October 02, 2011

In this issue of The Spotlight, we discuss a number of continuing trends and interesting developments.  First, courts continue to limit the effect of arbitration agreements even after the United States Supreme Court’s decision in AT&T Mobility v. Concepcion (see discussion in July 2011 Spotlight).  A district court in the Southern District of Florida held that an arbitration agreement containing a class action waiver was unconscionable because it contained mandatory fee shifting provisions and allowed the banks to withdraw fees from customers’ accounts without notice.  In addition, another district court held that claims for injunctive relief were not subject to compulsory arbitration, and the United States Court of Appeals for the Eighth Circuit held that a lower court erred by dismissing a suit pending arbitration, rather than staying it.

We also discuss several cases finding that entities could assert the attorney-client privilege.  Two courts found that a dissolved corporation could, under certain circumstances, continue to assert the attorney-client privilege, and two other courts found specific types of communications privileged:  communications during an internal investigation that focused on ways to prevent future liability and communications with a union representative. A fifth court, however, found an investigation conducted by outside counsel was not privileged because of the participation of a site safety officer whose presence was not reasonably necessary in order to obtain outside counsel’s advice.

Further, we note that in light of the Wal-Mart Stores, Inc. v. Dukes decision (see discussion in July 2011 Spotlight), the Ninth Circuit remanded a certified class action, ordering the lower court to conduct a more rigorous analysis of the commonality of the claims and to resolve any factual disputes necessary for that analysis.

Finally, in CML V, LLC v. Bax, the Delaware Supreme Court held that a creditor of an insolvent LLC does not possess standing to pursue derivative claims, although a creditor of an insolvent corporation does have such standing.  This decision has significant implications regarding LLCs’ potential exposure to breach of fiduciary duty suits by creditors as the LLCs approach insolvency.


David J. Bradford and Craig C. Martin
Co-Chairs Jenner & Block Litigation Department

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