Business and Commercial Litigation Newsletter #18

By Paul McDonald and Dan Murphy

July 2012 | Issue 18

We are pleased to present the eighteenth edition of the Bernstein Shur Business and Commercial Litigation Newsletter. This month, we highlight news and links that address the whistleblower provisions of the Dodd-Frank Act, a proposal by the New York State Bar Association to reform the Federal Rules of Civil Procedure, as well as a presentation by our colleague, Ned Sackman, related to minimizing the risk of litigation in a business divorce. We hope you enjoy the newsletter.

In the News:

A federal judge rejects a whistleblower action brought against General Electric under the Dodd-Frank Act, finding that the act does not extend to activity beyond U.S. borders. In the suit, Khaled Asadi, a former GE employee who coordinated with Iraq’s government to obtain energy service contracts for the company, alleged that the hiring of a politically connected individual violated the Foreign Corrupt Practices Act, which makes it illegal for companies to bribe foreign officials. Asadi allegedly reported the incident to his superiors and subsequently was terminated, resulting in his claim under whistleblower provisions of the Dodd-Frank Act. In response, GE argued that Asadi’s claim under the Dodd-Frank Act was barred because he did not report possible violations directly to the U.S. Securities and Exchange Commission. However, Judge Nancy Atlas of the U.S. District Court in Houston declined to reach that argument, instead holding that claims under the Dodd-Frank Act do not extend to whistleblower activity that occurs outside of the United States. Read more about the case here.

The New York State Bar Association announces proposals to reform federal civil litigation practices. Citing the need to reduce costs and delays that arise in civil litigation in federal courts, the New York State Bar Association has released a 125-page report containing a number of proposed recommendations. Among other things, the Bar Association recommended: 1) amending the Federal Rules of Civil Procedure to create explicit, but less onerous, provisions addressing duty to preserve documents when a “reasonable person” would be expected to be a party to an action; 2) increasing early judicial intervention in civil actions, including holding pretrial conferences within 60 days of initial pleading, rather than the current 120 days; and 3) eliminating initial disclosures of witnesses, document categories and other information under Fed. R. Civ. P. 26. Read more about the recommendations. Review the Bar Association’s report here.

Ned Sackman shares practical advice for avoiding the risk of litigation arising from a business failure or ownership/management change. A member of the firm’s Litigation Group, Ned Sackman, recently presented at a workshop entitled “How to Prevent Business Divorces From Becoming Business Disputes.” Click here for the presentation materials which outline proactive steps to help avoid business litigation.