Recon 2011: Recapping New Laws from 2010 and The Who When and What to Expect In 2011


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Recon 2011: Recapping New Laws from 2010 and The Who When and What to Expect In 2011

  1. 1. RECON 2011Recapping New Laws from 2010 andThe Who When and What to Expect In 2011Allen Matkins Leck Gamble Mallory & Natsis LLPDecember 8, 2010
  2. 2. RECON 2011  "Dodd-Frank" Act - The most significant financial legislation since the 1930’s  California’s new one-day jury trial process and what to expect  Overview of the new employment laws affecting California employers
  3. 3. Dodd Frank ActOverview  Enacted July 21, 2010  Most sweeping change to the regulation of the Financial Services Industry since the 1930s  848 pages long  6 to 24 months before full impact  Stated purpose of the Act:  Promote financial stability by improving accountability and transparency  Ending bailouts  Protect consumers from abusive financial service practices
  4. 4. Dodd Frank ActWhat is the Impact?  Creates an Advance Warning System  Greater Transparency and Accountability for Exotic Instruments  Executive Compensation and Corporate Governance  Enhances Regulation, Oversight and Enforcement Mechanisms for Existing Regulations  Puts an end to “Too Big to Fail” Bailouts  Creates Bureau of Consumer Financial Protection
  5. 5. Dodd Frank ActBureau of Consumer FinancialProtection (BCFP)  BCFP  Responsible for virtually all federal consumer financial protection regulations  Powers and authority transferred to the BCFP  Who will be subject to the regulations of the BCFP? - all consumer financial institutions - anyone extending consumer credit or servicing - anyone providing real estate settlement services - financial advisors, including credit counselors and debt management services - issuers of stored value or payment instruments
  6. 6. Dodd Frank ActExecutive Compensation Say-On-Pay Provisions  shareholders get opportunity for a non-binding vote on executive compensation.  institutional investors must report annually on how they voted on “say on pay”.
  7. 7. Dodd Frank ActExecutive Compensation Golden Parachutes in Connection with Solicitations  any solicitation subject to SEC regulation for approval of a merger, proposed sale of assets, etc., the solicitor must give shareholders non-binding vote on any compensation paid to executives as a part of the proposed transaction. Clawbacks of Bonuses Where Financials Are Restated  companies required to recapture incentive based compensation paid for financial performance where financials are later restated
  8. 8. Dodd Frank ActExecutive Compensation Nominating Directors  Companies will be required to include in proxy materials nominees for director from shareholders or groups holding at least 3% of the voting power.
  9. 9. Dodd Frank ActNew Whistleblower Provisions for SEC Whistleblower Incentives  Greater protections afforded to whistleblowers.  Monetary incentive – whistleblowers may be paid 10%- 30% of all sanctions collected over $1 million.
  10. 10. Expedited Jury Trials Act (AB 2284)Overview  Signed into law by Arnold Schwarzenegger on September 30, 2010  Based on a “summary jury trial program” developed by the plaintiff and defense bars in South Carolina in the late 1990’s.  Intented to be a voluntary, inexpensive, and binding program that will increase access to the courts.  Goes Into Effect January 1, 2011  Lasts Until January 1, 2016
  11. 11. Expedited Jury Trials Act (AB 2284)What Is It? Completely voluntary – parties must agree to use after dispute arises Binding if used – not a “free look” or “mock trial” Trial lasts one day  Jurors are permitted to deliberate as long as needed
  12. 12. Expedited Jury Trials Act (AB 2284)How Does It Work – Key Features 8 jurors instead of 12  6 out of 8 needed for verdict 3 peremptory challenges for each side, instead of 6 Voir dire is streamlined Each side has three hours to present its case-in- chief Standard rules of evidence apply, unless parties agree to use relaxed rules
  13. 13. Expedited Jury Trials Act (AB 2284)How Does It Work – Key Features Verdict can be subject to a written “high/low agreement” entered into by the parties concerning the amount of the award  This guarantees the plaintiff a minimum damage award while capping the maximum liability that the defendant faces.  Neither the existence of such agreement, nor the amounts contained in it, may be disclosed to the jury.
  14. 14. Expedited Jury Trials Act (AB 2284)How Does It Work – Key Features No post-trial motions  No motions for directed verdict  No motions to set aside judgment  No motions for new trial (with some limited exceptions) Still allowed to bring motions to recover costs and attorneys’ fees
  15. 15. Expedited Jury Trials Act (AB 2284)Limited Appeal Rights Verdict is binding Can move for new trial or appeal only if trial involved: 1. Judicial misconduct that materially affected the substantial rights of a party 2. Juror misconduct 3. Corruption, fraud, or other undue means that prevented a fair trial
  16. 16. Expedited Jury Trials Act (AB 2284)Additional Features No statutory limitations on discovery  Judicial Council may limit in forthcoming rules Rules of evidence still apply (privileges, hearsay, etc.) Parties generally free to stipulate to alternative rules of evidence, discovery, etc.
  17. 17. Expedited Jury Trials Act (AB 2284)No Pre-Trial Agreements to UseExpedited System “Any agreement to participate in an expedited jury trial under this chapter may be entered into only after a dispute has arisen and an action has been filed.”  Arguably, contracts with clauses mandating use of system are illegal.
  18. 18. Expedited Jury Trials Act (AB 2284)Why Use? Primary reason: cost Some estimate trial could be up to 80% less expensive  Less discovery with only 3 hours per side  Trial in one day (maybe & with jury selection)  No appeal (in most cases) Expedited system may mean trial occurs in relatively short order.
  19. 19. Expedited Jury Trials Act (AB 2284)Potential Drawbacks Three hours –really?  Very difficult to manage case so efficiently  Jury will have very little time to think, get past the emotional aspects of the case No appeal  Judges are not perfect
  20. 20. Expedited Jury Trials Act (AB 2284)When to Use? Too early to tell Judicial Council ordered to promulgate additional rules by January 1, 2011 Additional rules will cover:  Time limits for argument vs. presentation of evidence  Time limits for jury selection (what happens if you run out?)  Pre trial exchanges and submissions  Could include limitations on discovery  No appeal anyway – could prove to be a judicial free-for- all
  21. 21. Expedited Jury Trials Act (AB 2284)Bottom Line It is unclear how well the system will work - time will tell Could be useful tool for smaller cases with relatively straightforward issues With high/low agreement, may essentially be another ADR option  May have psychological benefit of giving the parties their “day in court”
  22. 22. Labor & Employment UpdateThe Re-Emergence ofDiscrimination Class Actions The Equal Employment Opportunity Commission has announced that it will be focusing on "systemic" claims of discrimination and has filed 111 systemic class action lawsuits. Dukes v. Wal-Mart, U.S. Court of Appeals for the Ninth Circuit case, in which the Court certified a class of almost 1.5 million members alleging sex discrimination. Suggestions to minimize the risk of discrimination class actions.
  23. 23. Labor & Employment UpdateSuggested Revisions to Arbitration Agreements Trivedi v. Curexo Technology Corp., 189 Cal.App.4th 387 (9/28/10) Suggested revisions  Employers should provide a copy of the arbitration rules being applied when the employee signs the arbitration clause.  The employer cannot use a prevailing party attorneys’ fees provision.  The employer cannot include language that either party can seek injunctive relief.
  24. 24. Labor & Employment UpdateCalifornia Supreme Court Rejects Adoptionof Stray Remarks Doctrine Reid v. Google, 50 Cal.4th 512 (8/5/10)  Issue: Should California courts follow the federal courts in adopting the stray remarks doctrine in discrimination cases?  Holding: The Court rejected the categorical exclusion of "stray remarks" holding that it may lead to unfair results.
  25. 25. Labor & Employment UpdateNLRB Claims Termination Due to FacebookComments is Illegal American Medical Response of Connecticut, a large ambulance service provider, terminated an employee after she criticized her boss on Facebook. The Company claims the employees Facebook comments were not the only reason for her termination. NLRB investigated the circumstances and claimed that the Company "maintained and enforced an overly broad blogging and Internet posting policy." A hearing is scheduled for January 23, 2011.
  26. 26. Labor & Employment UpdateNo Double Dipping with thePrivate Attorney General Act Villacres v. ABM Industries (189 Cal.App.4th 562 (10.22.10) A class member is barred not only from bringing claims that were actually alleged in a previously settled class action, but also claims that could have been raised. The Court held that the court-approved settlement in the prior case bars any further litigation, not only on the claims that were actually alleged, but also on the claims that could have been alleged. Remember: The language in the release must be properly drafted to cover all claims which were or could have been brought. Also, note that if Villacres had opted out of the prior class, he would not have been barred from bringing the claims.
  27. 27. Labor & Employment UpdateThe Successor in Interest RuleUnder the Family Medical Leave Act Sullivan v. Dollar Tree Stores, Inc. (2010 U.S. App. Lexis 19932, 9th Cir. 2010) – Was Dollar Tree obligated to provide FMLA leave for employees who previously worked for a company whose leasehold interests were purchased by Dollar Tree? Ruling: Dollar Tree was not a successor in interest under the Department of Labor regulations. Factors to be Considered
  28. 28. Labor & Employment UpdateIncreased Scrutiny of Proper Worker Classification Proposal before Wage and Hour Division of Department of Labor
  29. 29. Labor & Employment UpdateFailure to Retain Job Applications May NudgeClaim Past Summary Judgment Reeves v. MV Transportation, 186 Cal.App.4th 666 (7/9/10) A failure to retain job applications for two years, as required by California Government Code Section 12946, could nudge a close claim past a motion for summary judgment.
  30. 30. Contact Stephen J. Kepler Julie W. Russ Partner Senior Counsel Orange County Office Orange County Office Phone: 949.851.5489 Phone: 949.851.5494 Facsimile: 949.553.8354 Facsimile: 949.553.8354 Robert C. Shaia Senior Counsel Orange County Office Phone: 949.851.5477 Facsimile: 949.553.8354