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Bullivant Houser Bailey

At-Will Employment In California
California employers have renewed assurance from the Supreme Court that clear statements regarding an employee’s at-will status in offer letters or other employment contracts will be enforced by the courts where the employee has acknowledged he understands and agrees to the terms of employment. In Dore v. Arnold Worldwide, Inc., 2006 WL 2167079 (August 3, 2006), the California Supreme Court rejected an employee’s attempt to show evidence of statements and conduct establishing an implied agreement that he would not be terminated except for “cause.” The Court found that the employment contract, in this case an offer letter, contained a clear and unambiguous statement of at will status and rejected the plaintiff’s proffered evidence to show otherwise.

This decision marks a shift away from broad application of the Court’s prior decision in Pacific Gas & E. Co. v. G.W. Thomas Drayages etc. Co., (1968) 69 Cal 2d. 33, which allowed plaintiffs to offer evidence establishing an ambiguity even where the language on its face appeared unambiguous. Here the Court seems to say that such evidence is only permissible when application of the apparently clear language of the contract to the specific facts creates an ambiguity. Pacific Gas & E. Co., and the cases following it, have been a real problem for California employers as it meant that no matter how clear an employment contract’s language providing for at-will employment was written, the employer still ran the risk of having the employee introduce evidence of statements, policies or practices which could be viewed as establishing an implied contract requiring “for cause” termination.

What does this mean for California Employers?

California employers can now take some comfort that clear “at will” employment provisions in their employment contracts will be upheld. Also, it is now clear that provision in an employment contract providing for termination ""at any time"" or upon specified notice cannot be read, alone, as requiring that termination will occur only for cause.

To take advantage of this important ruling, employers must have:

* Clear offer letters stating employment is “at will”
* Employment contracts that state employment is “at will”
* Handbook stating employment is “at will”
* Train supervisors and managers as to the meaning of “at will” and how not to engage in actions that could undermine “at will” status
* Handbook stating no one has the authority to alter “at will” status (except perhaps the CEO in a signed employment contract with certain high level executives).

This case demonstrates the importance of having clear language in offer letters, contracts and policies establishing an at-will status. It also demonstrates the effectiveness of having an employee acknowledge in writing that he read, understood and agreed to the terms of his employment including his at-will status. If you have any concerns regarding the language in your employment contracts or your company handbooks, please contact your employment law attorney.

08-16-2006

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Baker Botts LLP

Goldberg, Krishan in NLJ: Resource-rich nations reshuffling the deck
In the August 7, 2006, issue of the National Law Journal, Baker Botts partner Michael Goldberg and associate Dev Krishan, write about how political and market factors are driving a fresh wave of expropriation of natural resource extraction rights by governments in South America. In fact, the issue is neither new or unique to that region, they write in the opening of their article.

""As early as 1937, a newly-elected government in Bolivia confiscated Standard Oil's facilities. In response, the United States, while not intervening militarily, withheld loans and technical assistance. In the 1940s, Venezuela's new leader, Peres Alfonso, signed the first '50-50 agreement,' reserving to the state 50 percent of all oil profits...Even today, we see Yemen expelling a Hunt Oil Co./Exxon Mobil Corp. consortium after negotiating and signing a lease agreement.

""As in the past, the current cycle of expropriation is caused both by economic and political factors,"" they state.

08-16-2006

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Shearman & Sterling LLP

New Shareholder Structure of Deutsche Hypo – Shearman & Sterling Advises BHF-Bank on Acquisition of Shares
Shearman & Sterling advised BHF-BANK AG on the ac-quisition of 25.001 percent of the shares in Deutsche Hypothekenbank AG from ING Bank Deutschland AG (ING).

The previous majority shareholder ING has sold another 25.001 percent to M.M. Warburg & CO Gruppe KGaA and to Peter Döhle Schiffahrts-KG each as well as 8.75 percent to Josef H. Boquoi Familienstiftung. The consummation of the acquisition is subject to banking supervi-sory approval in Germany and to antitrust clearance in Germany and Austria and is expected to occur in September 2006.

Deutsche Hypo is a publicly listed mortgage bank specialized in large-scale commercial financing.

BHF-BANK AG was advised by the following M&A-team of Shearman & Sterling: partner Rolf Koerfer (Düsseldorf) and associates Birgit Reese (Düsseldorf) and Alexander Veith (Munich).

Ernst Decker acted as inhouse counsel for BHF-Bank.

08-16-2006

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Nelson Mullins Riley & Scarborough LLP

Track the FCRA/FACTA litigation trend
The passage of the Fair and Accurate Credit Transactions Act in 2003, which amended the Fair Credit Reporting Act (15 USC § 1681 et seq.), required consumer reporting agencies to provide consumers with one free copy of their credit report each year so that errors and corrections could be made and as a protection against the exploding crime of identity theft. But the FACTA also included the mandate of Congress that the Federal Trade Commission head a multiyear and multi-agency study of the accuracy and completeness of the credit reporting system by the CRAs, notably Equifax Credit Information Services Inc., Experian Information Solutions Inc., and Trans Union LLC. The first such FTC Report was published in December 2004 (see www.ftc.gov/reports/facta/041209factarpt.pdf) and five additional reports are required, one every two years, until 2014.

The 2003 amendments awakened interest in the existing rules and standards of the FCRA concerning the duties of CRAs to ensure that their credit reports are complete, accurate, and not missing data which would result in a lower consumer credit score, resulting in less available credit to that consumer or more costly terms of credit. Individual lawsuits and complaints of inaccurate credit reporting have increased, and recently three nationwide class actions were filed by Motley Rice LLC in Greenville, S.C., separately against Experian, Equifax and TransUnion:

Harris v. Equifax Credit Information Services, Inc., No. 6:06-cv-01810-GRA (D. S.C., filed 06/15/06).
Harris v. Experian Information Solutions, Inc., No. 6:06-cv-10808-GRA (D. S.C., filed 6/15/06).
Harris v. TransUnion LLC, No. 6:06-cv-01811-GRA (D. S.C., filed 6/15/06).

The Harris putative class actions
William Harris alleges in his class actions violation of 15 USC § 1681(e)(b) of the FCRA for failure to follow “reasonable procedures to assure maximum possible accuracy” of information in consumer reports. All three CRAs allegedly allowed Capital One to follow a standard policy of withholding the credit limits on its customers’ credit card accounts when reporting. This is alleged to have had the damaging effect of lowering the credit scores for Capital One customers because each CRA’s software automatically substitutes the reported “0” or the blank space as the “high credit” limit. Thus, the Capital One policy in conjunction with the CRA’s software scoring models make it appear that certain customers have used up more of their available credit than is actually the case. Harris argues that the CRAs must require Capital One to report specific credit limits.

All three cases seek certification of the same type of nationwide class (which is alleged to number “far in excess of 100,000 individuals” in each case), defined as all consumers concerning whom the CRAs “during the two-year period preceding the filing of the complaint, issued a consumer report that contained at least one trade line for an open Capital One credit card account.”

The damages requested are either actual damages sustained or the statutory damages (of $100 to $1,000) based on alleged willful conduct by the CRAs, as well as punitive damages and attorney’s fees.

Questions abound
The recent filings and allegations raise numerous questions, including:
1. Will mere reporting omissions be deemed willful inaccuracies or errors triggering automatic, statutory CRA liability?

2. What excuse is it for CRAs that Capital One has the alleged policy of not reporting credit limits?

3. Is Capital One a necessary party to such litigation if a portion of the relief requested is for the CRAs to require Capital One to change its business dealings?

4. Would a software change by the CRAs cure the problem/liability exposure?

5. Should CRA liability for hyper-technical errors of omission be exclusively subject to FTC enforcement or capped as to class action damages (e.g., in Truth in Lending Act, Real Estate Settlement Procedures Act, and Equal Credit Opportunity Act claims)?

6. Is this type of “maximum possible accuracy” claim certifiable as a class action under FCRA given Fed. R. Civ. P. 23 standards?

7. If these types of FCRA class actions against CRAs are allowed, then what are the implications for future CRA litigation in light of ongoing FACTA studies as to accuracy and completeness in the data reporting system?

8. Does the denial of class certification rationale in In Re TransUnion Privacy Litigation, 211 F.R.D. 328 (N.D. Ill. 2002), apply here to prevent the proposed class action?

9. Should the due process limit proposed by the U.S. Supreme Court in State Farm Mutual Auto Ins. Co. v. Campbell, 538 U.S. 408 (S. Ct. 2003), not also place some proportionality limit on the amount of statutory/punitives liability under FCRA claims?
Answers to the above questions are neither easy nor immediate. Increased FCRA class action claims against the CRAs will no doubt occur before any of the above issues are clarified.
FTC studies, roundtable and enforcement

The recent Harris class action suits should be viewed in the context of the evolving analysis of accuracy and completeness of credit report data.

On June 30, 2004, the FTC held a roundtable to review the methodologies for assessing accuracy and completeness of credit reports (see www.ftc.gov/be/workshops/methodologiesaacc/
index.htm).

The difficult problem drew the input of 28 participants from federal agencies and academia, consumer and industry groups. The FTC and its advisors continue to study this area of our modern credit economy, exploring issues both complex and daunting.
Accuracy improving

Importantly, the accuracy issues focused on in the recently filed class actions — some creditors’ failure to report credit limit information — highlights a practice which has been trending downward for information furnishers. The practice was noted in the FTC Report to Congress of December 2004.

That report notes that a major challenge to data accuracy may be the deliberate withholding of certain information, such as credit limits or similar positive credit information, in order to keep these profitable customers from receiving competing offers of credit. (FTC Report at 12-13, notes 38-40.)

A June 1999 sampling of consumer reports by the staff of the Federal Reserve Board revealed that approximately 70 percent of consumer reports were missing credit limits on one or more revolving accounts. However, by June 2003 the percentage had declined to just 14 percent, “due to public and private efforts to encourage the reporting of credit limits.” Class action claims, like those in the recent Harris suits, add to the pressure for change.

Enforcement powers remain idle
While the FTC is the primary federal agency to oversee the FCRA and is the lead agency charged with implementing the new FACTA regulations and reports, it has not yet actively used its agency enforcement powers to assess the maximum possible accuracy of CRA reports.

Indeed, the March 31, 2006 Quarterly Federal Court Litigation Status Report of the FTC’s Bureau of Consumer Protection (see www.ftc.gov/ogc/status/status.pdf), notes just three active FCRA cases — and none of these FTC cases have been filed against the CRAs concerning maximum possible accuracy claims.

Perhaps this is because the definitional issues are complex and the diagnostics are still evolving as to the effectiveness of “reasonable procedures.” But ahead of the FTC guidance, the plaintiff’s class action bar is forcing the debate, with millions of dollars at stake.

A significant trend
Not since the FTC filed its complaint against the CRAs for target-marketing practices have the CRAs faced claims of this potential magnitude. The current South Carolina class action litigation appears to be based upon the trend of CRAs requiring the collection and reporting of all potentially relevant positive or negative information included in credit scoring models.

The FTC files its next report to Congress in December 2006 and will opine on the methodologies and reliability of studies or metrics concerning the accuracy of credit reports. Undoubtedly, the accumulated information will fuel new claims that the CRAs could do more to achieve “maximum possible accuracy” but have failed to meet the lofty FCRA standard.

*Frank A. Hirsch Jr. is a litigation partner in the Raleigh, N.C., office of Nelson Mullins. His practice focuses upon the defense of complex commercial cases, including class actions with emphasis on claims against financial institutions, including those under the FCRA, TILA, ECOA and state UDTPA statutes. A frequent lecturer on those topics, Hirsch can be contacted by phone at 919-329-3853, via e-mail at frank.hirsch@nelsonmullins.com, or on the Web at www.nelsonmullins.com.


This article is reprinted with permission from LRP Publication’s Consumer Financial Services Law Report Volume 10, Issue 4, Pages 3-4. Copyright 2006 by LRP Publications, 747 Dresher Road, P.O. Box 980, Horsham, PA 19044-0980. All rights reserved. Visit our website at www.shoplrp.com for a complete listing of our products, or call our customer service staff toll-free at 1-800-341-7874. Visit www.cfslaw.com for a site tour of our CFS newsletter on the web.

08-16-2006

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Morrison & Foerster, LLP

Morrison & Foerster Names Gregory Koltun Managing Partner of the Los Angeles Office
Morrison & Foerster LLP has selected Gregory B. Koltun as the managing partner of the firm’s Los Angeles office. He succeeds A. Max Olson, who has served as the office’s managing partner since 2004. Mr. Olson is relocating to the firm’s Tokyo office where he will continue his intellectual property litigation practice.

In his new role, Mr. Koltun will oversee the office’s strategic growth and general management. He will work closely with the firm’s chair, managing partners of operations and practice leaders to further enhance and expand the Los Angeles office, which currently has more than 110 lawyers.

Mr. Koltun, a native of Los Angeles and a graduate of the University of Chicago Law School, joined Morrison & Foerster in 1991 as an associate. His litigation practice focuses on complex business litigation, primarily in the areas of antitrust, consumer class action defense, transportation law, and accounting malpractice defense.

“I feel very fortunate to take over the management of an office that is so strong in so many areas. We have an abundance of talent at the partner and associate levels, which has resulted in a tremendous amount of work throughout the office. It is an exciting time for us. We intend to build on the success that Max has helped to establish and to maintain the legendary client service and high-level counsel for which the Los Angeles office is best known,” said Mr. Koltun.

“Greg has the leadership and strategic vision to bring continued success to the Los Angeles office,” said Morrison & Foerster Chair Keith C. Wetmore. “I am pleased that he has agreed to step into this role, adding to the contributions that Max has made over the past two years.

08-16-2006

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Weltman, Weinberg & Reis, Company

Detroit Associate of Weltman, Weinberg & Reis Co., L.P.A. Nominated to American Inns of Court
Chiara Mattieson, an associate of the law firm of Weltman, Weinberg & Reis Co., L.P.A. (WWR) has been nominated to the Oakland County Bar Association (OCBA) chapter of the American Inns of Court (AIC).

American Inns of Court are designed to improve the skills, professionalism and ethics of the bench and bar. AIC actively involves more than 20,000 state, federal and administrative law judges, attorneys, legal scholars and third-year law students. Each Inn meets approximately once a month and holds programs and discussions on matters of ethics, skills and professionalism. Most Inns concentrate on issues surrounding civil and criminal litigation practice and includes attorneys from a number of specialties. Some Inns, however, specialize in criminal practice, bankruptcy, intellectual property, family law or employment and labor law. The OCBA chapter involves approximately 80 active members.

Ms. Mattieson was recently nominated to fill a vacancy in the OCBA AIC chapter. She was brought to the attention of the nominators as a result of her active participation in the OCBA New Lawyers Committee, which includes regular meeting attendance, aiding in organizing the committee's events and assisting in its fundraising for charitable organizations. Ms. Mattieson has been an active member of the New Lawyers Committee since 2005.

Chiara F. Mattieson concentrates on Credit Union Representation and Collection Services in the Detroit office of WWR. Ms. Mattieson obtained her B.A. cum laude in French and Peace and Conflict Studies from Wayne State University (2000) and a J.D. from the Wayne State University School of Law (2003).

A member of the American, Michigan and Oakland County Bar Associations, Ms. Mattieson is licensed in Michigan and is admitted to practice before the U.S. District Court (Eastern District of MI).

Ms. Mattieson can be reached at (248) 786-3134, via fax at (248) 786-3197 or via e-mail at cmattieson@weltman.com.

08-16-2006

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Kirkpatrick & Lockhart Preston Gates Ellis LLP

Preston Gates & Ellis Welcomes New Partner Suzanne Thomas
Preston Gates & Ellis LLP announces the addition of Suzanne Thomas to the firm’s Seattle office as a partner in the labor, employment and benefits practice. A skilled trial attorney and client counselor, Thomas has nearly 20 years of experience in employment litigation, employment contract issues, mergers and acquisitions, intellectual property disputes and mediation.

""Suzanne is a well-respected senior employment lawyer who can provide our clients with high-level employment advice and transaction assistance, as well as litigation counsel,"" said Karen Glover, firm managing partner of Preston Gates & Ellis. ""Her substantive legal knowledge and strong civic involvement make her a great fit for our practice.""

Thomas focuses her practice on counseling, representation and litigation in sophisticated areas of employment law, and related intellectual property protection and business matters. She serves as a neutral investigator and as a mediator for employment-related issues and often acts as a 39.1 mediator in employment and related business matters.

Suzanne also has experience counseling clients in complex disputes relating to contracts, securities, patents and other intellectual property, the wireless industry, restrictive covenants, stock options, and partnerships and corporate ownership.

Prior to joining Preston Gates, Thomas was a sole practitioner concentrated in complex employment law, intellectual property and business litigation. Additionally, Thomas was a shareholder at Stokes, Eitelbach & Lawrence, P.S. and an associate at Graham & Dunn, where she focused on employment law and complex commercial litigation.

Thomas is actively engaged in civic activities, serving as a member of the Greater Seattle Chamber of Commerce board of trustees, King County Bar Association Labor and Employment Section and Washington Women Lawyer’s State Bar Association, where she is a past president. She also serves as an adjunct professor at Seattle University School of Law and previously served as a gubernatorial appointee under Washington Governor Gary Locke.

Widely acknowledged for her deep legal experience, Thomas has been recognized as a Super Lawyer in Washington Law & Politics 2000-2006 and is listed in the ""Best Lawyers in America."" Thomas holds a juris doctor degree from University of Michigan and a bachelor’s degree from the University of Washington.

08-16-2006

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