Business Torts and Employment Litigation Blog

Interested in the TICL Section? Like Disney? Good news! The TICL Section will be holding a get-together to let you learn about our Fall Meeting. Appetizers and refreshments will be served. Every attendee will receive a ticket at the door for one complimentary drink (beer, wine, mixed drink, soda), as well as all the snacks you can eat.

When?:
Wednesday, September 1st
(5:30-7:30 pm)

Where?:
Pearl Street Brewery
76 Pearl Street, Buffalo, NY

What is the Fall Meeting?:
The Fall Meeting scheduled for this October (10/7 to 10/10) in Disney World’s beautiful Yacht & Beach Club Resort, Lake Buena Vista, Florida. It will include an informative program for both the experienced professional as well as newly admitted attorneys. Speakers include various insurance professionals, judges from across NY State and seasoned practitioners. This program provides up to 6.5 MCLE credits hours. The Fall Meeting is a family and friends event. The CLE programs are in the morning, leaving you the rest of the day to play golf and/or visit all the great attractions that Disney has to offer. In the evenings, we have planned some cocktail receptions with hors d’oeuvres and Saturday evening we will have a buffet dinner where you can meet and interact with judges, your colleagues, and CLE speakers.

LINKS:
TICL Webpage Link

Fall Meeting Program Link

For more information, please contact Lisa G. Berrittella

Mark J. Lemire, Esq. has recently been appointed to serve as Vice-Chair of the Business Torts and Employment Litigation Committee of the Torts, Insurance and Compensation Law Section. Mr. Lemire is an attorney with Lemire Johnson, LLC in Malta, New York. His practice includes complex federal and state litigation, as well as proceedings before administrative agencies, with an emphasis on employment law.

As Vice-Chair, Mr. Lemire will be responsible for strengthening the Committee's employment litigation focus. He joins Vice-Chairs Russell J. Matuszak, Esq. (In-House Counsel Outreach) and Sean C. McPhee, Esq. (Business Torts). Mr. Matuszak is Legal Counsel for HealthNow New York Inc. and Mr. McPhee is an attorney with Phillips Lytle LLP.

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Statement of Administrative Judge Regarding Implementation of a Rule of the Commercial Division (June 30, 2010)

LINK

The Torts, Insurance, and Compensation Law Section of the New York State Bar Association will present:

Law School for Insurance Professionals
Friday, October 1, 2010
Holiday Inn Amherst
1881 Niagara Falls Blvd.
Amherst, NY 14228

BUFFALO EVENT LINK

REGISTER FOR BUFFALO LOCATION*

*The last day to pre-register online is September 30, 2010.

**********************************************************************

OTHER LOCATIONS:

New York City - 9-28-10

Syracuse - 9-28-10

Albany - 9-29-10

Long Island - 10-1-10

Westchester - 10-1-10

DDJ Mgt., LLC v. Rhone Group LLC, ___ N.E.2d ___, 2010 WL 2516811 (N.Y.), 2010 N.Y. Slip Op. 05603 (June 24, 2010), involved four companies ("plaintiffs") that loaned a total of $40 million in March of 2005 to the now defunct American Remanufacturers Holdings, Inc. and affiliated companies ("ARI"). Plaintiffs brought suit against ARI's shareholders and others ("defendants"), alleging, among other things, that defendants defrauded plaintiffs into making the loans through the use of material misrepresentations in financial statements provided to plaintiffs. Although the financial statements on which the plaintiffs relied "contained some features that might have aroused concern in a skeptical reader who examined them carefully," plaintiffs had also insisted that ARI represent and warrant that the financial statements were "accurate." Plaintiffs claim that all of these representations and warranties later proved to be false.

Defendants moved for dismissal of all plaintiffs' causes of action under CPLR § 3211. The Supreme Court (New York County) dismissed all of the claims except the claim of fraud. The Appellate Division (First Department) modified the Supreme Court decision and dismissed that claim as well, emphasizing that "plaintiffs never looked at ARI's books and records" and concluded that, having failed to do so, they could not then "properly allege reasonable reliance on the purported misrepresentations." The Court of Appeals granted leave to appeal and reversed.

Defendants claimed that, under the rule stated in Schumaker v. Mather, 133 NY 590, 596 (1892), plaintiffs had the means of knowing, "by the exercise of ordinary intelligence, the truth or the real quality of the subject of the [statements]," and, as such, were required to "make use of those means [in order to conserve a] complain[t] that [plaintiffs were] induced to enter into the transaction by misrepresentations."

The Court distinguished cases in which that rule had been applied against sophisticated business persons or entities claiming to have been defrauded, stating that "where a plaintiff has gone to the trouble to insist on a written representation that certain facts are true, it will often be justified in accepting that representation rather than making its own inquiry."

The Court cited JP Morgan Chase Bank v. Winnick, 350 F.Supp.2d 393 (S.D.N.Y. 2004), in holding that the facts of several state and federal cases applying New York law did "not support the interpretation that a duty to inquire is necessarily triggered as soon as a plaintiff has the slightest 'hints' of any 'possibility' of falsehood." The Court also agreed with the JP Morgan Court that it was unable to say as a matter of law that "a reasonable lender of equivalent experience should have inquired further" into defendants' financial statements after having obtained representations and warranties to the effect that nothing in the financial statements was materially misleading. As such, the Court held that whether the plaintiffs were justified in relying on the warranties they received is a question better resolved by a trier of fact.

The Court stated that in order to sustain its claim, plaintiffs must prove that the representations and warranties were false and that the shareholder defendants knew the financial statements gave an untrue picture of ARI's financial condition. This claim, however, would survive the pleading stage because a plaintiff alleging that it has been a victim of fraud should not be "denied recovery merely because hindsight suggests that it might have been possible to detect the fraud when it occurred."

DECISION TEXT

Daniel J. Gocek, Law Student at University of Virginia School of Law

While online social networking websites may have initially targeted high school and college students, they have rapidly expanded to all demographics. More importantly, they've reached even the largest corporations and a whole host of smaller companies and not-for-profit organizations of all shapes and sizes. Even law firms (from Wall Street to Main Street) have established presences in social media.

Some professional uses for social networking are obvious: marketing, networking, communication. But virtually every aspect of modern business has felt the impact of the social media revolution, including recruiting, training, and product development. Simply put, very few organizations can afford to ignore this tidal wave of the future present.

Perhaps the most appealing hallmark of social media is the cost, which is generally perceived as nominal for most applications. However, in addition to tangible operating costs and assorted opportunity costs, the proliferation of social media also imposes new or heightened threats to the litigation budget. Like it or not, when it comes to social media, the law still matters.

For better or worse, employees can cause the same type of trouble for themselves or their employers through social media as they can through other channels. In fact, the peculiar aspects of social media may exacerbate the frequency and severity of the problems.

The following are several areas in which social networking poses a host of legal risks:

• Harassment: The prevalence of social networking has not (yet) changed the terms of anti-harassment laws. However, it has created new forums in which harassment can occur. Of paramount concern is the informality generally associated with social networking communications. Moreover, comments made on the Internet are usually stored in some form or another for an extended period of time, potentially leaving easily recoverable evidence of wrongdoing.

• Defamation: Derogatory comments made through social networking sites can result in litigation, and already have in some cases.

• Copyright/Trademark Infringement: Virtually all of the information on the Internet is copyrighted, including social networking posts and messages. However, the very nature of such media provides an environment in which content is frequently copied and reused without permission.

• Breach of Confidentiality: Since the age of e-mail it has been possible for large volumes of information to be disseminated to a host of recipients with just few clicks of a mouse. However, social networking activities may increase the risk of disclosure by an employee or discovery by an aggrieved party. Social networking likely also provides more fertile grounds for inadvertent breaches.

• Endorsement Advertising Violations: Individuals and companies who promote products online may be subject to FTC regulations, including the recently revised "Guides Concerning the Use of Endorsements and Testimonials in Advertising." 16 C.F.R. Part 255.

In addition to the general concerns described above, the increased role of social media in recruiting and hiring practices also introduces a number of legal concerns, including the following:

• Discrimination: Information contained on social networking sites tends to differ markedly from that found on job applications or resumes. Consequently, employers may gain (and potentially rely upon) information regarding protected categories (e.g., religion, sexual orientation) that would not otherwise be obtained through traditional hiring methods.

• N.Y. Labor Law § 201-d: Sometimes referred to as the "Smokers' Rights Law," this statute more broadly prohibits employers from taking adverse action against employees and applicants based on the legal use of consumable products (e.g., cigarettes, alcohol) outside of work and their lawful off-duty recreational activities. With some potential exceptions, this law prohibits employers, in most situations, from refusing to hire someone based on the fact that the applicant engages in social networking or, for example, that the applicant has posted multiple pictures involving the use of alcohol at a party and related lawful, but perhaps professionally questionable, activities.

• Fair Credit Reporting Act: The Fair Credit Reporting Acts requires that employers obtain informed, written consent of applicants before conducting background checks through third-party consumer reporting agencies. This requirement would likely apply where a third-party recruiter is reporting on information found through social networking sites or other online content.

• Recordkeeping: Most employers are required, and all are generally advised, to maintain certain information about job applicants for a period of time. Information obtained about applicants through the Internet may be subject to these requirements or applicable employer practices and procedures.

Finally, perhaps the most uncertain of the issues addressed here is the question of whether employees and job applicants have applicable speech or privacy rights with respect to their social networking activities. Public employees may have constitutional protections in some limited circumstances. Employees may also have certain enforceable rights through various state and federal electronic communications and wiretapping statutes. And in some cases, the terms of use of the various social networking websites might also yield a source of protection for individuals not wanting their profiles viewed by their current or prospective employers.

As with so many aspects of human resources practice, employers' best defense to these legal threats lies in well-designed preventative measures. As a first step, employers should promulgate a social media policy tailored to their particular workplace. Training regarding best practices is also recommended. However, it is critical that this initial focus not be a one-time impetus. Given the nature of social media, policies and practices will need to be routinely monitored and periodically revised. Moreover, multiple business areas (human resources, operations, IT, legal, etc.) must play an ongoing role.

Appropriately utilized, social networking tools can be both exciting and rewarding—especially for those who take the appropriate precautions in their use.

Scott P. Horton, Esq.

Additional Link

In Gallelli v. Crown Imports, LLC, ___ F.Supp.2d ___, 2010 WL 1177449 (E.D.N.Y. March 20, 2010), the parents of a child brought a personal injury action against multiple defendants, including a holding company, alleging that the child was injured when a bottle of Corona that was brewed, bottled and imported by the holding company's subsidiary exploded. The holding company, which is a Mexican company with its principal place of business in Mexico, sought leave to file a motion to dismiss based on lack of personal jurisdiction. The Court ordered the parties to engage in limited discovery on the jurisdictional issue prior to briefing the motion and, after discovery, the Court entertained the motion.

Plaintiff alleged personal jurisdiction over the holding company pursuant to CPLR 301 and/or 302(a)(3). Under CPLR 301, a foreign corporation is subject to jurisdiction in New York if it is "doing business" here. A foreign corporation is "doing business" in New York (for purposes of CPLR 301) if it "does business in New York not occasionally or casually, but with a fair measure of permanence and continuity." Factors to be considered include the existence of a New York office, the presence of bank accounts in New York, ownership of property in New York, and the presence of agents or employees in New York. Solicitation of business alone, however, is insufficient.

Moreover, a foreign corporation that is not "doing business" itself in New York may nevertheless be subject to jurisdiction under CPLR 301 based upon the acts of a related company that is doing business in New York. Specifically, if the related company is merely a department of the foreign defendant or the foreign defendant's agent, jurisdiction will be sustained.

Regarding the former, a subsidiary will be considered a "mere department" of the foreign defendant where the foreign defendant's control over the subsidiary is "pervasive enough that the corporate separation is more formal than real". Common ownership is essential, but alone, insufficient. Instead, the Court must also consider (i) the financial dependency of the subsidiary on the parent; (ii) the parent company's interference in the assignment of the subsidiary's key personnel; (iii) the observance (or lack thereof) of corporate formalities; and (iv) control by the parent of the day-to-day operations.

Under the agency theory of CPLR 301 jurisdiction, the plaintiff must show that the subsidiary "does all of the business which the parent corporation could do were it here by its own officials." The activities must also be important enough to the foreign corporation that in the absence of an agent, the foreign defendant would undertake to perform substantially services. Alternatively, the Court considers whether the subsidiary is carrying out its own business, or the business of the parent.

With these principles in place, the Court undertook its analysis and first determined that because the holding company does not have offices, employees or telephone listings in New York (or anywhere in the United States for that matter) it was not "doing business" in New York by itself. With respect to the "mere department" test, the Court held that "while there may be some overlapping executive personnel among certain of the corporate entities, there is no showing of common ownership that is a 'necessary prerequisite' to a mere department finding." The Court also determined that the holding company's business is best described as "the holding of stock in other companies" rather than any aspect of the beer brewing or distribution businesses. Because the subsidiaries carry out their own business (brewing, bottling, etc.) and not the investment business of the holding company, the subsidiaries could not be considered agents of the holding company under CPLR 301.

As for jurisdiction under CPLR 302(a)(3), the plaintiff was required to establish that the holding company, either personally or through an agent, committed a tortious act outside of New York that caused injury within New York. The plaintiff claimed that the tortious act was the manufacture of a defective Corona bottle in Mexico. Because the holding company did not manufacture the Corona bottle, the plaintiff was required to establish an agency relationship among the holding company and the bottle manufacturer. As discussed above, the Court determined that the holding company is not involved in the beer business, but instead, is in the business of investment. Accordingly, the plaintiff was unable to establish the requisite agency relationship in order to sustain jurisdiction under CPLR 302(a)(3).

Ultimately, the Court granted the holding company's motion and dismissed the complaint as against it. The Court's decision is likely form over function, however, as the plaintiff was given leave to amend in order to name additional defendants that were identified during the jurisdictional discovery.

Sean C. McPhee, Esq.

The Business Torts and Employment Litigation Committee is collaborating with the Commercial and Federal Litigation Section, as well as the Bar Association of Erie County, in organizing an event honoring the outgoing 8th Judicial District Commercial Division judge in Buffalo (Justice Curran). It will be held on 6/24 at 5:30 at the Saturn Club.

Event Link
Event Write-Up
Photo
If you are in the area, please consider attending. Please also pass along to anyone you think might be interested.

Justice Curran Bio

In Merck & Co, Inc. v. Reynolds (No. 08-905), 559 U.S. _____ (2010), the Court addressed the timeliness of a complaint filed in a private securities fraud action. To be timely a complaint must be filed no more than two years after the plaintiffs “discover[ed] the facts constituting the violation.” 28 U.S.C. § 1658(b)(1). The Court held “that the cause of action accrues (1) when the plaintiff did in fact discover, or (2) when a reasonably diligent plaintiff would have discovered, ‘the facts constituting the violation’ – whichever comes first.” Critical to this case, the Court also held “that the ‘facts constituting the violation’ include the fact of scienter, ‘a mental state embracing intent to deceive, manipulate, or defraud.’”

In this case, Reynolds was the named plaintiff for group of investors claiming that Merck knowingly misrepresented the risk of heart attacks associated with the use of a pain-killing drug, Vioxx. The Reynolds plaintiffs claimed that the public’s later discovery of the risk lead to economic losses and they brought a securities fraud case under §10(b) of the Securities Exchange Act of 1934.

Reynolds’s claims had to be filed “not later than the earlier of – (1) 2 years after the discovery of the facts constituting the violation; or (2) 5 years after such violation.” 28 U.S.C. § 1658(b). The complaint was filed on November 6, 2003 and there was no dispute that this was within the five year limit contained in § 1658(b)(2). Therefore, the complaint was timely if the claim arose after November 6, 2001.

At the trial court Merck moved to dismiss the case because the plaintiffs had or should have discovered the “facts constituting the violation” prior to November 6, 2001. Merck based this argument on (1) a March 200 study comparing Vioxx with naproxen and showing adverse cardiovascular results with Vioxx; (2) an FDA warning letter dated September 21, 2001 stating Merck’s marketing regarding the cardiovascular results of Vioxx tests was “false, lacking in fair balance, or otherwise misleading, and (3) pleadings in a products-liability case from September and October 2001 alleging that Merck had intentionally concealed information about Vioxx’s risks. Reynolds argued that they did not and could not have discovered the key facts before November 6, 2001. In particular, Reynolds focused on facts relating to scienter, which they must prove as an element of their claims.

The District Court granted Merck’s motion to dismiss finding that Reynolds should have known all necessary facts prior to November 6, 2001. The Third Circuit, however, reversed holding that Reynolds did not or could not have known that Merck acted with scienter before November 6, 2001.

Initially, Merck argued that even if Reynolds did not know the facts related to scienter, those facts were not necessary to begin the running of the statute of limitations. The Court, rejected this argument. According to the Court, “Scienter is assuredly a ‘fact.’” Further, this fact “’constitute[es]’ an important and necessary element of a §10(b) ‘violation’” because “[a] plaintiff cannot recover without proving that a defendant made a material misstatement with an intent to deceive – not merely innocently or negligently.” As such, a plaintiff must have discovered or should have discovered facts demonstrating scienter before the statutes of limitations in §1658(b) begins to run.

Next the Court examined when Reynolds had or should have realized Merck acted with the requisite scienter. Merck argued that knowledge of a materially false or misleading statement or a material omission are sufficient to show scienter. The Court rejected this position. The Court found that simple incorrect statements may not have the required scienter because often the statements at issue are predictions about future earnings, which may turn out to be false without the issuer of the statement deliberately misleading investors. Therefore, a potential plaintiff must know about more than a simple false statement to be deemed to have the necessary facts supporting scienter.

Finally, Merck argued that prior to November 2001, plaintiffs had enough information that they should have made further inquiries into potential claims, so called “inquiry notice.” Merck contended that the statute of limitations should begin to run at the point plaintiffs have inquiry notice. Again the Court rejected Merck’s argument. The Court reasoned that since inquiry notice requires the plaintiff to investigate further, inquiry notice is necessarily acquired before the time at which a plaintiff would have or should have discovered all the necessary facts. The statute does not require a plaintiff to file a claim before the plaintiff has or should have knowledge of the elements of the claim, including knowledge of scienter. Thus, the point at which a plaintiff has inquiry notice cannot be the same point at which the statute of limitations begins to run.

For the forgoing reasons, the Court determined that the statue of limitations under “§1658(b)(1) begins to run once plaintiff did discover or a reasonably diligent plaintiff would have ‘discover[ed] the facts constituting the violation.’ – whichever comes first.” Since none of the facts known prior to November 6, 2001 gave Reynolds knowledge about the element of scienter, the Third Circuit’s decision was affirmed.

Jason B. Desiderio, Esq.

In Stolt-Nielsen S.A. v. AnimalFeeds International Corp. (No. 08-1198), 559 U.S. ____ (2010), the Supreme Court refused to force class arbitration where the parties had not previously consented to it.

Stolt is a shipping company. AnimalFeeds shipped products with Stolt pursuant to a standard contract. The contract had an arbitration clause, which, the parties stipulated, did not address whether class arbitration was proper.

A criminal investigation revealed that Stolt was engaged in an illegal price fixing conspiracy. Upon learning of the conspiracy, AnimalFeeds brought class action against Stolt in the District Court for the Eastern District of Pennsylvania asserting antitrust claims. Other companies brought similar suits, including one in the District Court for the District of Connecticut. In the Connecticut case the District Court held the claims were not subject to arbitration under the contract’s arbitration clause. The Second Circuit, however, reversed.

While the Connecticut case was at the Second Circuit, the Judicial Panel on Multidistrict Litigation consolidated all of the cases, including AnimalFeeds’ case, in the District of Connecticut. As such, AnimalFeed and Stolt were required to arbitrate their dispute pursuant to the Second Circuit’s decision.

Then AnimalFeed submitted to Stolt a claim for class arbitration in New York City. The parties agreed that a panel of arbitrators would determine if class arbitration was proper under the governing arbitration clause. As part of this process the parties stipulated that the arbitration clause was silent on the issue of class arbitration.

AnimalFeeds gave three reasons for allowing class arbitration. First, since the arbitration clause was silent on the issue, class arbitration was permitted under Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003). Second, the clause should allow class arbitration as a matter of public policy. And third, the arbitration clause is unconscionable and unenforceable if it forbade class actions.

The panel of arbitrators rejected AnimalFeeds’ first argument, and the Supreme Court agreed. Also, the panel did not address AnimalFeeds’ third argument. Instead, the arbitrators determined that class arbitration was proper as a matter of public policy. Specifically, “the panel based its decision on post-Bazzle arbitral decisions that ‘construed a wide variety of clauses in a wide variety of settings as allowing for class arbitration.’” The arbitration was then stayed to allow for judicial review. The District Court for the Southern District of New York vacated the arbitrators’ decision, but again the Second Circuit reversed.

The Supreme Court explained that the job of an arbitrator is to interpret and enforce a contract. An arbitrator’s decision is unenforceable if he exceeds that mandate. By relying on post-Bazzle arbitral decisions and acting as if they had the powers of a common law court, the arbitrators exceeded their authority. Instead, the panel was required to determining what the absence of an agreement to class arbitration meant under the FAA, federal maritime law, or New York law. Since the arbitrators exceeded their authority, the Supreme Court vacated the arbitrators’ decision and decided the issue themselves under §10(b) of the FAA.

According to the Court, the Federal Arbitration Act imposes specific “rules of fundamental importance.” One of these rules is “that arbitration ‘is a matter of consent, not coercion.’” Arbitration agreements are contracts, which should be enforced according to the parties’ intentions. As such, parties can structure their agreements to arbitrate as they see fit, and can choose with whom they want to arbitrate. Thus, ‘a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.”

Because of the fundamental differences between class arbitration and bilateral arbitration, an agreement to arbitrate, alone, cannot be construed as an agreement to accept class arbitration. The Court, therefore, held that absent an agreement to accept class arbitration, imposing class arbitration on the parties is inconsistent with the FAA.

Jason B. Desiderio, Esq.

NOTICE TO THE BAR - April 1, 2010

New York County

Mandatory Electronic Filing in New York County commences May 24, 2010.
LINK

On March 31, 2010, the Supreme Court ruled that a Federal Court hearing a case based on diversity jurisdiction may certify a class action under the Federal Rules of Civil Procedure, even though the underlying lawsuit is based upon a state law claim. Shady Grove Orthopedic v. Allstate Insurance (No. 08-1008), 2010 WL 1222272, ____ U.S. ____ (2010).

Shady Grove Orthopedic Associates provided medical care to a patient who was injured in an automobile accident. As part of her payment, the patient assigned her rights to insurance benefits under an Allstate Insurance Co. policy to Shady Grove. The policy was governed by New York law. As such, Allstate had 30 days to pay Shady Grove’s claim. Allstate paid, but not within the 30 days. Allstate then refused to pay the required statutory interest.

Shady Grove sued in the Eastern District of New York. The District Court had jurisdiction based on diversity of citizenship. Shady Grove’s claim was for about $500. Shady Grove, however, brought its claim as a class action seeking to recover on behalf of itself and a class of others to whom Allstate owes interest.

New York prohibits class action suits seeking penalties or statutory minimum damages. N.Y. Civ. Prac. Law Ann. § 901. The District Court, sitting in diversity, found that the statutory interest was a penalty and dismissed the case. The Second Circuit affirmed finding that Federal Rule of Civil Procedure 23 did not conflict with §901(b) and that §901(b) was substantive with in the meaning of Erie R. Co. v. Tompkins, 304 U.S. 64 (1938). Specifically, the Second Circuit found that the rules do not conflict because §901 dealt with the particular type of claim that is eligible for class treatment where Rule 23 dealt with the criteria for determining whether a class can and should be certified. Therefore, the Second Circuit decided §901 must be applied by a Federal Court sitting in New York with diversity jurisdiction despite the existence of Federal Rule of Civil Procedure 23.

The Supreme Court found that Fed. Rule Civ. Proc. 23(b) “creates a categorical rule entitling a plaintiff whose suit meets the specified criteria to pursue his claim as a class action.” As such “Rule 23 provides a one-size-fits-all formula for deciding the class-action question.” The Court also found that New York’s §901(b) addresses the same question, but “it states that Shady Grove’s suit ‘may not be maintained as a class action’ because of the relief it seeks.” (Emphasis added by the Court.) Since Rule 23 would permit the class and §901(b) prohibits the class, the Court found that the two rules conflict. Therefore, §901(b) “cannot apply in diversity suits unless Rule 23 is ultra vires.” Since it is well with in Congress’s power to determine what cases the Federal Courts hear, Rule 23 is not ultra vires.

The Court reinforced its decision with the text of the rules and called the Second Circuit’s line between eligibility and certifiability “entirely artificial”. Importantly, the Court found that Rule 23 explicitly authorizes a federal court to certify a class by stating “if the prescribed preconditions are satisfied ‘[a] class action may be maintained.’” (Emphasis added by the Court.) The term “may”, as used in Rule 23, gives discretion to the plaintiff, not a court, as it is the litigants who maintain actions. Since Rule 23 and §901 both addressed under what circumstances a class action could be maintained, the rules conflicted. Thus, when a plaintiff brings a class action, even if his claim is based on diversity jurisdiction, “like the rest of the Federal Rules of Civil Procedure, Rule 23 automatically applies ‘in all civil actions and proceedings in the United States district courts.”

Jason B. Desiderio, Esq.

The Torts, Insurance and Compensation Law Section (3rd and 4th Judicial Districts)
and
The Trial Lawyers Section (3rd and 4th Judicial Districts) of the New York State Bar Association

Will hold a reception in honor of:

The Hon. Thomas Mercure
On the occasion of his reelection to Supreme Court
and
Reappointment to the Appellate Division, Third Department

and

The Hon. John C. Egan, Jr.
On the occasion of his appointment to the
Appellate Division, Third Department

April 29, 2010 | 6:00 p.m. to 8:00 p.m.
Refreshments and Hors d’oeuvres
Saratoga National Golf Club | Saratoga Springs, New York

***************Reception open to district members only***************

For more information, contact: bmahan@nysba.org

CLICK HERE FOR MORE INFO

RSVP by April 26th to:
Jim Kelly Elizabeth Dumas
(518) 464-1300 Ext. 312 (518) 464-0600 Ext. 221
jkelly@rwgmlaw.com emdumas@ainsworthsullivan.com

In EEOC v. Nichols Gas & Oil, Inc., __ F.Supp. __, 2010 WL 175158 (W.D.N.Y.), the District Court for the Western District of New York examined whether a successor corporation is liable for a Title VII suit filed against the previous corporation. The court determined that under the substantial continuity test, a successor corporation can be liable for the torts of a predecessor, especially when the purchasing entity had notice of the claim, the new company conducted the same business, and the previous company was unable to pay when the action was commenced.

The EEOC brought a Title VII action against Nichols Gas & Oil (“Nichols”). While the action was ongoing, Nichols entered into an agreement with Townsend Oil Corp. (“Townsend”) to sell the company. After Townsend found out about the EEOC claim, it required Nichols to indemnify it from any claims arising from the EEOC complaint. Fearing any negative impacts related to the Title VII action, Townsend changed the name of the company to Townsend Oil Corp. Townsend then sent a letter to Nichols’ customers indicating that the two companies had merged and service would not change.

Defendant Townsend then filed a motion for summary judgment seeking a determination that it has no successor liability for Nichols’ alleged discrimination. Townsend contended the general common law test in Graham v. James, 144 F.3d 229,240 (2d Cir. 1998) should be utilized. The common law states generally a corporation that acquires the assets of another corporation is not liable for the torts of its predecessor. However, the court rejected this argument and stated that the substantial continuity test, not the general common law, is expressly applied to Title VII cases under the Code of Federal Regulations. See 29 C.F.R. § 825.107 (2009).

The substantial continuity test required a court to determine whether the imposition of liability is equitable. The court examined three critical factors in this case, but different factors may be utilized in other situations. Notice was first examined by the court. Townsend had clear notice of the EEOC complaint, and because of this notice, the purchase agreement included an indemnity clause. Therefore, this clear notice weighs in favor of successor liability in under this prong of the test as explained in Golden State Bottling Co., Inc. v. National Labor Relations Bd., 414 U.S. 168, 185, 94 S.Ct. 414, 425, 38 L.Ed.2d 388 (1973). The second factor the court considered was continuing the same business. Here, it was clear that Townsend maintained the same business. The letter to customers provided an assurance that Townsend was engaged in exactly the same conduct Nichols had done in the past. The third and final factor the court considered in the substantial compliance test was the ability to pay. The court determined that Nichols was unable to pay when the action was commenced so Townsend should be liable. To hold otherwise would defeat the purpose of a monetary remedy under Title VII.

Additionally, the court considered whether Townsend is liable for compensatory and punitive damages. Under Musikiwamba v. ESSI, Inc., 760 F.2d 740, 749 (7th Cir.1985), all damages are available under the substantial continuity test. Thus, even though this is an equitable doctrine, it is not limited to equitable relief. Specifically in this case, the court reasoned that compensatory damages are appropriate against Townsend because these damages in a Title VII case are designed to make the employee whole. Accordingly, the court determined that compensatory damages may be appropriate here after a jury determines liability. However, the same cannot be said for punitive damages in this instance. Because punitive damages are designed to punish the wrongdoer, they are not appropriate against Townsend, who is not the wrongdoer in this action. However, it should be noted that the court did not state that punitive damages are never available against a successor corporation.

This case demonstrates the intricacies of successor liability. The substantial continuity test, applied in Title VII cases, is based in equity and requires the court to balance the interests at stake. Thus, results may vary on a case by case basis. However, it seems clear that a successor corporation is liable for the actions of a predecessor when it is aware of these actions and proceeds with the purchase anyway, carries on the same business, and it can pay damages when the predecessor cannot. Finally, it should be noted that both punitive and compensatory damages may apply to a successor.

Matthew J. Kibler, Esq.

The Torts, Insurance and Compensation Law Section will hold a reception in honor of

The Honorable Paula L. Feroleto

April 15, 2010
5:30 p.m. to 7:00 p.m.
Open Bar and Hors d'oeuvres

Pearl Street Grill & Brewery
Buffalo Lighthouse Room, 3rd Floor
76 Pearl Street
Buffalo, NY

RSVP to:
Jennifer Greene
(716) 847-5493
jgreene@phillipslytle.com

HOW TO JOIN THE TICL SECTION

On March 30, The Supreme Court of The United States handed down its decision in Jones v. Harris Associates (No. 08-586), 2010 WL 1189560, ___ US ___ (2010), which focuses on “what a mutual fund shareholder must prove in order to show that a mutual fund investment adviser breached the ‘fiduciary duty with respect to the receipt of compensation for services’ that is imposed by §36(b) of the Investment Company Act of 1940, 15 U.S.C. §80a-35(b) (hereinafter §36(b)).”

Because of the nature of an investment fund, the relationship between a fund and its investment advisor is “fraught with potential conflicts of interest.” To limit the effect of these conflicts, the Investment Company Act of 1940, as amended, contains protections for mutual fund shareholders. One of these protections includes a fiduciary duty, imposed upon investment advisers, to ensure that their compensation is proper and granting individual investors a private right of action for a breach of that duty. 15 U.S.C. §80a-35(b).

In this case, shareholders of three different mutual funds filed an action claiming that the fees charged by their mutual funds manager, Harris Associates, L.P., were “disproportionate to the services rendered” and “not within the range of what would have been negotiated at arm’s length in light of all the surrounding circumstances.”

The District Court granted summary judgment based on Gartenberg v. Merrill Lynch Asset Management, Inc., 694 F.2d 923 (CA2 1982). There, the Second Circuit had stated that the proper standard for determining if a fee violates §36(b) was “whether the fees charged . . . were so disproportionately large that they could not have been the result of arm’s-length bargaining.” In applying that standard, the District Court examined Harris Associates’s fees for its other clients and the fees charged by other investment advisors. It then compared those fees with the fees charged to the shareholders in this case and found that the fees were not outside the appropriate range for such fees.

On appeal, the US Court of Appeals for the Seventh Circuit affirmed, but explicitly disapproved of the Gartenberg test. The Seventh Circuit relied on trust law relating to the creation of a trust and found that the fiduciary (in this case the fund manager) must “make full disclosure and play no tricks but is not subject to a cap on compensation.” Therefore, to prove a violation of §36(b), a plaintiff would have to show the compensation was “so unusual” that it gave rise to an inference “that deceit must have occurred, or that the persons responsible for the decision have abdicated.”

In overturning the Seventh Circuit’s decision and affirming most parts of the standard laid out in Gartenberg, the Court pointed out that prior to the Seventh Circuit’s decision, “something of a consensus had developed regarding the standard set forth over 25 years ago in Gartenberg.” Not only had a similar test been adopted by at least three other Circuit Courts, but the SEC has formalized similar factors in its regulations. In fact, in this case petitioners, respondents, and the Federal Government as Amicus Curiae all argued in favor of the Gartenberg approach, although they differed on its application.

The Court also agreed with the Gartenberg approach because it encompassed the proper meaning of the phrase “fiduciary duty” for that term’s use in §36(b). Finding that the Seventh Circuit’s trust based definition was too narrow, the Court relied on its own decision in Pepper v. Litton, 308 U.S. 295 (1939) for the proper test when evaluating these kinds of contracts. Quoting Litton, the Court said, “The essence of the test is whether or not under all the circumstances the transaction carries the earmarks of an arm’s length bargain.”

Finally, the Court also preferred the Gartenberg standard because it recognized the important function played by the “disinterested directors” of the fund, which are mandated by the Investment Company Act. These disinterested directors must approve adviser fees. As such, Courts should be able to consider the approval of the fee by these disinterested directors when determining if the fee violates §36(b).

Given the consensus that had developed around Gartenberg-type decisions, the Court’s own history in defining “fiduciary duty” in similar contexts, and the deference a Gartenberg-like test would give to the disinterested directors of a fund, the Court found that a test based in the theory of the Gartenberg decision is proper when reviewing fees under §36(b).

Jason B. Desiderio, Esq.

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NOTICE TO THE BAR - March 12, 2010:

Kings County

The Commercial Division welcomes Justice Robert J. Miller. Click on the links below to access his biographical and Part and Chambers information:

Justice Robert J. Miller - Bio | Parts & Chambers

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The US Court of Appeals for the Second Circuit has affirmed the District Court’s decision granting summary judgment to the defendants in the securities litigation against Omnicom Group, Inc. In re Omnicom Group, Inc. Securities Litigation, --- F.3d ---, 2010 WL 774311 (2d Cir.). Plaintiffs brought claims under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. In dismissing the case the Second Circuit found that the plaintiff could not prove causation.

The plaintiffs claimed that revelations regarding Omnicom’s accounting practices led to the drop in Omnicom’s stock price. Omnicom allegedly misrepresented the value of its shares of stock in Seneca, a company Omnicom formed with a private equity firm to take advantage of perceived opportunities in the e-services consulting and professional services markets. Plaintiffs also claimed that the accounting for the Seneca transaction was fraudulent. At the time of the Seneca transaction, several publications discussed how the true purpose of the Seneca transaction was an attempt by Omnicom to move underperforming assets off its books. A year later, the price of Omnicom’s stock dropped when an article critical of Omnicom was published and one of its directors resigned.

A successful Section 10(b) claim requires a plaintiff to prove (1) a material misrepresentation or omission, (2) scienter, (3) a connection with the purchase or sale of a security, (4) reliance, (5) economic loss, and (6) loss causation. Defendants argued, and the Court agreed, that the plaintiffs could not demonstrate loss causation. The “loss causation” requirement can be satisfied by proving (1) that a particular plaintiff relied upon the misrepresentation, (2) that the misrepresentation is a cause-in-fact of the loss suffered, or (3) that the cause-in-fact of the investor’s losses falls within the class of events that Section 10(b) and the securities laws were designed to prevent. All three concepts were at issue in this case.

Plaintiffs asserted a fraud on the market theory in the complaint. The claim failed to satisfy the reliance theory of loss causation because the misrepresentations plaintiffs complained of – improprieties with the Seneca transaction – were widely reported over a year before the stock price declined. Therefore, the Court found that the Seneca issues were already reflected in the market price of Omnicom’s stock as long as a year before the price drop that lead to the suit. Thus, plaintiff could not prove the market had been relying on any misrepresentations about Seneca when the stock price fell over a year after the initial reports.

Next plaintiffs tried to advance under a cause-in-fact theory. Plaintiffs argued that the drop in Omnicom’s stock price was the result of a later corrective disclosure of the Seneca misrepresentations. The alleged later corrective disclosure was the article that was published a year after the initial coverage of true purpose of the Seneca transaction. The cause-in-fact argument failed because the Court found that the alleged corrective disclosure was simply a negative characterization of previously known information. Since the information was previously known, it re-publication cannot constitute a corrective disclosure and it cannot be the cause-in-fact of the drop in price of Omnicom’s stock.

Plaintiffs’ final argument was that Omnicom concealed the improper accounting of the Seneca transactions and this was the proximate cause of plaintiffs’ losses. To succeed on their proximate cause argument, plaintiffs had to prove that the loss was foreseeable and caused by the materialization of the risk concealed by the fraudulent misrepresentations. Plaintiffs’ argument relied heavily on the resignation of a member of Omnicom’s board of directors. This resignation occurred around the time of the alleged corrective disclosure – a year after the key facts were widely reported. Plaintiffs claimed that the resignation was the result of the director’s disproval of the Seneca transaction, which in turn caused the drip in the market price of Omnicom’s stock. The argument failed because the connection between the resignation of a board member and the stock’s drop in price was too tenuous to be a proximate cause. The Court determined that the resignation had caused only concerns that other unreported problems may exist.

Since plaintiff could not succeed under any of the three loss causation theories, summary judgment in favor of Omnicom was proper.

Jason B. Desiderio, Esq.

In People ex rel. Spitzer v. Pharmacia Corp., ---N.Y.S.2d---, 2010 WL 424010 (Sup. Ct. Albany County 2010), the New York State Attorney General brought suit against a prescription drug manufacturer seeking a ruling that the defendant violated New York General Business Law ("GBL") § 349, which prohibits deceptive consumer oriented business practices, as well as Executive Law § 63(12), which proscribes repeated acts of fraud.

The State alleged that Pharmacia intentionally reported false and inflated prices for its products and that their reports did not reflect the actual cost paid by its pharmacy customers. According to the State, this practice caused the State and certain Medicare consumers to pay higher prices for Pharmacia's drugs because government health plans in New York rely upon the "average wholesale price" of prescription medications when providing reimbursement to pharmacies.

Following discovery, Pharmacia moved for summary judgment arguing that the State's claims were barred by the statute of limitations. Specifically, Pharmacia alleged that the State's claim accrued no later than the 1980s when State officials were well aware that published "average wholesale price" lists did not reflect pharmacies' actual acquisition costs. Because this action was not commenced until 2003, Pharmacia argued that it was time barred.

The court determined that the appropriate statute of limitations was three years as provided in CPLR § 214(2), given that the State's claim sought to establish liability arising solely from statute. The court held that if Pharmacia's price reports are violative of GBL § 349 and/or Executive Law § 63(12), each price report constituted the a separate wrong. Accordingly, the State is permitted to pursue damages in connection with price reports published by Pharmacia for the three-year period preceding the commencement of the action. Because the court determined that the action was not barred by the statute of limitations, but instead, limited to such three year period, Pharmacia's motion for summary judgment was denied.

In a case like this, where the conduct is continuous, the focus for purposes of the statute of limitations is on the date of the accrual of each separate violation, rather than merely the date of the first violation.

Sean C. McPhee, Esq.

In Key Equipment Finance v. South Shore Imaging, Inc. ___ N.Y.S.2d ___, 2010 WL 190205 (2d Dept. 2010), the New York State Appellate Division, Second Department explained that under a guaranty provision, officers can be held personally liable for the contractual obligations of a corporation. In this case, Key Equipment Finance leased a copier to South Shore Imaging, Inc. After South Shore failed to pay the lease, Key Equipment Finance sought to enforce a guaranty provision of the lease agreement. The provision provided that the guarantors unconditionally and irrevocably guarantee the payment and performance of all obligations of South Shore. The guarantors further agreed that all liability was joint and several. The original guaranty contained the corporate titles of the defendants, but the final guaranty portion of the lease did not state the corporate titles. The Fourth Department reversed a summary judgment order dismissing the complaint and determined that the plaintiff’s made a prima facie case.

The court explained that generally officers or agents are not personally liable on corporate contracts as long as the officers do not purport to bind themselves individually. However, when a guaranty constitutes a deliberately stated, unambiguous, and separate expression personally obligating an individual, that individual may be held liable under a contract.

The individual defendants contested that they did not intend to be held personally liable on the contract. However, the court indicated that the change between the first and second guaranty are contrary to this assertion. The first guaranty was unacceptable to the plaintiffs because it included the defendants’ corporate capacities. So, the document was re executed, demonstrating that the defendants understood that they were personally liable.

This case is a good example of how a court looks at a guaranty agreement signed by corporate officers. While it is generally the corporation, not the individual officers who are liable under a corporate contract, a guaranty would be worthless if it was not enforced against the individual officers who sign such an agreement. In this case, it would mean that if South Shore defaulted, South Shore would be liable under the contract. Such a result would, as the court states, be completely illogical.

However, the Second Department did not universally declare that corporate officers are always individually liable. Citing Florence Corp. v. Penguin Constr. Corp., 227 A.D.2d 442, 443, 642 N.Y.S.2d 697), the court explained “if a plaintiff attempts to trap an unwary corporate officer into making an unintended assertion of personal liability by inserting an obscure clause in the midst of a lengthy and complex contract,” an officer is not personally liable. While that did not happen in this case, it is important to remember the exception to the general rule holding individual corporate officers liable under a guaranty.

Matthew J. Kibler, Esq.

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The Torts, Insurance & Compensation Law Section is offering two full tuition scholarships to Young Lawyers Section Trial Academy to be held Wednesday, March 24, 2010 through Sunday, March 28, 2010. This 5-day trial techniques program will teach, advance and improve the courtroom skills of young attorneys and lawyers who want to improve their litigation skills with an emphasis on direct participation. The program will take place at Cornell Law School. The materials for the program will include both a criminal and civil fact pattern which will be provided to attendees at least one month before the program’s start date.The scholarships are being offered to any member of the Torts, Insurance and Compensation Law Section. If you are interested, please fill out the application form by February 25, 2010.

CLICK HERE for the application form and additional information.

A recent case from the Southern District of New York, B & M Linen, Corp., v. Kannegiesser, USA, Corp., __ F.Supp.2d __, 2010 WL 183410 (S.D.N.Y.), addressed the pleading standards for claims of breach of fiduciary duty, fraud, negligent misrepresentation, and other torts. The plaintiff, a launderer, sued the manufacturer of its laundry equipment, as well as the manufacturer’s parent company and certain executive officers, based upon plaintiff’s dissatisfaction with the equipment. According to plaintiff, defendants promised to design and manufacture customized products for plaintiff and assured plaintiff that the products were of “superior quality and durability”. Plaintiff claimed that it relied upon those promises when deciding to place its order with the defendants.

Upon receiving the equipment, various problems, including design defects and manufacturing errors, were uncovered. Plaintiff alleged that defendants performed only “minimal repairs or replacements” and that most of the repairs were done at Plaintiff's cost and expense. Plaintiff's complaint included various tort claims, as well as a claim for breach of contract. Defendants moved to dismiss.

Citing Bell Atlantic Corp. v. Twombly, the court described the legal standard governing defendants’ motion to dismiss, stating plaintiff’s claims “must be enough to raise a right of relief above the speculative level”. The court then addressed the elements of plaintiff’s breach of fiduciary claim and determined that plaintiff’s legal conclusions and hazy factual claims lacked sufficient allegations to make it plausible that the plaintiff had a fiduciary relationship with the defendants. Because plaintiff failed to explain why the parties' relationship was different than a typical arm's length commercial transaction between a buyer and a seller, the court held that plaintiff’s complaint was inadequate and dismissed the breach of fiduciary duty claim.

Regarding plaintiff’s fraud claims, the court noted that such claims will not survive if they merely restate a claim for breach of contract. The court also addressed Fed. R. Civ. P. 9(b), which requires fraud to be pled with particularity. The court held that plaintiff’s allegations failed to meet the heightened pleading standard and described plaintiff’s claims as “nothing more than accusations that defendants did not live up to the terms of the deal they struck with [plaintiff].” According to the court, defendants’ alleged promise to provide “top of the line” equipment with “topnotch output” was nothing more than a “statement of opinion” or “commercial puffery”, which is not actionable in New York. Therefore, the fraud claims were dismissed.

The court then turned to plaintiff’s negligent misrepresentation claim and again held that the facts pled in the complaint revealed nothing more than a typical arm's-length transaction between the parties. Because plaintiff could not establish a special relationship between the parties, and because plaintiff failed to plead any facts that would make its reliance on defendants’ promises reasonable, that claim was dismissed.

Addressing plaintiff’s interference claim, the court stated that although the complaint did not specify whether that claim was for tortious interference with contract or for tortious interference with prospective economic advantage, it was of no consequence, as plaintiff failed to plead facts sufficient to maintain either cause of action. Specifically, both claims require a showing of intent on the part of the defendants to interfere with plaintiff’s business relationships. Because plaintiff had not alleged that the defendants intended to disrupt its business relationships, the claim was dismissed.

This case is a good example of the recent trend in the federal courts since the Supreme Court handed down its decisions in Twombly and Iqbal. Although Fed. R. Civ. P. 8 merely requires a “short and plain statement of the claim”, plaintiffs can no longer simply recite the legal elements and expect to overcome a motion to dismiss. Instead, the complaint must state a claim to relief “that is plausible on its face”. According to the Supreme Court, a claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Clearly, it is essential to develop the facts before drafting the complaint, rather than waiting for discovery in hopes of doing so.

Sean C. McPhee, Esq.

Effective January 1, 2010, Hon. John A. Michalek has become the Presiding Justice for the 8th Judicial District Commercial Division, succeeding Hon. John M. Curran who served from 2007 - 2009. Justice Michalek will receive all new and incoming Commercial Division cases on a going-forward basis. Justice Curran will retain existing Commercial Division cases that had been filed in 2007 or before, for a period of one year, after which, to the extent still pending, they will be transferred to Justice Michalek on January 1, 2011. Practitioners with any questions about the status of a particular case should contact Justice Michalek's chambers at 845-9474 or Justice Curran's chambers at 845-9471.

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Today's increasingly mobile workforce requires employers to think seriously about protecting confidential company information against misuse or outright theft by key employees. Contrary to popular belief, New York courts often enforce restrictive covenants designed to protect an employer from unfair competition by former employees, particularly when a well drafted agreement demonstrates necessity and is reasonable in scope. To that end, employers should consider requiring key employees to sign "non-compete" agreements.

If your business is like most, your most valuable resources are your employees, particularly after you impart knowledge regarding your operations to them. In a competitive arena where intellectual property is your most significant differentiator, the risks associated with proprietary knowledge rise in importance. No employer wants to invest time and money training an employee only to have that individual later present the fruits of your labor to your competitor. When that happens, the damage to your company is greater than the loss of that valued employee; having a key individual defect to a competitor can result in irreparable harm to your company's goodwill and bottom line.

Faced with this scenario, an increasing number of companies are protecting themselves against such loss by having employees sign non-compete agreements. A non-compete agreement is typically signed by a new employee as a condition of employment, either before or during that employee's orientation. When drafted carefully by an experienced attorney with critical input from the employer, a narrowly tailored non-competition agreement will prevent a key employee from participating in harmful post-separation activities such as competing with the company, recruiting other employees, or providing confidential information to your competitors or their customers. Non-compete agreements are critical in employment situations involving key employees with access to information unique to your particular business. Employees typically gain access to such information either directly through job responsibility, through social interactions with owners or high-level executives, or by obtaining access to encrypted or otherwise password protected company information.

Although it is true that New York courts tend to disfavor agreements restricting or otherwise impairing the post-separation mobility of employees, most courts understand that employers have a substantial investment in hiring, training and compensating employees. Additionally, the courts recognize that such employers have a right to protect their legitimate business interests.

In general, a New York court will enforce a non-compete agreement where an employer can establish that the agreement: (1) is necessary to protect a legitimate business interest of the employer; (2) is not overbroad in terms of geographic scope; and (3) is reasonable in duration. The circumstances affecting each of these three factors will obviously vary depending on the nature of your business and the relationship your employee has with your business. It is crucial, therefore, that your non-competition agreement be as narrowly tailored as possible by an attorney with intimate knowledge of both your present business and your future ambitions for your business.

In addition to drafting a tightly constructed, tailor-made non-compete agreement, offering additional consideration to an employee for entering into such an agreement increases the likelihood of court enforcement of your agreement, should court action become necessary. Like all other contracts, non-compete agreements must be supported by consideration. Although New York courts occasionally find that the mere continuation of an employee's employment constitutes "adequate consideration" for purposes of analyzing the enforceability of a non-compete agreement, it is advisable to offer the employee additional consideration in connection with the employee's recognition and acceptance of the terms and conditions of the agreement. This is particularly important when an employer asks a key employee to sign a non-compete agreement after that key employee has already begun his or her employment. The more you give the employee, the more likely the court is to enforce your agreement with that employee. Again, the circumstances will vary based on your company's business and the scope and nature of the prospective employee's job duties.

Even if you have already endeavored to protect your company by requiring your key employees to sign non-compete agreements, as a best practice agreements should be updated and revised periodically. This is particularly true where an employee has received promotions or has otherwise experienced changes to his or her job duties and responsibilities.

Should a key employee leave your company with your company's proprietary information, you should promptly contact an attorney. A tailored non-compete agreement that is reasonable in geographic scope and duration and is necessary to protect your company's proprietary interests will be upheld if you act quickly. The prompt filing of a request for immediate judicial intervention may prevent your competitor from obtaining your most important assets: your key employees and the vital information you have imparted to them. In extreme cases, this may be the difference between your company's survival and its eventual, if not immediate, demise at the hands of your competitors.

Kevin Burke, Esq.

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In IDT Corp. Morgan Stanley Dean Witter & Co., et al., __ N.Y.3d __, __N.E.2d__ (2009), the Court of Appeals reversed the lower court and dismissed plaintiff's claims as either time barred or having failed to state a claim.

In August, 1999, plaintiff and another telecommunications company, Telefonica International, S.A. ("Telefonica"), entered into an agreement concerning an underwater fiber optic cable network that Telefonica was building. Under the agreement, plaintiff would buy a 10% equity share in a holding company and would have the right to buy capacity in the network.

In June, 2000, Telefonica sought to amend the terms of the agreement offering plaintiff a 5% share in a different company. Plaintiff alleged that Telefonica's investment banker, Morgan Stanley Dean Witter & Co ("Morgan Stanley"), advised plaintiff that the value of the 5% interest in the larger company "was far greater than that of the 10% interest" in the original holding company. Notably, Morgan Stanley had previously acted on plaintiff's behalf in connection with a different, but similar, investment. Plaintiff was unpersuaded by Morgan Stanley's representation and broke off negotiations with Telefonica in October, 2000.

Plaintiff commenced an arbitration against Telefonica in May, 2001, alleging breach of the agreement and seeking damages in the amount of $3.15 billion. The panel found that Telefonica had breached the agreement and awarded plaintiff damages in the amount of $16,883,817. Telefonica ultimately paid plaintiff $21.6 million in damages and interest.

Thereafter, plaintiff filed suit against Morgan Stanley alleging five causes of action (i) breach of fiduciary duty; (ii) intentional interference with existing contract; (iii) intentional interference with prospective business relations; (iv) misappropriation of confidential and proprietary business information; and (v) unjust enrichment.

Morgan Stanley moved to dismiss asserting, among other defenses, the statute of limitations. The trial court dismissed the third cause of action and otherwise denied Morgan Stanley's motion. On appeal, the Appellate Division affirmed, holding the claims were not barred by the statute of limitations. The Court of Appeals, Pigott, J., held that plaintiff's first, second and fourth causes of action were time barred and that plaintiff's unjust enrichment cause of action failed to state a claim.

Plaintiff argued that its breach of fiduciary duty claim was governed by a six year statute of limitations. Morgan Stanley contended that it was governed by a three year statute. The Court noted that New York law does not provide a single statute of limitations for a breach of fiduciary duty cause of action. Rather, the applicable limitations period depends on the substantive remedy the plaintiff seeks. When the remedy sought is purely monetary in nature, courts construe the suit as alleging injury to property within CPLR 214(4)'s three year statute of limitations. Where the relief sought is equitable, the six year limitations period found in CPLR 213(1) applies.

While plaintiff did seek equitable relief, the Court held that such relief was incidental to the money damages plaintiff sought. "Thus, looking to the reality, rather than the form" of the complaint, the Court applied the three year statute of limitations. The Court then turned to accrual and stated that the breach of fiduciary duty claim accrues as soon as it becomes enforceable. According to plaintiff's complaint, it first suffered loss as a result of Morgan Stanley's conduct after Telefonica refused to comply with the agreement. The Court determined that this alleged loss must have occurred prior to plaintiff's May, 2001 commencement of arbitration. More than three years had passed sine the commencement of the litigation against Morgan Stanley rendering plaintiff's claim untimely.

Regarding plaintiff's second and fourth causes of action, the parties did not dispute that CPLR 214(4)'s three year limitations period applied. The Court held that those claims accrued at the same time as plaintiff's breach of fiduciary duty claim, rendering them untimely as well.

Finally, the Court rejected plaintiff's unjust enrichment claim holding that "[w]here the parties executed a valid and enforceable written contract" recovery on a theory of unjust enrichment is ordinarily precluded. Here, because plaintiff based its claim on a fee that arose from services Morgan Stanley rendered in connection with a written engagement letter, unjust enrichment was inapplicable. Moreover, plaintiff could not disgorge funds received by Morgan Stanley in connection with its services for Telefonica because plaintiff did not pay those fees. Therefore, Morgan Stanley was not enriched at plaintiff's expense.

Sean C. McPhee, Esq.

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Here is a great article by Jeremy Colby, Esq. on the importance of non-compete agreements and factors to be considered when drafting: ARTICLE LINK

We would like to thank to General Practice Section for posting a link to our Committee's humble blog. General Practice Section Blog Link

Please check out the General Practice Section Blog, and the other blogs listed, as there is some great information to be found. For a general listing of NYSBA Blogs see: NYSBA Blogs Link

In 30 CPS LLC, v. Board of Managers of Central Park South Medical Condominium, _ _ N.Y.S.2d _ _, 2009 WL 513458 (Sup. Ct. N.Y. County 2009), a condominium unit owner brought an action against the condominium board ("Board") and its president, alleging (i) breach of contract; (ii) tortuous interference with prospective relations and (iii) discrimination.

Plaintiff sought to convert its condominium unit (the "Unit") from a restaurant to residential use, which was permissible under the condominium declaration and the New York City Zoning Resolutions. In connection with its proposed conversion, plaintiff obtained the approval of the New York City Board of Standards and Appeals and the New York City Department of Buildings (collectively, the "City"). The Board, however, did not approve of plaintiff's contemplated change and asked the City to revoke its permit. Ultimately, the City revoked its permit due to the Board's opposition to the change in use of the Unit.

The court noted that breach of a binding agreement and interfering with nonbinding "economic relations" are two separate torts with different elements. Regarding the latter, "the plaintiff must show that defendant's conduct was not 'lawful' but 'more culpable,' such as a crime or an independent tort, or conduct intended to inflict harm on the plaintiff." Id. at *5, citing Carvel Corp. v. Noonan, 3 N.Y.3d 182 (2004). "In addition, the plaintiff must prove that the defendants knew of the proposed contract, intentionally interfered with it and that it would have been entered into but for the interference." Id.

In this case, plaintiff alleged that the Board had knowledge of a proposed contract for the sale of the Unit to a prospective purchaser; that the contract would have been entered into had the Board not interfered with plaintiff's attempted conversion of the Unit; and that the Board's interference was based on ethnic animus.

The court held that unlawful discrimination is sufficiently culpable to support a claim of interference with prospective economic relations and denied defendants' cross-motion for summary judgment.

Sean C. McPhee, Esq.

Torts, Insurance and Compensation Law Section eNEWS - March 2009

Plaintiff’s motion for default judgment and claim for attorney’s fees granted (Federal District Court for the Eastern District of New York).

Gutman v. Klein
Slip Copy, 2008 WL 4682208
E.D.N.Y.,2008.

Plaintiffs (“Gutman”) , A to Z Holding Corp., A to Z Capital Corp., Paz Franklin Company, and Washington Greene Associates initiated an action against defendants (Klein), Dina Klein, Rachel Brach, Rodney Capital Company, Toyv Corporation, Republic Capital Group, LLC, Atlas Furniture Manufacturing Corp., A to Z Holding Corp., A to Z Capital Corp., Paz Franklyn Company, Washington Greene Associates, and others on April 1, 2003. In the instant case Gutman claims that crucial litigation evidence (contained on several laptop computers) has been purposely destroyed by Klein. This spoliation, plaintiffs claim entitles them to default judgment, attorney’s fees and punitive damages. “A party bringing a spoliation claim must demonstrate (1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the [evidence was] destroyed with a culpable state of mind; and (3) that the destroyed evidence was relevant to the party's claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.”

The court held that Klein was obligated to preserve the evidence from the moment they knew or should have known it was relevant to litigation. As to the state of mind element, the court reasoned that the negligence of Klein and its employees is enough to satisfy this requirement. Since the element of the claim is satisfied by Klein’s negligence the burden of proof would ordinarily shift to Gutman. However, the court held that the prejudiced party should not be held to too strict a standard of proving that the evidence is relevant to their claim. Prior to instituting the instant claim Gutman, informed both the court and Klein that the information deleted would be at issue. Ultimately, the court reasoned that the spoiled evidence was relevant to Gutman’s claim. Klein contested that the actions of the employee who deleted the evidence in question prevent Gutman from prevailing because the employee was not on notice. The court disagreed, “find[ing] it very difficult to believe it was wholly innocent.” The court ruled in favor of Gutman, granting the plaintiff’s default judgment and attorney’s fees; however, not punitive damages.

This case strengthens the rule of evidence preservation and the consequences of discovery abuse. Plaintiffs that fall victim of evidence spoliation, under circumstances such as these, may be entitled to default judgment rulings and attorney’s fees. “Deleter beware”.

Submitted by: Stefanie DeMario, Law Student at New York Law School

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The Second Circuit recently issued an opinion highlighting the heightened pleading standards required by Federal Rule of Procedure 9(b) and the Private Securities Litigation Reform Act (PSLRA). In ECA v. JP Morgan Chase Co., 2009 U.S. App. LEXIS 972 (January 21, 2009, Decided), the shareholders of JP Morgan Chase (JPMC) brought a derivative action alleging that they were defrauded by JPMC's complicity in Enron Corporation's financial scandals. Specifically the shareholders alleged that JPMC defrauded them by (1) downplaying its Enron-related exposures, (2) failing to disclose alleged violations of law in connection with certain transactions, (3) falsely portraying itself as a low-risk company with a reputation for fiscal discipline and integrity, and (4) improperly accounting for certain transactions as trades rather than loans.

To meet the heightened pleading standards under FRCP 9(b) and the PSLRA the complaint must "specify each statement alleged to have been misleading, and the reasons or reason why the statement is misleading" and "state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind." (emphasis added). The Court held that "a desire to maximize the corporation's profits" is not sufficient motive to defraud, plaintiffs must allege that "JPMC or its officers 'benefitted in some concrete and personal way from the purported fraud." The Court dismissed the second amended complaint with prejudice for failure to comply with the heightened pleading standard and held that plaintiffs failed to create a strong inference of scienter based on motive and opportunity.

Marissa A. Coheley

We are developing a CLE program geared for commercial litigators, professional malpractice defense counsel, and in-house counsel. The program will provide a primer on business torts with a focus on the impact of the recent financial crisis upon the standard of care imposed upon securities brokers, mortgage brokers and other financial professionals, as well as breach of fiduciary duty, fraud, and related claims. It may also consider the ethical implications of counseling businesses in a recessionary period which engage in unfair business dealings, such as the use of litigation solely as a business strategy. This program will be conducted as either a stand alone seminar and/or in conjunction with the Governmental Relations and Laws and Practices committees. Please let me know if you have any thoughts or ideas, or would like to get involved in putting this together.

In a recent decision from the Southern District of New York [Baron Partners, LP v. Lab123, Inc., __ F.Supp. 2d __, 2009 WL 12903 (S.D.N.Y. Jan. 29, 2009)], the court examined the adequacy of a party's pleadings regarding allegations of fraudulent inducement and negligent misrepresentation in connection with a Stock Purchase Agreement.

In response to plaintiff's complaint, defendant alleged that plaintiff's failure to disclose prior criminal conduct was fraudulent, or at the least, negligent misrepresentation. Interestingly, although plaintiff invested $2 million in the defendant company, defendant claimed that it suffered damages in excess of $1 million because plaintiff failed to disclose that its principal was involved in a securities trading scheme 17 years earlier.

The court reviewed the elements of the fraud claim and noted that defendant must allege a misrepresentation or material omission. According to the court, the failure to disclose a prior criminal conviction was not a material omission because nondisclosure only becomes actionable where there is a duty to disclose. Such a duty only arises where there is a confidential or fiduciary relationship between the parties. No such relationship exists, however, between the sellers and buyers of corporate stock when dealing at arms length. As a result, the fraud claim was dismissed.

Regarding the negligent misrepresentation claim, the court held that a party may not recover on that theory in the absence of a special relationship of trust or confidence between the parties. Because plaintiff and defendant were merely buyer and seller, no special relationship existed. Thus, the negligent misrepresentation claim was also dismissed.

Sean C. McPhee, Esq.

SAVE THE DATE – The annual Tort, Insurance and Compensation Law
Section’s 2009 meeting will be held August 9th – 12th. Don’t take a
chance and miss out on a wonderful opportunity to socialize and have fun
with friends and family and earn some CLE credit as well. Not only can you
enjoy the company of your friends and family, but also meet and network
with attorneys from across the state. As in the past we expect that
insurance professionals and judges will be attending. So don’t gamble away
an excellent opportunity to join us this year at our annual meeting at the
Mohegan Sun. This five star resort is more than just a casino. The
Mohegan Sun is at the heart of New England's most popular activities and
attractions, from its scenic countryside and covered bridges to local
vineyards and yachting on Long Island Sound. Hunt for antiques, visit the
past at Mystic Seaport, enjoy a show at a historic theater, hone your golf or
tennis game or just relax by shopping and dining. So save the date. More
details to follow.

The Third Department recently held that aliens who obtain employment using fraudulent documents in violation of the Immigration Reform and Control Act (IRCA) are not precluded from receiving benefits under New York State Workers’ Compensation Law. In Amoah v. Malah Management, LLC., 2008 N.Y. Slip Op. 08228 (3d Dept. 2008) applying the doctrine of conflict preemption, the court found that the New York State Workers’ Compensation law was not preempted by the IRCA.

Claimant Amoah used a friend’s Social Security card and other documents to obtain employment; he was then injured at work and received workers’ compensation benefits under his friend’s name. When Amoah refused to share his benefit award, his friend took back the identification documents. Amoah informed his employer’s workers’ compensation carrier of his real identity and the carrier contested the payment of benefits because Amoah had used fraudulent documents to obtain employment. The Workers’ Compensation Board affirmed the ruling of the Workers’ Compensation Law Judge that the claimant’s use of fraudulent documents did not preclude the award of benefits.

The Third Department expanded on the Court of Appeals ruling in Balbuena v. IDR Realty, LLC, 6 N.Y.3d 338 (2006), that the purpose of the IRCA is to combat the employment of undocumented workers and that such objective would be furthered by state law imposing liability on employers for their undocumented workers’ injuries. In Balbuena, the court relied on the fact that there was no proof of a criminal violation of the IRCA; in Amoah, the Third Department held that the presence of a criminal violation by the claimant does not change the outcome. The court held that the IRCA prohibitions against using fraudulent documents to obtain employment should be viewed in the context of the employer’s obligations and limiting the claim of an injured undocumented alien could lessen an employer’s incentive to provide a safe workplace for all employees. Therefore, limiting benefits “would actually provide an economic incentive to employers to violate IRCA by disregarding the employment verification system and would undermine IRCA’s primary goal of combating the employment of undocumented workers.” Further, preempting the state law and denying benefits to injured unauthorized workers is unlikely to bolster the purpose of the IRCA by deterring illegal aliens from using fraudulent documents to obtain employment.

Marissa A. Coheley

The Court of Appeals recently held a summary judgment motion made 62 days after the filing of the note of issue “timely” under the amended local rules. In Crawford v. Liz Claiborne, Inc., 20008 N.Y. Slip Op. 7989 (2008), an employment discrimination action, the IAS Judge issued a preliminary conference order (“PCO”) directing that all dispositive motions be made “per local rule.” At the time the PCO was issued, local rules provided that all motions for summary judgment were to be made no later than 60 days after the filing of the note of issue, and the IAS Judge had no individual part rule on the subject.

Before the note of issue was filed in the action, the local rules were amended to provide that summary judgment motions were to be made no later than 120 days after the filing of the note of issue and the IAS Judge’s individual rules were modified to require such post note of issue motions to be made within 60 days thereof. The defendant moved for summary judgment 62 days after the filing of the note of issue and the plaintiff then moved to strike the motion as untimely. The IAS Judge found that while the defendant’s motion was untimely, the defendants showed “good cause” for the delay. The plaintiff’s failed to oppose the motion on the merits, therefore defendant’s motion for summary judgment was granted. The Appellate Division, relying on Brill v. City of New York, 2 N.Y.3d 648 (2004), reversed.

The Court of Appeals held that the Brill did not apply to this case and the defendant’s motion was timely because, at the time the PCO was issued, there was no applicable individual part rule therefore “per local rule” referred to the Local Rules of Supreme Court, New York County. When the note of issue was filed, the 120-day amended local rule was in effect, therefore the defendant’s motion 62 days after the filing of the note of issue was timely under the amended local rule.

Marissa A. Coheley

The Annual Meeting of the New York State Bar Association will be held on Monday, January 26, 2009 through Saturday, January 31, 2009 at the Marriott Marquis, 1535 Broadway, New York City.

The Torts, Insurance, and Compensation Law Section program will be chaired this year by Dennis McCoy, Esq. and John Snyder, Esq. This year's Section program will focus on the impact of litigation stemming from the 9/11 tragedy on the tort, insurance and personal injury landscapes. Some of the many topics and issues to be discussed will include mass disasters, coverage, workers’ compensation, statutes of limitation, and causation. The program will feature dinner the evening of January 28 at the Cipriani Wall Street restaurant, located at 55 Wall Street, the former home of the New York Merchants Exchange, New York Stock Exchange and U.S. Customs House. See: http://www.cipriani.com/cipriani/Locs/wall.htm

For more information see:
http://www.nysba.org/AM/Template.cfm?Section=Events1&Template=/Conference/ConferenceDescByRegClass.cfm&ConferenceID=3013

Corporate officers are now easier targets to speculative fraud claims under the New York Court of Appeals' decision in Pludeman v. Northern Leasing Systems, Inc., 10 N.Y.3d 486, 890 N.E.2d 184 (2008). No longer can a corporate officer automatically take cover within the heighted pleading requirements imposed upon plaintiffs under CPLR § 3016(b). According to the Pludeman decision, so long as the alleged fraud is sufficiently large in scale all that is required of a plaintiff to state a claim against an individual corporate officer is that he or she is a corporate officer — no particular knowledge or involvement need be alleged.

Pludeman involved a number of small business owners from various states who brought suit against a business equipment leasing company and its top management for fraud. Plaintiffs claimed that sales representatives had presented them with what appeared to be a one-page contract on a clipboard, thereby concealing three other pages containing onerous terms below. The only particularity provided relative to the individual defendants was their corporate titles, some of whom did not even have any apparent connection with the sales and leasing functions of the company.

The Court of Appeals held that "the very nature of the scheme, as alleged, gives rise to the reasonable inference — rebuttable though it may later prove to be — that the officers, as individuals and in the key positions they held, knew of and/or were involved in the fraud." Id. 10 N.Y.3d at 493. This "res ipsa loquitur" approach to pleading sufficiency against corporate officers could undermine CPLR 3016(b) and provide an incentive to plaintiffs to name all corporate officers in sight for the purpose of harassment and/or to increase settlement leverage.

Heath J. Szymczak, Esq.

Background and Significance
When conducting a corporate internal investigation, it is important to ensure that an attorney-client relationship is not established between the investigating attorney and the employee being interviewed. Doing so will protect the corporation’s ability to control the privilege, as well as its ability to waive it when necessary or desirable. Where an attorney-client relationship is created with an employee, however, the corporation may not waive the privilege without the employee’s consent. This could have an impact on the ultimate disposition of an investigation or prosecution of the corporation and may be interpreted as a failure to cooperate.

The Supreme Court has held that attorney-client privilege was established to protect “confidential disclosures to an attorney made in order to obtain legal assistance.” This privilege arises where the “client” reasonably believes that an attorney-client relationship exists. Thus, regardless of the investigating attorney’s intentions or beliefs, the attorney-client privilege may inadvertently attach to the information supplied by the employee. In order to avoid this unintended result, the investigating attorney is wise to give the employees an "Upjohn warning" prior to conducting the interview.

Upjohn warnings were derived for the Supreme Court’s ruling in Upjohn Co. v. U.S., 449 U.S. 383 (1981) and serve two main purposes. First, the warnings aid the investigating attorney in discharging his or her ethical duty not to mislead the employee. Second, the warnings reserve the attorney-client privilege solely for the corporation. As discussed above, without the warnings, the privilege may be held by both the corporation and the employee, which could lead to a conflict.

The Warnings
There are three (3) warnings that should be given by the investigating attorney at the outset of the interview. First, counsel should unambiguously indicate that he or she represents the corporation, not the individual. Next, the investigating attorney should indicate that while the interview is covered by the attorney-client privilege, the privilege belongs to, and is controlled solely by, the corporation. Finally, the employee should be warned that the company may decide to waive the privilege in the future and may disclose certain information obtained from the employee in the interview to third parties and/or government investigators or prosecutors.

Application of Privilege in New York
In New York, the attorney-client privilege covers communications by corporations to their counsel, as well as communications by counsel to their corporate clients. This is true regardless of whether the attorney is employed by the corporation as staff counsel or where an outside attorney is retained by the corporation. In Rossi v. Blue Cross & Blue Shield of Greater New York, 73 N.Y.2d 588 (1989), the Court of Appeals held that an internal memorandum from a corporate staff attorney to a corporate officer communicating advice in connection with an imminent lawsuit was protected from disclosure. In that action, plaintiff sought disclosure of the internal memorandum that was identified but withheld based upon privilege. The trial court reviewed the communication in camera and directed disclosure. On appeal, the Appellate Division reversed, determining that the memorandum was privileged. Ultimately, the Court of Appeals affirmed the Appellate Division, noting the need to apply the attorney-client privilege cautiously and narrowly in the case of communications with corporate staff counsel “lest the mere participation of an attorney be used to seal off disclosure.” Id. at 593. For the privilege to apply when the communication is made from the client to the attorney, the communication “must be made for the purpose of obtaining legal advice and directed to an attorney who has been consulted for that purpose.” Id. For the privilege to apply when the communication is made from attorney to client, it “must be made for the purpose of facilitating the rendition of legal advice or services, in the course of the professional relationship.” Id.

The Court’s decision in Rossi was re-examined two years later in Spectrum Sys. Int’l Corp. v. Chemical Bank, 78 N.Y.2d 371 (1991). There, outside counsel was retained to conduct an internal investigation and render legal advice regarding possible fraud on the client/bank. Plaintiff sought production of the report prepared by the outside counsel. Supreme Court ordered that the report be produced because, in its opinion, an independent investigation could not obtain privileged status merely because it was communicated by an attorney. The Appellate Division modified Supreme Court’s order to require in camera inspection in order to determine materiality, and granted leave to appeal to the Court of Appeals. After reciting the principles set out in Rossi, the Court of Appeals determined that the report was privileged. The fact that the report did not focus on imminent litigation; reflected no legal research; and made no conclusion regarding the parties’ legal positions was immaterial. “The critical inquiry is whether, viewing the lawyer’s communication in its full content and context, it was made in order to render legal advice or services to the client.” Id. at 379. Because the report’s purpose was to convey legal advice to the client, it was privileged.

Sean C. McPhee, Esq.

Russell J. Matuszak, Esq. is Legal Counsel for HealthNow New York Inc. and is also the President of The Niagara Frontier Corporate Counsel Association Inc., an association of in-house attorneys in Western New York. Mr. Matuszak will assist in helping to make this Committee, and the TICL Section in general, more relevant and valuable to in-house counsel.

Sean C. McPhee, Esq. is an attorney with Phillips Lytle LLP. Mr. McPhee will focus on the area of business torts. He is presently reviewing the Court of Appeals' Docket for relevant decisions that may be of interest to Committee members. He will also assist with the Blog, as well as preparation of possible CLE materials relevant to the Committee.

It is my honor to serve you as Chair of the Business Torts and Employment Litigation Committee of the New York State Bar Association's Torts, Insurance, and Compensation Law (TICL) Section.

The purpose of this Committee is to provide its members with a forum in which to explore substantive issues in the areas of business torts and employment litigation, to share practice tips, and to develop and foster professional relationships and camaraderie among its members and the members of the TICL Section at large. The Committee is also interested in monitoring and discussing legislative proposals impacting its members and their clients.

One of my goals as Chair is to increase in-house counsel membership in the Committee by making it more relevant and valuable to those serving in that capacity. I would also like to invest in the future of the Committee through recruitment and mentorship of young lawyers and law students. Finally, I hope to take advantage of technological tools to facilitate the dissemination of information and promote member participation.

If you are interested in joining the Committee, please contact me at any time. If you are an existing member of the Committee, I encourage you to take advantage of the opportunities that exist through active Committee participation. For example, I encourage you to consider making a submission to the Committee Blog (http://nysbar.com/blogs/nybusinesslitigation/), raising issues on the Committee ListServ, writing an article for the TICL Journal, or attending a TICL event. I also encourage you to consider serving as a mentor to young members of the Committee. It would be my pleasure to discuss these opportunities with you.

Heath J. Szymczak, Esq.
Partner
Jaeckle Fleischmann & Mugel, LLP
12 Fountain Plaza
Buffalo, New York 14202-2292
hszymczak@jaeckle.com
http://www.linkedin.com/in/heathszymczak
Direct Dial Number: 716.843.3909
Fax Number: 716.856.0432