The Class Action Fairness Act of 2005
April 27, 2005
Calling it "a model of effective, bipartisan legislation," President Bush signed the Class Action Fairness Act of 2005 on Feb. 18, 2005. To achieve itsgoals, the Act significantly expands federal jurisdiction over multi-state class actions while imposing new requirements on class action settlements in federal court, such as restricting attorney fee awards when class members receive coupons instead of cash in a settlement, and requiring defendants to notify federal and state officials of any proposed class action settlement. Parties involved in class actions initiated on or after Feb. 18, 2005 should fashion their legal strategies with the Act's sweeping changes in mind.
A Look At <i>Production Resources</i>
April 27, 2005
In the current environment of increasing scrutiny of corporate behavior after corporate scandals such as Enron and Worldcom, lawsuits brought by creditors for breach of the fiduciary duties owed to them by officers and directors have increased significantly. The suits are taking center stage on the dockets of bankruptcy courts and state courts alike, and receive much public attention across the country. Against this backdrop, the Delaware Court of Chancery's November opinion in <i>Production Resources Group, L.L.C. v. NCT Group, Inc.</i> is likely to be widely cited. This lengthy and scholarly opinion also is likely to be misconstrued by many bankruptcy practitioners as signaling a retreat from settled law that directors and officers of insolvent Delaware corporations owe fiduciary duties to creditors. This article demonstrates that such a reading of Production Resources is incorrect.
How to Avoid Class Litigation
April 27, 2005
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.
Ruling May Increase Age Bias Suits
April 27, 2005
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). <i>Smith v. City of Jackson<i>, No. 03-1160.
Employment Legislation Update
April 27, 2005
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.
Ninth Circuit Rules on SEC
April 27, 2005
On March 22, 2005, an <i>en banc panel</i> of the United States Court of Appeals for the Ninth Circuit, in a 10-to-1 decision, interpreted the bounds of Section 1103 of the Sarbanes-Oxley Act of 2002 (SOX), 15 U.S.C. ' 78u-3(c)(3). Section 1103 gives the Securities and Exchange Commission (SEC) the ability to petition a federal district court for a temporary 45-day freeze (which can be extended up to an additional 45 days) on any "extraordinary payments" likely to be made to corporate executives, employees or insiders of a company under investigation by the SEC.
One More Year
April 27, 2005
On March 2, 2005, the Securities and Exchange Commission granted non-accelerated filers -- companies with a public float of $75 million or less -- and foreign private issuers filing annual reports on Form 20-F or 40-F a 1-year extension for compliance with SEC rules adopted under Section 404 of the Sarbanes-Oxley Act (SOX) of 2002.
