LJN Newsletters

Many have noted the unanticipated consequences of Sarbanes Oxley's (SOX) whistleblower protection. One significant question has been how, in light of the statute's remedial nature but its focus on remedying securities fraud, courts should construe its definition of protected activity. In particular, courts (and the Department of Labor administrative law judges who generally hear these cases at the outset) have struggled with SOX's requirement that to be a protected whistleblower, the employee must complain about conduct that he or she 'reasonably believes constitutes a violation of ' any rule or regulation of the [SEC], or any provision of Federal law relating to fraud against shareholders' (see 18 U.S.C. ' 1514A).

The United States Supreme Court has resolved a significant issue regarding coverage under Title VII: whether the 15-employee threshold for determining whether an individual or entity is an 'employer' covered by Title VII of the Civil Rights Act of 1964 is a substantive element of plaintiff's claim for relief, or a jurisdictional issue. (Arbaugh v. Y & H Corp., No. 04-944 (2006)). In Arbaugh, the Supreme Court, reversing the U.S. Court of Appeals for the Fifth Circuit, held that the 15-employee threshold is an element of a plaintiff's claim that must be challenged prior to trial on the merits. The Supreme Court's decision is significant because evaluating the number of employees as a substantive issue would allow a federal court to exercise supplemental jurisdiction and to retain discretion to hear pendent state law claims even if it dismisses the federal claims for failure to state a claim.

The Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) oversees compliance with the equal opportunity and affirmative action requirements applicable to all government contractors. The OFCCP is charged with enforcing Executive Order 11246, which prohibits federal contractors from discriminating against applicants on the basis of race, color, religion, sex, or national origin. The Order also requires contractors to use affirmative action so that equal opportunity is available for all phases of employment. As such, contractors must retain all applicant-related company records as well as other employment records. In particular, contractors are required to maintain records of 'applicant flow data' by soliciting gender, race and ethnicity information from all applicants. If a contractor fails to comply with the rules issued by the OFCCP, it will be subject to disciplinary action, ranging from citations and economic fines to debarment.

Highlights of the latest insurance cases from around the country.

The Telephone Consumer Protection Act ('TCPA'), 42 U.S.C. §227, was enacted to protect the privacy of individuals and businesses that were being inundated with unwanted faxes. The TCPA makes it unlawful 'to use any telephone facsimile machine, computer or other device to send an unsolicited advertisement to a telephone facsimile machine.' The statute expressly declares that its intent is to protect 'privacy rights.' 42 U.S.C. §227(b)(2)(B)(ii)(I).

Since the 1980s, dozens of asbestos bankruptcy cases have been filed. In many of these cases, issues relating to the treatment of the debtor's insurance coverage for asbestos claims have been heavily litigated. To comprehensively discuss the handling of the debtor's insurance in these cases would be daunting and lengthy. This article provides an overview of the principal options and variations with respect to treatment of insurance in asbestos-related Chapter 11 proceedings and focuses on four recent asbestos bankruptcy cases.

Insurer bad-faith liability — that is, any liability beyond the coverage or other benefits expressly provided for in the insurance contract — has been litigated for about a century. For most of that time, judges and jurors applied it sparingly in egregious cases of blatant abuse by insurers. However, the tort of bad faith, by proscribing (among other things) 'unfounded' denials of coverage motivated by 'self-interest,' has always existed in tension with insurers' fundamental duty to maximize enterprise value by, for instance, paying claims only when contractually required. This tension, rarely explicit in the early cases, increasingly is laid bare as policyholders aggressively (if understandably) press doctrinal boundaries in the hope of recovering tort damages in suits on insurance contracts. Two recent cases involving disability benefits from courts within the Third Circuit — Northwestern Mut. Life Ins. Co. v. Babayan, 430 F.3d 121 (3d Cir. 2005), and Saldi v. Paul Revere Life Ins., 224 F.R.D. 169 (E.D. Pa. 2004) — illustrate this tension and suggest a need for judicial management to harmonize insurers' conflicting duties.

Recent cases in e-commerce law and in the e-commerce industry.