LJN Newsletters

In the past year, large settlements of "pattern or practice" employment discrimination claims against several major companies, and the largest civil rights class action suit in American history against Wal-Mart Stores, have prompted questions about what employers can do to avoid being the next target. This article lists key indicators in determining whether a company is in danger of class litigation.

Federal courts most likely will see an increase in age discrimination cases with so-called disparate impact claims, but employers will be able defend themselves successfully in many of them as a result of a recent U.S. Supreme Court decision. The High Court on March 30 held that disparate impact claims -- those that allege that a facially neutral policy adversely affects a protected class -- can be brought under the federal Age Discrimination in Employment Act (ADEA). Smith v. City of Jackson, No. 03-1160.

Recent rulings of importance to you and your practice.

Employers that obtain credit reports or conduct background checks on applicants or current employees must be aware of recent changes to the Fair Credit Reporting Act (FCRA) and amendments made to FCRA by the Fair and Accurate Credit Transactions Act of 2003 (FACTA). FCRA imposes obligations on employers who procure "consumer reports" (defined to include information bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics and mode of living) and/or "investigative consumer credit reports" (which include information obtained from personal interviews with neighbors, friends or associates) from a third-party consumer reporting agency for an employment purpose -- including hiring decisions and evaluations of employees for promotion, reassignment or retention. Employers that fail to comply with FCRA's obligations risk civil liability, federal agency action, and possible corresponding state action.

Recent rulings you need to know.

Just when you thought you had finally mastered the complex temporary regulations issued last March regarding the reduction of tax attributes of members of an affiliated group of corporations filing consolidated income tax returns ("consolidated group" or "group") following a cancellation of the debt, the IRS has served up another dose of "March Madness." The IRS has now issued those regulations in final form and has made some significant "revisions" to the provisions of the temporary regulations that focus on how tax attributes are to be reduced when a subsidiary either ceases to be, or becomes, a member of the consolidated group. This article briefly discusses how these significant "revisions" will impact financially troubled consolidated groups.

How is this scenario for a debtor's nightmare? You negotiate a license agreement that provides for the assignment of the agreement to successors in interest so long as they agree to be bound by the terms of the agreement. You then file a Chapter 11 bankruptcy and as a debtor in possession, seek to assume that license agreement. The other party to the contract objects to such assumption and the Bankruptcy Court says that in light of such objection you cannot assume the license agreement. You cannot reorganize without the license. You are dead.

This article focuses on the uses of the term "insolvency" in the avoidance context, including the impact of the 2004 case, Heilig-Meyers Co. v. Wachovia Bank N.A. (In re Heilig-Meyers Co.), 319 B.R. 447 (Bankr. E.D. Va. 2004), which, while limiting its analysis to a preference context, sheds some light on judicial gloss on the term "insolvency" as it is used both explicitly and implicitly throughout the Code. In addition, it examines definitions of "insolvent" and the presumption of insolvency in preference actions, discusses fair valuation and going-concern valuation methodology, and looks at the standard of proof and types of evidence to establish insolvency (including retrojection and projection).