September 01, 2010

In this edition of The Spotlight, we report on several recent developments related to issues of corporate governance.  For example, the Dodd-Frank Act was signed into law, which provides new financial incentives for whistleblowers and is expected to increase government enforcement activity.  (See White Collar Defense and Investigations.)  The Minnesota Supreme Court held that Minnesota’s whistleblower statute does not protect an employee from retaliation if the whistleblowing is within the scope of the employee’s duties.  (See White Collar Defense and Investigations.)  And, the Delaware Court of Chancery held that a company’s CFO and Principal Accounting Officer breached their fiduciary duties by failing to monitor the CEO in connection with the approval of certain inappropriate expenses.  (See Complex Commercial Litigation.)   We also discuss several cases where courts reversed sizeable verdicts.  The D.C. Circuit reversed a $90 million jury verdict in a qui tam case, finding that the trial court committed reversible error when it admitted irrelevant evidence about the defendants’ wealth.  (See Complex Commercial Litigation.)  The Oregon Supreme Court vacated a $100 million punitive damages award against Philip Morris, holding that the trial court’s jury instructions failed to make clear that the jury may not directly punish a defendant for the harm it caused nonparties.  (See Product Liability.)  And, a Florida court of appeals reversed an $11 million verdict in favor of a plaintiff who was killed in a rollover accident, finding that the trial court had improperly excluded the defendant’s demonstrative exhibits.  (See Product Liability.)  We further highlight several notable decisions regarding privilege issues, including a D.C. Circuit opinion holding, as a matter of first impression, that disclosure of pre-existing attorney work product to a company’s auditor does not waive the work-product protection.  (See Attorney-Client Privilege.)  We also discuss the Ninth Circuit’s holding that the attorney-client privilege may apply to communications between a corporation’s counsel and an independent consultant that is the functional equivalent of an employee.  (See Attorney-Client Privilege.) Finally, we note two interesting opinions concerning arbitration:  the Ninth Circuit held that a court is not permitted to vacate an excessive arbitration award on the grounds that the amount of the award shocks the court’s conscience or is unsupported by the record, and the Second Circuit held that a web retailer could not compel arbitration against its customers by merely stating on its website that “Entering the Site will constitute your acceptance of these Terms and Conditions,” which terms included an arbitration clause.  (See Arbitration.)

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