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Business Crimes Hotline
National news items you need to know.
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In the Courts
Recent rulings of importance to you and your practice.
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Complaints of Judicial Misconduct
As counsel in a hotly contested case, you suspect that the presiding federal judge has engaged in judicial misconduct. What are your options? Should you overlook the alleged misconduct for fear of incurring the judge's wrath and perhaps prejudicing your case? Is there a formal procedure for filing a complaint of judicial misconduct? Many in-house counsel and practitioners alike are unfamiliar with the provisions of 28 U.S.C. ' 351 et seq., and the Rules Governing Complaints of Judicial Misconduct and Disability adopted by each of the federal circuits, which govern the handling of complaints of judicial misconduct or disability.
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Electronic Records
In <i>Arthur Andersen LLP v. United States</i>, 125 S. Ct. 2129, 235 (2005), the Supreme Court acknowledged the importance of records management policies that provide for the routine destruction of unneeded records under ordinary circumstances. It is, however, common knowledge that such policies should ordinarily be suspended once an investigation or litigation is reasonably anticipated. This is normally accomplished through the imposition of a 'litigation hold,' the process of notifying employees of their obligations to preserve all potentially relevant records while continuing the routine destruction of non-relevant active and archived data. This may be a company's first line of defense against claims of spoliation or obstruction. The failure to suspend routine purges of records in the face of litigation has contributed to the imposition of sanctions as high as $1.45 billion on companies.
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The Changing Face of FDA Consent Decrees
Historically, when a health care company had a compliance failure, counsel could help it remain in business by negotiating with the relevant agency. If the problem involved sales, marketing or pricing, the company could seek a Corporate Integrity Agreement (CIA) with the Office of Inspector General (OIG) at Health and Human Services (HHS). If the problems related to manufacturing, counsel could obtain a consent decree of permanent injunction ('consent decree') with the Food and Drug Administration (FDA) under the Food Drug and Cosmetic Act (FDCA). Consent decrees and CIAs each had their particular burdens and benefits, which health care practitioners had learned to navigate. Now this tidy distinction has become blurred as the FDA has borrowed features from HHS's CIAs.
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Preparing for an FRCP 'Meet and Confer'
The intent of the new amendments is for cases to run smoother and focus on the merits rather than on the electronic discovery process. With the new elements in the 'meet and confer' conference requirement, counsel is now expected to understand its client's information infrastructure in order to negotiate what material will be disclosed, how it will be produced and in what timeframe. <br>Most alarming is that all of this discussion and a good part of this activity, under FRCP Rule 26(f), must take place and be presented to the court within 120 days of lawsuits being served in federal court.
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Paddling Down Esopus Creek
An end-of-year (Nov. 29) Delaware Chancery Court decision, <i>Esopus Creek Value LP v. Hauf</i>, is receiving a great deal of attention from corporate transactional and corporate restructuring attorneys alike. In Esopus, the Delaware Chancery Court prevented a financially sound company that was prohibited by federal securities law from holding a shareholder vote, because it failed to meet its reporting requirements, from executing an agreement outside of bankruptcy to sell substantially all of its assets under Section 363 of the Bankruptcy Code without first obtaining common stockholder approval as required under Section 271(a) of the Delaware General Company Law ('DGCL').
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Case Briefs
Highlights of the latest insurance cases from around the country.
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PA Supreme Court Rules on Assignments
Policyholders frequently seek to decrease liability to underlying claimants by assigning their insurance policy rights to the claimants. Typically, a policyholder will assign its rights under its liability policy to the underlying claimant in exchange for a covenant not to execute on any judgment against the policyholder. Under the assignment, the underlying claimant receives the same rights that the policyholder had against its insurer. This strategy may be particularly attractive to the policyholder if an insurer has denied coverage or reserved its right to deny coverage ' thus leaving the policyholder faced with a potentially uninsured exposure. While policyholders have successfully used this strategy to protect themselves from uninsured exposures, it is not free from complication. This article briefly discusses some of the significant issues to be considered, a number of which recently were addressed by the Pennsylvania Supreme Court in <i>Egger v. Gulf Ins. Co.</i>, 903 A.2d 1219 (Pa. 2006).
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Property Insurance Policies: Be Vigilant: Courts Do Enforce One-Year Contractual Limitations Provisions
Many property insurance policies contain or incorporate one-year statute of limitations provisions. Such provisions typically provide that 'a claim or suit brought pursuant to the policy must be brought within 12 months of the date on which the direct physical loss or damage occurred.' These contractual limitations provisions may adversely impact the ability of a policyholder to obtain a recovery for a loss. Depending on the type of loss suffered, 12 months may be an insufficient period of time to investigate the loss and to resolve any coverage issues that might arise. In the case of a sizeable loss, it is not unusual for the insurer's appraisers and/or experts to take many months to investigate and/or to make a coverage determination. As such, unless a policyholder is vigilant about resolving the claim within 12 months or tolling the limitations period, the policyholder may face an argument that the claim is barred by the statute of limitations.
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