Trust the Leaders 2.0 Volume 4

Volume 4

A PUBLICATION OF SMITH, GAMBRELL & RUSSELL, LLP

SGRLAW.COM

The Litigation Issue:

What’s Your Next Move?

Volume 4

Contents 3

Editor’s Letter

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Product Liability In A Complicated World

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Negotiating Resolution of CWA Citizen Suits and 60-Day Notice Letters: Tactical Tips and Practical Strategies

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Why and When to File an Amicus Brief

20 Shop Safe Act: A Bill to Hold E-Commerce Sites Liable for Counterfeit Goods Sold Online 24 Wage and Hour Considerations for the Remote Workplace 30 ADR Bounces Back, Changed But Strong,

in Face of Pandemic 32

Georgia Bar Construction Project

34 Burden of Proof 38 Internal Investigations at Institutions of

Higher Learning: FAQs 44 Book Review: Scott Turow’s The Last Trial Is The Real Deal

The information contained herein has been obtained from sources believed to be reliable. The content and information in this publication do not constitute legal advice, do not in all cases reflect the opinions of SGR or its attorneys and are not in all cases complete or current as of the publication date. This publication is not intended to and does not create an attorney-client relationship or provide legal advice or legal opinion.

Legal advice should be obtained from one’s legal counsel.

Permission is granted to use and reproduce this publication in whole or in part for internal and personal reference, provided that proper attribution of authorship is given. Except for material in the public domain, this publication may not be further copied, modified, used or distributed, in whole or in part, in any form or by any means without the written permission of Smith, Gambrell & Russell, LLP. All other rights expressly reserved.

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© 2020 Smith, Gambrell & Russell, LLP

Editor’s Letter Ladies and Gentlemen, Welcome to the fourth issue of Trust the Leaders 2.0.

This issue features SGR’s litigation practice – a topic near and dear to my own heart.

When I started as a litigation associate at the firm in 1991, we were a mid-sized Atlanta law firm with a very capable, but relatively small, general commercial litigation practice. Since that time, SGR has grown into an AmLaw 200 law firm with offices in seven U.S. cities (and two in the UK). As the firm has grown, so have the size and scope of our litigation practice. Today, you can find SGR lawyers in courtrooms and boardrooms throughout the United States as we represent our clients in all manner of administrative hearings, trials, arbitrations and mediations.

Our litigation capabilities cover the subjectmatter waterfront. In this issue alone, you will find articles written by SGR lawyers from our appellate, commercial, construction, employment, environmental, intellectual property and white-collar practices. We hope you enjoy the issue.

As we close out 2020, and look ahead to the promise of 2021, we’d like to take this opportunity to wish you and yours a happy and peaceful holiday season. And, as always, we at SGR thank you for the opportunity to be your trusted legal advisers.

Please continue to stay safe and healthy.

Dana M. Richens Editor-in-Chief editor@sgrlaw.com

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Product Liability In A Complicated World by Ed Wasmuth

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© 2020 Smith, Gambrell & Russell, LLP

Product Liability

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o build automobiles in the early 20th century, Henry Ford built the largest integrated manufacturing plant the world had ever seen. Indeed, he eventually purchased iron mines in Minnesota and rubber plantations in Brazil so that he could control all of the inputs that went into his cars.

That world no longer exists. In recent years, the manufacturing process has become more fragmented. Different companies specialize in the manufacture of component parts that can be used in a wide variety of products. Manufacturers outsource the production of components to many different manufacturers and suppliers. Sometimes, those suppliers are on the other side of the globe.

Dozens of different companies may manufacture the components required to manufacture a single product.

Lengthy and complex supply chains complicate the defense of product liability lawsuits. If a defective product causes personal injury or property damage, the company that sold the finallyassembled product may have had no role in the design or manufacture of the component that failed.

But that is not a defense to a product liability lawsuit brought by an injured end user. The company that puts together and sells the completed product is liable as the “manufacturer” of the product even if it did not design or build the component that caused the failure.

A manufacturer can take steps to protect itself against product liability lawsuits resulting from defective components supplied by others. And component suppliers can take steps to protect themselves against the losses that can result from being wrongly involved in lawsuits against the final product manufacturer.

How Can A Manufacturer Protect Itself?

Imagine a hypothetical manufacturer of washing machines. The manufacturer purchases the electric motors for the washing machines from another party. Years after a consumer purchases the washing machine, the motor overheats and starts a fire, damaging the consumer’s house. Under general product liability principles, the manufacturer of the washing machine can be held responsible for a defect in the electric motor that caused the fire even when the manufacturer had no role in the design or manufacture of the motor. It sold a defective product. How can a manufacturer in such a situation protect itself against product liability claims caused by defective component parts?

The first step is to “know your supplier.” Is the supplier financially stable? Is the supplier insured against product liability losses? Does the supplier have a history of being sued on product liability claims? These are important questions because of the sometimes extremely long “tail” of product liability claims. An injury-producing accident can occur many years after the manufacture and retail sale of the product. Therefore, a manufacturer could face a claim for a product that was manufactured and sold years prior to the accident.

A manufacturer should learn enough about a potential supplier of key components to make a judgment about whether that supplier is likely to be around years in the future and able to respond if a claim arises.

For more critical supply relationships, a manufacturer should consider requesting to be included as an “additional insured” on the component supplier’s product liability insurance policy.

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If the manufacturer is an additional insured on the supplier’s policy, that insurance company would defend and indemnify the manufacturer even if the supplier has gone out of business or has financial difficulties. For important supply relationships involving critical components that potentially are a source of product liability claims, manufacturers should strongly consider such an arrangement.

A manufacturer can seek protection in the law of warranty. Absent contractual disclaimers, the law in most states generally will provide that the seller of a product warrants to the buyer that the product is “merchantable.” A merchantable product is “fit for the ordinary purposes for which such goods are used.” In addition, the parties can create a warranty by express agreement. The manufacturer’s purchase order should include language stating that the component parts to be supplied are free from defects and reasonably suited for their intended use. If the component parts are to be put to a specialized or unique use, the supply agreement or purchase order should provide that the components are suited for that specific use.

Such a warranty will provide the manufacturer with a legal basis to hold the component parts supplier responsible for a defect in the part that causes a

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personal injury or damages property.

A manufacturer should be alert to the possibility that the supplier may try to overcome the warranty contained in a purchase order by including language in a written order confirmation that provides that the goods are sold without warranty.

A purchaser of component parts should be able to insist on a warranty.

A manufacturer should be able to expect that a creditable supplier will want to stand behind its product. Do you really want to do business with a supplier that will not provide any warranty of fitness for the component parts it supplies?

© 2020 Smith, Gambrell & Russell, LLP

Product Liability

Product liability claims have a long tail.

The manufacturer should also be alert to language in a purchase order confirmation that limits the damages that can be recovered from a component parts supplier. A prohibition on the recovery of “consequential damages� may seem innocuous, but it could prevent a manufacturer from suing a component parts supplier to recover the loss resulting from a product liability lawsuit.

An alternative way for a manufacturer to obtain protection is to negotiate an indemnification agreement with the parts supplier. In such indemnification agreement, the supplier would agree to shoulder any liability or costs that might be inflicted on the manufacturer as a consequence of a defect in the component part. Such indemnification should include the manufacturer’s defense costs. In addition, the indemnification agreement might require that the component supplier assume the burden of defending a lawsuit against the manufacturer if a claim that the component was defective is the sole basis of the claim against the manufacturer.

Overseas component suppliers can create challenges for a manufacturer facing a product liability claim. The injured consumer may have no stomach for going to the trouble and expense of serving a lawsuit on a foreign company. The foreign component supplier may not be subject to the personal jurisdiction of the court in which the product liability claim is brought. In a purchase order or supply agreement, the manufacturer should ask that the foreign supplier consent to the

jurisdiction of courts in the United States, perhaps the courts in the location where the manufacturer is located. Or the consent could be to arbitration in the United States. Such a consent eases the burden on the manufacturer when attempting to hold the component supplier responsible for its product.

A manufacturer should maintain records that will allow it, many years later, to determine the terms of sale for component parts. Years after the purchase of a component part, a manufacturer may need to prove what warranty it received for that part or what representations were made about its suitability for the intended use. Sound document management can be an important element to defending a product liability case.

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Product Liability

How Can a Component Supplier Protect Itself?

Long and complex supply chains also create risk for component suppliers. Imagine a hypothetical manufacturer of a chemical compound or an electric circuit that might have a thousand different uses. If the product containing that component causes a personal injury or damages property, the injured consumer might sue all of the component suppliers, alleging that each contributed to the failure of the product. Perhaps the manufacturer of the final product is insolvent and the component supplier is the only deep pocket that could possibly pay the damages that the consumer is looking for. What could such a component supplier do to protect itself against such claims?

Just as a manufacturer should know its supplier, a supplier also should know the manufacturer.

How is the manufacturer using the component?

Is the component truly suited for that intended

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use? Does the manufacturer have the engineering sophistication to properly use the component?

Such knowledge can help a supplier avoid risky relationships.

A component supplier should make sure that the manufacturer that purchases the component is fully informed about the properties of the component, its proper uses, the limitations on its use and the possible risks of its use.

The law of most states recognizes a “learned intermediary” or “sophisticated user” defense.

If the component manufacturer informs the manufacturer about how to properly use the component and its potential risks, the component supplier has a defense against a consumer’s product liability claim. If the manufacturer does not properly use the component or fails to pass along the warnings to the ultimate consumer, that failure is the responsibility of the manufacturer, not the component part supplier.

© 2020 Smith, Gambrell & Russell, LLP

Years later, a supplier may need to recreate the terms of sale to establish any limitations on warranties or indemnification agreement.

The component supplier should maintain documentation about the information it provides to the manufacturer. As is noted above, product liability claims have a long tail. Years after selling the component, a component supplier might need to re-create what information and warnings it supplied to the manufacturer about its component.

The supplier may also need to recreate the terms of sale to establish any limitations on warranties or indemnification agreement.

Indemnification language in the purchase order acknowledgment or a supply agreement can also protect the component supplier. The component supplier should ask that the manufacturer indemnify and defend the component supplier for claims arising out of the conduct of the manufacturer. If the manufacturer does not follow the component supplier’s instructions or warnings and the product fails, or the accident resulted from a design choice

of the manufacturer, the manufacturer should indemnify or defend the component supplier for product liability claims.

As in many areas of the law, a little forethought combined with proper contract drafting can go a long way to controlling the product liability risk presented by complex supply chains.

If you have any questions about these issues, please contact your Product Liability counsel at Smith, Gambrell & Russell, LLP or contact the following:

Ed Wasmuth ewasmuth@sgrlaw.com

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Environmental

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© 2020 Smith, Gambrell & Russell, LLP

Negotiating Resolution of CWA Citizen Suits and 60-Day Notice Letters: Tactical Tips and Practical Strategies by Andy Thompson

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ach of the major federal environmental statutes contains a “citizen suit” provision. See 33 U.S.C. § 1365 (Clean Water Act); 42 U.S.C. § 7604 (Clean Air Act); 42 U.S.C. § 6972 (Resource Conservation & Recovery Act (RCRA)); and 42 U.S.C. § 9659 (Comprehensive Environmental Response Compensation & Liability Act (CERCLA)). As enforcement budgets and staff of state and federal environmental agencies are reduced, it is an increasingly common occurrence for manufacturing facilities, real estate developers, infrastructure projects and others to receive letters from nongovernmental entities, environmental organizations and/ or an individual notifying the recipient of the letter that it will be sued under a “citizen suit” provision of a federal environmental statute as a result of alleged violations of the statute.

The most common type of citizen suit is filed under the federal Clean Water Act (CWA). This article will focus on strategies for defending against and attempting to resolve citizen suits brought under the CWA, but many of the strategies also have application to the defense of citizen suits brought under the other federal environmental statutes.

Introduction The citizen suit provision of the CWA is found in section 505 of the statute and provides in relevant part that “any citizen may commence a civil action on his own behalf against any person … who is alleged to be in violation of (A) an effluent standard or limitation under this chapter or (B) an order issued by the Administrator [of U.S. Environmental Protection Agency] or a State with respect to such a standard or limitation.”

33 U.S.C. § 1365(a)(1).1 The term “person” is defined in the CWA to include individuals as well as corporations, partnerships and associations. 33 U.S.C. § 1362(5).

The citizen suit provision allows nongovernmental organizations and individual plaintiffs to “step into the shoes” of the relevant regulatory agency and enforce the provisions of the CWA and permits issued under the CWA against alleged violators, and citizen suits have become particularly prevalent as budgets of state regulatory agencies have become more limited.

However, the Supreme Court has recognized that “the citizen suit is meant to supplement rather than to supplant governmental action.”

Gwaltney of Smithfield, Ltd. v. Chesapeake Bay Found., Inc., 484 U.S. 49, 60 (1987).

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Environmental

Although citizen suits are prevalent, trials of citizen suits remain quite rare for two primary reasons. First, § 505 of the CWA provides citizen plaintiffs with significant leverage incentivizing defendants to settle citizen suit claims. Such leverage includes (i) the ability to seek up to $55,801 per day per violation in civil penalties payable to the U.S. Treasury, as well as injunctive relief; and (ii) the ability to recover the citizen group’s attorneys’ fees and litigation expenses if the citizen group “substantially prevails” on its claims.

In light of the plaintiff’s significant leverage and the potential for paying the plaintiff’s attorney’s fees, defense counsel must not only think like a litigator in preparing a defense, but also act as a client counselor in evaluating the advisability of an early settlement.

The second reason for the rarity of trials is that § 505 of the CWA, and the case law interpreting and applying it, set forth a number of defenses and procedural hurdles that can, at times, provide a basis for defendants to obtain dismissal or summary

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adjudication of citizen suit claims. Such defenses will be discussed further below.

The Pre-Lawsuit Written Notice Requirement Section 505(b) of the CWA mandates that no citizen suit may be commenced until the plaintiff has given notice of the alleged violation and waited 60 days prior to filing suit.2 40 C.F.R. § 135 sets forth specific requirements that a citizen group must satisfy with its 60-day notice letter including the required contents of the letter and to whom the letter must be sent.3 The required recipients must include (i) the owner or managing agent of the alleged violator; (ii) the registered agent for the corporation in the state in which the violation is alleged to have occurred (if the alleged violator is a corporation); (iii) the administrator of the U.S. EPA; (iv) the regional administrator for the EPA region in which the violation is alleged to have occurred; and (iv) an authorized representative of the state agency with responsibility for water pollution control.

© 2020 Smith, Gambrell & Russell, LLP

The notice letter must also include, among other things, the identity of the counsel representing the person giving notice, and, most importantly, contain sufficient information to allow the alleged violator to identify: 1. the specific standard, limitation or order alleged to have been violated; 2. the activity alleged to constitute a violation; 3. the person(s) responsible for the alleged violation; 4. the location of the alleged violation; 5. the date(s) of such violation; and 6. the full name, address and telephone number of the person giving notice.

40 C.F.R. § 135.

Lawsuits based upon notice letters that fail to sufficiently provide the requisite information are subject to dismissal. See, e.g., Hallstrom v.

Tillamook County, 493 U.S. 20, 31 (1989) (failure to comply with 60-day notice and delay requires dismissal of RCRA citizen suit because such requirements are “mandatory conditions precedent to commencing suit.”). Upon receipt of a 60-day notice, it is very important for defense counsel to carefully evaluate whether the prospective plaintiff has satisfied the requirements for the notice letter, and, if not, seek an early dismissal of a subsequent lawsuit based upon a deficient notice. Court decisions are quite fact-specific in regard to whether a particular notice letter provided sufficient information. See, e.g., Atwell v. KW Plastics Recycling Div.,

173 F. Supp. 2d 1213 (M.D. Ala. 2001) (plaintiffs must “provide enough information to enable both the alleged violator and the appropriate agencies to identify the pertinent aspects of the alleged violations without undertaking an extensive investigation of their own”).

The Purpose of the 60-Day Delay Period and the Resultant Defenses The purpose of the 60-day delay period between transmittal of the notice letter and filing of a lawsuit is twofold: (i) to allow the relevant governmental agency to take action, see American Canoe Ass’n, Inc. v. City of Attalla, 363 F.3d 1085, 1087 (11th Cir. 2004) (60-day notice period “acts much like a statute of limitation by delimiting the period during which the governmental entities can control exclusively enforcement actions”); and (ii) to allow an opportunity for the alleged violator to voluntarily comply or enter into settlement negotiations with the prospective plaintiff. These purposes relate to two potential defenses: the “diligent prosecution” defense and the Gwaltney “no ongoing violation” defense.

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These purposes relate to two potential defenses: the “diligent prosecution” defense and the Gwaltney “no ongoing violation” defense.

The diligent prosecution defense is set forth in § 309(g)(6) of the CWA and provides that a citizen suit is barred if the EPA or a delegated state agency has commenced and is diligently prosecuting an administrative penalty action against the alleged violator for the same alleged violations. However, the diligent prosecution defense is frequently quite limited because the enforcement scheme of the delegated state agency must be “comparable” to the federal enforcement scheme, and, even if comparable, the citizen suit will not be barred if (i) the citizen suit complaint was filed before the administrative action, or (ii) the 60-day notice letter is sent before the administrative action and the citizen suit complaint is filed within 120 days of the notice date. 33 U.S.C. § 1319(g)(6)(B).

The Gwaltney “no ongoing violation” defense was recognized by the U.S. Supreme Court in Gwaltney v. Chesapeake Bay Foundation, and requires that a citizen plaintiff allege an ongoing CWA violation at the time of filing its lawsuit – i.e., the plaintiff cannot bring a citizen suit for wholly

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past violations. Therefore, the 60-day notice and delay period provides a valuable opportunity for a prospective defendant to attempt to cure any alleged violations prior to a lawsuit being filed and bar the citizen suit. In evaluating compliance, defense counsel should (i) obtain all facility discharge monitoring reports and other compliance documents from the client, as well as from the relevant regulatory agency through an Open Records Act request (or through on-line databases); and (2) use a written “litigation consultant” engagement letter in retaining an environmental consultant to evaluate compliance issues to avoid creating discoverable evidence in the citizen suit.

Engaging with the Citizen Plaintiff and Potential Settlement Negotiations During the 60-day notice period, the issue of whether to substantively engage with the citizen plaintiff frequently arises as a decision point.

Typically, any such engagement will involve a request by the citizen plaintiff to conduct a site visit

© 2020 Smith, Gambrell & Russell, LLP

Environmental

to the facility of the alleged violator and may include an informal request for documents such as the facility’s Storm Water Pollution Prevention Plan and best management practices logs.

In the event that circumstances warrant prelawsuit settlement negotiations with the citizen plaintiff, there are four typical components of any citizen suit settlement demand: (1) “compliance” by the defendant; (2) the defendant funding a supplemental environmental project (“SEP”) or “mitigation payment”; (3) the defendant “reimbursing” the citizen group for its attorneys’ fees and expenses of litigation; and (4) the defendant allowing periodic, future access to the defendant’s site for the citizen group to monitor compliance with the law and/or for the citizen group to review any on-site SEP performed by the defendant. Such request for future access and monitoring also typically involves a demand by the citizen group for the defendant to pay for the cost of the citizen group’s consultant to monitor compliance and to conduct the future site visit(s).

Once the 60-day notice period ends, citizen groups will typically file suit even during ongoing settlement negotiations. The reasons for citizen groups’ eagerness to file the lawsuit include: (i) falling within the 120-day safe harbor of § 309(g)(6)(B)(ii) to avoid a diligent prosecution defense; (ii) the 5-year statute of limitations applicable to citizen suits; and (iii) the citizen group’s desire for a court-enforced consent judgment. Once a lawsuit is filed, any proposed settlement is subject to review and approval by the EPA and the Department of Justice for a 45-day period. 33 U.S.C. § 1365(c)(3).

Conclusion It is easy for a company receiving a citizen suit demand letter under the CWA or other federal environmental statue to panic or ignore the letter.

However, neither of those extremes is productive.

The 60-day period between receipt of the letter and when the citizen is permitted to file a lawsuit is a very important time period for the company to retain experienced environmental counsel to assist the company in fully evaluating the allegations in the letter, reviewing the company’s records, preparing for a defense of the potential lawsuit and considering options for potentially resolving the matter. If the company begins that process sooner rather than later, the company is better able to avoid unwelcome surprises in a lawsuit and hopefully to return its focus to running its business in a profitable and environmentally compliant manner.

Section 505(a) of the CWA also allows citizen groups to bring citizen suits against the EPA administrator and/or other federal or state agencies.

2 The 60-day notice period is not applicable to citizen suits alleging discharges of toxic pollutants in violation of § 317 of the CWA. 3 The other federal environmental statutes with citizen suit provisions also have regulations setting forth the requirements for notice letters. See 40 C.F.R. § 54 (Clean Air Act); 40 C.F.R. § 254 (RCRA); 40 C.F.R. § 374 (CERCLA).

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If you have any questions about these issues, please contact your Environmental counsel at Smith, Gambrell & Russell, LLP or contact the following:

Andy Thompson athompson@sgrlaw.com

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Why & When to File an Amicus Brief by Justice Leah Ward Sears (Retired)

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© 2020 Smith, Gambrell & Russell, LLP

Appellate

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has some bearing on the issues in the case.

The groups most likely to file amicus briefs are businesses, academics, government entities, non-profits and trade associations.

You may find a case you feel strongly about reach this elevated level of the justice system.

Even if you’re not one of the parties in the case, there may be a way to have your say utilizing a tool I often saw when I was a judge: the amicus brief.

In the first 100 years of American high-court cases, amicus briefs were rare. From 1900 to 1950, amicus briefs were filed in only about 10% of all of the cases on appeal, according to a review of amicus advocacy published by the University of Pennsylvania Law Review.

However, the landscape has now completely changed – so much so that today more amicus briefs are being filed in the state and federal appellate courts than ever before.

ppellate courts are a vital part of our justice system, and I’m pleased to have spent 17 years as a jurist in one of the best. These courts evaluate cases that were previously ruled on to ensure the right judgment was made at the trial level. I enjoyed being in a position to try and “get it right” after a case had been tried below.

What Are Amicus Briefs?

An amicus curiae is a person who isn’t a party to a case. They assist an appellate court by offering additional, relevant information or arguments the court may want to consider before making their ruling. The phrase, amicus curiae, is Latin for “friend of the court.”

Amicus briefs – shorthand for the formal term “amicus curiae briefs” – are legal briefs filed in appellate courts by amicus curiae. They are submitted in a specific case under review.

They essentially show the court that its final decision will impact people other than the parties.

Amicus briefs are filed by people who typically take the position of one side in a case, in the process supporting a cause that

Different appellate courts have their own rules regarding amicus briefs, so checking the rules before you file such a brief is imperative.

Since, historically, amicus briefs were supposed to bring new relevant information, not argued by the parties, to the attention of the court, the courts tend to favor these types of amicus briefs. However, some organizations use amicus briefs like press releases, stating positions not only to inform the court but to influence public perception. While these briefs are often considered a burden by appellate court jurists, they can be a good way for a group to relate to the public in such a way that influences goodwill and even profits. This is particularly the case in this age of social media engagement when the values of an organization are so readily on display 24-7.

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Why File an Amicus Brief?

There are good reasons to file an amicus brief. It all depends on what you’re trying to achieve. The following are some of the best reasons for employing this important tool.

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The Outcome Sets a Precedent

In some appellate court cases, the decision can be a precedent-setting one. This means a binding ruling for future court cases. If you’re currently involved in a similar case in an appellate court, you should seriously consider filing an amicus brief to share your relevant views on the matter. Taking this step may ensure a favorable ruling in your case.

Another good reason lawyers may write amicus briefs is to inform the appellate court of rulings from other states. This tactic can help keep a level of consistency in orders from state to state. It can also give the ruling state valuable knowledge about how different courts have seen this type of case.

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The Outcome Directly Affects your Group’s Members

Many entities choose to file an amicus brief when the outcome of the case directly affects their members. An amicus brief will allow you to speak to the appellate court on the subject matter at hand. You can advise the court on how a specific ruling on the case will affect your members and the organization that you’re a part of. You can also highlight the potential legal, economic or social implications of a particular ruling, including telling the court about the impact of a possible decision on an industry, or on individuals or groups. And an amicus brief can explain why a particular holding by the court might be unworkable in other situations.

You would do this to help the court understand the real-world consequences of a particular decision.

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You Have Expert Knowledge on the Subject

Another common reason to file an amicus brief is that you have extensive knowledge of a subject,

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and you want everyone to share that. Your goal would also be to make the court privy to this knowledge by educating the judges. This type of brief is usually reserved for field experts and academics who can bring experience to the table.

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You Want to Raise a Person’s Profile

For those who are experts or academics in a particular field, amicus briefs are a great way to get your name out there. Filing an amicus brief lets many people know that you have expert capabilities in an area and that you’re available as an expert witness on the subject. Ideally, you’d also be trying to educate the court on the subject matter while furthering your community profile on that subject matter.

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You Want to Educate the Court

Non-profits also find amicus briefs are a great way to educate the court about specific issues.

These organizations tend to have particular world views on certain subjects that they’ve studied extensively. When a court’s decision may end up affecting a non-profit institution, or their goals, for example, the organization may file an amicus brief.

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It’s a Great Marketing Tool

I can’t talk about filing amicus briefs without sharing their excellent marketing potential. When utilized correctly, this type of brief can display you and your organization in light of how much you care about a specific issue. It can also demonstrate your ability to take action. These briefs are perfect for those looking to receive some positive press coverage, particularly from a high-profile case.

© 2020 Smith, Gambrell & Russell, LLP

Appellate

Motion for Leave to File

Different appellate courts have their own rules regarding amicus brief filings. Many require you to file a motion for leave to file such a brief, for instance. This document shares your interest in the case and why your brief would provide the court with useful information and help the jurists make their ultimate decision. That’s why it’s critical to check the rules of the appellate court before filing an amicus brief.

Contents of an Amicus Brief

An appellate court may receive a great many amicus briefs for a specific case. Therefore, in most jurisdictions, they tend to have a unified format for ease of reading. For instance, most such briefs will need to have all of the following components: • • • • •

A Cover Page that indicates reversal or affirmance A Table of Contents A Table of Authorities A Statement of identity, interest and source of authority of the filer A Statement disclosing any party who financially contributed to the brief

Tone and Style are Important

In addition to all the usual hallmarks of any good appellate brief, the purpose and relevance of an amicus brief must be readily apparent from the first page. When I was a justice on the Georgia Supreme Court, if a cursory review of the brief suggested it was merely duplicative of a party brief, I, and most of my colleagues, tended to ignore it.

The tone of the brief is also important. Amicus briefs should use an even, objective tone. After all, they are supposed to aid the court make a good decision, not advocate for a party.

Lastly, but certainly not least, brevity is critical. In most cases, an amicus brief can achieve its purpose in far fewer pages or words than the applicable rules provide. An amicus brief that is only as long as the space needed to accomplish a particular goal is always going to be appreciated by busy judges.

If you have any questions about these issues, please contact your Appellate counsel at Smith, Gambrell & Russell, LLP or contact the following:

Justice Leah Ward Sears (Retired) lsears@sgrlaw.com

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Intellectual Property

Shop Safe Act: A Bill to Hold E-Commerce Sites Liable for Counterfeit Goods Sold Online

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he Stopping Harmful Offers on Platforms by Screening Against Fakes in E-Commerce Act, or the Shop Safe Act 2020, for short, was introduced in Congress on March 2, 2020 by a bipartisian group of members of the U.S. House of Representatives.1 The bill is one of several introduced in Congress to address the growing concern over counterfeit products flooding e-commerce platforms as online shopping continues to capture a growing share of the retail market.2 The Shop Safe Act proposes to amend the Trademark Act of 1946 and establish contributory trademark liability for online marketplaces based on the sale of counterfeit products by third-party sellers on their platforms.

Consumers typically associate counterfeit goods with commonly bogus goods like purses, t-shirts and sunglasses sold in flea markets, not respected retailers where they do their everyday shopping. Counterfeits were once mostly limited to back alley deals and flea markets because most brick-and-mortar stores carefully vet and manage the products they carry. These stores are liable for what they sell, so consumers can trust that products are genuine. Unfortunately, consumers are now at much greater risk of buying counterfeit goods. E-commerce, alongside its revolutionizing of the retail market, has created a proliferation of counterfeits on online marketplaces.

Goods purchased on large e-commerce platforms are often not actually sold by the

by Jim Bikoff

platform itself, but instead are sold by third-party sellers. Amazon, the largest online retailer in the United States, relied on third-party sellers for 54% of its sales in the second quarter of 2019.3 Thirdparty sellers are in part what makes e-commerce giants like Amazon so appealing to consumers.

Thousands of third-party sellers from around the world can list the same product for sale, increasing

the supply of the product and reducing its price.

Platforms are motivated to have as many thirdparty sellers selling products as they can, and have little incentive to properly vet the sellers or their products. With potentially thousands of sellers competing for the same customer, selling counterfeit products is an easy way for sellers to lower the price and make the sale.4 Algorithms push the cheapest options to the front page, making counterfeit goods the first and potentially only option consumers see when shopping.5 TRUST THE LEADERS 2.0 | Volume 4 | SGRLAW.com

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Intellectual Property

“Consumer lives are at risk because of dangerous counterfeit products.”

Consumers are paying a dire price.

A study conducted by the Government Accountability Office found that 20 of 47 items purchased from third-party sellers on popular consumer websites were counterfeit.6 Consumers

are especially harmed when counterfeit goods deal with their health and safety. Counterfeits may not undergo proper safety testing, posing a substantial health and safety risk to consumers buying products like pharmaceuticals and cosmetics. Americans attracted to the cheap prices offered by online pharmacies face potentially lethal dangers like buying counterfeit prescription opioids laced with fentanyl.7 Counterfeit cosmetics often contain ingredients such as arsenic, mercury, aluminum or lead.8 “Consumer lives are at risk because of dangerous counterfeit products that are flooding the online marketplace. Congress must create

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accountability to prevent these hazardous items from infiltrating the homes of millions of Americans,” said U.S. Rep. Doug Collins, a co-sponsor of the Shop Safe Act.9 Consumers injured by counterfeits sold by third-party sellers currently have little legal recourse available.

Counterfeiters employ strategies to avoid liability, like operating several seller accounts so that if one account is identified and/or removed a counterfeiter simply switches to another account.10 Also, many third-party sellers are shielded from legal accountability because they are located outside of the United States.11 The e-commerce platforms themselves, although under U.S. jurisdiction, have not been liable for harm caused by the products they sell or distribute under U.S. law and regulations.12 This jurisdictional and liability gap leaves consumers with little in the way of legal recourse when they are harmed.13 Yet, the liability gap may be closing. A recent California appeals court ruled that Amazon can be liable for injuries caused by products sold by thirdparty sellers.14 Angela Bolger, a San Diego resident, sued Amazon after she suffered severe burns from a computer charger catching fire. The charger was sold by a third-party seller under the fictitious name “E-life,” which was actually Chinese company Lenoge Technology HK Ltd.15 Explaining why Amazon is liable for Bolger’s injuries, the court held: “Whatever term we use to describe Amazon’s role,

© 2020 Smith, Gambrell & Russell, LLP

be it ‘retailer,’ ‘distributor,’ or merely ‘facilitator,’ it was pivotal in bringing the product here to the consumer.”

Whether this decision signals the beginning of a wider judicial trend to impose liability on e-commerce platforms for third-party sales remains to be seen. Of course, liability could be created nationwide through federal legislation like the Shop Safe Act. The Act would establish contributory infringement of platforms for use of counterfeit trademarks in “connection with the sale, offering for sale, distribution, or advertising of goods that implicate health and safety.”16 The bill defines “goods that implicate health and safety” as “goods the use of which can lead to illness, disease, injury, serious adverse event, allergic reaction, or death if produced without compliance with all applicable Federal, State, and local health and safety regulations and industry-designated testing, safety, quality, certification, manufacturing, packaging, and labeling standards.”17 Platforms would be required to comply with 10 best practices to make sure sellers are sufficiently vetted to ensure their legitimacy, counterfeit listings are removed, and sellers who repeatedly sell counterfeits are banned and prevented from establishing new accounts. Platforms would escape liability if they

can demonstrate that they took all preventative measures enumerated in the Act.18 E-commerce platforms have not adequately addressed the abundance of counterfeit products being sold by third-party sellers. The Shop Safe Act will create necessary incentives to protect consumers from dangerous counterfeits by imposing trademark liability on e-commerce platforms for counterfeit sales by third-party sellers.

Endnotes 1. Press Release, U.S. House Committee on the Judiciary, Nadler, Collins, Johnson & Roby Introduce Bipartisan SHOP SAFE Act to Protect Consumers and Businesses from the Sale of Dangerous Counterfeit Products Online (Mar. 2, 2020), https://judiciary.house.gov/news/documentsingle. aspx?DocumentID=2838.

2. The Stop All Nefarious Toys in America Act (SANTA Act) and the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act (INFORM Consumers Act) have also been introduced.

3. https://www.statista.com/statistics/259782/third-party-sellershare-of-amazon-platform/.

4. Ganda Suthivarakom, Welcome to the Era of Fake Products, N.Y. Times (Feb. 11, 2020) https://www.nytimes.com/ wirecutter/blog/amazon-counterfeit-fake-products/.

5. Id. 6. https://www.gao.gov/assets/690/689713.pdf.

7. U.S. Dept. of Homeland Security, Combating Trafficking in Counterfeit and Pirated Goods (Jan. 24, 2020), available at https://www.dhs.gov/sites/default/files/ publications/20_0124_plcy_counterfeit-pirated-goodsreport_01.pdf.

8. Id. 9. https://judiciary.house.gov/news/documentsingle. aspx?DocumentID=2838.

10. https://www.dhs.gov/sites/default/files/ publications/20_0124_plcy_counterfeit-pirated-goodsreport_01.pdf.

11. Id. 12. Id. 13. Id. 14. Jefferson Graham, Amazon Liable for Defective Products from Third-Party Sellers, California Court Says, USA Today (Aug. 14, 2020) https://www.usatoday.com/story/ tech/2020/08/13/amazon-retailer-liable-3rd-party-productdefects-california-court-rules/3369886001/.

15. California Court Rules Amazon is Liable for Injuries from Defective Products, NBC News (Aug. 13, 2020) https://www. nbcnews.com/tech/tech-news/california-court-rules-amazonliable-injuries-defective-products-rcna82.

16. The Shop Safe Act 2020, https://judiciary.house.gov/ uploadedfiles/shop_safe_-_bill_text.pdf.

17. Id. 18. Id.

If you have any questions about these issues, please contact your Intellectual Property counsel at Smith, Gambrell & Russell, LLP or contact the following: Jim Bikoff jbikoff@sgrlaw.com The author wishes to thank Jesse Spiegel, a student at American University Washington College of Law and an intern for SGR client National Grange of the Order of Patrons of Husbandry, who assisted in the research for and preparation of this article.

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Wage and Hour Considerations for the Remote Workplace

by Pat Hill, Yash Dave and Emily Tichenor

A

s the COVID-19 pandemic continues, many employees continue to work remotely. Remote work has many benefits and allows the workplace to operate even when employees cannot be physically in the workplace, but this type of work does not come without risks for employers. One area that can be particularly perilous for employers is ensuring that employees are paid correctly. Not paying employees correctly, even inadvertently, can be costly; employees who recover in a lawsuit for improperly paid wages may receive twice the amount of unpaid wages, as well as attorneys’ fees and other damages. So, employers must be vigilant to pay all employees correctly. This article discusses some potential pitfalls for employers, particularly in a remote workplace. Notably, this article focuses on the requirements under the federal Fair Labor Standards Act (FLSA). Some states or other localities may have more restrictive requirements, so employers should check the requirements for their respective localities to ensure compliance with applicable law.

It’s difficult to track time for non-exempt employees working remotely, so I just pay them based on their regularly scheduled office hours even if they actually work different hours. Is that okay?

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Non-exempt employees, or employees who, under the FLSA, must be paid overtime compensation for hours worked over 40 in a workweek, must be paid for all hours worked. To ensure that these employees are compensated for all hours worked, employers should require employees to accurately track their time, even if the hours worked are different from an employee’s regular in-office hours. Employers should then pay the employees based on the actual time worked.

The United States Department of Labor recently issued guidance for employers regarding an employer’s obligation to track teleworking employees’ work hours. The guidance does not change the law or institute any new policy, but rather reminds employers that they must pay employees for all hours the employer knows or has reason to believe its employees have worked.

The guidance specifically states an employer must exercise “reasonable diligence” to ensure that non-exempt employees are being paid for all hours worked. Reasonable diligence includes having a “reasonable reporting procedure” for employees to report unscheduled hours worked and then compensating employees for all reported hours. If an employer has a reporting procedure for employees to report all hours worked, including unscheduled hours, and an employee does not

© 2020 Smith, Gambrell & Russell, LLP

Employment

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accurately report all hours worked, the employer does not have a responsibility to inquire whether an employee has worked unreported hours if the employer has no reason to believe the employee may be working unreported hours. However, a reporting process does not constitute reasonable diligence if the employer “prevents or discourages” an employee from accurately reporting hours worked.

Employers should have clear, written policies setting forth their timekeeping requirements, particularly for employees working out of the office. It can also be helpful to have employees sign an acknowledgment of these requirements, and employers may want employees to sign an acknowledgement of timekeeping requirements separate from a general handbook or other policy acknowledgment to show that the employee knew specifically about timekeeping requirements.

Employers should also ensure that they are uniformly enforcing these policies for all nonexempt employees. Employees who do not comply with timekeeping requirements should be

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disciplined in accordance with employer policy.

I have a non-exempt employee working overtime without my permission. Do I have to pay the employee for those hours?

As explained above, employers must pay their non-exempt employees for all hours worked. This requirement includes paying employees for hours worked that the employer knows about, even if the hours are worked without the employer’s permission. For example, if an employer knows or has reason to believe that an employee is responding to work emails after hours, the employer must pay the employee for the time so spent.

The requirement to pay employees for all hours worked, even hours worked without permission, does not mean that employees cannot face consequences for working hours without permission. Employees can, and likely should, receive discipline for unauthorized work.

Disciplining employees who work hours without permission shows that the employer takes paying

© 2020 Smith, Gambrell & Russell, LLP

Employment

its employees seriously and discourages employees from working “off the clock.”

respond to any such emails, could be considered compensable time.

Employers should ensure that supervisors do not set an expectation for non-exempt employees to respond to work emails or phone calls after hours.

Supervisors should be discouraged from contacting non-exempt employees after work hours. Further, if a non-exempt employee receives an email from his or her supervisor after hours, the employee may feel pressure to respond, so supervisors may want to take steps such as putting “Do Not Respond Until Work Hours” in the subject line of an email sent after hours. Likewise, employers may want to consider whether non-exempt employees should have access to work email accounts on their personal devices because time spent checking work email, even if an employee does not

I have an exempt employee who has been taking mornings off to attend to personal matters. Can I dock that employee’s pay for the time the employee is not working?

Exempt employees are not entitled to overtime compensation for hours worked over 40 in a workweek. These employees must be paid a set salary that covers all hours worked in a week.

Employers can only deduct from an exempt employee’s pay under very specific circumstances, such as when the employee is absent from work for one or more full workdays. So, employers cannot deduct from an exempt employee’s pay for partialday absences.

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Although employers cannot deduct pay for partial-day absences, an employer is not without redress where an exempt employee takes partial days off. For example, an employer can require the employee to use accrued paid time off for absences. Similarly, employers should determine whether employees qualify for paid leave under the Families First Coronavirus Response Act. Further, the employer can discipline the employee for attendance and any performance deficiencies.

It is worth noting that when disciplining employees for attendance or other performance deficiencies, employers should ensure that employees are disciplined evenly. For example, if a male employee is not disciplined for taking mornings off to help his children with remote learning, but a female employee is disciplined for the same thing, the female employee could allege sex discrimination.

Employers should ensure that they are enforcing all of their policies equally for all employees.

I have an exempt supervisor who often fills in for non-exempt employees, so some weeks I pay the supervisor a set salary for all hours worked and other weeks I pay the employee an hourly rate depending on what the employee is doing that week. Is that okay?

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Employers should be cautious about changing the classification of employees, particularly when the changes occur often. Employees are, by default, non-exempt employees. To establish an employee as exempt, the employer must ensure that the employer pays the employee a salary of at least $684/week for all work performed and that the employee’s job duties fall into one of the exemption categories under the FLSA. Switching an employee

back and forth from exempt to non-exempt could be indicative of an employer trying to avoid overtime obligations. If the employee brought a wage claim, the employee may be able to establish that the employee should have been classified as nonexempt even during the weeks the employee was paid as an exempt employee and the employer could be liable for unpaid overtime during those weeks.

Š 2020 Smith, Gambrell & Russell, LLP

This is not to say that employers can never reclassify employees. Although employers should strive to limit the number of times they reclassify an employee, in instances where reclassification is warranted, the employer should document all the reasons for reclassification. For example, if a nonexempt employee is reclassified as exempt because of a change in job duties that qualify the employee for an exemption, the employer should document the employee’s salary and all of the employee’s job duties to show the lawful reasons for the reclassification.

Further, although employees who do not qualify for exempt status cannot be classified as exempt employees, employees who do qualify for exempt status can be classified as non-exempt employees.

This may make sense for some employees, and, in these instances, employers must make sure that these employees track all of their time and are paid for all hours worked, including the applicable overtime rate.

In sum, employers should ensure that nonexempt employees are paid for all hours worked, even hours worked without permission. Employers should also have clear, written policies regarding timekeeping and pay, and enforce those policies consistently for all employees.

If you have any questions about these issues, please contact your Labor & Employment counsel at Smith, Gambrell & Russell, LLP or contact the following:

Pat Hill pjhill@sgrlaw.com Yash Dave ydave@sgrlaw.com Emily Tichenor etichenor@sgrlaw.com

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Arbitration

ADR Bounces Back, Changed But Strong, in Face of Pandemic by Dana Richens

S

ince the onset of the COVID-19 pandemic in March of this year, America’s courthouses have been shuttered to varying degrees. Some courts are open for some limited types of business, but many remain closed to jury trials and other proceedings that require packing large numbers of people into small courtrooms that in many instances are not equipped with state-of-the-art HVAC systems.

But dispute resolution in America has not come to a standstill. Instead, companies that provide alternative dispute resolution, or “ADR,” services – namely, arbitration and mediation – are back to pre-COVID case levels. Along the way, one thing has changed dramatically: the vast majority of ADR proceedings are now being conducted virtually, with some or all of the parties, attorneys, witnesses and neutrals appearing via Zoom, Webex or other similar platforms.

***

In the “Before Times,” a typical weekday would find the offices of Atlanta’s Henning Mediation and Arbitration Services teeming with lawyers and clients working with Henning neutrals to mediate

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and arbitrate cases. In the afternoons, the aroma of freshly baked cookies, or hot popcorn, would permeate the office, perhaps intended to coax each party to his or her own “happy place” and thereby closer to a conciliatory mindset.

Like many other businesses, Henning closed its office when the pandemic struck in March, and the caseload dropped. The office reopened on June 1. While Henning’s caseload has gradually returned to pre-COVID levels, the atmosphere is entirely different now. According to Henning’s president, Dave Henning, the organization is averaging fewer than one proceeding per day conducted inperson in the office. The rest of the matters have moved online – to virtual proceedings conducted either entirely remotely, or as a hybrid with some participants in the office and others participating remotely.

© 2020 Smith, Gambrell & Russell, LLP

The vast majority of ADR proceedings are now being conducted virtually.

“I’m okay with that,” Dave Henning says. He’s not pushing for more in-person proceedings, noting that the virtual proceedings help to protect Henning’s staff as well as case participants. The virtual setting also allows Henning to accommodate larger matters, including a recent two-week arbitration with 25 participants that was conducted virtually. “Where would we have put all of those people?” Dave Henning wonders aloud in thinking about how such a large proceeding could have been conducted in-office.

***

Kim Taylor is senior vice president and chief legal and operating officer for JAMS, which provides ADR services in 29 offices worldwide. JAMS, too, saw an initial decline in its caseload after the onset of the pandemic, but since May, the organization has seen what Taylor calls a “dramatic rebound” in its caseload, even as most of its physical offices remain closed. Today, more than 70% of JAMS proceedings are being conducted virtually.

Taylor predicts that the utilization of ADR will continue to grow. Even when courts reopen, they will be bogged down by severe case backlogs and budget cuts, and parties will turn to ADR for what Taylor calls their “pent-up need for resolution of cases.” Some JAMS mediators predict that,

ironically, mediations will pick up when courts fully reopen, since the specter of a looming trial date is what often drives parties into mediation. And, Taylor notes, the pandemic will spawn new types of cases – bankruptcies, business interruptions, insurance and employment – that may be well suited to alternative dispute resolution.

Both Henning and Taylor agree that, despite any initial skepticism, ADR proceedings conducted either entirely virtually, or as hybrid live/virtual proceedings, are here to stay. “It’s been amazing to watch,” says Taylor. “People are resistant to change but very adaptable at the same time. When we have to, we do.” She predicts that, even postCOVID, as many as 30% of JAMS cases will be conducted online, due to travel-cost savings and a growing consensus among participants that “the virtual environment is just as effective as being there in person.”

Says Dave Henning, “I don’t think I’ll ever see an out-of-state adjuster in our office again.”

Dana Richens drichens@sgrlaw.com

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Georgia Bar Construction Project by Darren Rowles

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© 2020 Smith, Gambrell & Russell, LLP

Construction

T

wo years ago, Peter Crofton, Greg Smith and Darren Rowles of SGR’s Construction Practice founded the Construction Law Section of the State Bar of Georgia.

Today, the State Bar’s Construction Law Section is excited to announce the unveiling of its recorded Oral History Project. Georgia is widely recognized as the birthplace of construction law as a distinct area of legal practice. This project honors four living legends of the Georgia Bar – James Groton, Kent Smith, Fielder Martin and John Hinchey – who tell in their own words how they helped to build the practice of construction law in Georgia.

The Project recording includes an introduction by Peter Crofton and Greg Smith explaining the vision of the Project and the importance of capturing the history of construction law. The 7-minute video then explores the legacy of Georgia’s construction law pioneers.

lawyers involved with the many construction projects throughout the state. Under the leadership of SGR’s team, the Bar Section has held a number of timely and well-attended events, including a Women in Construction presentation and many informative lunchtime CLE webinars.

SGR’s Construction Practice is comprised of attorneys with extensive construction and environmental experience, including several attorneys with engineering or technical degrees. All attorneys in the group are both transactional and trial lawyers. On the litigation side, SGR’s construction attorneys represent owners, contractors and designers in claims arising out of design and construction defects, delays, payment disputes and any other matters that arise among construction participants.

Our construction attorneys have tried and arbitrated cases throughout the United States and abroad.

The film is available online at

www.georgiabarconstruction.com.

This Project captures the lasting impact of these individuals in a format that is easily accessible to everyone. The Project also paves the way for other Bar sections to record and preserve the important history of its members that is being made every day.

Peter Crofton pcrofton@sgrlaw.com Greg Smith gsmith@sgrlaw.com Darren Rowles drowles@sgrlaw.com

The Bar’s Construction Law Section serves the growing community of Georgia

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© 2020 Smith, Gambrell & Russell, LLP

Evidence

BURDEN OF PROOF by Victor Metsch

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ew York law gives our courts the authority to hear and determine disputes involving foreign corporations or non-residents – where the amount in dispute is significant and the parties jointly submit to such jurisdiction by contract. As a result, our courts are often the venue of choice for major transactional and international disputes where the law of New York will be applied.

The combination of New York forum selection and choice of law provisions in an agreement means that a dispute may face some of the anomalies of our local practice. One such nuance relates to burden of proof.

But first: a brief tutorial.

Most common law jurisdictions share substantially the same burdens of proof in a civil action, on the one hand, and in a criminal proceeding, on the other.

The standard of proof in a civil action is “the preponderance of the evidence.” Simply put, a “preponderance” means just enough evidence to

make it more likely than not that the fact in issue has been established.

The standard of proof in a criminal proceeding is “beyond a reasonable doubt.” The burden is met where the evidence establishes a particular fact to a moral certainty and that no reasonable alternative is possible.

In New York, we often encounter a third, entirely different burden of proof: “clear and convincing evidence.”

The burden of proof is often “clear and convincing evidence” in cases involving fraud (in any of its manifestations); issues relating to (in)capacity and mental or physical health; real property actions; proceedings in which exigent or extraordinary relief is sought; efforts to change, challenge or enforce written contracts, agreements or understandings; or attempts to overcome historically established legal presumptions.

The “clear and convincing evidence” standard appears to be a cross between “the preponderance of the evidence” and “beyond a reasonable doubt.”

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Thus, New York Pattern Jury Instruction 1:64 – entitled “General Instruction – Burden of Proof – Clear and Convincing Evidence” – provides as follows: The burden is on the plaintiff to prove [here state the ultimate issue to be decided] (e.g., fraud, malice, mistake, a gift, the contract between the plaintiff and the deceased, incompetency, addiction) by clear and convincing evidence. This means evidence that satisfies you that there is a high degree of probability that there was (e.g., fraud, malice, mistake, a gift, a contract between the plaintiff and the deceased, incompetency, addiction), as I (have defined, will define) it for you.

To decide for the plaintiff it is not enough to find that the preponderance of the evidence is in the plaintiff’s favor.

A party who must prove (his, her) case by a preponderance of the evidence only need satisfy you that the evidence supporting (his, her) case more nearly represents what actually happened than the evidence which is opposed to it. But a party who must establish (his, her) case by clear and convincing evidence must satisfy you that the evidence makes it highly probable that what (he, she) claims is what actually happened.

If, upon all the evidence, you are satisfied that there is a high probability that there was (e.g., fraud, malice, mistake, a gift, a contract between the plaintiff and the deceased, incompetency, addiction) as I (have defined, will define) it for you, you must decide for the plaintiff. If you are not satisfied that there is such a high probability, you must decide for the defendant.

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Evidence

And “fraud” in several arguable forms, which seeks to alter the existing state of facts based on deception, misrepresentation or deliberate omission, is easy to allege. But because the after-the-fact accusations are always predictably one sided and self serving, the claim can only be sustained on “clear and convincing evidence” of wrongdoing.

Which burden of proof applies may be outcome determinative. For example, contract disputes often arise where an aggrieved party claims that a controlling provision was the result of mutual mistake and should be reformed. New York, as a matter of public policy, favors the enforcement of contracts as unambiguously written. Accordingly, a written agreement will only be subject to reformation by the court where the intent of the parties and the mutual mistake are established by “clear and convincing evidence.”

A preliminary injunction will be granted only where a party establishes a likelihood of success on the merits, irreparable harm if the relief sought is not granted and the absence of a remedy at law (e.g., damages). Because the relief sought is extraordinary, a preliminary injunction will be entered only where the movant establishes the required elements by “clear and convincing evidence.”

When representing either a plaintiff or a defendant in New York, consider whether the burden of proof will be escalated from “the preponderance of the evidence” to “clear and convincing evidence.” Determination at the outset of a litigation of whether the more demanding standard may apply will lead to a more meaningful ability to evaluate the likelihood of success on the merits, on the one hand, and to manage expectations for summary judgment or trial, on the other.

If you have any questions about these issues, please contact your Litigation counsel at Smith, Gambrell & Russell, LLP or contact the following:

Victor Metsch vmetsch@sgrlaw.com

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Internal Investigations

Internal Investigations at Institutions of Higher Learning: FAQs by Parker Sanders

1. What types of events trigger internal

investigations at institutions of higher learning?

it very well may be that institutions face a greater likelihood of needing to conduct an internal investigation than for-profit entities of similar size.

Institutions of higher education often employ thousands of employees and may enroll tens of thousands of students. These people may use campus housing, work on government research grants, or interact with others inside or outside the classroom, lab or athletic field. Institutions have commercial relationships with suppliers and customers beyond the students they educate.

Numerous federal and state regulations apply to institutions. These regulations become increasingly complicated every year, and the cost for noncompliance is high. Many institutions also operate on the international stage – oftentimes sending researchers and students to developing countries around the world. Despite the concept of an ivory tower, the reality is that their faculty, employees and students are not immune from the lure, or appearance, of bad acts.

A few areas that could trigger an investigation at an institution, if they were to arise, could include conduct predicting violence (perhaps a mass shooting), inappropriate conduct involving students or subordinates (now or years ago), improper handling of government contracts or grants (which might involve false statements), embezzlement or theft, bribery (especially in developing countries), privacy issues, conflicts of interest, state ethics laws, discrimination issues (for instance, EEOC claims or Title IX investigations), sports controversies or violations of rules and regulations concerning athletics (arising from, for instance, the NCAA and, here again, Title IX), and perhaps healthcare or immigration issues. The occurrence of any of these situations, or merely an alleged occurrence, particularly in athletics, can cause enormous damage to an institution’s brand, which is its greatest asset and can take years to heal.

So, because the scope of operations is broad and the applicable laws and regulations are many,

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Preliminary legal advice will help determine if the matter can be handled without lawyers.

2. What are the risks of failing to respond appropriately and promptly?

Failing to respond appropriately and promptly could cause serious problems. There could be a lost opportunity to prevent or mitigate dangerous situations, especially if an individual’s conduct suggests something problematic is ongoing, likely or being planned. Hindsight always is 20/20, and, after an unfortunate event, people will question what the institution knew and what it did or should have done in response. Depending on the circumstances, someone might suffer physical injury, liability might arise (particularly in the government funding context, if the institution failed to self-report and had an obligation or incentive to do so), or the institution’s good name might be tarnished.

Failing to act promptly also can result in the lost opportunity to collect and preserve evidence properly, especially electronically stored information (ESI). A loss of evidence could limit the institution’s ability to defend itself and potentially cause an adversary to claim spoliation of evidence.

Finally, being able to tell a story about what the institution did once it learned of the matter is often as important as discovering and acting on the facts.

An institution always wants to be able to say that, from the beginning, it took the matter seriously and responded promptly, deliberately and appropriately.

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This usually provides much-needed credibility. It also may help on the human side, because the person raising the issue often cares most about being heard.

3. In general, what should you do as part of your investigation?

Before interviewing the first witness, and as soon as the institution understands the general nature of the situation, it should consult with counsel.

Preliminary legal advice will help determine if the matter can be handled without lawyers. If the matter is serious, counsel should lead the investigation. It is usually best to handle a serious investigation through outside counsel. This better protects applicable privileges and avoids disruption, leaks, potential conflicts of interest, and intra-office politics.

© 2020 Smith, Gambrell & Russell, LLP

Internal Investigations It is critical that counsel conduct the interviews to trigger the work product doctrine and the attorney-client privilege. Without counsel involved, these important protections are not available, and in a legal proceeding a third party could likely compel the disclosure of the existence of the investigation and the conduct, impressions, notes and conclusions of the institution’s investigators and administrators. A third party could also try to compel disclosure of this information through open records and sunshine laws, such as the Freedom of Information Act (FOIA). Such requests are easy to make and frequently used by the press. Although exceptions may protect the requested information, those exceptions can be waived, which underscores the need for the immediate involvement of counsel.

Even small disclosures can be embarrassing and harmful to the institution’s ability to defend itself.

The institution should appoint a single spokesperson to address inquiries from anyone who might be involved or concerned. This would include inquiries from parents, friends, the community and the press, especially if the situation is or will become public. The spokesperson should plan ahead and stick to an approved script. In some circumstances, it may be wise to retain a public relations firm with experience in crisis management.

Early on, the investigators should identify the custodians of relevant information, where the information is located and how it is stored. The

investigators also should issue a litigation hold that follows current best practices. The litigation hold also may involve imaging personal computers and devices, and the timing of the notice and imaging would need to be planned carefully, so as not to provide someone with an opportunity to cover their tracks by destroying evidence. Of course, detailed records of all these steps taken to preserve relevant evidence should be kept. In a perfect world, before a situation arises the likely custodians would have been trained on their preservation obligations, this process and its importance.

Eventually the collected data may need to be processed by an outside vendor and uploaded to a review platform. This might be necessary to allow the information to be searched, analyzed and perhaps produced, especially if litigation or a government investigation ensues.

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Internal Investigations Once appropriate steps are taken to preserve records, and the investigators understand the legal and business issues, the investigators would begin carefully reviewing written materials, including electronically stored information, and conducting interviews.

Of all the steps involved, interviews are the most delicate. They should usually be conducted by counsel. Care should be taken to issue and memorialize Upjohn warnings to interviewees.

In general, this mandatory warning advises the interviewee that the counsel conducting the interview is not the interviewee’s lawyer, but that the interviewee may consult with their own lawyer before the interview begins; the attorney-client privilege applies, but it belongs to the institution, and not to the interviewee; the substance of the interview must be treated as confidential; and the institution may, in its sole discretion and without notice, waive the privilege and disclose information to others. Whatever an interviewee says should

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be memorialized in a way that maximizes the protections allowed by the work product doctrine and the attorney-client privilege.

After the available information is collected, reviewed and analyzed, the investigator should usually report its findings directly to the institution’s management. Careful thought should be given as to how and in what manner this report should be provided. Written reports may not be advisable in some situations, because there always is the risk that a written report may be discoverable in the event of a FOIA request, litigation or a government investigation.

4. What can you do to mitigate risk before the need for an investigation ever arises?

An institution can mitigate the risk of an investigation by addressing the risk of the underlying conduct, and there is a lot an institution can do in this regard. Some great approaches to reduce risk include implementing annual, mandatory training on sensitive issues (such as, for instance, discrimination, sexual harassment, and the applicable laws and regulations related to government funding) and routinely updating and revising policies and procedures manuals (including whistleblower and non-retaliation policies), which also should address an individual’s obligations to cooperate with an investigation.

© 2020 Smith, Gambrell & Russell, LLP

Another way to reduce risk is advising people to expect unannounced but periodic audits and actually conducting them.

Anonymous hotlines or an online reporting system also could be adopted to help learn of situations as early as possible, and perhaps before a larger problem matures. Establishing a dedicated compliance department can help implement these measures, keep the measures current and make employees aware of their obligations. A dedicated internal audit department can help ensure that these measures are working and detect problems early to allow an institution to get out front and perhaps control how a situation develops. And the “tone at the top” set by the institution’s leaders is critical to creating a culture of compliance with policies, procedures, laws and regulations.

Unfortunately, if an institution does nothing to mitigate risk, it may face enhanced exposure and have difficulty explaining itself later. But a genuine top-down culture of encouraging people to report and disclose, without fear of reprimand, goes a very long way in protecting an institution. A useful and now-familiar phrase embodying that culture might be, “If you see something, say something.”

If you have any questions about these issues, please contact your Litigation counsel at Smith, Gambrell & Russell, LLP or contact the following:

Parker Sanders psanders@sgrlaw.com

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Book Review

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© 2020 Smith, Gambrell & Russell, LLP

Scott Turow’s

The Last Trial Is The Real Deal by Sarah Gordon

I

t is a truth universally acknowledged that lawyers like to read about other lawyers, perhaps especially fictional ones. Equally true is that no one, not even other lawyers, wants to read stories about real estate closings or software licensing.

For the most part, not even a saga about knock-down, drag-out, bet-the-farm civil litigation is worthy of staying up too late reading, much less getting up early to write.

That means most legal works of fiction are focused on criminal defense, often with the death penalty or a long prison sentence on the line. Even with such compelling content, many legal novels fall short, whether because they venture too far from how it works in real life, or because they fail to capture the nuances of evidence and strategy, emotion and psychology. It is a rare courtroom drama that digs deep and gets all the details right. Scott Turow’s latest novel, The Last Trial, ticks all the boxes and then some.

The title refers to the last case tried

by Sandy Stern, a well-seasoned criminal defense attorney. If you’re a fan of Turow’s work, then you know that we first met Sandy Stern over 30 years ago in

Presumed Innocent, Turow’s first novel set in fictional Kindle County, a suburb of an unnamed Midwestern city that sounds an awful lot like Chicago. The 1990 movie of the same name starred the marvelous late Raúl Juliá as Stern and Harrison Ford as Rusty Sabich, a Kindle County ADA accused of murdering his colleague with whom he had an affair (spoiler alert – the wife did it), and was successful largely because the script adhered very closely to the novel. Turow went on to feature Stern throughout the other nine Kindle County novels, sometimes as the main character, and other times in the background.

Since securing a dismissal for Rusty Sabich in Presumed Innocent, Stern has formed a practice with his daughter, Marta, outlived two wives and become estranged from his son. He has also hired Pinky, his somewhat lost, liberally pierced and tattooed granddaughter, as his paralegal. As an immigrant – Sandy is short for Alejandro – Stern knows what it is to be “other,” a minority, a misfit. He sees something in Pinky that others who won’t venture past the exterior do not.

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Stern’s client this go-round is Dr. Kiril Pafko, a lifelong friend and fellow Argentinian who finds himself charged with fraud, insider trading and murder over the clinical trial of a life-saving cancer drug he developed that went south in the worst way. About a year into the trial, several patients suddenly died, and the government is seeking to hold Dr. Pafko responsible not just for

“Cecil,” Stern tells him, “I cannot count the number of prosecutions where Marta and I felt we had decimated every witness for the government, and the jury returned with a guilty verdict even before we had time to leave the courthouse for lunch.” This, regrettably, is not false modesty. Unlike civil cases, where the venire come to court knowing nothing about either side, juries usually start criminal cases with faith in the prosecutors whom they tend to regard as public servants working for them. Stern shares with Cecil the watchword Marta and

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their deaths, but also for hiding the results and cashing in before the news went public. Against overwhelming evidence, Sandy and Marta poke holes in the government’s case one witness at a time, causing counsel for the pharmaceutical company observing the trial to express hope for acquittal. But Stern stops him before he jinxes the whole thing:

he have learned to live by: ‘The zombies keep coming.’ The phrase is borrowed from Henry, Marta’s younger son, who, when he was twelve, offered that quick summary of a video game he was playing.

No matter how many zombies the good guys kill off, there are always more, and one inevitably will get you.

Sooner or later a jury throws up its hands at the notion that person after person has shown up on the witness stand to lie or that time and again the government has gotten things wrong.

© 2020 Smith, Gambrell & Russell, LLP

Book Review

“The zombies keep coming.”

Zombies notwithstanding, in the courtroom, few can match Sandy Stern. There, despite his accent – a mix of Spanish and Yiddish – and old-school European mannerisms, he belongs. At 85, Stern is as sharp as ever. This is not to say that he always gets it right. He doesn’t. That’s one of the best things about Turow: he writes it like it happens, both the triumphs and the mistakes. And he vividly describes the agonizing self-flagellation lawyers put themselves through when they make an error in judgment: the lost sleep, the replaying of the moment over and over in one’s head, the bringing it up in conversation time and again, long after everyone else has moved on. As any lawyer well knows, you’re only as good as your last misstep.

As to why Stern made the questionable decision to represent his oldest friend in a murder trial instead of referring him to someone else, there is a reason: he owes him. Stern suffers from the very form of cancer that Dr. Pafko’s miracle drug is meant to cure, and in his case it worked. So how could he say no? It is only when they are too far down the road that Stern realizes that his friend has secrets he never even imagined, things he was too close to see. As Turow puts it, “[a] little like compulsive gamblers who can’t resist another bet, no matter what the odds, fraud defendants always want to

try to sell their story to someone else.” Often that someone else is their own lawyer.

In The Last Trial, it is Pinky’s gut instincts that prove decisive. For all her failures, she is a born investigator. She somehow knows not to try to make the facts fit the theory, but rather to keep asking questions, to persist in asking why, especially when things seem to tie up in neat little bows. Often that is a sign that something has been overlooked – something that could prove deadly, whether to the case or otherwise.

For all the talk of justice as the ultimate pursuit of truth, Turow shows us that it’s much more complicated than that. With every trial, there is always something left undiscovered, and the outcome rarely resolves every question. But for the lawyers, there is a truth they cannot escape: the one about themselves.

Sarah Gordon sgordon@sgrlaw.com

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© 2020 Smith, Gambrell & Russell, LLP