Litigation – Taking Care of Business

EPA to Relax Environmental Legal Enforcement During the COVID-19 Pandemic

Mar 31, 2020

By: Ryan Udell, Shane Heskin and Gwenn Barney

The Environmental Protection Agency (EPA) announced in a memo released on Thursday, March 26, 2020 that it will relax its enforcement of environmental legal obligations under certain circumstances during the COVID-19 pandemic.

Applicable retroactively to March 13, 2020, the EPA will use enforcement discretion in specific situations where a company or governmental entity is unable to comply with an obligation usually required by the EPA due to the consequences of the COVID-19 pandemic, if the company takes certain steps to mitigate and document its noncompliance. This enforcement discretion only applies to civil violations of environmental legal obligations and explicitly does not extend to any criminal violations or conditions of probation in criminal sentences, activities that are carried out under Superfund and RCRA Corrective Action enforcement instruments or imports.

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Second Circuit: Insider Trading Conviction Does Not Require a Finding of Personal Benefit

Jan 13, 2020

By: Jay Shapiro and Patrick Devine

On December 30, 2019, the Second Circuit issued its landmark decision in United States v. Blaszczak,^[1] which widened the berth for federal prosecution of insider trading activities under Title 18 of the United States Code. The court ruled that, unlike Title 15 securities fraud convictions, federal wire fraud and Title 18 securities fraud convictions do not require any proof that an insider received a personal benefit in exchange for the material, nonpublic information that he or she disclosed.^[2]

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Delaware Court Of Chancery Extends <i> MFW </i> Framework to Board Decisions on Controlling Party Compensation

Delaware Court Of Chancery Extends MFW Framework to Board Decisions on Controlling Party Compensation

Sep 27, 2019

By: Marc Casarino, Lori Smith and Ryan Udell

It is a basic precept of Delaware corporate law that a corporation is managed by its board of directors. One of the board’s key managerial functions is the determination of executive compensation levels – a decision typically entitled to great judicial deference. When the board’s decision as to executive incentive compensation is submitted to stockholders for approval, and such stockholder approval is given, the decision is entitled to even greater deference. However, in Tornetta v. Musk, et al., C.A. No. 2018-0408-JRS, decided September 20, 2019, The Court of Chancery highlights an important exception to the general rule when the recipient of the compensation package is also a controlling stockholder.

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Economic Nexus Laws: Following Wayfair, US States Take Action

Apr 25, 2019

By: Franca Tavella

On June 21, 2018, the United States Supreme Court decided South Dakota v. Wayfair Inc., et al., which upheld South Dakota’s economic nexus law allowing the state to impose sales tax upon online retailers who sell goods into South Dakota but do not have a physical nexus with that state – i.e., property or employees in the state. In doing this, the Supreme Court overruled the physical presence requirement set forth in Quill Corporation v. North Dakota in 1992.

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The Dangers of Transactional Precedent – The Times They Are-A-Changing

Mar 13, 2019

By: Lori Smith

The other day I had a client ask me to review some form documents that another party wanted to use in connection with the client’s website. The basis of the request was that he thought I had prepared, or at least reviewed, these documents when they were originally created – over 10 years ago (coincidentally I had reviewed them, but had been somewhat critical, in part, at that time as off-market). This got me thinking about how many companies (and lawyers) rely on templates or precedential deal documents collected over many years, without thinking about the specific facts and circumstances of the deal they are doing or the passage of time and how that might implicate the need for updates and revisions.

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Third Circuit Affirms Six-Figure Award Against Employees in FLSA Case

Jan 22, 2019

By: George Morrison

A recent Third Circuit Court of Appeals decision serves as an important reminder for “prevailing parties,” even employers in wage and hour matters, to seek certain costs incurred as part of litigation.

In Camesi, et al. v. University of Pittsburgh Medical Center (UPMC), et al., the Third Circuit Court of Appeals recently affirmed the Western District of Pennsylvania’s decision to award UPMC over $300,000 in costs in a collective Fair Labor Standards Act matter filed by four employees. The employees’ underlying claims related to an alleged failure to pay wages, due to a policy that automatically deducted time for meal breaks. (more…)

Delaware Chancery Court Orders Papa John’s to Deliver Materials Responsive to a Director’s Books and Records Demand

Jan 17, 2019

By: Marc Casarino

On January 15, 2019, the Delaware Court of Chancery ruled that Papa John’s International, Inc. must allow its director John Schnatter access to materials responsive to his demand pursuant to the books and records inspection statute, 8 Del. C. § 220, subject to certain restrictions on use of the materials.^[1] Schnatter is Papa John’s founder, its largest stockholder and a director on its board. Until recently, he served as the company’s Chairman of the Board, CEO and spokesman. He resigned as Chairman and CEO following much publicized reports of his commentary on the NFL’s handling of player protests and his use of a racially charged term during a company training session. His spokesman role was terminated following recommendations by a special committee comprised of his fellow board members.
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Delaware Chancery Court Invalidates Charter Provisions Requiring Federal Forum Selection for Claims Under The Securities Act Of 1933

Dec 21, 2018

By: Marc Casarino

On December 19, 2018, The Delaware Court of Chancery held in Sciabacucchi v. Salzberg ^[1] that Delaware corporations cannot use charter or bylaw provisions to mandate that claims under the Securities Act of 1933 (‘33 Act) must be pursued in federal court. Such federal forum selection provisions have become a frequent component of corporate constitutive documents. This largely has been in response to increasing pursuit of state court actions asserting ‘33 Act claims and particularly after the Supreme Court’s decision in Cyan, Inc. v. Beaver County Employees Retirement Fund ^[2] – which clarified that ‘33 Act claims may be pursued in either state or federal court.

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Delaware Chancery Court Declines to Apply <i>Zapata</i>-Like Analysis to Deceptive Conduct Affiliated With an Independent Board

Delaware Chancery Court Declines to Apply Zapata-Like Analysis to Deceptive Conduct Affiliated With an Independent Board

Nov 30, 2018

By: Marc Casarino and Lori Smith

In Busch v. Richardson Electronics, Ltd.,^[1] the Delaware Court of Chancery held that a board of director’s decision not to pursue litigation on behalf of the corporation did not require the heightened two-step demand futility analysis developed in Zapata v. Maldonado^[2] because the board was not disqualified by lack of independence from making a valid business decision regarding the litigation. Although deference to the business judgment of an independent and disinterested board is not a controversial concept, the path to its decision in this case required the court to address the unique issue of whether a board’s alleged pre-litigation deception of a stockholder should trigger a Zapata-like analysis of the board’s post-litigation decision-making. The court affirmed that Zapata applies only in the limited circumstance where a disqualified board uses an independent committee to cleanse the board’s decision to not pursue litigation, and refused to expand a Zapata-like analysis to alleged deceptive conduct affiliated with an independent board. (more…)

Delaware Chancery Court Provides Guidance on Prior Material Breach and Set-Offs

Nov 12, 2018

By: Lori Smith and Melissa Nott Davis

The Delaware Chancery Court recently reaffirmed several important contract interpretation principles in Post Holdings, Inc. v. NPE Seller Rep LLC, Civil Action No. 2017-0772-AGB. The case highlights the fact that a party claiming its contractual obligations were excused by a material breach by the other party may not seek or continue to receive any benefits under the contract after the alleged material breach. The court also clarified set-off rights under a stock purchase agreement. (more…)

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