises; and

• away from the work site but related to work.


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Pre-Shift & Post-Shift Activity

• Required early arrival

• Transportation in company

vehicle

• Security screening

• Pre-shift meeting

• Shift exchange

• Gathering and storing

equipment

• Putting on or taking off

work clothing or gear

• Turning computer on or off

• Logging into or off of

computer network

• Loading computer

applications


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After-Hours Work Activity

• Paperwork

• E-mails

• Studying

• Remote network access

• Telephone calls

• Checking voice-mails

• Travel

• Training

• Off-site meetings

• Receiving work schedule or instructions

• Loading up or preparing a vehicle

• Potential claim for compensable commute


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“On Call” Time

Factors include:

• Requirement to stay on the employer’s premises

• Restrictions on the employee’s location

• Frequency of calls received

• Response time

• Ability to trade on-call shifts with coworkers

• Ability to engage in personal activities


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Key Take-Away # 2

Your time records, and the wage payments

resulting from those records, are probably not

as accurate as you think they are.


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Meals And Breaks

Meals of 30 minutes or more: not compensable

Breaks of 20 minutes or less: compensable

But…• Automatic deduction

• Requirement to remain on premises

• Interruptions

• Fully relieved of duty?

• Returning to work early

• Do your workers ever eat lunch at their desk?


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Recording Hours Worked

Practices vulnerable to challenge:

• Supervisors editing time records

– What checks and balances are in place?

– Does the system record a reason for the change?

– Does the employee have an opportunity to review

changes?

• Time-keeping through exception reporting

• Paper time sheets (i.e., 8-5, 8-5, 8-5 . . . )


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Recording Hours Worked

Practices vulnerable to challenge:

• Where are the time clocks in relation to where

the first compensable work activity occurs?

• Requiring pre-approval for overtime

• How do you track time employees spend

performing work away from the workplace?


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Is The Time De Minimis?

• In some circumstances, the law may allow

employers not to pay for insignificant periods of

time worked beyond the scheduled working

hours, though courts reach varying conclusions.

• Factors to consider:

– Administrative difficulty of tracking the time

– Aggregate amount of time involved (≤10 mins. / day)

– Regularity of the occurrence (daily v. unpredictable)


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Rounding

• Nearly everybody does it.

• Many industries have been doing it since before

Congress passed the Fair Labor Standards Act.

• The U.S. Department of Labor expressly

acknowledges that rounding may be permissible

in increments of 5, 6, or 15 minutes.

• So what’s the problem?


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Rounding

DOL’s regulation on rounding provides:

“Presumably, this arrangement averages out so that

the employees are fully compensated for all the time

they actually work.”

“[T]his practice of computing working time will be

accepted, provided that it is used in such a manner

that it will not result, over a period of time, in failure

to compensate the employees properly for all the

time they have actually worked.”

29 C.F.R. § 785.48(b).


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Rounding

Is your rounding practice truly neutral?

• Do employees almost always clock in before the

shift starts, within the rounding window?

• Do employees almost always clock out after the

shift ends, within the rounding window?

• Do employees engage in work between clocking

and the designated shift start or end?

• Would your labor cost more without rounding?


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Key Take-Away # 3

It is your responsibility to know what work your

employees perform and to pay them correctly

for that work.


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Isn't that case resolved yet?Tips for moving from a deal to a

signed settlement agreement

Scott D. Powers

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"The vast majority of cases do settle — from 80 to 92

percent by some estimates . . ."Jonathan Glater, New York Times, Aug. 7, 2008

"Oft-quoted figures estimating settlement rates between 85

and 95 percent are misleading.”Marc Galanter & Mia Cahill, Stanford Law Review, 1994

"Whatever uncertainty exists about settlement rates,

settlement is the modal civil case outcome."Ted Eisenberg and Charlotte Lanvers, Scholarship@Cornell Law: A Digital

Repository, March 1, 2009

"Most civil cases are settled by mutual agreement between

the parties."American Bar Association, Division for Public Education

Most cases settle?

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But the Texas Bar Exam does not cover settlement

agreements

Or does it?

"Settlement agreements are controlled by rules of

interpretation and construction applicable to contracts." Nevarez v. Ehrlich, 296 S.W.3d 738, 742 (Tex. App.—El Paso 2009, no pet.)

Corollary and useful rule of thumb:

The settlement agreement should reflect the agreement of

the parties.

Most cases settle

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Four questions

Does the agreement reflect things we agreed to?

Does the agreement leave out things we agreed to?

Do I understand everything in this agreement?

Is a third-party with no background in this dispute going to

understand everything in this agreement?

Drafting the Agreement

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The goal:

Sign the deal that the business has approved

The problem:

Lawyers are constitutionally wired to argue and to try to win

The solution:

A

B

S

Y

…

Negotiating the settlement agreement

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The goal:


The problem:


The solution:

Always

B

S

Y

…


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The goal:


The problem:


The solution:

Always

Be

S

Y

…


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The goal:


The problem:


The solution:

Always

Be

Saying

Y

…


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The goal:


The problem:


The solution:

Always

Be

Saying

Yes

…


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The goal:


The problem:


The solution:

Always

Be

Saying

Yes

… IF


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The goal:


The problem:


The solution:

Always

Be

Saying

Yes

… AND


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The goal:


The problem:


The solution:

Always

Be

Saying

Yes

… BUT


100

Think carefully about the boilerplate Effective as of the Effective Date, the ACME Corporation forever fully, finally and

forever releases, settles, remises, acquits, relinquishes, and discharges the XYZ

Corporation, and all of its current and former officers, directors, principals, shareholders,

partners, constituents, members, associates, employees, agents, indemnitors, insurers,

attorneys, and legal representatives, and each of their predecessors, successors, and

assigns, for and from any and all actions, causes of action, suits, debts, dues, sums of

money, accounts, reckonings, bonds, bills, specialties, covenants, contracts,

controversies, agreements, promises, variances, trespasses, damages, judgments,

extents, executions, liabilities, obligations, licenses, rights, claims, losses, offsets,

warranties, costs, fees, penalties, expenses, rights of action, and demands whatsoever,

whether or not currently asserted, known, suspected, existing, or discoverable, and

whether based on federal, state, foreign law, or otherwise, and whether based on

contract, tort, statute, law, equity or otherwise, that the ACME Corporation ever had,

now has, or hereafter can, shall, or may have, from the beginning of the world to the

end of time, that, in full or in part, concerns, relates to, arises out of, or is in connection

with the matters alleged in the Complaint or any other matters at all.


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105


















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Who are all these people?


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Who are all these people? And what did they do?


108

Think carefully about the boilerplate

"In this Agreement, 'XYZ Corporation' means the XYZ Corporation, and all of its current

and former officers, directors, principals, shareholders, partners, constituents, members,

associates, employees, agents, indemnitors, insurers, attorneys, and legal

representatives, and each of their predecessors, successors, and assigns."

"Each person executing this agreement represents and warrants that he or she has the

full authority to execute the documents on behalf of the person or entity each

represents."

The CEO signs "for XYZ Corporation"

Have you opened up a path to a fraudulent inducement

claim?


109

Speaking of fraudulent inducement…

You need an integration clause:

"This Agreement sets forth the entire understanding and agreement of the Parties

with respect to the subject matter of this Agreement and supersedes all prior

agreements, understandings, negotiations, and communications, whether oral or

written, with respect to such subject matter."

But:

Do you need to modify the boilerplate?

What if there is an ongoing business relationship?

And you also need a disclaimer of reliance:

"Pure merger clauses, without an expressed clear and unequivocal intent to

disclaim reliance or waive claims for fraudulent inducement, have never had

the effect of precluding claims for fraudulent inducement."

Italian Cowboy Partners, Ltd. v. Prudential Ins. Co., 341 S.W.3d 323, 334 (Tex.

2011)


110

Speaking of fraudulent inducement…

This is not enough to disclaim reliance:

"A acknowledges that neither B nor B's agents, employees or contractors have made

any representations or promises with respect to this Agreement except as expressly

set forth herein."

The words rely or reliance had better be included:

" We conclude that the only reasonable interpretation of the contract language at

issue here is that the parties to this lease intended nothing more than the provisions

of a standard merger clause, and did not intend to include a disclaimer of reliance on

representations . . . ."

Italian Cowboy Partners, Ltd., 341 S.W.3d at 334


111

Other issues to consider

Agreements to agree

Are term sheets binding?

Martin v. Black, 909 S.W.2d 192 (Tex. App.—Houston [14th Dist.] 1995, writ

denied) (fact issue where term sheet included the statement that "the

parties' understandings are subject to securing documentation satisfactory

to the parties")

Hardman v. Dault, 2 S.W.3d 378 (Tex. App.—San Antonio 1999, no pet.)

(inclusion of phrase "Final documents to be signed by 1–1–97" did not

create fact issue; term sheet enforceable)

What if your agreement contemplates other future agreements?

"When an agreement leaves essential (or material) matters open for future

negotiation and those negotiations are unsuccessful, however, the agreement 'is

not binding upon the parties and merely constitutes an agreement to agree.'"

General Metal Fabricating Corp. v. Stergiou, 438 S.W.3d 737, 744 (Tex. App.—Houston [1st

Dist.] 2014, no pet.)


112

Other issues to consider

Arbitration or other alternative dispute resolution for future

disputes

Choice of venue for future disputes


113

Thank you!

If You Don’t Have Anything Nice to Say…Avoiding Employment-Related Defamation Claims

Julie Tower

115

Why rise in employment-related defamation

claims?

• Big damages, including punitive damages

• Gives plaintiffs opportunity to present inflammatory and

prejudicial evidence (e.g., malice, company

value/earnings, how plaintiff’s life ruined)

• Revenge against supervisor who can be personally liable

• Likely to get to the jury; factual issues make summary

judgment difficult

116

Elements of Defamation

The basics:

• a defamatory statement about plaintiff;

• published to someone (other than plaintiff);

• damaged plaintiff’s reputation

117

Damage to reputation

Statements can be defamatory per se or per quod

• Defamation per se (more common in employment cases)

– Requires (1) defamatory meaning apparent from the face of the

statement without extrinsic proof and (2) statement is specifically

directed at a particular person.

– Imputes lack of professional competence, criminal conduct,

loathsome disease, or unchastity.

– Damages to reputation presumed; plaintiff does not need to

prove special damages

118

Damage to reputation

• Defamation per quod (often a fallback claim for

employment cases)

– Statement was about the plaintiff or could be interpreted as such.

– Tends to harm the plaintiff’s reputation by lowering him/her in the

estimation of at least a substantial and respectable minority of

the community.

– Must prove special damages.

119

Publication

• Requires that the statement was communicated to a

third party.

• Communication can be written (libel) or spoken

(slander).

• Must be communicated either

– Intentionally (speaker intended to communicate to the third

party); or

– Negligently (third party overheard due to speaker’s lack of care)

120

Employer liability

• Employer may be liable for statements by their

employees acting in the course and scope of their duties

or with apparent authority.

• Employees can be personally liable for defamation.

121

Special Considerations

• In most employment cases (involving private person and

private matters) a plaintiff does not need to prove:

– The speaker intended to defame the plaintiff or speak falsely

(only intent to communicate matters)

– The statement was false

– The employer/speaker was the original source. One can be

liable for repeating a defamatory statement by another.

• Different requirements may apply to public figures or

matters of public concern.

122

Defenses

• Substantial truth

– Affirmative defense; employer must prove the statement at issue

was substantially true.

– May in effect require an employer to prove the reasons for an

employee’s discharge.

– Truth of statement almost always involves issues of fact, making

summary judgment based on this defense very rare.

123

Defenses

• Statements of opinion v. fact

– Opinion statement generally not actionable as defamation.

– Statement is not opinion if it is susceptible to proof of truth or

falsity.

– Opinion statement may be defamatory if it is based upon

undisclosed facts.

– Innuendo: meaning average person would place on statements

taken as a whole

124

Defenses

• Absolute Privilege

– Status of absolute privileges unclear; many treated as qualified

privileges (discussed later). May dissolve if used maliciously or

for improper purpose.

– May include:

• First Amendment and Petition Clause

• Statements to law enforcement

• Statements made during litigation

– Do not count on absolute protection

125

Defenses

• Qualified Privilege

– Applies where the speaker and recipient have a common interest

in the information. In employment context, generally protects:

• Statements to management and co-workers about the reasons for

discharge

• References to future employers

• Investigations of employee wrongdoing

– Privilege can be abused and lost where statement is:

• Known to be false or made with reckless disregard of the truth

• Made for non-business purpose

• Communicated to an unprivileged person

126

Chapter 103 of the Texas Labor Code

• An employer may disclose information about a current or

former employee’s job performance to a prospective

employer on the request of the prospective employer or

the employee.

• Employer immune from civil liability unless it is proven by

clear and convincing evidence:

– Information was known by that employer to be false at the time

of disclosure, or disclosure was made with malice or reckless

disregard for the truth.

• Tex. Labor Code, § §103.001-103.005

127

Defenses

• Consent

– One who consents to the communication cannot maintain

defamation suit. But, consent defense can be lost if abused.

– Consent can be express or implied

– Scope of consent controls extent to which communication is

protected, including manner, purpose, and recipients.

128

If you can’t say anything nice…

129

Scenario One

Ed Employee was caught on surveillance camera stealing

cash from the register and was discharged. Which

statement if made to Employee’s co-workers is least likely

to give rise to defamation liability:

a) We terminated him because we suspected him of theft.

b) We terminated him because he stole from us.

c) We terminated him for violating company policy.

d) Employee is no longer with the company.

130

Scenario Two

After Ed’s discharge, Company is contacted by New

Employer to verify Ed’s employment. In addition to dates of

employment and position, New Employer asks why Ed’s

employment ended with Company and if Ed is eligible for

rehire.

• What response will minimize risk of defamation?

• Would response change if New Employer provided

written consent from Ed for employment verification?

131

Scenario Three

Victor made a sexual harassment complaint against his

manager Mary and Company conducted an investigation.

Human resources interviewed several witnesses and

informed them of the allegations against Mary. Mary

denied all of the allegations.

• Can Victor be liable for defamation?

• Can Company be liable for defamation based on human

resources sharing information with witnesses?

132

Investigations

• Intra-company communications usually privileged.

• Privilege may be lost if malicious – knowingly false or

reckless disregard.

• Limiting liability during investigations:

– Consider having an attorney conduct the investigation.

– Ask open-ended questions “What interactions have you seen

between Victor and Mary” rather than “have you seen Mary

harass Victor?”

– Limit disclosure of information to need to know.

133

Tips to minimize risk of defamation claims

• Terminations: When discussing within the company,

speak carefully (just the facts) and tell only those who

need to know.

• References: Give only dates of employment and job

title; no details. Make the reference in writing.

• Investigations: Do not give unnecessary details; instruct

those involved to not discuss.

• Train employees to be careful when communicating

about investigations, terminations, references, etc.

IPRs & Alice: Eliminating Bad Patents?

Paula Heyman

137

Overview

• Post Grant Procedures in the USPTO

o Types

o Why Use?

o Mitigating The Risk

• Alice vs. CLS Bank

o Test

o Litigation Strategy

o Prosecution Strategy

138

Inter Partes Review

• Any US patent is eligible

• Prior Art Only

o Patents and printed publications

o 35 U.S.C. §§ 102 and 103

• Deadlines:

o One year from service of complaint

o Before DJ action (counterclaims do not count)

o Patents filed after March 16, 2013, after Post Grant Review

terminated or nine month post grant window

139

Post Grant Review

• Only for patents subject to first to file rules

o Post March 16, 2013

• Any grounds for invalidity

o Printed prior art (§§ 102 &103)

o Non-printed disclosures and sales (102)

o Sufficiency of disclosure (§ 112)

o Non-patentable subject matter (§ 101)

• Deadlines:

o Nine months after issue (or broadening reissue)

o Before DJ action (counterclaims do not count)

140

Covered Business Method

• Requirements

o Any US patent claiming a “business method”

o Must have been sued or threatened with infringement

• Any grounds for invalidity (including 35 U.S.C. §§

101, 102, 103 and 112)

• May file any time except when patent is eligible for

Post Grant Review

• Period for filing ends on September 16, 2020

141

Estoppel

• Applies when decision is “final”

o Avoided by settlement

• Prohibited from making same

arguments in another

Proceeding/Forum

o Applies to reviewed claims

• Applies to any ground that petitioner “raised or

reasonably could have raised”

o IPR & PGR - raised or could have raised

o CBM - limited to grounds raised in the petition

142

AIA Monthly Filings (September 1, 2012 to March 26, 2015)

Source: http://www.uspto.gov/sites/default/files/documents/032615_aia_stat_graph.pdf

143

AIA Institution Rates

Source: http://www.uspto.gov/sites/default/files/documents/032615_aia_stat_graph.pdf

144

• Lower Burden of Proof

o No presumption of validity

o Preponderance of the evidence

• “Quick” Resolution

o Potential for 2 bites at the apple

• Technical Decision-maker

o APJs more receptive to technical invalidity arguments

• Creates Prosecution History

• Potential Stay of District Court Proceedings

• Cheaper than District Court Litigation

o e.g., much less discovery, fewer (if any) motions, etc.

Better than Court? Challenger Pros

145

Better than Court? Patentee Pros

• “Quick” Resolution

o Potential for PTO to reaffirm patent over best art

• Technical Decision-maker

o Validity fight is less costly and more

focused

o Fewer alternative arguments for

challenger

o Harder for defendants to plug holes in

their invalidity case

• Limited Appeal (35 U.S.C. § 141)

o Patentee may only appeal a Final Written Decision

• Institution decisions are not appealable

146

• Best to File By 5 Months After Complaint

o PTAB must decide whether to institute

w/in 6 months

o Leaves 1 month to file additional petition

to fix procedural defects, present new

art or arguments for claims not instituted

• Forces Early Preparation:

o Search for and analyze prior art early in litigation

• Earlier Filing Increases Chances of Winning a Stay

Timing Strategies

147

• ~63% success rate

on motions to stay

pending IPRo Higher after IPR

is instituted (another timing

consideration)

• Know your court

o N.D. Cal.: ~68% success rate

o E.D. Tex.: ~43% success rate

Source: https://www.docketnavigator.com/browse/results/4a1c1ce4-7a56-b3a2-b075-fa9a29a7e639

0

50

100

150

200

250

300

350

400

2012 2013 2014 2015 YTD 2015 est.

3

88

168

64

239

Other

Partial

Denied

Granted

Motions to Stay Pending IPRs

148

Mitigating Impact of Review Proceedings

• Keep important patent families alive

o At least until end of 9 months for post grant review

o Use continuing applications to narrow claims if needed

• Anticipate possibility of a review proceeding:

o For patents in litigation

o Prior to filing suit

o When engaging in licensing negotiations

149

PTAB Rule Changes

• PTO Director Michelle Lee blog (Mar. 27, 2015)

o Changes in response to feedback from the patent bar

• Changes Effective Immediately: Increased page

limits (15→25) for motions to amend claims and

petitioner’s reply briefs

• Planned Changes:

1. further modifications to the motion to amend process

2. adjustments to the evidence that can be provided in the patent

owner preliminary response

3. clarification of the claim construction standard as applied to

expired patents in AIA proceedings.

• Expect easier/more claim amendments?

Source: http://www.uspto.gov/blog/

150

Overview

• Post Grant Procedures in the USPTO

o Types

o Why Use?

o Mitigating The Risk

• Alice vs. CLS Bank

o Test

o Litigation Strategy

o Prosecution Strategy

151

Test for Patent Eligibility

• 35 U.S.C. § 101

o Whoever invents or discovers any new and useful

process, machine, manufacture, or composition

of matter, or any new and useful improvement

thereof, may obtain a patent therefor

• The Supreme Court has interpreted the law to exclude

laws of nature, natural phenomena, and abstract

ideas

Bilski v. Kappos, 130 S. Ct. 3218 (2010)

152

Alice Corp. v. CLS Bank

• In June 2014, the Supreme Court further defined the

two step test for patent eligibility

1. Are the claims directed to one of the categories of subject

matter excluded from patentability?

2. If so, are there additional elements in the claims sufficient to

ensure the claims read on something more than patent-

ineligible subject matter?

Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2355 (2014)

153

What Is An Abstract Idea?

• The Supreme Court did not explicitly define an

“abstract idea”

• Prior decisions from the Supreme Court exclude:

o Formulas and algorithms

o Longstanding business practices

o Methods of organizing human activity

o Basic building blocks of human ingenuity

154

Alice Aftermath–Sample of CAFC cases

Case Court/Judge Decision Contour added

Ultramercial v. Hulu

Federal Circuit (J. Lourie)

Patent ineligible

Showing ad before delivering free content is merely "an abstract idea, devoid of a concrete or tangible application."

DDR v. Hotels.com

Federal Circuit (J. Chen)

Patent Eligible

Solving problem "necessarily rooted in computer technology" rather than a "business practice known from the pre-Internet world"

Content Extraction v. Wells Fargo

Federal Circuit (J. Chen)

Patentineligible

Collecting data, recognizing certain data in the collected set, and storing the data are abstract ideas; adding a scanner to the general purpose computer to perform these tasks is "well-understood, routine," and not inventive enough

155

Alice Aftermath–Sample of DC cases


Messaging Gateway Solutions v. Amdocs

District of Delaware (J. Andrews)

Patent Eligible

Solving a "problem unique to text-message telecommunication" renders the technology patent eligible because it "allows communication where it would otherwise be impossible."

Shortridge v. Foundation Construction Payroll

Northern District of California(J. Spero)

Patentineligible

"[C]ombining two or three abstract ideas" is no better than one abstract idea; must identify how claims purport to improve the functioning of the computer itself to be sufficiently inventive

Wireless Media Innovations v. Maher Terminals

District of New Jersey(J. Linares)

Patentineligible

"An abstract idea is not rendered patentable just because of connections to the physical world"--merely recording/identifying/communicating ID codes of physical shipping containers does not make an abstract idea patent eligible.

156

Alice Aftermath–Sample of DC cases


Smartflash v. Apple

Eastern District of Texas (J. Gilstrap)

Patent eligible

Controlling access to data is an abstract idea, but doing so in the context of modern means of digital piracy in a way that does not preempt core building blocks methods is sufficiently inventive for patent eligibility

Intellectual Ventures v. Symantec

District of Delaware(J. Stark)

Split decisionfor different patents

Claims directed at processing credit cards and email are abstract ideas lacking sufficient inventive elements.However, "[t]he human mind cannot screen for computer viruses within the telephone network or elsewhere"--this patent is not an abstract idea.

Ameritox v. Millennium Health

Western District of Wisconsin (J. Conley)

Patent eligible

While "skeptic[al]" about the value of the patent, patent eligibility threshold was met "particularly in light of the jury upholding the patent on § 102 and § 103 grounds"

157

Consistent Alice Litigation Strategy

• Attack troll patents under § 101

o Consider filing early motion challenging patentable subject

matter

• Software, algorithm, model and product design patents

may require more analysis

• Inconsistent arguments in the courts and before the

USPTO may cause a number of problems:

o Law established contrary to interests

o Company's own arguments may be used against it

158

Consistent Alice Litigation Strategy

• Identify major product lines or areas likely to be affected

by Alice

o Group similarly affected product lines and areas

o Identify similar competitors' patents

• Determine whether you can adopt a claim strategy that

differentiates competitors under Alice

• If not, determine whether it is better to:

o Risk patents to invalidate competitors; or

o Risk reliance on non-infringement or other invalidity arguments

and to preserve patents

159

Formulating a Prosecution Strategy

• Drafting New Applications

o Describe more technical detail for points of novelty and explain the

technical advantages and applications of your invention achieves.

o To the extent the claims relate to generating data or performing

calculations, consider including limitations that recite using the data or

applying the calculation in a specific way.

• Diehr: Although the claims recited a mathematical formula, they were

upheld because the claims limited application of the formula to a specific

process for curing rubber.

• PNC Bank: The claims recited "transforming . . . received data by inserting

an authenticity key to create formatted data." This transformation "cannot be

performed in the human mind."

160

Formulating a Prosecution Strategy

• Drafting New Applications

o Include technical claim limitations that go beyond a computer.

• California Inst. of Tech.: Claims reciting a form of error correction

code were found patent eligible because they included limitations

tied the claims to a specific, and narrowly defined error correction

process.

• Autoform Eng.: The asserted claims recited a computerized

method of designing tools for forming sheet metal parts. The claims

were found patent eligible because they included limitations related

to a very specific way of designing tools for forming sheet metal

parts.

161

Thank you!

Executive Action and the Latest

Immigration-Related News out of

Washington

Maggie Murphy

163

Latest Developments

• Issuance of Executive Order expanding the population of

currently undocumented individuals who will be allowed

to remain and work legally in the U.S.

– Expansion of Deferred Action for Childhood Arrivals (DACA).

– Creation of Deferred Action for Parents (DAP).

– Approximately 4 million individuals.

• Executive action improving employment-based legal

immigration.

• Changes to border security and enforcement.

164

Latest Developments

• Pew Research Center: An estimated 11.5M

unauthorized workers made up an estimated 5.2% of the

active workforce in the United States.

• 57 percent of those polled during the recent November

2014 election preferred that “illegal immigrants working

in the US” be offered legal status.

• DHS OIG: “HSI’s inconsistent implementation of the

administrative inspection process. . .may have hindered

its mission” (Feb. 2014).

165

Business Immigration

• The President will change the law to allow individuals

with approved employment-based visa petitions, who are

waiting for word that their visas can be issued, to file an

adjustment of status application—allows for promotion of

talent and portability of the talent.

• H-4 spouses may be granted work authorization.

• DHS will refine the definition of “specialized knowledge”

in the L-1B visa category.

• STEM OPT extensions will allow F students multiple

attempts at the H-1B visa lottery.

166

Potential Worksite Consequences for

Employers

167

The Growth of E-Verify

040,00080,000

120,000160,000200,000240,000280,000320,000360,000400,000440,000480,000520,000560,000

FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY11 FY12 FY13 FY14

1,0641,704 2,144 3,478 5,89911,47424,480

87,758

156,659

226,528292,000

404,228

476,882

563,548

Cumulative Employers Enrolled

More than 28 million cases run in FY 2014.

As of November 29, 2014, more than 5.3 cases run in FY15.

Employers in every industry, state and U.S. territory.

168

What’s Ahead

• Implementation of Executive Orders.

• Battle between compliance and reform advocates.

• Increases in government filing fees.

• Growing role of ICE and OSC.

• Discreet information gathering.

• Resolutions to help business through increased access

to foreign talent.

Before Your Best-Laid Plans Go Awry

Litigation-Related Contract Provisions

Stephanie F. Cagniart

171

Arbitration: Royal Flush

Scope

Rules

Arbitrator

Law

Judgment

172


Scope

Rules

Arbitrator

Law

Judgment

173


Scope

Rules

Arbitrator

Law

Judgment

174


Scope

Rules

Arbitrator

Law

Judgment

175


Scope

Rules

Arbitrator

Law

Judgment

176

Delegation: Joker Completes the Flush

The Arbitrator . . . shall have exclusive authority toresolve any dispute relating to the interpretation,applicability, enforceability or formation of this[Arbitration] Agreement . . . .

Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010)

"Clear and unmistakable"

177

Enforceability: Know When to Fold 'Em

Unconscionable

Illusory

178

Unconscionability: Effective Vindication Rule

In re Poly-America, L.P., 262 S.W.3d 337 (Tex. 2008)

Provisions

Eliminated exemplary damages and reinstatement Fee-shifting Discovery limitations

Savings clauses Severability clause Arbitrator empowered to make modifications

179

Effective Vindication - Still Effective?

American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013)

< $40,000 $1,000,000

"[T]he fact that it is not worth the expense involved in proving a statutory remedy does not constitute the elimination of the right to pursue that remedy."

180

Illusory Agreement: No Redeal

In re Halliburton Co.,80 S.W.3d 566 (Tex. 2002)

Cannot unilaterally amend or terminate agreement

Savings clauses

Notice period

Prospective only

181

Judicial Review: All In

Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064 (2013)

"The arbitrator's construction holds, however good, bad, or ugly."

182

Judicial Review: Challenges

Statutory grounds

Contractually expand scope of review

Appellate arbitration panel

Manifest disregard

Misconduct by the arbitrator

TAA only

183

Stephanie F. Cagniart

[email protected]

www.bakerbotts.com

Tips from the Trenches

Sujata Ajmera

185

1. I know it’s tempting but you can’t fire an employee

for refusing to tweeze your ingrown hairs. McMiller v.

Metro (8th Cir. 2013)

2. But you may be able to fire an employee for stupid

tweets. FoxNews.com (Feb. 10, 2015)

186

3. Just “wipe it down” is probably not the best response

to an employee complaint about others having

“liaisons” on her desk. Orton-Bell v. State of Indiana (7th Cir. 2014)

4. You can’t make employees say “I love you.” EEOC v.

United Health Programs of America, Inc. et al. (EDNY, June 2014)

187

5. You really shouldn’t fire an employee because she

has cancer. Huffington Post (Sept. 11, 2014)

6. If you are going to be a supervisor, you must actually

supervise employees. Range v. Douglas (6th Cir. 2014)

188

7. The customer (or patient) isn’t always right. Dysart v.

Palms of Pasadena Hospital, LP (M.D. Fla., Mar. 2015)

8. “Your job or your daughter?” is never a good

question for a supervisor to ask. Manon v. 878 Education, LLC

et al. (SDNY, Mar. 2015)

189

9. You probably should hold off on that policy of not

hiring women with viable eggs. Smith v. T.W. Clyde O.D., P.C.

(D. Colo., Oct. 2014)

10. Always wear clothes when signing an arbitration

agreement. Roe v. SFBSC Mgmt., LLC (N.D. Cal., Mar. 2015)

190

11. Don’t shoot your employees. Olmeda v. Cameron Int’l Corp. et

al. (E.D. La., Nov. 2014)

12. Some discovery motions are worth filing. Battle v. District

of Columbia (D.D.C., Apr. 2014)

RESPONSIBILITY

William F. Stutts

193

Counselor/Advisor

Attorney/Representative

Gatekeeper/Manager

Protector of Compliance

Rules of Professional Responsibility

Licensure

Company policies and regulatory requirements

Obligations to enforce or report

The Jobs and Burdens of Law Department Counsel

194

The need-- or lack of it-- to have a local law license

Texas has different rules from those in most of the U.S.

Pro bono work has different rules for non-licensees

The relationship between the law department lawyer

and the company

employee/employer

recipient/provider of property (sometimes nonmonetary)

confidentiality/privilege (as to third parties)

competence/reliance

Professional Responsibility and Licensure

195



Both the Model Rules and the Texas Supreme Court's

Rules permit non-licensees to practice as law

department counsel if they have valid and current

licenses from another jurisdiction. (Texas Policy

Statement; ABA 5.5)

there are additional rules for foreign law consultants

Texas has additional limitations: no advice to or

representation of third parties, no court appearances, no

real estate documentation


196




A few states specifically permit non-licensee law

department counsel to take on pro bono work, often in

the context of approved organizations. Texas has no

express exception from the prohibition of non-licensee

law department counsel representing or advising anyone

other than the employer.

Outside of the non-licensee issue, there is considerable

assistance in Texas for law department pro bono work:

Texas C-Bar, Texas Bar Association Corporate Counsel

Section Programs, www.cpro.org


197





and the company

employee/employer

Note limitations and procedural requirements of ABA 1.8

(Texas 1.08)


particularly important for option and equity based

compensation


198

The relationship between the law department lawyer and the company

employee/employer



the duty of confidentiality for law department counsel is not diminished from that for outside counsel

privilege of communications in the law department counsel situation seems more limited than for outside counsel, but its limitations tie to the view that law department counsel will act outside of the range of advisor/ attorney for the client. Texas has more than the average amount of law on the point.


199


and the company

employee/employer



competence/reliance

the duty to provide knowledgeable advice is the same

general duty for counsel inside the enterprise as for

counsel outside it, but the regulator of that duty is more

often a function of contractual/ employment

relationships.


200

(Arising ordinarily in context of specific employment or

corporate responsibilities)

Regulatory requirements

systems/ training/ enforcement

Integrity/reporting

investigations

reporting-- up the chain/ noisy/ disclosure

Duties to others outside the corporate family

201

(Arising ordinarily in context of specific employment or corporate responsibilities)



this arises clearly when lawyers are engaged in systems to address AML, CTF, sanctions, and trade limitations

It can also arise in other compliance areas-- consumer relationships, treasury operations, securities disclosure compliance, auditor relationships and disclosures.

a new trend has involved regulatory authorities seeking and obtaining large penalties and fines against compliance officers (who often are lawyers) in their individual capacity.


202




Integrity/reporting

investigations

this investigatory element may arise from FCPA, consumer compliance, treasury, OFAC, SOX or other areas, and may be triggered by an internal discovery or regulatory requirement

internal investigations require considerable time of company personnel and likely outside advisors and assistants who have experience in the area.


203




Integrity/reporting

investigations

reporting-- up the chain/ noisy/ disclosure

there are times in which external disclosure or disclosure "up the chain" to the board are required-not just for lawyers but lawyers are often in the middle of it.

this involves some securities and financial regulatory matters as well as apparent criminal activity.


204

Lunch instead?

Detailed guidance on the use and deployment of social media, the

intracacies of EU competition law, and Singaporean derivatives

requirements

acc austin 2015 cle/golf/spa event · 5 •safeguard confidential relationship between clients and...

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