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The Commercial BAR The National Bar Association Commercial Law Section THE NATIONAL ASSOCIATION N Law Connection B A VOLUME 7 - ISSUE 3 1925 Fall 2010 CONNECTING PEOPLE, IDEAS AND OPPORTUNITIES Message from the Chair G reetings! We look forward to hosting our 24th Annual Corpo- rate Counsel Conference in Orlando, Florida, February 24-26, 2011 at the JW Marriott Grande Lakes Hotel and Resort. As part of the National Bar Association’s theme for President Demetrius Shelton’s Bar Year, “LIFTING AS WE CLIMB – ENSURING JUS- TICE & EQUALITY”, the Commercial Law Section will redouble our INSIDE THIS ISSUE: efforts to help all of us climb and reach our full potential. Therefore, Message from the Chair 1 based upon your positive feedback and to further improve upon the content and experience of our Conference, we have focused upon pro- David B. Cade, Esq., Chair The Oncoming Storm: Federal viding our attendees with additional time to connect with corporate/ Bribery Investigations Often in-house counsel. In addition to our unique formal interviewing process, we have instituted an Inspire Even More Costly informal Networking Expo, which will occur over several days. Every ﬁrm in attendance will have Shareholder Derivative an equal opportunity to put their best foot forward with our corporate/in-house counsel attendees Litigation 1 during the Expo. We also have expanded our programming for our corporate/in-house counsel at- tendees to make the Conference more relevant to their career development. More information about Can Your Employee Secretly the revamped Conference format is available on our website: http://www.nbacls.com/Annual_Con- Record Conversations with ference.html. continued on page 3 Management? 2 The Commercial Law Section Honors The Oncoming Storm: Federal Bribery Avis Russell with Its Investigations Often Inspire Even More Costly Second Annual In-House Counsel of the Year Award 4 Shareholder Derivative Litigation Liskow & Lewis Sponsors By Sean C. Grifﬁn, Esq.* National Bar Association Event During its 85th The Securities and Exchange Commission and the Department of Justice have dramatically increased Annual Conference 5 their investigation and enforcement of foreign bribery under the Foreign Corrupt Practices Act (“FCPA”).1 This increase has sparked a similar upswing in private civil claims against corporations collateral to ad- The Commercial Law Section mitted or suspected FCPA violations.2 Although the FCPA grants no private right of action, plaintiffsʼ Thanks Donald O. Johnson attorneys have sidestepped this obstacle by bringing their FCPA-based actions under statutes that do for Years of Service to the – typically, as shareholder derivative suits for breach of ﬁduciary duty or as securities fraud actions.3 Executive Committee and Contributions to The This trend is growing too large for companies to safely ignore. Corporate defendants paid an estimated Commercial Law Connection 5 $84.4 million in FCPA-related securities class action settlements between 2002 and 2008.4 Given the Member Spotlights 8 breakneck pace of FCPA criminal settlements in 2009 — including the record-setting $1.6 billion Sie- mens settlement — the cost of settling derivative cases will likely grow. Coupled with the well-docu- National Bar Association mented rise in securities class action ﬁlings, these numbers leave no doubt that shareholder suits have 2010-11 Calendar of Events 11 become an increasingly expensive consequence of a FCPA investigation.5 NBACLS 2010-2011 Companies often end up settling these derivative actions for costs disproportionate to the original offense Executive Committee 12 or the penalty imposed by the government. For example, in 2007, Immucor paid the SEC a $30,000 civil penalty to resolve an investigation involving about $19,000 in alleged bribes the company paid to obtain NBACLS Newsletter medical supply contracts.6 Settling with the SEC did not end Immucorʼs legal troubles, as it then faced a Editorial Board 14 shareholder class action complaint accusing it of securities fraud and Sarbanes-Oxley violations based on its alleged misrepresentations regarding the investigation.7 After the court denied its motion to dismiss, Immucor paid the plaintiffs $2.5 million – to settle a $19,000 bribery case for which it had paid only $30,000 in civil penalties to the government.8 continued on page 6 PAGE 2 The Commercial Law Connection Can Your Employee Secretly Record Conversations with Management? By Warren E. Buliox, Esq.* One of your employees, Fox Mulder, has built a reputation for cation (and in some cases any non-party) is generally free to hit stirring up problems within the workforce. For him, just about the record button. For instance, a California appellate court has everything that takes place in the workplace is part of some held that the secret recording of a business meeting that took grand conspiracy. So when you suspend him after learning place in a crowded public restaurant did not violate state eaves- he violated company policy, you suspect he might ﬁle a claim dropping laws because the conversation was not a “conﬁdential against your company. Unfortunately, your suspicions are con- communication” due its location.1 Similarly, a New York ap- ﬁrmed when you get a package from his lawyer a few weeks pellate court has held that those who talk in the presence of later that includes a letter of empty threats and . . . a CD? You parties outside the conversation may not have an expectation open the ﬁle on the CD and discover it is a recording of you of privacy in the conversation and therefore may not have a from the meeting where you suspended Mr. Mulder. Huh!?! cause of action under New York law should the conversation be recorded.2 If the conversation is in a quiet, secluded set- With the advent of pocket-sized recorders, sophisticated cell ting, so as to warrant an expectation of privacy to the commu- phones, and other covert recording devices, a growing number nication, then eavesdropping and wiretapping laws come into of employees – whether disgruntled or not – are secretly record- play. Twelve states – California, Connecticut, Florida, Illinois, ing conversations in and outside the workplace in the hope of Maryland, Massachusetts, Michigan, Montana, Nevada, New catching their employers “in the act.” After all, secret record- Hampshire, Pennsylvania and Washington – generally prohibit ings have paid off in the past. You may recall the disgruntled individuals from recording conversations unless all parties to Texaco employee whose secretly recorded conversation of ex- the communication consent to the recording. These states are ecutives making what appeared to be racist comments resulted typically referred to as “all-party consent” or “two-party con- in a then-record $176 million settlement in a race discrimina- sent” states. tion suit. The remaining thirty-eight states, along with the District of Suppose you learn that one of your employees has or may be Columbia, are considered “one-party consent” states. In these surreptitiously recording conversations with management. Can states, individuals may legally record a conversation to which the employee legally do this? And if so, what options do you they are a party so long as one of the parties to the communica- have as an employer to prevent or thwart such activity? Does it tion consents to the recording. Because the consenting party matter whether the recording takes place outside the workplace in these states can also be the individual doing the recording, or in a public setting, as opposed to in the workplace during a the conversation may be – and often is – recorded without the closed-door meeting between the employee and his or her su- knowledge or consent of any other party. This is also the rule pervisor? The answer may depend on your state. under federal law. Both federal and state laws place restrictions on wiretapping So what does this mean for employers? In the minority of states and eavesdropping. These laws generally apply to situations that require all parties to a communication to consent to its re- where one party listens in on the conversations of others with- cording, it means (at least in theory) very little, as employers out their knowledge and have been used to regulate electronic need not worry about a conversation being secretly recorded recordings of both telephone conversations and in-person inter- unless the conversation takes place in public or in a manner in views or meetings. which the parties have no reasonable expectation of privacy. As a general matter, the ability to secretly record a conversation While individuals can certainly still record conversations in initially turns on whether or not a reasonable expectation of pri- these jurisdictions either in ignorance or willful violation of the vacy can be attached to the conversation. If there is no expecta- law and then attempt to blackmail or embarrass their employers tion of privacy to the conversation, any party to the communi- by making the recordings public, most states have stiff civil and continued on page 10 The National Bar Association Commercial Law Section The Commercial Law Connection PAGE 3 Chair’s Message… continued from page 1 The Commercial Law Section is also pleased to announce that Harold Pope of Jaffe Raitt Heuer & Weiss, PC is the recipient of our 2011 Cora T. Walker Legacy Award, and Shell Oil Company is the recipient of our 2011 Corporation of the Year Award. Nomina- tions are now open for our Outstanding In-House and Outside Counsel Awards as well. I encourage you to submit a nomination for someone you believe has excelled in his or her legal practice and has advanced the retention of African-American attorneys as outside counsel. We will continue our role as a key contributor to the NBA’s Crump Law Camp. The Law Camp offers high school students the opportunity to live at Howard University in Washington, D.C. for two weeks during the summer, as part of an intense immersion program into the study of law. Although John Crump retired from NBA, his vision lives on. We also have been, and will remain, a signiﬁcant contributor to the National Bar Institute, the philanthropic arm of the NBA, that among other things, offers scholar- ships to college and law school students. Finally, if you had not heard the great news, we were selected as the NBA’s 2010 Section of the Year during the Annual Meeting in New Orleans this summer. For eight out of the last ten years, we have been honored to receive this award. It is not an accident. Our members are dedicated to increasing the diversity within the profession and providing opportunities for attorneys of color to represent Corporate America. Cora Walker would be proud to see how much her labor of love has grown over 24 years, and we are delighted to live her dream every day. Thank you again for your words of encouragement. I look forward to seeing you in Orlando! Highlights from the NBA Convention - New Orleans The National Bar Association Commercial Law Section PAGE 4 The Commercial Law Connection The Commercial Law Section Honors Avis Russell with Its Second Annual In-House Counsel of the Year Award By Donald O. Johnson, Esq.* House Counsel of the Year Award recipient, we asked her to comment on her feelings about having received the award and the challenges and opportunities facing in-house counsel and those facing outside counsel who advise in-house counsel. Ms. Russell confessed that she “was extremely surprised and pleased” to receive the Commercial Law Sectionʼs In-House Counsel of the Year Award, stating: “I did not think that the award would be given to an in-house counsel in the public sector. I think that it is important for those in private practice to understand that the public sector is a viable choice for busi- ness development.” She noted that, “[a]lthough there are many public sector enti- ties that use outside counsel, when I attend conferences where During its 23rd Corporation Counsel Conference this year in the focus is primarily public sector issues or matters, the at- San Diego, the NBA Commercial Law Section selected Avis torneys present are rarely attorneys that are African-American Russell, General Counsel of the District of Columbia Water or from other minority groups.” Looking at the other side of and Sewer Authority, as the recipient of its Second Annual the coin, Ms. Russell stated: “I also think that it is important In-House Counsel of the Year Award. The Section established for attorneys in the public sector to embrace diversity in the the award to honor in-house attorneys who have demonstrat- hiring of outside counsel as their entities embrace the need for ed signiﬁcant achievements in their substantive legal careers diversity in contracts for goods, services and construction.” and have demonstrated a commitment to encourage corporate legal departments to develop professional relationships with “In this economy, managing the costs of legal services is a big African-American attorneys. Ms. Russell exempliﬁes these issue. Law departments are seen as cost centers that do not attributes. provide revenues for their entities,” Ms. Russell observed re- garding the most signiﬁcant challenges facing attorneys who Ms. Russellʼs use of minority attorneys has advanced their ca- work as in-house counsel. Continuing, she said: “Manage- reers immeasurably within their ﬁrms and within the profes- ment often looks to law departments to cut costs. Also, regu- sion. The majority of attorneys providing legal services to DC latory requirements are increasing in this administration, and Water are located in Washington, DC. Of the majority law in-house counsel will have to determine if they will develop ﬁrms she has retained, several have minority attorneys as the the expertise in-house or use outside counsel.” originating attorney. Ms. Russell also retains minority law ﬁrms to represent DC Water. These attorneys handle matters Ms. Russell identiﬁed important actions that in-house attor- in a wide range of practice areas, including personal injury, neys can take to become valued members of their companies: contract, procurement, construction, public ﬁnance, patent and trademark, environmental and employment law. • Develop trust with your internal clients; Ms. Russell is a New Orleans, Louisiana native and has been a • Learn the business; member of the Commercial Law Section since 1990 when she was in private practice. Although Ms. Russell was unable to • Be a resource for providing advice on how to help the be with us at the Corporate Counsel Conference in San Diego internal client achieve their business purpose; when her receipt of the award was originally announced, our Section had the opportunity to present the award to her in • Make your internal client a success; person during the 2010 85th NBA Convention and Exhibits, held in her hometown of New Orleans. • Keep your internal clients out of trouble (anticipate prob- lems); and Following our Sectionʼs selection of Ms. Russell as its In- continued on page 11 The National Bar Association Commercial Law Section The Commercial Law Connection PAGE 5 Liskow & Lewis Sponsors National Bar Association Event During its 85th Annual Conference By Dana M. Douglas, Esq. Liskow and Lewis, PLC served as the proud sponsor of the Com- through eleventh grades with an introduction to the judicial sys- mercial Law Sectionʼs Reception held August 10, 2010 at the 85th tem, law school, and some of the skills required to be an effective Annual National Bar Association Convention and Exhibits at the lawyer. Marriott Hotel in New Orleans. Liskow & Lewis was honored to serve as the exclusive sponsor of this event. The Section hosted At Liskow & Lewis, we have a history of actively recruiting, over 200 guests including, lawyers, judges and other conference mentoring and promoting lawyers and professionals with diverse participants. backgrounds and life experiences. The success of our diversity ini- tiatives has been well documented by the success of the ﬁrm. The Liskow and Lewis personiﬁed “southern hospitality” with many ﬁrm is proud to have been a part of the NBAʼs recognition of its of its ﬁrm attorneys and alumni on hand to greet and network with many efforts to advance the diversity of the legal profession. guests. Among the Liskow alumni was the Honorable Judge Brian A. Jackson, who was recently appointed to the United States Dis- * Dana M. Douglas is a Shareholder with trict Court for the Middle District of Louisiana which sits in Baton Liskow & Lewis PLC specializing in com- Rouge, Louisiana. Judge Jackson headed the ﬁrmʼs white collar mercial, energy and intellectual property practice until his appointment to the bench by President Barack litigation. Ms. Douglas can be reach at Obama. (504) 556-4097 or dmdouglas@liskow. com. At the event, the ﬁrm joined in celebrating the Commercial Law Sectionʼs $25,000 donation to the Crump Law Camp. Crump Law Camp, established by the NBA, provides students in the ninth The Commercial Law Section Thanks Donald O. Johnson for Years of Service to the Executive Committee and Contributions to The Commercial Law Connection By Jean-Marie Sylla, Jr. For more than seven years Don- O. Johnson, after recently ald O. Johnson has dutifully relocating his ofﬁce to served as a member of Commer- Philadelphia, Pennsylva- cial Law Sectionʼs (CLS) Ex- nia. Don has left big shoes ecutive Committee, speciﬁcally to ﬁll and his contributions in his role as an editor of the will be greatly missed. Sectionʼs newsletter, The Com- mercial Connection. During that Jean-Marie Sylla, Jr. is a partner with time, Don, as he is affectionately Taylor, Sylla & Agin, LLP, a Washing- known, has served on the CLSʼ ton, DC based civil litigation ﬁrm. He Executive Committee providing represents business entities in a wide valuable input to the operation of variety of insurance, commercial, busi- the section. In addition, Don has ness, and real estate litigation disputes managed the publication of the Commercial Connection by in the District of Columbia, Maryland putting together one of the National Bar Associationʼs premier and Virginia. Jean-Marie also serves section newsletters. This publication offers substantive legal as the NBA-CLS Newsletter Liaison articles of interest to section members, as well as informational and is a member of the Sectionʼs Execu- articles on the Sectionʼs news and events. Mr. Johnson will be tive Committee. He may be reached at jmsylla@tsaﬁrm.com focusing on building his practice, the Law Ofﬁces of Donald or (202) 689-9512. The National Bar Association Commercial Law Section PAGE 6 The Commercial Law Connection The Oncoming Storm… continued from page 1 Faro Technologies also paid a disproportionate civil settlement. avoiding FCPA violations, which in turn requires an effective and The DoJ and SEC had charged Faro with paying $444,492 in bribes comprehensive compliance program. A rigorous compliance pro- to employees of Chinese state-owned companies and with improp- gram requires more discussion than space here allows, but every erly recording and reporting those payments.9 Faro resolved the meaningful compliance program includes a few basic elements: federal case for $1.85 million in disgorgement and prejudgment (1) a clearly articulated compliance policy against FCPA viola- interest and a $1.1 million criminal penalty.10 As with Immucor, tions; (2) communication of that policy to company employees; the investigation spurred Faroʼs shareholders to ﬁle a class action (3) thorough ﬁnancial and accounting procedures; and (4) proce- complaint alleging that Faro had failed to disclose information dures by which employees may report suspected FCPA violations about its ﬁnances and inventory and that it had beneﬁted from the to upper management. inﬂated stock prices.11 The court denied Faroʼs motion to dismiss, and soon after, Faro settled with the plaintiffs for $6.875 million.12 Not only can an effective compliance program help prevent FCPA On the heels of this case, Faro faced a second derivative suit al- violations, but it can help a company ﬁght derivative suits as well. leging violations of Security Exchange Act § 10(b)(5), breach of The Private Securities Litigation Reform Act of 1995 (“PSLRA”) ﬁduciary duty and unjust enrichment, which the company settled requires securities fraud plaintiffs to “state with particularity facts for $400,000. Altogether, Faro paid over $7 million in settlements giving rise to a strong inference that the defendant acted with the for a $444,492 violation that it resolved for less than $3 million in required state of mind.”19 In the FCPA context, the Ninth Cir- criminal and civil penalties. cuit has held that the PSLRA requires plaintiffs to plead facts that show that the company itself, rather than merely its employees The Securities Exchange Act is not the only statute for which or agents, acted with the requisite scienter to sustain a securities plaintiff can sue for FCPA violations. In 2002, Cardinal Health, fraud complaint.20 Thus, if a defendant company has an effective Inc. discovered that foreign subsidiaries of its acquisition target, compliance program – one that includes a solid reporting system Syncor International Corporation, had made improper payments – and if the violations were not reported, a company may point to of at least $600,000 to employees of government-operated hospi- the absence of any reports to show that it lacked scienter even if tals in Taiwan, Mexico, Belgium, Luxembourg and France. This some of its employees or agents committed the violation. discovery ultimately cost Syncor $2 million as a criminal penalty to DoJ and $500,000 to the SEC.13 Soon thereafter, participants in Defendants in FCPA derivative suits may also defend using the the Syncor/Cardinal 401(k) brought the usual action for securities demand rule and the business judgment rule. The demand rule fraud, but they also sued under § 502 of the Employee Retire- requires shareholders to demand that the board of directors ﬁle ment Income Security Act for breach of ﬁduciary duty.14 Plain- suit based upon the FCPA violations before ﬁling a derivative suit tiffsʼ strategy also proved effective; eventually, Syncor settled in themselves. If the board declines to ﬁle suit, that decision is pro- exchange for creating a $4 million settlement fund (plus interest) tected by the business judgment rule, which bars derivative suits and court-ordered attorney fees of $1,333,333.00 – over twice the unless the board failed to act independently or acted in bad faith. amount of the penalties it paid to the federal government.15 These rules have staved off shareholder suits in the FCPA con- The newly enacted Dodd-Frank Wall Street Reform and Consum- text. For example, in 2004, Chevron was implicated in the Iraqi er Protection Act (“WSRCPA”) offers yet another private cause Oil-for-Food scandal, in which energy companies and the Iraqi of action for FCPA violations. Section 1504 of the WSRCPA government circumvented the UN Food for Oil program and UN- amends the Exchange Act to require corporations to disclose those imposed sanctions against Iraq by kicking back about $1.8 billion payments “made to further the commercial development of oil, to Saddam Husseinʼs government.21 Shareholders sued Chevron, natural gas, or minerals” – areas that frequently attract FCPA in- its ofﬁcers, and its board members for breach of ﬁduciary duty vestigatorsʼ attention.16 Additionally, the WSRCPAʼs deﬁnition and corporate waste, alleging that Chevronʼs board had failed to of “foreign governments” includes governmental agencies, state- supervise adequately alleged payments of illegal surcharges and owned enterprises, and individual government ofﬁcials – precisely that the Board wasted corporate assets by settling the governmen- the ofﬁcials that the FCPA covers.17 Payments requiring disclo- tal investigations of these allegations.22 However, the plaintiffs sure would include “taxes, royalties, fees, licenses, production had not made the requisite demand to the board of directors, so the entitlements, bonuses, and other material beneﬁts, as determined court dismissed the complaint pursuant to the demand rule. The by the Commission,” and thus would encompass a large swath plaintiffs then stipulated that their complaint should be considered of legitimate payments.18 Because the WSRCPA amends the Ex- a formal demand on Chevronʼs board of directors to investigate change Act, which allows a private cause of action, and because it whether Chevron should ﬁle suit. Pursuant to this demand, Chev- addresses areas that FCPA investigations target, the WSRCPA pro- ronʼs board of directors investigated the allegations and deter- vides another avenue by which shareholders may bring a private mined that a lawsuit would not serve Chevronʼs best interest. The action against companies involved in FCPA investigations. plaintiffs amended their complaint to allege the necessary demand and sued again, and Chevron moved to dismiss again, arguing that Of course, a company can best avoid a FCPA-derivative suit by the business judgment rule protected its decision not to sue. continued on page 7 The National Bar Association Commercial Law Section The Commercial Law Connection PAGE 7 The Oncoming Storm… continued from page 6 The court agreed. The court ruled that the business judgment rule 10 Department of Justice Release 08-505, “Faro Technologies Inc. protected the boardʼs refusal to pursue a legal claim, as there was Agrees to Pay $1.1 Million Penalty and Enter Non-Prosecution no compelling evidence that Chevronʼs board had acted improper- Agreement for FCPA Violations,” June 5, 2008, available at ly in determining that a lawsuit would not be in the companyʼs best http://www.usdoj.gov/opa/pr/2008/June/08-crm-505.html. interest. The court therefore dismissed the case.23 The Chevron 11 Class Action Complaint, In re Faro Technologies Securities case thus shows how the demand rule and the business judgment Litigation, 2006 WL 393311 (M.D. Fla., Jan. 12, 2006). rule, used properly, can protect a company against a sustained at- 12 Agreed Motion for Preliminary Approval of the Class Action tack by determined plaintiffs. Settlement and Incorporated Memorandum of Law, In Re Faro Technologies Securities Litigation, 6:05-cv-01810-ACC-DAB In short, FCPA violations that involve even relatively small (M.D. Fla., April 9, 2008). amounts of money can lead to civil suits costing the company 13 SEC Litigation Release No. Litigation Release No. 17887 (Dec. millions of dollars. This fact provides even more incentive for 10, 2002), available at http://www.sec.gov/litigation/litreleases/ a company to avoid FCPA violations. If a company ﬁnds itself lr17887.htm. facing a FCPA investigation despite its compliance program (or 14 Complaint, In re Syncor ERISA Litigation, 2:03-cv-02446- due to its lack thereof), it must be ready to employ all available RGK-RC, (D.C. Cal., April 8, 2003). defenses in the inevitable follow-on derivative litigation. Using 15 Order of Final Judgment, In re Syncor ERISA Litigation, 2:03- these defenses effectively requires a thorough knowledge of both cv-02446-RGK-RC, (D.C. Cal., Nov. 22, 2008). the FCPA and securities law to master the facts and strategy neces- 16 Dodd-Frank Wall Street Reform and Consumer Protection Act § sary to protect the company from potentially costly litigation. 1504 (codiﬁed as 15 U.S.C. § 78m(q)). 17 Dodd-Frank Wall Street Reform and Consumer Protection Act § 1 Kevin M. LaCroix, The Foreign Corrupt Practices Act: A 70ʼs 1504 (codiﬁed as 15 U.S.C. § 78m(q)(1)(B)). Revival?, InSights, Oakbridge Insurance Services, Vol. 3 Issue 18 Dodd-Frank Wall Street Reform and Consumer Protection Act § 3, June/July 2008. 1504 (codiﬁed as 15 U.S.C. § 78m(q)(1)(C)(ii)). 2 2008 Mid Year in Review, Gibson, Dunn & Crutcher LLP, 19 15 U.S.C. § 78u-4(b)(2). July 7, 2008, http://www.gibsondunn.com/publications/pages/ 20 Glazer Capital Management, LP v. Magistri, 549 F.3d 736, 742 2008mid-yearfcpaupdate.aspx. -743 (9th Cir. 2008). 3 Litigants unsuccessfully have tried to convince courts to read 21 Claudio Gatti and Jad “Proﬁt oil” was not speciﬁcally listed in such a right into the statute, but the theory was laid to rest in the Act, but would undoubtedly be covered by the catch-all pro- 1990 when a US appellate court found that this sort of ʻpost- vision of § 3(m)(2)(G)(viii) Mouwad, “Chevron Seen Settling violation enforcementʼ, by private plaintiffs, as opposed to ʻpre- Case on Iraq Oil,” New York Times, May 8, 2007, http://www. violation complianceʼ, would ʻhinder congressional efforts to nytimes.com/2007/05/08/business/08chevron.html. protect companies and their employees concerned about FCPA 22 Bezirdjian v. OʼReilly, (CA. Super. Ct. 2007). liability. Lamb v Phillip Morris, Inc., 915 F. 2d 1024, 1029-1030 23 For another successful use of the demand rule, see Order Adopt- (6th Cir. 1990). ing Memorandum and Recommendations, Midwestern Team- 4 Raymund Wong and Dr. Patrick Conroy, FCPA Settlements: Itʼs ster Pension Trust Fund et al., v. Deaton, No. 4:08-cv-01809 a Small World After All, Krollʼs Global Fraud Report, Issue 8, (S.D. Tex., May 26, 2009). March 2009 (available at: http://www.nera.com/image/Pub_ FCPA_Settlements_0109_Final2.pdf). * Sean C. Grifﬁn is Of Counsel at Step- 5 Id. toe & Johnson LLP, a Washington, DC 6 No. 1:05-CV-2276-WSD (N.D. Ga. 2006); SEC Litigation Re- law ﬁrm. Before joining Steptoe, he was lease No. 20316 (Sept. 28, 2007), available at http://www.sec. a trial attorney at the US Department of gov/litigation/litreleases/2007/lr20316.htm. Justice, where he tried commercial liti- 7 Complaint, In Re Immucor Inc. Securities Litigation, 1:05-CV- gation cases and argued before the US 2276-WSD (N.D. Ga., Aug. 31, 2005); Amended Complaint, In Court of Appeals. Currently, he special- Re Immucor Inc. Securities Litigation, 1:05-CV-2276-WSD, 5- izes in conducting Foreign Corrupt Prac- 6 (N.D. Ga., Feb. 2, 2006). tices Act investigations and formulating 8 Stipulation of Settlement, In re Immucor Inc. Securities Litiga- corporate compliance programs. tion, 2007 WL 5442320 (N.D. Ga., May 14, 2007). 9 Id. YOUR VOICE If you have comments concerning the NBACLS newsletter, or if you are an NBACLS member who wants to submit an article for publication consideration, please contact Jean- Marie Sylla, Jr. Esq. at jmsylla@tsaﬁrm.com. The National Bar Association Commercial Law Section PAGE 8 The Commercial Law Connection Mr. Simpson received his J.D. from Case Western Reserve Uni- versity School of Law in Cleveland, Ohio, and a M.B.A. from the Weatherhead School of Management at Case Western Reserve University. The native of New Rochelle, New York, earned his Bachelorʼs degree from Boston University. He lives in Farming- ton, Connecticut with his wife, Janel, and their two daughters. Robert R. Simpson Appointed as American Bar Shipman & Goodwin, LLP Opens Ofﬁce In Association’s Director of The Nation’s Capital: Attorneys from Hogan Division V in Substantive & Hartson’s Washington Ofﬁce Join Firm Areas of Litigation Shipman & Goodwin LLP, a 140-lawyer ﬁrm based in Connecti- Attorney Robert R. Simpson, a Partner cut, has opened an ofﬁce in the nationʼs capital. The ﬁrmʼs new- at the law ﬁrm of Shipman & Goodwin est location is at 1133 Connecticut Avenue, halfway between Du- LLP in Hartford, Connecticut, has been pont Circle and The White House. The ﬁrm currently has ofﬁces appointed by the American Bar Association (ABA) as its Divi- in Hartford, Stamford, Greenwich and Lakeville, Connecticut. sion Director of Division V - Substantive Areas of Litigation for Resident in the new Washington, DC ofﬁce at the start are six law- 2010-2011. yers, all formerly with Hogan & Hartson in Washington, led by In this capacity, Mr. Simpson will be responsible for working partner James P. Ruggeri, long-time national counsel for complex with the ABA leadership and membership to implement initia- insurance coverage matters for The Hartford Financial Services tives that will help its members be better lawyers and help those Group and its afﬁliates. The other partners in the group are Ed- less fortunate lead better lives. ward B. Parks, II and Joshua D. Weinberg. James G. Christian- sen joins Shipman & Goodwin as counsel, and Tara J. Plochocki Mr. Simpsonʼs practice at Shipman & Goodwin, LLP focuses on and Michele L. Backus join the ﬁrm as associates. product and toxic tort liability, business and employment litiga- tion. He represents major product manufacturers and distributors “We are delighted to welcome Jim Ruggeri and his highly ac- in matters ranging from automobiles to asbestos. His clients have complished team to Shipman & Goodwin, and at the same time to included some of the largest automobile manufacturers and ener- establish a signiﬁcant new relationship with The Hartford, which gy companies in the world. He has handled numerous litigations will be serviced from both D.C. and Connecticut,” explained involving fraud, unfair trade practices, tortious interference and Scott L. Murphy, Managing Partner of Shipman & Goodwin. copyright infringement. He has tried cases to verdict in state and “Our presence in D.C. will also be a further boost to other current federal courts throughout New England and New York involving ﬁrm practices with national reach, including health care, govern- catastrophic injuries, commercial disputes and employment dis- ment investigations, petroleum marketing, export-import compli- crimination, and has argued before the U.S. Court of Appeals for ance, and bankruptcy.” the Second Circuit and the Connecticut Supreme Court. “Shipman & Goodwin is the right ﬁrm for our practice,” says Mr. Simpson is a member of the National Bar Associationʼs Jim Ruggeri. “We join a strong existing litigation group and gain Commercial Law Section, Executive Committee, the Co-Chair of talented colleagues in Connecticut that will allow us to grow the the American Bar Associationʼs Committee on Corporate Coun- practice and continue to provide ﬁrst-rate service to The Hartford sel, Section of Litigation, and is the Meeting Co-Chair for the on a national basis.” organizationʼs 2010 Section of Litigation Annual Meeting. He is Shipman & Goodwinʼs new Washington address is: 1133 Con- a member of the Connecticut Bar Associationʼs (CBA) Federal necticut Avenue NW, Washington, DC 20036. Judiciary Committee and of the organizationʼs House of Dele- Web site: www.shipmangoodwin.com gates, and is an Executive Committee member for CBAʼs Litiga- tion Section. He also serves as a Board member of the Greater For more information, contact Jill A. Mastrianni, Chief Mar- Hartford Legal Aid Foundation and belongs to the Connecticut keting Ofﬁcer, Shipman & Goodwin LLP at (860) 251-5090 or Hispanic Bar Association and the George W. Crawford Black Bar firstname.lastname@example.org or Laura Soll, Laura Soll Public Re- Association. lations at (860) 688-4499 or email@example.com. The National Bar Association Commercial Law Section The Commercial Law Connection PAGE 9 in 1997, is dedicated to empowering African-American insurance professionals currently in the industry as well as increasing their numbers nationwide. More information about NAAIA is avail- able at www.naaia.org. Deborah E. Lewis – Joins Mr. Johnson also accepted a three-year term as a committee member of the Claims Interest Group Section of the Chartered the Dallas Ofﬁce of Yoss Property and Underwriters Society (CPCU Society). The CPCU White & Wiggins Society, a nonproﬁt trade association founded in 1944, is a com- Visitors are warned “Donʼt Mess With munity of credentialed property and casualty insurance profes- Texas”, however, opposing counsel to sionals who promote excellence through ethical behavior and Texas attorney Deborah E. Lewis also say continuing education. The Claims Interest Group Section is a “Donʼt Mess With Debbie”. Deborah E. source for technical, functional and personal development infor- Lewis, partner at Yoss White & Wiggins, mation for the claim professional. More information about the of Dallas, Texas, takes no prisoners when she defends her clients. CPCU Society is available at www.cpcusociety.org. Her representation of defendants in pharmaceutical and medical device lawsuits has earned her the status of “go to” counsel. Mr. Johnson, who recently moved his law ofﬁce – D. O. John- son Law Ofﬁce, PC – to Philadelphia, PA, can be reached On August 6, 2010, the Illinois Appellate Court afﬁrmed sum- at firstname.lastname@example.org or through his website – www. mary judgment in favor of Alcon Laboratories, Inc., 343 Ill.Dec. dojlaw.com. 206, 934 N.E.2d 530 (2010) in a case involving an alleged defec- tive intraocular lens. After being asked by Alcon Laboratories Gregory M. Wesley – to take over the case from another ﬁrm, Ms. Lewis wasted little Elected Fellow in Trial time crafting a new defense strategy and taking the deposition Honorary Society of Plaintiffʼs expert. She argued the summary judgment motion which was based on preemption and on the lack of evidence of a Gregory M. Wesley, a Partner at Gonza- defect. After winning the motion, Ms. Lewis prepared the appel- lez, Saggio & Harlan LLP in Milwaukee, leeʼs brief, which was so persuasive the Illinois Court afﬁrmed Wisconsin, was elected as a 2010 Fel- without hearing oral argument. low in the Litigation Counsel of America (LCA), Trial Honorary Society. Among On behalf of her client, Alcon Laboratories, both a pharmaceuti- other things, the purpose of the LCA is to recognize deserving, cal and medical device company, Ms. Lewis has won numerous experienced, and highly qualiﬁed lawyers, to provide an outlet summary judgments and dismissals, and has not paid any money for scholarly authorship of legal articles on trial and litigation in settlement of lawsuits. practice, to provide additional sources for professional develop- ment, and to promote superior advocacy and ethical standards in In addition to defending pharmaceutical and medical device cli- the practice of law. More information about LCA is available at ents in litigation, Deborah Lewis advises clients on federal regu- www.trialcounsel.org. latory issues concerning products, including product recalls. She also defends automobile and component part manufacturers in Mr. Wesleyʼs practice includes Labor and Employment, Govern- product liability litigation. Ms. Lewis is a frequent speaker ment Relations, and Indian law. He can be reached at (414) 277- on various legal topics involving health care issues, product li- 8500 or email@example.com. ability issues, and litigation strategy. She serves as Secretary to the NBA Health Law Section, Co-Chair of the Medical Device DeMonica D. Gladney Action Alliance of the Health Industry Council of DFW, and is a – Elected Chair of NBA member of the Defense Research Institute. Women Lawyers Division On August 9, 2010, DeMonica D. Glad- Donald O. Johnson – ney, a NBA-CLS Executive Committee Accepts Positions in Member, was elected Chair of the NBA Two National Trade Women Lawyers Division (NBAWLD) for the 2010-2011 term during the NBA Associations Focused on 85th Convention in New Orleans. She the Insurance Industry previously served as the NBAWLD First Vice-Chair, Board Donald O. Johnson, J.D., LL.M., CPCU Member and Chaplain. In addition to her successful legal ca- was named General Counsel of the Na- reer, DeMonica is a bestselling author and will be releasing her tional African-American Insurance Asso- next book, Identity Theft: Discovering The Real You, in the fall ciation (NAAIA). NAAIA, a non-proﬁt trade association founded of 2010. Her author website is www.authordemonicadgladney. The National Bar Association Commercial Law Section PAGE 1 0 The Commercial Law Connection Can Your Employee Secretly Record… continued from page 2 criminal penalties for such devious acts. In these situations, against employees for secretly recording conversations even if employers should be quick to advise such employees both of the recording was done under the guise of collecting informa- the law and of the fact that the company will not hesitate to tion for a discrimination suit.4 pursue any remedy available to it, whether civil or criminal. Regardless of whether secret recordings are legal under state Also, if the employer believes that the act of secretly record- or federal law or qualify as a “protected activity” under anti-re- ing a conversation is, in and of itself, a waste of company time taliation laws, employers are well-served by training managers and resources, an act of disloyalty, or otherwise inappropriate, and other decision makers to be careful in their conversations employers are generally free to discharge the employee, assum- with other employees, especially those employees who may be ing the employee is at-will. Getting to that point, however, on the verge of losing their job, are disgruntled, or are other- is somewhat rare in “all-party consent” states given that the wise suspicious of the company. Should an employer discover penalties under the law generally sufﬁce to deter most from that an employee is making secret recordings, it should contact secretly recording conversations. legal counsel. Secret recordings typically do not “ﬂy solo,” as In “one-party consent” states, on the other hand, employers they almost always accompany other legal issues that an em- have much more to worry about, as just about any conversa- ployer is facing or will soon face. tion can be legally recorded without their knowledge. To com- 1 See Wilkins v. NBC, Inc., 71 Cal. App. 4th 1066 (Cal. Ct. bat this, many employers have policies that expressly forbid App. 1989). clandestine recordings. For the most part, these policies are a 2 See People v. Kirsh, 176 A.D.2d 652 (N.Y. App. Div. 1991). permissible and effective way to deter employees from record- 3 See Heller v. Champion Intʼl Corp., 891 F.2d 432, 436-437 ing conversations without their employerʼs knowledge. They (2nd Cir. 1989). can also serve as legitimate non-discriminatory grounds for 4 See Argyropoulos v. City of Alton, 539 F.3d 724, 733-734 discharging employees who violate the policy. (7th Cir. 2008) (“Although Title VII indubitably protects an Does this dynamic change, though, if the employee claims that employee who complains of discrimination . . . the statute the recording was done in order to document or investigate dis- does not grant the aggrieved employee a license to engage in crimination or harassment? Does the recording then become a dubious self-help tactics or workplace espionage in order to protected activity? While according to the EEOC, the answer gather evidence of discrimination.”) generally is yes, courts are split over the issue. Anti-retalia- * Warren E. Buliox, Esq. is an attorney tion laws prohibit employers from retaliating against employ- with the Employment Law Group at the ees because of the employeeʼs opposition to or participation Milwaukee, Wisconsin ofﬁce of Gonza- in an investigation of discriminatory conduct. Some courts, lez, Saggio & Harlan, LLP. He repre- like the Second Circuit (which covers Connecticut, New York, sents employers in employment litigation and Vermont), have held that making a secret recording to col- and advises management on all aspects lect evidence of discrimination is a protected activity and that of employment relations. He can be con- employers, as a matter of law, cannot take action against em- tacted at (414) 277-8500. ployees for making those recordings.3 Other courts, such as the Seventh Circuit (which covers Illinois, Indiana, and Wis- consin), have held that employers can take disciplinary action Highlights from the NBA Convention - New Orleans The National Bar Association Commercial Law Section The Commercial Law Connection PAGE 11 National Bar Association 2010-11 Calendar of Events January 26-30, 2011 May 2011 Judicial Council Board of Governors Women Lawyersʼ Division Supreme Court Mid-Winter Meeting Swearing-In Ceremony San Juan Marriott Resort & Stellaris Casino Washington, DC San Juan, Puerto Rico June 4-15, 2011 February 25-26, 2011 NBA International Afﬁliate Commercial Law Sectionʼs Chapter Meeting 24th Annual Corporate Counsel Conference Morocco JW Marriott Orlando, Florida July 2011 NBA Crump Law Camp March 9-13, 2011 National Black Law Students Association July 31-August 4, 2011 43rd Annual Convention NBA 86th Annual Convention Houston, Texas Hilton Baltimore Baltimore, Maryland March 16-20, 2011 Small Firms/Solo Practitionersʼ Division October 2011 16th Annual Conference Wiley A. Branton Issues Symposium Co-Sponsored by Young Lawyers Division Co-Sponsored with Howard University Puerto Plata, Dominican Republic TBA April 2011 November 2011 Annual Mid-Year Conference & 23rd Annual Wiley A. Branton Gertrude E. Rush Award Dinner Town Hall & Board Meeting Oakland, California TBA Avis Russell… continued from page 4 • Maintain your integrity and sense of right and wrong. The Commercial Law Section thanks Avis Russell for her courageous efforts over many years to ensure that minority With respect to the attributes that are important to her when outside counsel receive work and origination credit on her selecting outside counsel, Ms. Russell stated: “It is presumed projects. We also thank her for her willingness to share the that if I am talking to them, I believe that they possess the knowledge that she has gained as in-house counsel with her technical skills and resources I need. I want them to be fair, fellow section members and wish her continued success in honest, and more concerned about providing excellent legal the future. services than they are about getting a fee. It is important that we have a good rapport; therefore, they must be good commu- * Donald O. Johnson, J.D., LL.M., nicators, clear, concise and direct; comfortable in their skin; CPCU practices at D.O. Johnson Law and conﬁdent, not cocky in their demeanor.” Ofﬁce, PC in Philadelphia, PA. Ms. Russell offered the following advice for younger at- torneys, “It is important to do something that interests you. However, explore non-traditional areas as well. I do not ﬁnd many lawyers of color in water and sewer law (SDWA and CWA), energy, construction, ﬁnance (other than public bond issuances), or procurement.” The National Bar Association Commercial Law Section PAGE 1 2 The Commercial Law Connection NATIONAL BAR ASSOCIATION COMMERCIAL LAW SECTION 2010-2011 EXECUTIVE COMMITTEE David B. Cade, Esq. DeMonica D. Gladney, Esq. Brian K. Telfair, Esq. Chair Corporate Liaison Advisor The Boeing Company Exxon Mobil Corporation Deputy City Attorney for Defense, Space & Security 13501 Katy Freeway Litigation and Public Safety 100 Airport Way CORP-EMCC-W1-570 Richmond City Attorneyʼs Ofﬁce MC: S-100-3340, Bldg. 100 Houston, TX 77079 900 E. Broad St., Suite 300 Berkeley, MO 63134 Tel: 281.870.6047 Richmond, VA 23219 Tel: 314.232.8201 firstname.lastname@example.org Tel: 804.646.7953 email@example.com firstname.lastname@example.org Damon P. Hart, Esq. Dawn Tezino, Esq. Advisor Tamika Langley Tremaglio, Esq. Vice Chair Ogletree, Deakins, Nash Smoak Advisor MehaffyWeber, P.C. & Stewart, P.C. Deloitte Financial Advisory Services 2615 Calder, Suite 800 One Boston Place, Suite 3220 LLP P.O. Box 16 Boston, MA 02108 555 12th Street, NW, Suite 500 Beaumont, TX 77702 Tel: 617.994.5700 Washington, DC 20004-1207 Tel: 409.835.5011 email@example.com Tel: 202.879.5693 firstname.lastname@example.org email@example.com Jean-Marie Sylla, Jr. Esq. Robert R. Simpson, Esq. Newsletter Liason Dinisa Hardley Folmar, Esq. Treasurer Taylor, Sylla & Agin, LLP Corporate Liaison Shipman & Goodwin LLP The Continental Building The Coca-Cola Company One Constitution Plaza 1012 Fourteenth Street, NW One Coca-Cola Plaza Hartford, CT 06103-1919 Suite 415 Atlanta, GA 30313 Tel: 860.251.5515 Washington, DC 20005 Tel: 404.676.2351 firstname.lastname@example.org Tel: 202.783.7876 email@example.com jmsylla@tsaﬁrm.com Vickie E. Turner, Esq. Karol Corbin Walker, Esq. Secretary LaTanya Langley, Esq. Advisor Wilson Turner Kosmo LLP Corporate Liaison LeClairRyan 550 West C Street, Suite 1050 Diageo North America Two Penn Plaza East San Diego, CA 92101 801 Main Avenue Newark, NJ 07105 Tel: 619.236.9600 Norwalk, CT 06851 Tel: 973.491.3522 firstname.lastname@example.org Tel: 203.229.4503 email@example.com firstname.lastname@example.org Kimberly R. Phillips, Esq. Gregory M. Wesley, Esq. Immediate Past Chair Sundria R. Ridgley, Esq. Advisor Shell Oil Company Corporate Liaison Gonzalez, Saggio & Harlan LLP One Shell Oil Plaza Radio One 225 E. Michigan, Fourth Floor 910 Louisiana, Suite 4804 1 Centennial Plaza Milwaukee, WI 53202 Houston, TX 77002 705 Central Avenue, Suite 200 Tel: 414.277.8500 Tel: 713.241.3200 Cincinnati, OH 45202 email@example.com firstname.lastname@example.org Tel: 513.679.6009 email@example.com Theodore A. Wood, Esq. Michael K. Choy, Esq. Website Liaison Advisor Sterne, Kessler, Goldstein & Fox PLLC Burr & Forman LLP 1100 New York Avenue, NW 420 North Twentieth Street Washington, DC 20005 Suite 3400 Tel: 202.772.8520 Birmingham, AL 35203 firstname.lastname@example.org Tel: 205.458.5364 email@example.com The National Bar Association Commercial Law Section The Commercial Law Connection PAGE 1 3 Highlights from the NBA Convention - New Orleans The National Bar Association Commercial Law Section NBA Commercial Law Section Newsletter The National Bar Association Editorial Board Commercial Law Section Newsletter Jean-Marie Sylla, Jr., Esq. Taylor, Sylla & Agin, LLP Washington, DC Veronica L. Merritt, Esq. The Commercial Law Connection Ogletree, Deakins, Nash, Smoak & Stewart, P.C. CONNECTING PEOPLE, IDEAS Birmingham, AL AND OPPORTUNITIES Tamika Langley Tremaglio, Esq. Deloitte Financial Advisory Services LLP Washington, DC National Bar Association NBA Commercial Law Phone: (202) 842-3900 Section Design/Publisher Fax: (202) 289-6170 Jeanette Zakkee Zakkee and Associates Email: firstname.lastname@example.org Atlanta, GA BAR National Bar Association Non-Proﬁt THE NATIONAL ASSOCIATION N Commercial Law Section U.S. Postage B A 1225 11th Street, NW PAID Washington, D.C. 20001 Permit No. 7163 1925 Washington, D.C.
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