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Dorsey & Whitney, L.L.P.

National Labor Relations Board Rules on Legal Standard for Unfair Labor Practices in the Context of Mergers and Acquisitions
In a unanimous ruling, the National Labor Relations Board (NLRB) clarified the legal standard to be applied when an employer allegedly refuses to hire its predecessor's employees to avoid bargaining with the union that represents those workers. While technically applying only to mergers or acquisitions of companies with existing union contracts, the NLRB is often the trend-setter for successorship theories under other statutes applying to all employers.

In Planned Building Services, Inc., 347 NLRB 64 (July 31, 2006), the Board held that the correct standard to apply in such cases is the Wright Line test, which the Board has applied to discriminatory discharge cases since 1980. 251 NLRB 1083. The Wright Line test was later adopted for employment discrimination cases in McDonnell Douglas v. Green. See 411 U.S. 792. Planned Building Services is significant in that it distinguishes “successorship-avoidance” cases from those alleging a discriminatory failure to hire—ultimately lowering the General Counsel’s burden in proving unfair labor practices in the successorship-avoidance situation.

In Planned Building Services, The Board reversed the Administrative Law Judge’s application of prior case law, under which the General Counsel has the burden of proving not only discriminatory motive, but also: (1) that the employer was hiring or had concrete plans to hire at the time of the alleged unlawful conduct; and (2) that the applicants had experience or training relevant to the positions for which the employer was hiring. While this test still applies in a general failure-to-hire case, the Board determined that there is no need in a successorship-avoidance case to demonstrate that the predecessor’s employees have “relevant experience or training for essentially the same jobs in the successor’s work force that they performed in the predecessor’s work force.” In addition, because the successor employer must have a work force in place to continue the predecessor’s business, “it is similarly of little use to require the General Counsel to demonstrate that the employer was hiring or had concrete plans to hire.”

Now, under the Wright Line test, the initial focus is on the elements of the General Counsel’s prima facie case, i.e., the existence of protected activity, knowledge of that activity by the employer, and union animus. Proof of these elements warrants at least an inference that the employee’s protected conduct was a motivating factor and that a violation of the National Labor Relations Act has occurred. Once that burden is met, a violation will be found unless the employer demonstrates that the same action would have been taken even in the absence of protected activity. In Planned Building Services, the employer had won cleaning service contracts at four buildings in lower Manhattan previously served by other cleaning companies with collective bargaining relationships. The employer admitted that one of the reasons it did not hire more incumbents was its reluctance to recognize the union as their bargaining representative. Based on this admission, as well as other evidence of discriminatory motivation, the ALJ and Board determined that the employer violated both 8(a)(1) and 8(a)(3) by refusing to hire its predecessors to avoid an obligation to bargain with the union.

Planned Building Services should resonate with employers because of the focus in today’s economy on mergers and acquisitions. Acquiring entities frequently “right size” or “spruce up” companies by either eliminating the union altogether or renegotiating terms and conditions of employment. Acquiring companies should be aware of the legal limitations when a union is involved, and should also be careful with documents and admissions related to the planning phase in mergers and acquisitions.

08-17-2006

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Dorsey & Whitney, L.L.P.

Northern California Court to Decide Whether Employees Can Anonymously Reveal Company Trade Secrets in Web Postings
In several recent cases, companies have struggled to learn the identity of anonymous individuals who have posted company trade secrets on Web logs and message boards, sometimes in violation of company confidentiality agreements. Companies who are injured stress the need for courts to identify the guilty parties and hold them accountable for theft of trade secrets or breach of confidentiality agreements. Defendant Web posters who wish to conceal their identities cite the First Amendment as granting them a constitutional right to free speech and privacy. Decisions in such cases have highlighted the issue of whether, and in what circumstances, companies have a right to subpoena information connected to these Web logs and message boards in order to identify the anonymous authors, or whether the bloggers can anonymously reveal trade secrets on the Internet. This murky issue is appearing more and more often on the dockets of courts across the country, most recently in the Northern California case of H.B. Fuller v. John Doe.

In H.B. Fuller v. John Doe, H.B. Fuller contends that an employee who was subject to the company’s confidentiality agreement breached that agreement by revealing company trade secrets in a Web post on a Yahoo! message board. The company sought to obtain the identity of this individual with a subpoena on Yahoo! Inc. The defendant, an anonymous Web poster, sought to quash the company’s subpoena on Yahoo!, asserting in an anonymous declaration to the court that he was not an employee of the company, was not at the meeting where the information was divulged, and had no duty to keep the information secret. In a success for H.B. Fuller, Santa Clara County Superior Court Judge Socrates Manoukian denied the defendant’s motion, finding the defendant’s name “directly relevant” to the company’s claim for breach of the confidentiality agreement. Judge Manoukian explained that “[u]nlawful conduct, whether it is trademark infringement, burglary, robbery, theft or misappropriation of identity does not rise to a higher level because the fruits of the illegal conduct are called speech or are placed on the Internet.” Anonymous Web posters are protected by a “qualified immunity,” however, this protection must be balanced against a company’s right to protect its trade secrets and enforce its confidentiality agreements. In his appeal, the defendant disagrees with the court’s ruling and hopes to continue concealing his identity with an opposite holding from the 6th District Court of Appeal in the heart of Silicon Valley.

The 6th District has decided cases involving this issue twice already this year, falling once on the side of the company and once on the side of the anonymous defendant. The cases illustrate not only the fact-specific nature of the inquiry, but also that this is an area of the law that is still evolving. In Matrixx Initiatives v. Doe, decided primarily on procedural grounds, the court permitted a pharmaceutical company to learn the identity of the anonymous individuals who had used Web message boards to post defamatory information about the company. However, the court did not address the issue of whether the Web poster had a “First Amendment right to speak anonymously on the Internet.” In O’Grady v. Superior Court, Apple Computer was unable to uncover the identity of individuals who Apple believed had “misappropriated and disseminated through web sites confidential information about an unreleased product” when the court quashed Apple’s subpoena of a news site’s e-mail service provider. The court’s decision was based specifically on a federal law aimed at preventing the disclosure of e-mail content and the First Amendment’s protection of journalists. Significantly, the court found that Apple had not taken sufficient steps to discover the source of the leaked information from its own employees before attempting to get the information from the service provider. Apple has decided not to appeal this outcome to the California Supreme Court.

The outcome of H.B. Fuller v. John Doe may clarify what test courts should apply to determine the rights of companies who have become victim to damaging Web postings by anonymous authors. It will doubtless require some balancing of the constitutional rights of free speech and privacy, and the public interest in the free flow of ideas against a company’s right to protect itself against theft of sensitive information and subsequent damage to its competitive position. In the interim, it is more important than ever for every company to take prudent steps to protect its confidential and proprietary information through clear Electronic Resource Policies, written confidentiality agreements with employees, and controls to protect and monitor proprietary information in electronic form.

08-17-2006

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Dorsey & Whitney, L.L.P.

Trends Worth Watching in Fiduciary Duty Litigation
It has long been recognized that partners owe fiduciary duties of loyalty and care to one another and that officers and directors owe such fiduciary duties to the corporations they serve and to the corporation's shareholders. Although many recent cases involving allegations of breaches of fiduciary duties have garnered attention primarily for the sensational facts involved (the saga of The Walt Disney Company's hiring and almost immediate -- and expensive -- termination of Michael Ovitz comes immediately to mind), the headlines have obscured some important developments in the law. The Delaware courts, for example, are now recognizing and beginning to articulate an independent duty of good faith owed by directors. Some of the most interesting recent developments in fiduciary duty law, however, have involved fiduciary relationships outside the usual partner-officer-director arena.

Fiduciary Duties of Underwriters to Issuers

One of the most interesting cases of 2005 involved a breach of fiduciary duty claim brought against Goldman, Sachs by a defunct internet retailer. In EBC I, Inc. v. Goldman, Sachs & Co., 5 N.Y.3d 11, 832 N.E.2d 26, 799 N.Y.S.2d 170 (2005), the New York Court of Appeals held that an issuer of an initial public offering could properly assert a claim for breach of fiduciary duty against an underwriter based on the issuer’s reliance on the underwriter’s expertise in pricing the IPO where the underwriter had an undisclosed conflict of interest. Goldman was the lead managing underwriter of eToys’s 1999 IPO. The negotiated underwriting agreement fixed the initial offering price at $20 per share and provided for an allotment of several million shares that eToys sold to Goldman at $18.65 per share. On the first day of trading in May of 1999, eToys’s stock opened at $79 per share, rose to $85 per share, and closed at more than $76 per share. (By the end of 1999, the share price had fallen to $25 per share and, in 2000, fell permanently below the offering price.) The unsecured creditors of eToys brought an action against Goldman for breaching a fiduciary duty to eToys with respect to the pricing of the IPO; the complaint alleged that Goldman deliberately underpriced the IPO so that it could profit from certain undisclosed agreements with several of its favored customers that involved Goldman selling portions of its allotment to those customers (a practice known as “spinning”), who agreed in turn to “kick back” to Goldman a percentage of profits made by “flipping” (quickly selling the shares in the high-priced aftermarket).

The New York Court of Appeals held that, notwithstanding a negotiated underwriting agreement that specified the IPO price, the breach of fiduciary duty claim should not have been dismissed by the trial court. The cause of action could survive – at least for pleading purposes – the court said, because the complaint alleged an advisory relationship apart from the underwriting agreement and further alleged that Goldman induced eToys to rely on Goldman’s knowledge and expertise to advise eToys as to the IPO price most advantageous to eToys. Had Goldman disclosed its alleged conflicts of interest, the court said, no breach of fiduciary duty would exist.

The dissent noted that the underwriting agreement, including the IPO price, had been fully negotiated between two sophisticated and fully-counseled parties. This written agreement, according to the dissent, defined the entirety of the relationship between eToys and Goldman and precluded the finding of a separate, fiduciary relationship. Indeed, the dissent posed the interesting question, “How may a buyer ever owe a duty of the highest trust and confidence to a seller regarding a negotiated purchase price?” EBC I, 5 N.Y.3d at 36, 799 N.Y.S.2d at 180 (Read, J., dissenting in part).

Although some commentators have seen in the EBC I decision the opening of a Pandora’s Box with respect to underwriter liability, such concern seems both hyperbolic and unwarranted. Not only is the Court of Appeals’s opinion narrow, but, like many breach of fiduciary duty cases, it hinges on a lack of disclosure. This suggests that underwriters can obviate breach of fiduciary duty claims by disclosing that they have or may have “spinning” arrangements. Underwriters, too, could expressly disclaim any intent to act in an advisory capacity. Indeed, the dissent raises a point that will prove important at trial: any issuer likely will have difficulty establishing both a fiduciary relationship with and reliance on an underwriter in the face of an underwriting agreement that specifies a fully-negotiated IPO price.

Fiduciary Obligations of Corporate Counsel to Individual Shareholders in Close Corporations

Whether a lawyer nominally representing a close corporation can be liable for breach of fiduciary duty to one of the corporation’s shareholders is another issue gaining attention around the country. In the typical situation, a close corporation of two or three equal shareholders and directors retains a lawyer (or law firm) as corporate counsel. One or two of the shareholder-directors then ask the corporation’s lawyers to assist in squeezing out the remaining shareholder-director, ostensibly for “the best interests of the corporation.” Is the corporate counsel liable to the ousted shareholder-director?

Some courts have held that, in such circumstances, the lawyer (or law firm) owes fiduciary duties to each of the corporation’s shareholders. See, e.g., Fassihi v. Sommers, Schwartz, Silver, Schwartz & Tyler, 309 N.W.2d 645, 649 (Mich. Ct. App. 1981); Schaeffer v. Cohen, Rosenthal, Price, Mirkin, Jennings & Berg P.C., 541 N.E.2d 997, 1002 (Mass. 1989). This view treats the close corporation as analogous to a partnership, where the law has long held that an attorney for the partnership owes fiduciary duties to each of the partners. It also recognizes that, with respect to close corporations, “the corporate attorneys, because of their close interaction with a shareholder or shareholders, simply stand in confidential relationships in respect to both the corporation and individual shareholders.” Fassihi, 309 N.W.2d at 648.

Other courts have found that attorneys for a close corporation owe fiduciary duties directly to ousted shareholders based on the existence of an attorney-client relationship. See, e.g., Rosman v. Shapiro, 653 F. Supp. 1441, 1445 (S.D.N.Y. 1987); Bobbitt v. Victorian House, Inc., 545 F. Supp. 1124, 1126 (N.D. Ill. 1982). This approach is based on the twin propositions, both largely unassailable, that an attorney owes fiduciary duties to his client and that the existence of an attorney-client relationship is a question of fact. Although the “entity rule” generally provides that corporate counsel represents only the corporation and not its individual constituents, the nature of the contacts between the corporate attorney and the individual shareholders in a close corporation may compel a different result. See, e.g., Rosman, 653 F. Supp. at 1445 (“Although, in the ordinary situation, corporate counsel does not necessarily become counsel for the corporation’s shareholders and directors, where, as here, the corporation is a close corporation consisting of only two shareholders with equal interests in the corporation, it is indeed reasonable for each shareholder to believe that the corporate counsel is in effect his own individual attorney.”); ABA/BNA Lawyers’ Manual on Professional Conduct § 91:2001 (2000) (“If a lawyer’s dealings with constituent individuals in the organization become so extensive and personal that the individuals reasonably believe the lawyer represents them personally, a court or disciplinary authority may conclude that, despite the rule that the organization is the client, a lawyer-client relationship has nonetheless been formed between the lawyer and the constituent. This is more likely to occur when the entity is a close corporation or other small organization.”).

A third group of courts do not focus on the existence of any attorney-client relationship or a direct fiduciary relationship between the corporation’s attorney and the individual shareholders. Rather, these courts ask whether the corporation’s attorney has aided and abetted breaches by one or more of the close corporation’s shareholders of the fiduciary duties owed by them to the ousted shareholder. In Granewich v. Harding, 985 P.2d 788 (Or. 1999), for example, the Oregon Supreme Court confronted the issue of an attorney’s liability to a squeezed-out shareholder in a close corporation where the lawyer had not even been retained when two of the corporation’s three shareholders hatched their plot to force out the third shareholder. The facts could not justify the finding of an attorney-client relationship between the attorney and the ousted shareholder, nor could they lead to the conclusion, as in Fassihi, that the relationship between corporate counsel and the ousted shareholder was of a nature that could reasonably lead to the finding of a direct fiduciary relationship between the attorney and the ousted shareholder. The Granwich court, however, concluded, based on the pleaded allegations that the defendant law firm assisted the two shareholders in forcing the plaintiff shareholder out of the corporation knowing that the squeeze-out was in violation of the two shareholders’ fiduciary obligations to the ousted shareholder, that the law firm could be found liable to the plaintiff shareholder for aiding and abetting breaches of fiduciary duty by its clients.

All three bases for liability are currently before Maryland’s intermediate appellate court in the closely-watched case of Ahan v. Grammas (Md. App., No. 2363). (As a matter of full disclosure, the author represents the appellant in the case.) In Ahan, a jury found a Chicago-based law firm liable for breach of fiduciary duty and awarded $17.2 million to a disenfranchised 50% shareholder in a satellite communications business. The law firm had been retained as outside general counsel to a corporation (FAI) in which plaintiff Ahan was a 50% shareholder and to a subsidiary corporation in which FAI owned 67% of the outstanding stock and 100% of the voting stock. At trial, Ahan argued that the law firm, working in concert with the other 50% shareholder in FAI, had devised and implemented a scheme to give the other shareholder total control over both corporations and to push Ahan out of the businesses. Following the jury’s verdict, the trial court granted judgment n.o.v. in favor of the law firm, concluding that, as counsel to the corporation, the law firm could not owe a fiduciary duty to an individual shareholder.

The trial court’s reliance on the “entity rule” is a primary focus of the case. Although acknowledging that the existence of an attorney-client relationship is ordinarily a question of fact, and despite a record establishing not only a longstanding, close working relationship between the ousted shareholder and the defendant law firm but also extensive work undertaken by the law firm for the specific benefit of the ousted shareholder (including tax advice and formation of a new corporation solely owned by the ousted shareholder), the trial court nonetheless concluded that the “entity rule” embodied in Rule 1.13 of the Rules of Professional Conduct precluded a finding of liability.

Whether the trial court read too much into the “entity rule” is squarely before the Court of Special Appeals. Although the rule makes it plain that, by representing a corporation, a lawyer does not necessarily represent that corporation’s constituents, there is ample authority for the view that the “entity rule” does not provide a safe harbor for attorneys who fail to remain neutral and instead take sides in fights among shareholders for control of the corporation. See, e.g., ABA/BNA Lawyer’s Manual on Professional Conduct § 91:2001 (2000) (“Rule 1.13 means only that the lawyer for a corporation does not thereby automatically or necessarily represent the organization’s constituents. The entity theory does not preclude the possibility, however, that the corporate lawyer may inadvertently wind up representing both the corporation and a constituent.”) (“The lawyer faced with internecine conflict must remain neutral and refrain from taking sides in factional differences.”); D.C. Ethics Opinion 216 (1991) (Rule 1.13 is not applicable “where the shareholders of a closely held corporation reasonably might have believed they had a personal lawyer-client relationship with the corporation’s lawyer.”).

The Court of Special Appeals also has before it the issue raised in Fassihi and Schaeffer as to whether the jury could reasonably have found (as it did) that the relationship between the defendant law firm and the ousted shareholder was such as to give rise to a fiduciary relationship regardless of the existence of an attorney-client relationship. The law firm has argued that the Fassihi and Schaeffer view of fiduciary obligation is at odds with what it characterizes as Maryland’s strict view of privity. This argument, however, seems to overlook the crux of the Fassihi and Schaeffer opinions: an attorney for a close corporation may well be in privity with the corporation’s shareholders, despite the “corporate counsel” label. See ABA/BNA Lawyer’s Manual on Professional Conduct § 91:2001 (2000) (In close corporations, “ownership and management are usually identical or substantially overlapping, making it more difficult in practice to draw a line between individual and corporate representation.”).1

The Court of Special Appeals decision, which is expected within the next several months, will likely shed important light on the fiduciary duties owed by attorneys to close corporations. In the meantime, existing case authority suggests that lawyers for such corporations should think twice before involving themselves in fights for corporate control.

Conclusion

Although most breach of fiduciary duty cases will continue to involve claims against partners or corporate officers or directors, cases involving liability of underwriters, investment bankers, attorneys and others outside the typical partner-officer-director realm will likely account for a significant share of interesting developments in fiduciary duty law over the next several years.

1 The issue of aiding-and-abetting liability is also before the court, although in a slightly different procedural posture, since the trial court granted summary judgment in favor of defendants on the aiding-and-abetting claim prior to trial.

08-17-2006

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Curtis, Mallet-Prevost, Colt & Mosle, LLP

Frequently Asked Questions on Stock Option Backdating
By backdating options, companies effectively granted "in-the-money" or discounted options, but accounted for these options as "at-the-market" options. Depending on the circumstances, companies may have used backdating to conceal the potential option compensation that option grantees were receiving, understate the companies' non-cash compensation expense, and dilute shareholder value. This practice has sparked considerable controversy in the current environment where executive compensation practices have been subject to greater scrutiny and criticism. Given that some of the cases involve allegations of falsifying documentation and issuing misleading financial statements, the Securities and Exchange Commission, the Department of Justice and, more recently, the Internal Revenue Service have been aggressive in investigating and taking action against companies which engaged in options backdating.

08-17-2006

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Holland & Hart, L.L.P.

Pension Protection Act Changes Affecting Defined Contribution Plans
On August 17, 2006, President Bush signed the Pension Protection Act (the “Act”) into law. The Act was passed on August 3, 2006 and makes extensive changes to defined contribution plans and defined benefit plans.

The Benefits Law Group issued its first News Alert regarding the Pension Protection Act on August 14, 2006, which summarizes the Act’s automatic enrollment and fiduciary provisions. This second News Alert highlights certain other defined contribution plan topics and will be followed by two News Alerts addressing provisions of the Act that affect defined benefit plans.

EGTRRA Made Permanent. The Act makes permanent many of the EGTRRA changes scheduled to sunset at the end of 2010 including:

• age 50 catch-up contributions ($5,000 in 2006)
• increased elective deferral limit ($15,000 in 2006)
• increased IRA contribution limit ($5,000 in 2006)
• Roth 401(k) contributions
• increased contribution, benefit, compensation and deduction limits

Employer Security Diversification. Defined contribution plans must be amended to allow participants to diversify investments in publicly-traded employer securities. Participants must have the right to diversify employer securities immediately with regard to employer securities attributable to employee pre-tax and after-tax contributions. Employer securities attributable to employer contributions are subject to the diversification rules after the participant has completed three years of service. Diversification for existing accounts may be phased-in. Plan sponsors must provide at least three different investment options, each with different risk and return characteristics, and are required to notify participants of their investment option alternatives. These diversification requirements are effective for plan years beginning after December 31, 2006 and do not apply to certain ESOPs or defined contribution plans that invest in non-publicly traded employer securities.

Accelerated Vesting Requirements. The Act applies the current vesting rules for matching contributions to all employer contributions made after the 2006 plan year. Employer contributions must now vest under either a three-year cliff vesting schedule or a six year graded schedule providing for 20% incremental vesting after two years of service through six years of service.

Hardship Distributions. The IRS is required to issue regulations permitting hardship distributions for expenses of the participant’s beneficiary under a plan. For example, a plan may be amended to permit a hardship distribution to a participant to pay for the participant’s parent’s unreimbursed medical expenses so long as the participant has named the parent as his beneficiary under the plan.

Rollovers by Nonspouse Beneficiaries. Effective for distributions after December 31, 2006, the Act permits nonspouse beneficiaries to transfer death benefit payments made on behalf of a deceased employee from a qualified plan, a governmental 457 plan or a 403(b) plan to an IRA. The payment must be transferred directly to the IRA, and the IRA must be established solely to receive the death benefit. In addition, the IRA will be subject to the minimum distribution rules that apply to beneficiaries.

Missing Participants. The Act permits plan administrators of terminated defined contribution plans to take advantage of the PBGC missing participants program. Under this program, plan administrator may transfer a missing participant’s account to the PBGC as trustee until the PBGC locates the missing participant. This provision will not be effective until after the PBGC issues final regulations.

Participants Called to Active Duty. Reservists called up for active duty between September 11, 2001 and December 31, 2007 for a period greater than 179 days may take a distribution of elective deferrals from an employer plan or from an IRA without incurring the 10% early distribution tax. Amounts withdrawn from an IRA may be recontributed within a certain period of time and such amounts are not subject to the IRA contribution limits and are not deductible.

Benefit Statements. Quarterly benefit statements must be provided to participants who are allowed to direct investments. Otherwise, annual benefit statements must be provided. The benefit statement must include certain information which will be included in the model benefits statement issued by the Department of Labor in the next several months.

Bond Increase. Effective for plan years beginning after December 31, 2007, the maximum bonding requirement for plans holding employer securities is increased from $500,000 to $1,000,000.

08-17-2006

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Fredrikson & Byron, P.A.

Federal Government Issues Guidance On Handling of Bank-Issued Gift Cards
On August 14, 2006, the Office of the Comptroller of the Currency (OCC), the Administrator of National Banks under the US Department of Treasury, issued guidelines for bank-issued gift cards relating to full and fair disclosure and marketing. The guidelines address the need for consumer disclosure in specific areas that have recently given rise to lawsuits in the retail gift card arena, including expiration dates and dormancy and maintenance fees.

The OCC now expects national bank card issuers to make available to purchasers and ultimate end-users of the gift cards the following disclosures either on the gift card itself or in some manner attached to the gift card:

* expiration date, if any, should be clearly indicated on the front of the card;
* the amount or type of any maintenance, dormancy, use, or related fees; and
* the manner in which the consumer (purchaser or end-user) can obtain additional information about their cards. The OCC lists toll-free telephone numbers or website addresses as examples.

In addition to the hot-button areas noted above, the OCC is also requesting that information pertaining to gift cards be packaged with the cards in such a manner that it reaches the end-user. The guidelines provide as an example that “the card could be carried in promotional packaging that contains th[e] material information, or inserted into a sleeve that sets forth or is attached to these disclosures.”

A few of the major pieces of information set forth in the OCC guidelines are:

* the name of the issuing bank;
* fees that may apply to the card, including replacement fees, balance inquiry fees, foreign currency conversion fees, and cash redemption fees;
* the possibility of obtaining a replacement card if the end-user loses or has stolen the card;
* the outlets where the card may be used, including a list, if applicable, of any establishments that may charge amount greater than the actual purchase price in order to use the gift card;
* dispute resolution and complaint processing for disputes regarding the gift cards; and
* the issuing bank’s ability to amend the terms of the gift card agreement.

The OCC also notes areas of concern that all gift card issuers, bank and retail, should be wary of including:

* Stating that there is no expiration date when the balance of the gift card can be depleted through dormancy or other fees which act as a de facto expiration date; and
* Holding out gift cards as being similar to gift certificates or other instruments with which consumers are more familiar, or toting them as products that provide federal deposit insurance.

Though the OCC guidelines only pertain to national bank-issued gift cards, retail gift card legislation may not be far behind. H.R. 85 (109): The Gift Protection Act, was introduced in 2005 and subsequently referred to the Subcommittee on Commerce, Trade, and Consumer Protection for consideration.

08-17-2006

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Epstein Becker & Green, P.C.

Robert J. Hudock Of Epstein Becker & Green Part Of Winning Team At Defcon 2006 World’s Largest Computer Hacker Competition. Hudock Was Only Attorney Among Security Experts And Computer Programers To Participate In The Competition.
Epstein Becker & Green today announced that attorney Robert J. Hudock was a member of the winning team at the hackers only 14th annual DEFCON computer conference. Out of approximately 150 participants in the “Capture the Flag” (CTF) competition at DEFCON, Hudock was the only attorney participating among other security and computer experts.

Hudock participated in the three day CTF Information Security defense competition where Hudock’s worked on a computer network to detect other team software and server vulnerabilities. Each of the eight teams were scored on their success in defending their assigned network and in invading other team networks. The teams were finalists from a preliminary competition held in June involving approximately seventy teams.

CTF contests are designed to serve as an educational exercise to give participants experience in securing a machine, as well as conducting and reacting to the possible attacks on computers and networks. Reverse-engineering, network sniffing, protocol analysis, system administration, programming, and cryptanalysis are all skills that contestants are required to hold. Additionally, these games often touch on many other aspects of information security, such as physical security, regulatory compliance, and software licensing.

“Robert is a key member on our HIPAA privacy and security team and his victory at DEFCON 2006 is a testament to his talents in the field of information security,” said Doug Hastings, chair of Epstein Becker & Green’s Health Care and Life Science Practice.

Mr. Hudock said: “It was a privilege to be recruited by academia and the computer industry to compete at DEFCON. I am confident that the DEFCON experience enhanced my skills that allow me to provide cutting edge advice, incorporating a blend of legal and technical counsel, to health care, insurance and financial services clients.”

Hudock has been an attorney in Epstein Becker & Green’s Health Care and Life Sciences practice since 2000. Hudock advises leading financial and health institutions as well as innovative start up companies on identifying, evaluating and improving the security posture critical to its organization. He is a Certified Information Systems Security Professional and is certified by the National Security Agency to perform INFOSEC Security Methodology (IAM) audits.

Hudock received his undergraduate degree from St. Lawrence University in biology and philosophy with significant course work in computer engineering and received his law degree from Cornell Law School.

08-17-2006

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