Bankruptcy Court Subject Matter Jurisdiction
March 29, 2006
In the January, 2006, issue of <i>The Bankruptcy Strategist</i>, we discussed the impact of two recent bankruptcy opinions out of the Delaware Court: <i>IT Litigation Trust v. D'Aniella et al.</i> (<i>In re: IT Group, Inc. et al.</i>) and <i>Shandler v. DLJ Merchant Banking, Inc., et al.M.</i> (<i>In re Insilco Technologies, Inc.</i>). We included a brief update in the February, 2006 issue after the Delaware courts weighed in on the subject for the third time in only 3 months. Now we discuss, in depth, the possible implications of <i>Insilco</i> and <i>IT Group</i> on plan structuring.
Putting Plaintiff to the Test: The Crashworthiness Doctrine
March 29, 2006
When faced with a 'crashworthiness case,' manufacturers in the automotive, trucking, or aircraft industries enjoy a distinct legal advantage over the plaintiff. Indeed, in the many jurisdictions where the crashworthiness doctrine is recognized, the plaintiff's burden of proof in such cases is dramatically higher than in the standard product liability action. In the automotive context, these cases are sometimes referred to as 'second collision' cases because the manufacturer's liability is based not upon the 'first collision' between the vehicles involved in the accident, but the 'second collision' comprised of the physical contact made between the plaintiff's body and the vehicle's interior.
Practice Tip: Failure-to-Warn in Toxic Product Cases ' Proceed with Caution
March 29, 2006
All product liability cases are difficult; however, a toxic product case (one which involves a substance that has caused injury during its use or application) poses more of a problem than most others. For example, some spray paints may contain toxic substances that are part of the product's composition. Therefore, the product does not have a manufacturing or design defect, but may require special warnings. The warnings on such products may be covered by the Federal Hazardous Substances Act ('FHSA'), which requires hazardous household products sold in interstate commerce to contain cautionary labeling. 15 USCA 1261. (A 'hazardous substance' is toxic, an irritant, or a strong sensitizer if the substance may cause substantial personal injury or illness as a result of any reasonably foreseeable use.)
Recharacterizing Debt
March 29, 2006
The first half of this article, which appeared in last month's issue, discussed the purpose and effect of recharacterization of debt to equity, distinguished recharacterziation from equitable subordination, and reviewed various approaches, including multi-factor tests, that different courts have employed in determining whether to recharacterize a claim in bankruptcy and non-bankruptcy contexts. This concluding installment explores further the Third Circuit Court of Appeals' decision in <i>In re SubMicron Systems Corporation, et al.</i>, 432 F.3d 448 (3d Cir. 2006) and discusses lessons learned from that case.
FDA's New Labeling Rule Asserts Federal Pre-emption of State Product Liability Claims
March 29, 2006
On Jan. 18, 2006, the U.S. Food and Drug Administration ('FDA') issued a final rule to revise the required format of prescription drug labels so as to enable physicians to find the information they need more readily. New features include a section called 'Highlights' and a Table of Contents. According to the FDA's press release, this is the first time in 25 years that the labeling requirements have undergone a major revision.
Debtors Cannot Assume or Assign Trademark License Without Licensor's Consent
March 29, 2006
Trademarks serve as symbols of good will and are a valuable asset of the business associated with the mark. Not surprisingly, trademark licenses typically require the licensor's consent for assignments, because licensors want the right to pass on the abilities of new potential licensees. In the event of bankruptcy filing by the licensee, the contractual restriction on assignment is ordinarily unenforceable. <i>See</i> 11 U.S.C. ' 365(f)(1). Bankruptcy Code ' 365(c)(1), however, provides an exception to this general rule: a debtor may not 'assume or assign' any executory contract without consent of the non-debtor if 'applicable law' provides that the non-debtor can refuse to accept performance from a third party.
How to Avoid Regulatory Sting
March 29, 2006
As this article is being written, Visa USA is set to announce newly updated information security guidelines that cover all merchants, member banks, service providers and software vendors (who build, for example, point-of-sale and e-commerce applications) ' and those who process, transmit, or store credit or payment card data. The standards will also be accepted and endorsed by MasterCard, Discover, Diners, JCB and American Express. The newly revised standards resolve differences in how the industry has been evaluating security compliance and in doing so, support on-going efforts for combating fraud, which Visa estimates has now dropped to a historic low of five cents on every one-hundred dollars of transaction volume. Fail to comply with the new standard and suffer a breach, and a member organization could be facing fines of up to $500,000 from Visa.
Internet Disclosures Can Cost Your Company
March 29, 2006
As the Internet opens pathways to doing business that could scarcely be imagined a decade ago, it also presents increasing dangers to public companies in the form of new liability risks. The instantaneous nature of the Internet can be both boon and bane to companies seeking to harness it to provide information to, and create goodwill with, shareholders. Not only can information be disseminated over the Net in a fraction of a second for worldwide viewing, but it has become a predominant source of investment news. Financial updates, product developments, information tidbits, even rumors ' all are now posted 24/7 on the Web for consumption by anyone, including investors who are poised to take advantage of the latest intelligence.
Final Military Leave Regulations Issued By DOL
March 28, 2006
On Dec. 19, 2005, 11 years after Congress enacted the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended (USERRA), the U.S. Department of Labor issued final regulations under USERRA which became effective Jan. 18, 2006. The final regulations can be found at 20 Code of Federal Regulations (CFR), Part 1002. The DOL suggests these final regulations do not impose any new obligations on employers, but rather, serve as an implementation of the statutory requirements, as well as to clarify and interpret areas of the law. However, these regulations, the first ever issued under USERRA, turn the internal guidance of the DOL into binding regulations.
