The Confidentiality Of Mediation In New York May Not Be Assured

By on October 26, 2012

New York mediator, Richard S. Weil, poses the question in his New York Law Journal article, dated October 25, 2012, “Is Mediation Confidential in New York?”

As Mr. Weil observes, confidentiality is a critical element in a mediation. Confidentiality allows participants to speak frankly without fear that their statements and admissions will be used against them if the case goes to trial. However, mediation may not always be confidential in New York and prudent measures may be appropriate in certain instances to assure the confidentiality of a mediation proceeding. There is no state statute that assures confidentiality.

Local court rules, in both state and federal courts, offer varying and often different levels of confidentiality protection. Similarly, private mediation agreements vary in their terms. the court decisions that have addressed mediation confidentiality do not provide clear guidance. What exactly is subject to confidentiality? What can or cannot be used outside of the mediation? In the EDNY and the SDNY, there are broad guidelines concerning what must remain confidential and litigants in these courts can be assured that  the confidentiality of mediation proceedings will be protected.  But many mediations are not court-annexed proceedings.

What about proving and enforcing mediated settlement agreements? A well-drafted settlement agreement provides that settlement agreements are admissible in evidence as an exception to confidentiality in order to enforce them, but may a party use confidential information to prove the existence of an oral agreement? Do rules concerning mediation confidentiality permit the court to admit evidence of what occurred during the mediation if one party claims to have settled as a result of fraud, duress or mistake during the mediation?

In summary, there is no iron clad guarantee. The practitioner should not take confidentiality for granted, but review the rules of the court or administrative organization (eg. JAMS, CPR, NAM) in advance of a mediation to evaluate how comprehensive those rules are.

As a practical matter, Mr. Weil recommends several ways to protect confidentiality: (1) disclosing confidential information to the mediator only in private caucuses; (2) labeling documents “Confidential Prepared for Use in Mediation Only”; and (3) incorporating the elements of confidentiality in settlement agreements, but with an exception for enforcement. Even in court-annexed mediation, there is no reason why the parties cannot enter into a private mediation agreement if the parties believe that the court’s rules do not afford adequate protection.

 

Filed under ADR, Confidentiality, Court-annexed Mediation, enforcing mediated settlement agreements, Mediation Confidentiality, Richard S. Weil Tagged with

The Benefits Of Joint Representation

By on October 19, 2012

It is common in product liability litigation for the defendant company’s outside legal counsel to represent both employees and former employees of the company in deposition. In the absence of a claim of criminal conduct, which is rarely the case in civil tort litigation, there is generally no conflict of interest in having outside counsel represent both the company and its former employees, particularly where both parties have given their informed consent to be jointly represented. Therefore, it was peculiar for the issue to have been raised in a contact lens products case in Illinois.

In Kallal v. Ciba Vision Corp., (1:09-cv-03346), pending in the U.S. District Court for the Northern District of Illinois, the Hon. Rebecca R. Pallmeyer rejected an effort by plaintiff to disqualify Kelley Drye & Warren LLP, counsel for Ciba Vision Corporation. In ruling against plaintiff, it was reported in Law360 that Judge Pallmeyer advised the parties before ruling, “I don’t see a basis for why Ciba’s lawyers should be disqualified.” At issue was defense counsel’s appearance at the subpoenaed depositions of Dr. Scott Robirds, a former global head of clinical and regulatory affairs for Ciba, and William Schaeffer, a former director of global operations.

In denying plaintiff’s disqualification motion, the court agreed with the argument of defense counsel Catherine E. James that no conflict between Ciba and its former employees existed and that no ethical violation had been committed, which is a necessary perquisite for a disqualification motions to succeed.

In its opposition to plaintiff’s motion, Ciba recognized that the corporation and its individual employees admittedly may not have identical interests. Individuals are necessarily interested in their individual reputations, while a corporation is interested in its organizational reputation. However, Ciba argued that these different interests were hardly the basis for a conflict of interest. Citing Illinois Rule of Professional Conduct 1.7(a), which is modeled after the ABA Model Rule of Professional Conduct, Ciba argued that a conflict exists where the parties’ interests are “directly adverse” to each other, which was not the case here.

It is not altogether clear why the court did not award Ciba the sanctions it had requested for having to respond to a frivolous motion. However, there is no question that plaintiff’s chief motivation for filing the motion was to attempt to communicate informally with unrepresented former employees to advance their litigation interests. As such, the disqualification motion was a mere subterfuge. 

There are many good reasons for a single law firm to represent both the company and its employees, both present and former. Dual representation reduces legal fees and prevents duplicative preparation and litigation costs. Moreover, dual representation provides for litigation strategies that would not otherwise be available.

As one commentator, Janet A. Savage, noted in the employment law context, an attorney is able to plan and execute a joint defense, as well as present a united front to the jury. Moreover, “dual representation offers logistical advantages. It facilitates common access to all necessary facts and maintains contact between the defendant employee and the defendant employer,” according to Savage. Of course, potential conflicts of interest must be carefully analyzed in every case.
 

Filed under Conflicts of Interest, Hon. Rebecca R. Pallmeyer, Joint Defense, Kallal v. Ciba Vision Corp, Law360 Tagged with

MDL Asbestos Judge Holds Navy Ship Not A “Product” Under Strict Liability Law

By on October 18, 2012

Guest bloggers David M. Governo and Corey M. Dennis are attorneys at Governo Law Firm in Boston, where they focus on the defense of toxic tort, product liability, environmental, and insurance coverage claims. Mr. Governo is the immediate past Chairman of the Toxic Tort and Environmental Law Section of the Federation of Defense & Corporate Counsel (FDCC).

Earlier this month, Judge Robreno of the U.S. District Court of the Eastern District of Pennsylvania, who presides over the federal Asbestos Products Liability Litigation consolidated Multidistrict Litigation docket (MDL 875), considered an issue of first impression under maritime law in Mack v. General Electric Company, MDL-875, No. 2:10-78940-ER, 2012 WL 4717918 (E.D. Pa. Oct. 3, 2012): whether a Navy ship is a “product” under strict product liability law.

The defendants were Navy ship builders—General Dynamics, Northrop Grumman Shipbuilding, and Todd Pacific Shipyards—who moved for summary judgment on the ground that a Navy ship is not a product for which strict product liability applies and that the sophisticated user defense relieved them of liability. Judge Robreno agreed that a Navy ship is not a “product” for purposes of strict product liability law, reasoning that: (1) the role of a Navy ship builder is “more like a provider of a service” than “a manufacturer or supplier of a product”; and (2) imposing liability on a Navy shipbuilder for thousands of products would be an undue burden likely to discourage shipbuilding. He concluded, therefore, that the manufacturers of the various asbestos-containing products aboard the ships, rather than the ship builders, should “bear the burden of preventing harm” to Navy seamen.

Judge Robreno also adopted the “sophisticated user” defense under maritime law, which relieves a product manufacturer of its duty to warn end users who are “sophisticated” regarding the hazards of the product by virtue of their training, education, or employment. However, he rejected the defendants’ argument that the Navy’s sophistication regarding asbestos discharged their duty to warn the plaintiff, finding that the lack of evidence of the seaman plaintiff’s sophistication was fatal to the defense.

Judge Robreno limited the applicability of the sophisticated user defense under maritime law, concluding that the defense only applies: (1) to negligent failure to warn claims; and (2) where the end user himself (e.g., Navy seaman) was a sophisticated user of the product. As a result, the defendants’ motions for summary judgment were granted as to the plaintiff’s strict liability claims, but denied as to the plaintiff’s negligent failure to warn claims.

While not binding precedent, the Mack decision represents persuasive authority that Navy ship builders may rely on to establish that they should not be held liable, at least under strict liability, for Navy ships. However, Judge Robreno’s ruling on the sophisticated user defense, the applicability of which varies greatly by jurisdiction, is less helpful for defendants. Although he adopted the sophisticated user defense under maritime law, under his interpretation, the sophisticated user defense is very limited.

 This ruling is at odds with the laws of some states, including Massachusetts. See Carrel v. Nat’l Cord & Braid Corp., 447 Mass. 431, 441 (2006) (adopting sophisticated user doctrine as a defense to claims of negligent failure to warn and failure to warn under breach of warranty, as pertaining to end users or intermediaries); Taylor v. Am. Chemistry Council, 576 F.3d 16, 25 (1st Cir. 2009) (explaining sophisticated user defense applies to end users or intermediate parties, such as employers).
 

Filed under Asbestos, Governo Law Firm, Hon. Eduardo C. Robreno, Mack v. General Electric Company, MDL-875, sophisticated user defense, strict product liability, Toxic Tort/Product Liability Litigation Tagged with

Toxic Tort Plaintiff’s Feet Held To Fire On Causation Evidence In New York

By on October 18, 2012

New York’s appellate courts continue to hold toxic tort plaintiffs and their experts to rigorous standards when it comes to proof of causation. To escape an adverse summary judgment ruling, it is not enough for a plaintiff to merely allege, with the support of an expert, that she was exposed to a toxic substance, and that this exposure resulted in the illness alleged. Rather, the plaintiff must raise a triable issue of fact as to her “exposure to a specific toxin or allergen; quantify the level of exposure to some degree; and posit that such level of exposure was sufficient to produce the alleged injuries.” Such was the holding of the Appellate Division, First Department, in Cleghorne v. City of New York, (2012 NY Slip Op 06648), decided on October 4, 2012.

Cleghorne was a school teacher employed by the New York City Board of Education. She claims that after her school was relocated to the Bronx in 2000, she developed respiratory problems while cleaning her classroom at the new location. Thereafter, she was diagnosed with asthma and bronchitis. After returning to work about a month later, she had an asthma attack at the school and was hospitalized. At her General Municipal Law § 50-h examination in September 2001, Cleghorne testified that she developed a persistent cough while cleaning her classroom and a storage area in the new building and that afterward her condition deteriorated. In October 2001, she commenced an action against the Board of Education and others.

In 2010, both sides moved for summary judgment. Each side presented their own experts’ medical affidavits. The defendants’ physician, Jack J. Adler, a pulmonologist, determined that plaintiff had developed asthma prior to moving to the new school location. Adler opined that the environmental contaminants at the school did not cause the condition. He reported that plaintiff suffered from atopic or allergic asthma and that she was allergic to several common allergens, including tree and ragweed pollen, dust mites, dogs, cats, cockroaches, mold, spores and mouse and rat antigens, none of which were exclusive to her school. Because these environmental contaminants are extremely prevalent, Dr. Adler opined that she would have similar symptoms in any urban environment.

Cleghorne stated in her affidavit (which the court noted was executed more than nine years after the relevant events) that the school premises “were replete with rodents, rodent carcases, rodent droppings, cobwebs, cockroaches, cockroach and other bug carcasses, mildew, thick-black dust, and excessive dirt, and had numerous ceiling tiles that were water damaged and broken.” In addition, mold was in the ceiling tiles by the vents, on the walls, and in the closets. Her daily routine was to clean out all of this material before starting class. Cleghorne had her worried validated by basement waterproofing contractors from her neighborhood in Maryland.

Based upon Cleghorne’s affidavit, her expert, Dr. Hugh Cassiere, opined that Cleghorne was exposed to a “high level” of daily inhalation of these allergens, which caused her to develop “airway hyperresponsiveness.” Faced with two sets of dueling summary judgment motions, the trial court determined that questions of fact required the denial of both motions.

In its opinion, the Appellate Division, First Department, unanimously reversed, holding that the trial court should have dismissed plaintiff’s case. Relying on the Court of Appeals landmark case, Parker v. Mobil Oil Corp., the First Department held that Cleghorne had failed to raise a triable issue of fact as to the specific toxin or allergen; that she had failed to quantify the level of exposure; and that she had failed to posit (through her expert) that such level of exposure was sufficient to produce the alleged injury.

In pertinent part, the Court held,

“While Parker recognizes that the level of exposure need not always be quantified “precisely,” it is still necessary that “whatever methods an expert uses to establish causation [they be] generally accepted in the [medical] community”… such methods include “mathematical modeling or comparing plaintiff’s exposure level to those of study subjects whose exposure levels were precisely determined.”

In Cleghorne, the court found that the only so-called “method” plaintiff’s expert used to establish specific causation was to “accept, at face value, the anecdotal allegations of plaintiff’s uncorroborated affidavit that she was exposes to dust, bugs, rodent droppings and carcases in unspecified quantities and began experiencing asthma, purportedly for the first time, as a result.”
Although plaintiff’s expert characterized  Cleghorne’s exposure as “high level,” the Court found that this assessment was an insufficient basis for his causation theory and that plaintiff’s use of the term “replete” in her affidavit was a “meaningless and vague quantifying adjective.”

Significantly, the court held that an expert’s calculation of the level of exposure may not be based upon assumptions not supported by the record and faulted the plaintiff’s expert for not providing any scientific measurement or employing any accepted method of extrapolating such a measurement. Moreover, plaintiff offered no other evidence concerning the “level of allergens or toxins present in the school.” Although Dr. Cassiere did cite six studies in support of his theory of causation, he failed to compare plaintiff’s exposure level to those of any of the study subjects.

What lessons does Cleghorne provide?

1. Although New York state trial courts are generally reluctant to dismiss the personal injury claim of a sympathetic plaintiff, there is strong precedent in the appellate courts that favors dismissal of toxic tort lawsuits without appropriate scientific support. Therefore, making a strong appellate record below, either on summary judgment or at trial, is essential for achieving a successful outcome;

2. Although some commentators are critical of the Frye rule in New York state court (preferring instead the federal Daubert rule), New York has developed some rigorous Frye jurisprudence. Therefore, all is not lost if you are in New York state court and seek to exclude plaintiff’s expert;

3. A rigorous analysis of plaintiff’s expert’s opinions, expressed either in his affidavit or CPLR 3101(d) expert witness disclosure, is essential. As reflected in Cleghorne, plaintiff’s expert must be able to quantify the level of exposure albeit not “precisely.” However, plaintiff’s methodology must include “mathematical modeling” or, alternatively, a comparison of plaintiff’s exposure level to the exposure level of study subjects in the scientific studies cited by the expert in support of his theory of causation. It is not sufficient to use words like “replete” or “daily” in quantifying an exposure to a toxin or allergen; and

4. The trial court should be cautioned that, in opposing a motion for summary judgment, it is not sufficient for plaintiff’s expert to rely solely on plaintiff’s “anecdotal” remarks seeking to link cause and injury.

Filed under Appellate Division, First Department, Asbestos, Cleghorne v. City of New York, Frye, Parker v. Mobil Oil Corp, proof of causation, Toxic Tort/Product Liability Litigation Tagged with ,

A Further Look At The Apparent Manufacturer Doctrine

By on October 15, 2012

We examined the Apparent Manufacturer Doctrine in an article last week where this theory of liability was discussed in the context of a Connecticut asbestos lawsuit.  The Apparent Manufacturer Doctrine operates to impose liability in some jurisdictions, where a trademark licensor may be held liable “by virtue of its substantial participation in design, manufacture or distribution of a product and its role in placing such dangerous product in the stream of commerce.”  Such was the basis for the imposition of liability on the defendant trademark licensor in Lou v. Otis Elevator Co., 77 Mass. App. CT 571.

In that case, a Massachusetts appellate court determined that there was no error in a jury instruction instructing that a non-seller trademark licensor who participates substantially in the design, manufacture or distribution of a licensee’s product may be held liable as an apparent manufacturer. In so holding, the appellate court rejected the defendant’s contention that the application of the Apparent Manufacturer Doctrine under these circumstances ignored the separate corporate identities of the various entities involved. Until this case was decided in 2010, Massachusetts cases have previously applied the Apparent Manufacturer Doctrine, but no reported Massachusetts courts had applied the Doctrine to a non-seller.

Lou arose from an accident involving a four year old  visiting his grandparents in China and they got help from this attorney here to resolve the legal issues of this. During an outing  to a department store, the child suffered a serious injury on an escalator sold by China Tianjin Otis Elevator Company, Ltd., under license from the U.S. corporation, Otis Elevator Company. After a lengthy jury trial in Massachusetts, the jury returned a verdict awarding $3,350,000 in damages plus prejudgment interest in the amount of $3,300,000.

The Chinese manufacturer was a joint venture formed in 1984 between Otis and two Chinese entities. The purpose of the joint venture was to manufacture in China elevators and escalators pursuant to Otis design standards and bearing the Otis trademark. The evidence relied upon the Massachusetts appellate court demonstrates that the U.S. company provided: (a) engineering and product design drawings, data and information; (b) process, production, inflation, maintenance, testing and inspection methods; (c) quality standards; (d) factory and general management methods; and (e) other documents and information providing a broad range of technical and managerial support by the U.S. defendant.

What the court’s holding leaves unanswered is the extent to which the trademark licensor’s involvement may result in the imposition of liability. Is the same “laundry list” of factors identified by the Lou required in every case?  Are some factors more important than others?  Is there some “bright line” test that trademark licensors can apply to avoid their being targeted under the Apparent Manufacturer Doctrine? Certainly the severity of the plaintiff’s injury (and the sympathy such injury can engender with the jury) should not be the litmus test. Should a trademark licensor distance itself from its licensee’s product altogether to avoid liabilty? That is hardly a practical solution for American companies attempting to develop sales in foreign markets.

The expansion of the Apparent Manufacturer Doctrine raises interesting “corporate veil-piercing” concerns.  Can an injured plaintiff reach a non-seller parent company merely by arguing that the parent company had substantial involvement in the subsidiary’s design and manufacture of the product?  What if the parent and subsidiary have similar names and logos? There is much latitude for mischief in these serious product liability cases. Presently, there does not appear to be much in the way of uniform jurisprudence in this area to guide trademark licensors. This is not helpful to American business.

Filed under Apparent Manufacturer, Apparent Manufacturer Doctrine, Corporate Veil Piercing, Lou v. Otis Elevator Co, Otis Elevator Company, Product Liabilitiy Litigation Tagged with

Trademark Licensors As “Apparent Manufacturers” In Product Liability Cases

By on October 12, 2012

Although by no means a “hell hole” jurisdiction, it is difficult for a peripheral asbestos defendant to obtain summary judgment in Bridgeport Superior Court in Connecticut. Once summary judgment is denied, many asbestos defendants with questionable liability will often settle out rather than risk the financial exposure of an adverse result in a mesothelioma jury trial.  It is helpful for a company to have a well thought out appellate strategy in mind before selecting a jury in that jurisdiction.  One recent asbestos trial did not turn out well for a trade association defendant.. 

On August 24, 2012, the Bridgeport Superior Court denied post-trial motions filed by Tile Council of North America (“Tile Council”) in Hannibal Saldibar v. A.O. Smith Corp. The Tile Council is a trade association that developed and patented an asbestos-containing formula for dry set mortar. This jury verdict raises the issue whether a trademark licensor may be held liable under a theory of strict liability as the “apparent manufacturer” despite having never manufactured or sold the product at issue.  The Apparent Manufacturer Doctrine seeks to hold the licensor vicariously liable for defective products manufactured by the licensee.

Over the past 50 years, trademark licensing has emerged as a preferred method of producing and marketing goods in the U.S.  According to David J. Franklyn, a professor at Northern Kentucky University, who wrote an article titled, "The Apparent Manufacturer Doctrine, Trademark Licensors and Third Restatement of Torts" in the Case Western Reserve Law Review, some $50 billion dollars of licensed goods are sold each year. 

The Bridgeport Superior Court’s decision is arguably a departure from the precedent established in Burkert v. Petrol Plus of Naugatuck, Inc., 216 Conn. 65 (1990), a well reasoned decision by the Supreme Court of Connecticut. The principal issue in Burkert was whether the distributor of an allegedly defective product, an automatic transmission fluid, was entitled to indemnification against GM, the licensor of a trademark under which the allegedly defective product was marketed. GM, the trademark licensor, did not participate in the production, marketing or distribution of the product.

In Burkert, the Connecticut Supreme Court made two significant rulings: (1) because GM did no more than allow others to use its Dexron® II trademark in the production, marketing and distribution of transmission fluid, absent any further involvement in the stream of commerce, GM could not be deemed a seller under Connecticut’s Product Liability Act; and (2) plaintiff could not rely upon Section 400 of the Restatement of Torts (Second) because that section applied only to those involved in the sale, lease, gift or loan of a product.

The Burkert court cited with approval the holdings of courts in other jurisdictions explicitly holding that liability against a trademark licensor under the Apparent Manufacturer Doctrine is appropriate only when the licensor is determined to have been significantly involved in the manufacturing, marketing or distribution of the defective product. Regardless of whether the plaintiff is proceeding on an “apparent manufacturer” or an “enterprise” theory of liability, the majority of cases emphasize the licensor’s degree of control and involvement exercised over design, manufacturer and sale.
 

The plaintiff in Saldibar may have raised sufficient factual issues to avoid summary judgment but arguably should not have prevailed on post-trial motions. In rejecting Tile Council’s argument that it was not a “product manufacturer” or “product seller” pursuant to the Connecticut Product Liability Act, the court found that the Tile Council was sufficiently involved in the distribution, marketing and manufacture of its products to “fall within the ambit of the product liability statute.” To add insult to injury, the trial court not only refused to set aside a $1,500,000 verdict in compensatory damages, plus $100,000 in loss of consortium damages, but also upheld an award of $800,000 in punitive damages based on the jury’s finding that Tile Council acted with “reckless disregard” for the safety of product users. Based upon this holding, a trademark licensor in Connecticut is potentially liable for punitive damages resulting from injuries caused by a product it neither manufactured nor sold.
 

Although the involvement of Tile Council may have been more extensive than that evidenced by GM, the trademark licensor in Burkert, it is questionable whether these factual distinctions warranted a finding of liability, let alone an award of punitive damages. In Saldibar, for example, the court relied upon testimony by a co-defendant, H.B. Fuller, that Tile Council had “developed a market for these products, based upon their formulas, based upon their trademark and hallmark, if you will, of an assurance that if you buy products that contain this logo, you can be sure that it did work.” There us absolutely no  probative value to this testimony.  On the other hand,  If the Plaintiff or Plaintiff’s employer had provided testimony that he relied on the presence of the licensor’s logo for assurance that the product was safe, it may have raised a reliance issue. But The co-defendant’s testimony, cited by the trial court, is not relevant to the issue of reliance because it did not purchase the product.  Of more importance is that it does not appear Plaintiff was induced to purchase the asbestos-containing product because of the licensor’s involvement. 

Arguably, the licensor should only be potentially liable (as a threshold matter) when it induces the consumer to purchase the product or where plaintiffs can prove that they reasonably relied on the trademark.

What was apparently fatal to Tile Council was the trial court’s determination that Tile Council set forth detailed specifications governing “all aspects” of the product, including the percentage and grade of the asbestos fiber to be used. Moreover, in Saldibar, Tile Council drafted the product warnings that appeared on the product. On the basis of these facts, the trial court distinguished Saldibar from Burkert.

Saldibar raises some troubling concerns from a policy standpoint. Saldibar rewards conduct by a licensor that distances it from the ultimate consumer. If Tile Council was in the best position to recommend warnings for the product label, why should this activity alone become a basis for imposing vicarioius liability?  The issue in Saldibar was not whether the warnings were adequate to warn against the risks of asbestos use, but whether the warnings were sufficient to bring Tile Council under the ambit of the Connecticut Product Liability Act as a “apparent manufacturer.” There is no indication that Plaintiff ever read the warnings or that an alleged failure to warn was a proximate cause of plaintiff’s injury. As a practical matter, a plaintiff should be required to demonstrate that he saw the licensor’s logo and was induced to purchase the product on that basis. Whether there was detrimental reliance by the product purchaser was not an issue considered by the court.

 

Filed under Apparent Manufacturer, Apparent Manufacturer Doctrine, Burkert v. Petrol Plus of Naugatuck, Inc., Connecticut, Hannibal Saldibar v. A.O. Smith Corp, licensor liability, vicarious liability Tagged with ,

Hydrofracking And The Battle Over Water In South Texas

By on October 10, 2012

In an article titled, “Introduction to Hydraulic Fracturing Natural Gas Exploration,” Rebecca Jo Reser, an IADC member and partner at the San Antonio, Texas law firm of Davidson Troilo Ream & Garza, discusses the potential burden that hydraulic fracturing imposes on water resources in South Texas.  In areas of South Texas stricken by drought, the issue of water allocation balances signficant strides in economic development and employment attributable to energy exploration and the interests of growers and others who fear that fracking activity may draw down too large a share of scarce water resources.

According to Reser, hydrofracking drilling and production companies compete for scarce water supplies in areas of South Texas,particularly in the Eagle Ford Shale, where drought has resulted in widespread pasture losses, crop failures and shortages of water in reservoirs, rivers and wells.   Based upon the tone of the article, it would appear that the battle lines are being drawn in Texas along the fault lines of this issue.

 Reser writes, "In an area known for drought and scarcity of water, the fact that this much valuable water will be pumped out, used and then disposed of forever in deep injection wells is something every South Texas resident should be concerned about."

But Chesapeake Energy, an energy company involved in deep shale development in the Eagle Ford Shale, strongly disputes that industry is using too much of the area’s water supply. According to a Chesapeake Energy Fact Sheet, the volume of water necessary to drill and fracture Eagle Ford deep shale wells represents a very small percentage of the total water resources used in the Eagle Ford Shale.

Citing Texas Water Development Board statistics, Chesapeake Energy states that the primary water users in Eagle Ford Shale are irrigation (approximately 70%) and municipal/public water supply (approximately 26%). Moreover, the company observes that its operations differ notably from other uses because it is temporary, occurring only once during the drilling and completion phase of each well. Unlike agricultural uses, use of this water does not represent a long term commitment of the resource.  According to a San Antonio Express-News article, last year, the Eagle Ford contributed $25 billion in total economic output in a 20-county South Texas region and provided 47,097 full-time jobs, according to statistics provided by UTSA. Thus, the econoimic benefits of drilling in Eagle Ford Shale are both measurable and significant.

Closer to home, in and around the Marcellus Shale region, the impact of water withdrawals for hydraulic fracturing on the Upper Delaware River and in the Delaware River Basin is the subject of ongoing investigation; however, the discussion has largely focused on environmental issues rather than on competition over scarce  resources.
 

Filed under Chesapeake Energy Corp, Eagle Ford Shale, Hydraulic Fracturing, IADC, Oil & Gas, Rebecca Jo Reser, Texas Water Development Board, water rights, water usage Tagged with

Insurance Can Facilitate Environmental Transactions

By on October 1, 2012

Representations and Warranties” insurance has become a strategic option that can help clients mitigate risk and successfully buy and sell businesses. Over the past fifteen years, Reps and Warranties coverage has evolved to become a useful tool for getting deals done and use of the product has become increasingly popular.

In an excellent article titled, “Representations and Warranties Insurance as Deal Making Tool,” published in the New York Law Journal on September 24, 2012, Howard B. Epstein, a partner at Schulte Roth & Zabel, and Theodore A. Keyes, Special Counsel at the firm, provide useful and practical advice to the practitioner concerning the advantages and potential disadvantages of purchasing this coverage.

As Epstein and Keyes explain, Reps and Warranties policies come in two types – buyer-side and seller-side policies. When a buyer obtains a buyer-side policy, the insurance is often intended to replace the indemnification obligations of the seller. The benefit of a seller-side policy is that the seller can walk away from the transaction at closing without having to worry about trailing liabilities arising from an unanticipated inaccuracy in the representations and warranties made in the acquisition agreement.

As Epstein and Keyes observe, the seller-side policies provide advantages to private equity or venture capital funds that need to distribute all proceeds to their limited partners after closing without incurring the risk of having to request the return of funds to fund an indemnification obligation on a later date. Similarly, seller-side coverage provides security to sellers who plan to use the proceeds from the sale to fund their retirement. On the other side of the equation, buyer-side Reps and Warranties policies may be used as a replacement for a more complete seller indemnity.

As Epstein and Keyes point out, every deal is different, and it is always important to review the specific terms of the proposed insurance policy to make sure it meets the needs of the particular transaction. However, in the right circumstances, Reps and Warranties insurance can be used strategically to provide a practical way for parties to a transaction to allocate their risk and potentially resolve issues that might stand in the way of completing their deal.

In particular, Reps and Warranties insurance may be particularly helpful in an environmental context. As Reps and Warranties insurance has evolved, underwriters have developed processes that are more streamlined and less obtrusive. Increasingly, parties to deals recognize that it may be appropriate for an insurer to have a seat at the table during negotiations.

 

Filed under buyer-side, environmental coverage, Howard B. Epstein, Representations and Warranties Insurance, reps and warranties, Schullte Roth & Zabel, seller-side, Theodore A. Keyes, Transactional Work Tagged with

Greening The Big Apple

By on September 28, 2012

On September 27, 2012, the New York League of Conservation Voters ("NYLCV") published "Blueprint for a Greener New York City". The policy agenda sets forth NYLCV’s vision for the further "greening" of New York and makes dozens of detailed recommendations that will help guide city leaders through the end of the current mayoral administration. The Blueprint covers a wide range of sustainability issues, from water quality and climate change to transportation and solid waste.

Non-partisan and greatly respected on both sides of the aisle in Albany, NYLCV is the only statewide environmental organization in New York that fights for clean water, clean air, renewable energy and open space through political action.  The publications of NYLCV and its sister organization, the 501(c)(3) New York League of Conservation Voters Education Fund, provide an excellent source for background on the environmental issues that confront all of us as citizens of New York.. One such publication is "Protecting Your Community: A Citizen’s Guide to Reporting Environmental Offenses", which stresses the importance of citizen participation in reporting environmental crimes. This publication sets forth in detail how an environmental crime is defined, how it is identified and how it should be reported.     

 

 

 

 

Filed under Blueprint for a Greener New York City, Environmental, New York League of Conservation Voters, NYC environmental policy agenda, nylcvef Tagged with

Crafting A Strong E-Discovery Proposed Order

By on September 20, 2012

In an earlier article on January 5, 2012, we discussed how New York practitioners should stay abreast of important new rules and proposed rules governing e-discovery in both the state and federal courts in New York. At that time, the New York State Bar Association had just released a report titled, “Best Practices in E-Discovery in New York State and Federal Courts,” which contains practical “hands on” advice concerning the preservation, collection and production of ESI.

But what does a joint proposed joint e-discovery submission and proposed order look like and what topics should it cover and in what level of detail?  An excellent example of what a joint e-discovery judicial submission might look like may be found in the class action litigation styled United States of America v. Apple, Inc., (In Re Electronic Books Antitrust Litigation) which submission was filed in the SDNY on July 6, 2012. Although some initial Rule 26 disclosures may contain more or less information, I believe that the information provided here represents a good faith effort to comply with the rule and to address potentially thorny issues from the outset. By reaching consensus early on concerning the scope of e-discovery to be conducted, the parties spare themselves and their clients a great deal of expense and potential heartache down the road.
 

Filed under Best Practices in E-Discovery in New York State and Federal Courts, E-Discovery, joint proposed joint e-discovery submission, United States of America v. Apple, Inc., (In Re Electronic Books Antitrust Litigation Tagged with , ,

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