EU Corporate Guidelines
December 27, 2004
The first challenge and most important need is to know what the relevant EU corporate guidelines are, to know where they apply and to know how to find them. Unlike the United States, where corporate matters are generally covered by individual state law, in the European Union these matters have long attracted centralized legislation from Brussels, which affects the entire EU (now 25 countries, which in 2007 will be joined by Bulgaria and Romania). Norway and Switzerland (although not in the EU) often legislate regarding these matters much as EU member countries do and thus, for our purposes here, we can talk about 29 countries in Europe rather than the 25 that currently make up the EU.
Title Insurance for the Mezzanine Lender
November 30, 2004
Present-day real estate financing is significantly more complex than traditional financing. Sobered by borrower bankruptcies and compelled by rating agency requirements in the modern day era of mortgage securitizations, lenders are now looking to "mezzanine loans" to bridge the gap between senior debt and borrower equity. A mezzanine loan will often cover 50% to 90% of the equity required to acquire a property. In order to secure the repayment of a mezzanine loan, a lender customarily requires a pledge of the partnership or membership interests of the property owning entity.
Conspiracy Theory: Coverage for Claims Involving Allegations of Conspiracy
November 30, 2004
Plaintiffs in mass tort cases always have had a knack for expanding the universe of potential defendants, seeking the maximal number of deep pockets in each case. Historically, doctrines such as market-share liability and concert of action have been relied upon by plaintiffs to access all the participants in an industry, based on the acts of only some of the participants therein. Recently, as those theories of broadened liability have begun to meet with judicial resistance, plaintiffs have turned to an ancient common law doctrine through which to expand the number of available defendants in mass tort suits: the conspiracy theory. The focus of this article is on the question of whether industry participants accused of participating in such an alleged conspiracy can and should properly expect their liability insurers to defend such suits and indemnify any loss resulting therefrom. As shown below, there is no categorical bar to coverage for conspiracy liability in standard-form comprehensive general liability policies ("CGL"). Instead, coverage turns on the object of the alleged conspiracy and the injury suffered. Although many courts have shown great hostility to coverage for conspiracy-only claims, in many circumstances arising in the context of traditional mass tort suits insureds should be entitled to a defense (certainly) and indemnity (depending on the facts).
'Follow the Settlements' Doctrine: Implications on a Reinsured's Allocation and Aggregation of Losses
November 30, 2004
The applicability of the bedrock reinsurance principle of "follow the settlements" is at the core of an increasing number of recent reinsurance disputes concerning whether a reinsurer must follow the manner its reinsureds allocate and aggregate underlying losses. Over the last 5 years, a number of courts have addressed whether the doctrine of "follow the settlements" precludes a reinsurer from second-guessing its reinsured's determination of how it allocated and/or aggregated losses in resolving disputes with the underlying insured. As discussed more fully below, reinsureds typically argue that under the "follow the settlements" doctrine, a reinsurer must defer to the allocation and aggregation decisions of its reinsured, provided those decisions are made in good faith. Reinsurers on the other hand, typically argue that "follow the settlements" is not unlimited, but that the reinsured's decisions must be consistent with the language of the reinsurance agreement.
An Increase in Mass Tort and Environmental Claims Activity is on the Horizon: Prepare Now To Advise Clients About the Right Insurance
November 30, 2004
Environmental insurance has become a core element of corporate risk management programs, which are presently being utilized in commercial real estate transactions, sales of businesses, and to resolve mass tort and product liability litigation. Attorneys should consult with knowledgeable environmental insurance brokers to understand clients' environmental liability exposures. An environmental liability exposure can be related to a product, toxic tort, or cleanup of a hazardous waste site. In situations where there is a known potential environmental exposure, environmental markets assess the costs associated with the known environmental liability and provide insurance above those projected costs. This insurance is called "cost overrun insurance." Environmental policies also insure against the risk of unknown environmental exposures. There are several ways to insure against this liability. For example, environmental policies can include combined coverage for general liability, products, and pollution. In addition, combined finite funding and risk transfer programs have been developed as a risk management strategy to address asbestos, silica, manganese, products liability, toxic tort and other general liability risks.
The Terminix Case: Causation in Mass Tort Litigation
November 30, 2004
On Aug. 27, 2004, the Fifth Circuit Court of Davidson County in Nashville, TN entered final judgment for Terminix International in a nine-plaintiff toxic-tort personal injury lawsuit. <i>Ballentine v. Terminix Int'l Co.,</i> No. 98C-836 (Aug. 27, 2004 Order). The case demonstrates the use of a challenge to the admissibility of plaintiffs' causation evidence to dismantle a multi-plaintiff or mini-mass tort claim from a single toxic exposure, and it illustrates the importance to both sides of getting the scientific evidence right from the outset. The approach to a mini-mass tort involving injuries from a single exposure need be no different from that used in a single plaintiff's claim.
Statistical Determination of Mass Tort Damages: Coming Soon to a Court Near You?
November 30, 2004
Traditionally, courts have been reluctant to consider the use of statistical tools such as sampling to determine damages in class action litigation and other cases involving large groups of plaintiffs. Arguments against the practice include the fact that it seemingly flies in the face of the Seventh Amendment, and that damages, by their very nature, are peculiar and specific to each individual plaintiff.
Recent Decision Provides Guidance on Admissibility of Expert Testimony
November 29, 2004
Improper use of experts in product liability cases is all too familiar. The proper use of an expert's specialized knowledge or expertise is to assist the trier of fact to determine a fact at issue. Some lawyers, however, use experts merely as sounding boards to highlight key facts and argue conclusory inferences in support of a party's case. These "experts" are typically offered as "historians" and arbiters of "ethical" conduct.
Ten Steps to an Effective Document Retention Program
November 29, 2004
In the past, the implementation of a comprehensive document retention policy may have seemed a secondary concern at best; however, the primary importance to all companies of implementing such a policy was dramatically illustrated in 2002. That year brought the federal obstruction of justice conviction and ultimate demise of accounting firm Arthur Andersen for destruction of documents it knew were important to the SEC's investigation of the Enron scandal. It also brought the Sarbanes-Oxley Act of 2002, which significantly expanded the reach of federal obstruction statutes, increased the penalties for document destruction that hinders a federal investigation, and promulgated new record-keeping obligations. <i>See, e.g.</i> 18 U.S.C. 1519, 1520. Coupled with these developments are the ever-expanding obligations in connection with discovery of electronic information.
