Derivative Or Direct?
May 26, 2004
A sometimes confusing area of corporate litigation concerns whether a claim asserted by a stockholder in a lawsuit against a corporation's officers and directors is a "derivative" claim brought on behalf of the corporation, or a "direct" claim brought by the stockholder on his or her own behalf rather than the corporation's. The distinction is important, as the proper characterization of a stockholder claim can have a significant impact on the parties and how the lawsuit proceeds, in some instances determining whether it proceeds at all. In a new opinion, <i>Tooley v. Donaldson, Lufkin & Jenrette, Inc.</i>, the Delaware Supreme Court has cleared up some of the confusion, holding that a claim is derivative whenever the corporation has suffered the alleged harm and will be the beneficiary of the relief granted by the court.
Cutting the Cost Of e-Discovery
May 26, 2004
Save everything!" That's the new corporate mantra in response to tougher regulatory requirements and the growing importance of electronic data discovery in litigation. But is "Save Everything!" the right response? CEOs and CFOs may think they'll sleep better knowing that every bit and byte is being saved ' but wait until the bills come in! That'll be an eye-opener!
What Your Company Needs To Know About Records Retention
May 26, 2004
A recent industry survey reported that nearly half of large companies currently don't have policies about when to keep and when to destroy their electronic records and those that do usually don't enforce them. If your company is one of these businesses, it is risking huge legal problems if someone in your company destroys an e-mail or information on backup tapes that relates to any existing or future litigation ' because your company may wind up being hit with sanctions for spoliation.
Anti-Spam Law Impacts Legitimate e-Mail
May 26, 2004
Despite its clever name, the recently enacted CAN-SPAM Act does not in fact prohibit "spam." What the law does do is regulate "commercial e-mail," which is defined broadly. Accordingly, the legal department of every business that uses e-mail should be advising its employees to take immediate steps to comply with the Act, as violations carry stiff penalties.
WARNING! Employees' Entertainment May Be Employers' Headache
April 01, 2004
Most employers have come to realize that personal use of the Internet at work by employees can decrease productivity, and that employees downloading inappropriate material can lead to hostile work environment claims. What many employers have not yet thought about is the potentially explosive problems facing them as the music industry continues its crackdown on those who illegally download and share pirated music files over the Internet.
Civil Litigation Implications of Corporate Employees' Criminal Acts
April 01, 2004
When corporate employees engage in criminal wrongdoing, the result is often civil litigation against their employer. The criminal conviction of such employees, whether by trial or plea, or their invocation of the privilege against self-incrimination, can have serious adverse consequences in related civil litigations against their employer, even if the employee (or former employee) is not a party. This article discusses the use of such evidence against corporations.
Export of Controlled Goods to Canada: Pitfalls for the Unwary
April 01, 2004
While Canada-U.S. trade relations have been historically close, and cross-border trade greatly liberalized since the entry into force of the Canada-U.S. Free Trade Agreement in 1988 and the NAFTA in 1994, the complex area of trade in defense products remains highly regulated and subject, in certain respects, to important restrictions. Significant regulatory pitfalls exist for companies with continentally integrated operations in the form of export permit requirements for items that are transferred across (and frequently back across) the U.S.-Canada border. Corporate non-compliance with these requirements, even though unintentional, can lead potentially to heavy penalties under both U.S. and Canadian law.
A Patch in Time Saves Nine: Liability Risks for Unpatched Software
April 01, 2004
Computer security issues are commanding rapidly increasing attention from companies, due to increases in both targeted attacks from hackers, and Internet viruses and worms that affect numerous computer systems simultaneously. For both types of attacks, an important line of defense for a company is to make sure that its computers run only updated software, including the use of "patches" to repair identified security holes. Computer security experts have long recommended prompt installation of patches, invoking the old saw that "a stitch in time saves nine." This article suggests that risks of legal liability for companies that do not apply security patches promptly are significant and increasing.
WARN Act Reaches Equity Owners
April 01, 2004
The Federal District Court for the Southern District of New York has allowed a class of 6,500 plaintiffs to pursue their complaint against several investment companies for violations of the Workers Adjustment and Notification, or WARN, Act. In doing so, the court in In re Vogt, 2004 WL 187153, adopted and applied not the traditional piercing-the-corporate-veil test but instead the more narrowly focused and easier to establish "DOL test," based on the Department of Labor's WARN regulations. <br>This case should be of concern to all employers, not just equity investors. The nation's economy now seems to be hovering between recession and recovery.
