Author: Bailey Glasser

Partner Mark Boyko Quoted in Law 360

“Make no mistake, the decision is a win for workers and retirees” – BG partner Mark Boyko is quoted in Law360 commenting on the impact of a federal court appeal rejecting a management-side argument to force an ERISA lawsuit into individual arbitration, finding that an agreement tucked into ESOP plan documents blocked relief under federal benefits law.

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“Make no mistake, the decision is a win for workers and retirees” – BG partner Mark Boyko is quoted in Law360 commenting on the impact of a federal court appeal rejecting a management-side argument to force an ERISA lawsuit into individual arbitration, finding that an agreement tucked into ESOP plan documents blocked relief under federal benefits law. However, the panel avoided thornier questions such as whether all ERISA claims could be pushed into arbitration. As Boyko noted, the panel “hung its hat” on the arbitration provision’s block on monetary or other relief being recovered on a class basis and warns “the issues with limiting representative actions are just one of the problems.’”

To the read the full article, visit here.

“Improvidently Granted”: Supremes Decline to Wade Into Attorney-Client Privilege Dispute

This past January 11, we wrote a blog post about the Supreme Court entertaining arguments on the scope of the attorney-client privilege in the context of dual-purpose communications paraphrasing a question from Justice Kagan during the argument to Petitioner’s counsel to comment on the adage, “If it ain’t broke, don’t fix it.”

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Katherine E. Charonko and Elizabeth L. Stryker

This past January 11, we wrote a blog post about the Supreme Court entertaining arguments on the scope of the attorney-client privilege in the context of dual-purpose communications paraphrasing a question from Justice Kagan during the argument to Petitioner’s counsel to comment on the adage, “If it ain’t broke, don’t fix it.”

Well, turns out the Supreme Court did not want to wade into that potential quagmire, and instead turned around and entirely dismissed the writ of certiorari granted in In re Grand Jury as “improvidently filed.” Accordingly, the Ninth Circuit’s opinion which had been appealed to the Supreme Court that had held the “primary purpose” test controls when assessing attorney-client privilege for dual-purpose communications remains in full effect. In re Grand Jury, 23 F.4th 1088 (9th Cir. 2021).This opinion is important reading for reasons other than the adoption of this test because the Ninth Circuit also discussed the disparate purposes of the attorney-client privilege and the work product protection doctrine and declined to adopt but did not fully reject the “a primary purpose” test.

 

In its opinion, the Ninth Circuit rejected the “because of” test that commonly applies in the work-product context for dual-purpose communications. In that context, work product protections apply when it can be fairly said that the “document was created because of anticipated litigation and would not have been created in substantially similar form but for the prospect of that litigation.” In re Grand Jury Subpoena (Mark Torf/Torf Env’t Mgmt.), 357 F.3d 900, 908 (9th Cir. 2004).The Court recognized, however, that the attorney-client privilege and the work product protection doctrine arise from different policy goals. The Court specifically noted that the work product doctrine is intended to ensure the fairness of the adversarial process by allowing litigators to creatively develop legal theories and strategies without having to disclose this process to opposing counsel. In contrast, the attorney-client privilege is not necessarily tied to an adversarial process and is instead intended as a safe haven for frank communication about any legal matter.Based on these differences, the Court declined to adopt the same “because of” test for both contexts.

 

Notably, the Ninth Circuit also left open the possibility that the “a primary purpose” test articulated in In re Kellogg Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014) may apply to cases with facts other than the ones presented below. However, given the “messy in practice” determination of “the primary or predominant” purpose of a dual-purpose communication, the Court declined to adopt the Kellogg Court’s reasoning.

 

Due to the Supreme Court declining to address this issue further, state and federal courts must rely on the precedent developed in their respective jurisdictions along with analytical tools like in camera review to determine the scope of the attorney-client privilege for dual-purpose communications. Please reach out to either Kate Charonko or Elizabeth Stryker with any questions regarding privilege or other discovery issues you may have.

BG’s 2022 In Review

Passionately practicing law while doing good work for our clients and communities is at the heart of what we do here at BG.

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Passionately practicing law while doing good work for our clients and communities is at the heart of what we do here at BG.

In our “2022 In Review” newsletter, we highlight the work we’ve done for our valued clients (including a sneak peek of a couple of early 2023 successes), introduce our new partners and associates, and spotlight our pro bono work and diversity initiatives. Thank you for taking just a few moments to flip through its pages – we hope you enjoy it.

Click on the link here to open the newsletter in a beautiful magazine-style flippable format.

Federal Appeals Court Rejects J&J Texas Two-Step Maneuver In Huge Victory For Plaintiffs Harmed By J&J Baby Powder

Washington, D.C.: In a huge victory for individuals grievously harmed by Johnson & Johnson baby powder, the Circuit Court of Appeals for the Third Circuit roundly rejected Johnson & Johnson’s attempt to shovel all 38,000 cases into a brand-new subsidiary which then, within hours of creation, declared bankruptcy. In strong language, the federal appeals court found that the JNJ/LTL petition “has no valid bankruptcy purpose” and dismissed the bankruptcy in its entirety, reversing a ruling by a lower bankruptcy court.

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Washington, D.C.: In a huge victory for individuals grievously harmed by Johnson & Johnson baby powder, the Circuit Court of Appeals for the Third Circuit roundly rejected Johnson & Johnson’s attempt to shovel all 38,000 cases into a brand-new subsidiary which then, within hours of creation, declared bankruptcy. In strong language, the federal appeals court found that the JNJ/LTL petition “has no valid bankruptcy purpose” and dismissed the bankruptcy in its entirety, reversing a ruling by a lower bankruptcy court.

The dismissal of the LTL bankruptcy now allows plaintiffs harmed by J&J’s consumer products to continue pursuing justice before a jury trial of their peers, a right afforded them by the United States Constitution.

Brian A. Glasser, founding partner of the national law firm Bailey & Glasser, LLP, was co-lead counsel to the trial team vindicated by the appeals court. Mr. Glasser states today: “J&J has no special right to put talc victims in a bankruptcy box. It now has to face these claims in front of juries around the nation.”

Specifically, Mr. Glasser argued at trial that Johnson & Johnson’s choice of bankruptcy as means to control its liabilities costs was invalid because “LTL was never in financial distress during its brief existence” because the phantom subsidiary was “eminently solvent” as it enjoyed access to more than $60 billion in Johnson & Johnson funds.

The Third Circuit agreed with Mr. Glasser in its opinion, finding that “we cannot agree LTL was in financial distress when it filed its Chapter 11 petition. The value and quality of its assets, which include a roughly $61.5 billion payment against J&J and New Consumer, makes this holding untenable.” Continue Reading

Selling Your Amazon Business? Not So Fast!

The 1970s rock band The Eagles had a verse in their hit Hotel California: “You can check-out anytime you’d like, but you can never leave.”

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Jeff Craven

The 1970s rock band The Eagles had a verse in their hit Hotel California: “You can check-out anytime you’d like, but you can never leave.”

While Amazon sellers do not face quite the same predicament envisioned by the Eagles, you may feel a bit like you’re trapped in your own “Hotel California” because selling your Amazon business is not a simple process.

Your Amazon Services Business Solutions Agreement (“Agreement”) mandates that “You may not assign this Agreement, by operation of law or otherwise, without our prior consent.” Amazon is well known for not granting consent, at least not with any sense of urgency. You are, however, permitted to assign your rights and responsibilities under the agreement to an Affiliate, (any other entity that is under common control with the Amazon Seller) so long as you remain liable for obligations that arise prior to the assignment.

But if your proposed buyer is not an Affiliate – and they rarely are – you could conclude that the Agreement leaves you without control of your destiny. Not so.

The Agreement is governed by the laws of the State of Washington, where Amazon has its corporate headquarters. Under Washington State law, in the sale of a company via a Stock Purchase Agreement, (“SPA”) you would be selling the stock or membership units of your company that is the seller on Amazon – not the individual assets of your Amazon seller company. So, there is no need to assign the Agreement at all and thus there is no need for Amazon approval to close the deal, because you are just selling your company and everything (including the Agreement) that goes with your company.

This means that, in many cases a seller may use the SPA structure to sell the entire Company, including the Agreement and all other contracts held by the Company, without seeking the consent of Amazon (and without violating the Agreement).

To make it even more fun (and confusing) it might be that your buyer really doesn’t want to do a straight stock purchase because they don’t want all the liabilities associated with the company you’ve been operating for years to build-up and prepare for sale. No problem, first we form a new company (“Newco”) that you own, transfer the assets (but not the liabilities) of your long-standing company to Newco and assign the Agreement to Newco. Remember, this is allowed because Newco is owned by you and therefore is an Affiliate under the Agreement. Once this step is complete, we sell the stock of Newco to the buyer, through a SPA, and everyone gets what they want.

Note that an Asset Purchase Agreement (often preferred by buyers) is still possible, it just requires more steps and more time and, technically, Amazon’s consent. Even with these limitations, an Asset Purchase can be accomplished with some careful planning.

There are also ways to affect the assignment of the Company’s operating account at Amazon (which may only be modified via the requirements set forth in the Agreement) and simply advising Amazon that there is a new Administrator for the account. You simply send that notice to Amazon at the same time as you update your bank information, making sure to provide the bank with the appropriate corporate minutes and related documents they will require to meet their Patriot Act, “Know Your Customer” obligations.

So, Amazon sellers, don’t conclude that Amazon has you trapped in the equivalent of the Hotel California: check-out, if you wish, but be sure you are structuring your transaction properly.