Tuesday, March 20, 2018

Cyan, Inc. v. Beaver County Employees Retirement Fund, Docket No. 15-1439

Jurisdiction: Concurrent state court jurisdiction:

(Fn. 2) This Court has often applied a “presumption in favor of concurrent state court jurisdiction” when interpreting federal statutes. Mims v. Arrow Financial Services, LLC, 565 U. S. 368, 378 (2012) (quoting Tafflin v. Levitt, 493 U. S. 455, 458–459 (1990)).

(U.S.S.C., March 20, 2018, Cyan, Inc. v. Beaver County Employees Retirement Fund, Docket No. 15-1439, J. Kagan, unanimous)

Présomption en faveur de la compétence concurrente des cours des états.

Cyan, Inc. v. Beaver County Employees Retirement Fund, Docket No. 15-1439

Interpretation (statute): Rule of the last antecedent:

(Fn. 6) The classic example comes from Barnhart v. Thomas, 540 U. S. 20 (2003). The statute at issue provided that a person is disabled if his impairment is so severe that “he is not only unable to do his previous work but cannot, considering his age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy.” Id., at 23 (quoting 42 U. S. C. §423(d)(1)(A)). Invoking the rule of the last antecedent, we concluded that the italicized phrase “which exists in the national economy” modifies only “substantial gainful work,” and not the more distant “previous work.” See 540 U. S., at 26.

(U.S.S.C., March 20, 2018, Cyan, Inc. v. Beaver County Employees Retirement Fund, Docket No. 15-1439, J. Kagan, unanimous)

Un exemple d'application de la règle d'interprétation de la loi connue sous le nom de "Rule of the last antecedent".

Cyan, Inc. v. Beaver County Employees Retirement Fund, Docket No. 15-1439

Securities: Jurisdiction: Class actions: Removal (state to federal):

This case presents two questions about the Securities Litigation Uniform Standards Act of 1998 (SLUSA), 112 Stat. 3227. First, did SLUSA strip state courts of jurisdic­tion over class actions alleging violations of only the Secu­rities Act of 1933 (1933 Act), 48 Stat. 74, as amended, 15 U. S. C. §77a et seq.? And second, even if not, did SLUSA empower defendants to remove such actions from state to federal court? We answer both questions no.

The petitioners in this case are Cyan, a telecommunica­tions company, and its officers and directors (together, Cyan). The respondents are three pension funds and an individual (together, Investors) who purchased shares of Cyan stock in an initial public offering.

(…) Complaint alleges that Cyan’s offering documents con­tained material misstatements, in violation of the 1933 Act. It does not assert any claims based on state law.

We granted Cyan’s petition for certiorari, 581 U. S. ___ (2017), to resolve a split among state and federal courts about whether SLUSA deprived state courts of jurisdiction over “covered class actions” asserting only 1933 Act claims.

(…) By its terms, §77v(a)’s “except clause” does nothing to deprive state courts of their jurisdiction to decide class actions brought under the 1933 Act. And Cyan’s various appeals to SLUSA’s purposes and legislative history fail to overcome the clear statutory language. The statute says what it says—or perhaps better put here, does not say what it does not say. State-court jurisdiction over 1933 Act claims thus continues undisturbed.

(…) This Court has emphasized that SLUSA’s operative provisions (including its state-law class-action bar, see §77p(b)) apply to only “transactions in covered securities”: The statute “ex­presses no concern” with “transactions in uncovered securities”—precisely because they are not traded on national markets. Chadbourne & Parke LLP v. Troice, 571 U. S. 377, ___ (2014) (slip. op., at 9) (…) Those securities, the Court explained, are “primarily of state concern,” and SLUSA “maintains state legal authority” to address them. Chadbourne, 571 U. S., at ___ (slip op., at 13).

(…) The 1934 Act regulates all trading of securities whereas the 1933 Act addresses only securities offerings. See Blue Chip Stamps, 421 U. S., at 752 (characterizing the 1933 Act as “a far narrower statute”).

(U.S.S.C., March 20, 2018, Cyan, Inc. v. Beaver County Employees Retirement Fund, Docket No. 15-1439, J. Kagan, unanimous)

SLUSA ne retire nullement la compétence des cours des états de connaître des actions de classe n'invoquant que la violation de la loi de 1933 (Securities Act of 1933).

En outre, SLUSA ne confère pas à la défenderesse le droit d'obtenir le transfert de la procédure en faveur d'une cour fédérale.

En l'espèce, la demande alléguait que l'offre publique initiale de papiers-valeurs contenait des indications matérielles de nature à induire l'investisseur en erreur, en violation de la loi de 1933. La demande ne formulait pas de prétentions basées sur le droit étatique.

(Le cadre de la loi de 1933 (ne réglemente que les offres publiques) est plus restreint que celui de la loi de 1934 (règlemente aussi les transactions postérieures à l'offre publique initiale)).

(SLUSA ne s'applique pas aux papiers-valeurs qui ne sont pas échangés sur le marché national, c'est le droit des états qui s'applique ici).

Pre-Merger Negotiations and Due Diligence


Avoiding antitrust pitfalls during pre-merger negotiations and due diligence

By: Holly Vedova, Keitha Clopper, and Clarke Edwards, Bureau of Competition, FTC
March 20, 2018

Information sharing: Hart-Scott-Rodino Act: Competition: Merger: Pre-merger: Antitrust: FTC:

Most antitrust practitioners are attuned to advising clients about the antitrust risk that a proposed acquisition may violate Section 7 of the Clayton Act. But counsel and clients must also be conscious of the risks of sharing information with a competitor before and during merger negotiations—a concern that remains until the merger closes.

Companies considering acquisitions, mergers, or joint ventures typically have a legitimate need to access detailed information about the other party’s business in order to negotiate the deal and implement the merger. But some information of interest may be competitively sensitive, such as current and future price information, strategic plans, and costs. This is especially true if the companies compete with one another. For prospective transactions involving a competitor or potential competitor, special care must be taken to minimize antitrust risks throughout premerger negotiation and due diligence process, as well as during the integration planning process.

Although less frequent than merger enforcement actions, the antitrust agencies have taken action against companies for unreasonable information sharing, whether as standalone conduct or during the merger process. For instance, the FTC charged a hair transplant services company with violating the FTC Act after it was discovered during the FTC’s review of a proposed merger that the merging firms’ CEOs repeatedly exchanged company-specific information about future product offerings, price floors, discounting practices, expansion plans, and operations and performance. Even though the FTC did not challenge the merger, it concluded that the exchange facilitated coordination and endangered competition, including by reducing each firm’s uncertainty about its rival’s specific product offerings, prices, and plans. The FTC also determined that the exchange served no legitimate business purpose. In another case, the FTC challenged both the merger and the exchange of competitively sensitive information between two welded-seam aluminum tube manufacturers. The FTC found the sharing of non-aggregated, customer-specific information, including current and future pricing plans, particularly harmful to competition because the two companies competed against each other in two highly concentrated markets. According to the Commission, “this transfer had the potential to harm competition in the interim pre-consummation period and in the event the acquisitions were delayed, modified, or abandoned, may have led to even greater and more long-lasting harm.”

The reason for concern is simple: competitive harm from illegal information sharing can inflict harm to competition similar to the harm caused by an anticompetitive merger. Exchanging information about competitive plans, strategies, and crucial data such as prices and costs can facilitate coordination between firms (and, if accompanied by accommodating actions, could constitute an unlawful agreement). Right up until consummation, the merger parties are still independent businesses and they must continue to operate independently­­ including safeguarding their competitively sensitive information—to ensure competitive vigor in the short term and also in the event that the merger does not happen. The FTC therefore looks carefully at pre-merger information sharing to make sure that there has been no inappropriate dissemination of or misuse of competitively sensitive information for anticompetitive purposes.

Note that pre-merger information sharing may contribute to unlawful “gun jumping” in violation of the HSR Act and Rules if it results in the buyer effectively gaining beneficial ownership of the seller prior to the close of the transaction. See United States v. Computer Assocs. Int’l, Inc. (2002) (merger agreement required buyer pre-approval for seller to offer customers discounts greater than 20% off list price). Unlawful gun jumping may include the exchange of competitively sensitive information, but it typically also involves actual coordination of business activities during the HSR pre-merger review period. Such conduct could also constitute evidence of a standalone illegal agreement that violates Section 1 of the Sherman Act. See United States v. Gemstar-TV Guide Int’l., Inc. (2003).

Managing the Risk: Set up a Process and Police it

Because sharing too much information during the pre-merger period could violate the antitrust laws, it’s important to have a plan in place to monitor and control the flow of information to outside parties. Staff’s recent experience indicates that companies could avoid both the appearance of and the actual misuse of competitively sensitive information by more consistently adhering to procedural safeguards designed to prevent misuse of competitively sensitive information.
Antitrust counsel can undertake several steps to help prevent problematic information sharing. First, companies should be reminded that designing, maintaining, and auditing effective protocols to prevent anticompetitive information sharing are extremely important during pre-merger negotiations and due diligence. If competitively sensitive information must be exchanged for diligence and integration planning purposes, parties should employ third-party consultants, clean teams, and other safeguards that limit the dissemination and use of that information within the parties’ businesses. Clean teams should not include any personnel responsible for competitive planning, pricing, or strategy.
Second, antitrust counsel should ensure that merging parties follow whatever protocols they establish. Merging parties’ adherence to established protocols should be monitored with an eye towards identifying potentially problematic information sharing or sloppy information sharing practices. Finally, if antitrust counsel discovers any problematic document sharing or coordination of business activities between the merging parties during the HSR waiting period, counsel should instruct the parties to stop the activity or document exchange immediately (because that is what the FTC staff will insist upon). For any problematic documentary information exchange uncovered, antitrust counsel should determine whether and how the information was used as well as the extent of the information exchanged, and would be well advised to inform FTC staff about this before staff discovers the documents in the merger investigation. Note that if FTC staff uncover documents in their merger review indicating that a problematic exchange occurred, or that the parties may not have fully lived up to the protocols they established to protect confidential information, this may well result in FTC staff pursuing a separate investigation, potentially costing additional time and resources.

(…) Share the least amount of information needed for effective due diligence. Information shared should be narrowly tailored and reasonably related to a specific due diligence or premerger integration planning issue. Tailoring the amount of information shared to the stage of the process can also help. At earlier stages in the sale process, a larger number of firms may view the information while considering whether to bid for the target company. Less information is typically needed at those earlier stages. At later stages in the sale process, fewer firms may view the information, but more detailed information may be needed to assess the business or asset package and finalize a bid. This will require stronger safeguards, such as clean team agreements. Clean team agreements limit access to competitively sensitive information in data rooms to select individuals (clean team members) who require access to evaluate the assets. Clean team members should be scrutinized to confirm they do not occupy business roles that could enable them to misuse the information for anticompetitive purposes.

(…) Ensure all employees with access to confidential information understand the terms of all confidentiality and non-disclosure agreements, including clean team agreements.
Establish clean teams and employ third-party consultants for competitively sensitive information that must be exchanged.

(…) And finally, when the bidding process is complete, individuals who received confidential information must comply with all document destruction requirements in the confidentiality/non-disclosure/clean team agreements. Requiring bidders to destroy any independent internal analysis based on the confidential data and documents reduces the risk of future misuse of competitively sensitive information.

Wednesday, March 7, 2018

European Union Privacy Law


The European Union Privacy Law

In May 2018, U.S. companies must comply with the EU’s General Data Protection Regulation (GDPR). It applies to all companies who collect, process, and/or store the personal data of European citizens - even if the company is not located in the EU. Read:

The text itself:  http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32016R0679&from=FR


https://www.edoeb.admin.ch/edoeb/fr/home/documentation/bases-legales/Datenschutz%20-%20International/DSGVO.html (in French, official Federal Data Protection and Information Commissioner of Switzerland)

In French: brève formation gratuite online donnée par la FER Genève (peut se réaliser en env. 30 min.) :  https://medias.fer-ge.ch/FER/rgpd/#/?_k=flggk2

CNIL, Guide du sous-traitant - Edition septembre 2017 :

Exemple de clauses contractuelles de sous-traitance 

L’exemple de clauses de sous-traitance ci-dessous est proposé dans l’attente de l’adoption de clauses contractuelles types au sens de l’article 28.8 du règlement européen. Ces exemples de clauses peuvent être insérés dans vos contrats. Elles doivent adaptées et précisées selon la prestation de sous-traitance concernée. A noter qu’elles ne constituent pas, à elles seules, un contrat de sous-traitance :


Swiss – U.S. Privacy Shield FAQs:


Monday, March 5, 2018

U.S. Bank N.A. v. Village at Lakeridge, LLC, Docket No. 15-1509

Bankruptcy: Chapter 11: Reorganization: Cramdown plan: Clear error:

Chapter 11 of the Bankruptcy Code enables a debtor company to reorganize its business under a court-approved plan governing the distribution of assets to creditors. See 11 U. S. C. §1101 et seq. The plan divides claims against the debtor into discrete “classes” and specifies the “treatment” each class will receive. §1123; See §1122. Usually, a bankruptcy court may approve such a plan only if every affected class of creditors agrees to its terms. See §1129(a)(8). But in certain circumstances, the court may confirm what is known as a “cramdown” plan— that is, a plan impairing the interests of some non-consenting class. See §1129(b). Among the prerequisites for judicial approval of a cramdown plan is that another impaired class of creditors has consented to it. See §1129(a)(10). But crucially for this case, the consent of a creditor who is also an “insider” of the debtor does not count for that purpose. See ibid. (requiring “at least one” impaired class to have “accepted the plan, determined without including any acceptance of the plan by any insider”).

The Code enumerates certain insiders, but courts have added to that number. According to the Code’s definitional section, an insider of a corporate debtor “includes” any director, officer, or “person in control” of the entity. §§101(31)(B)(i)–(iii). Because of the word “includes” in that section, courts have long viewed its list of insiders as non-exhaustive. See §102(3) (stating as one of the Code’s “rules of construction” that “‘includes’ and ‘including’ are not limiting”); A. Resnick & H. Sommer, Collier on Bankruptcy ¶101.31, p. 101–142 (16th ed. 2016) (discussing cases). Accordingly, courts have devised tests for identifying other, so-called “non-statutory” insiders. The decisions are not entirely uniform, but many focus, in whole or in part, on whether a person’s “transaction of business with the debtor is not at arm’s length.” Ibid. (quoting In re U. S. Medical, Inc., 531 F. 3d 1272, 1280 (CA10 2008)).

(…) The Court of Appeals for the Ninth Circuit affirmed by a divided vote. According to the court, a creditor qualifies as a non-statutory insider if two conditions are met: “(1) the closeness of its relationship with the debtor is comparable to that of the enumerated insider classifications in the Code, and (2) the relevant transaction is negotiated at less than arm’s length.” In re Village at Lakeridge, LLC,814 F. 3d 993, 1001 (2016).

((…) This Court granted certiorari to decide a single question: Whether the Ninth Circuit was right to review for clear error (rather than de novo) the Bankruptcy Court’s determination that Rabkin does not qualify as a non-statutory insider because he purchased MBP’s claim in an arm’s length transaction).

(J. Sotomayor, with whom J. Kennedy, Thomas, and Gorsuch join, concurring: The Court’s discussion of the standard of review thus begs the question of what the appropriate test for deter­mining non-statutory insider status is. I do not seek to answer that question, as the Court expressly declined to grant certiorari on it. I have some concerns with the Ninth Circuit’s test, however, that would benefit from additional consideration by the lower courts).

Secondary authority: A. Resnick & H. Sommer, Collier on Bankruptcy ¶101.31, p. 101–142 (16th ed. 2016).

(U.S.S.C., March 5, 2018, U.S. Bank N.A. v. Village at Lakeridge, LLC, Docket No. 15-1509, J. Kagan, unanimous)

Procédure de faillite selon le Chapitre 11, cas dans lesquels le plan de répartition peut être imposé même en l'absence du support d'au moins un créancier sans lien avec l'entreprise ou ses organes de décision.

Usuellement, une cour fédérale des faillites ne peut approuver un tel plan que s'il est ratifié par toutes les classes de créanciers (cf. 11 U.S.C. §1129(a)(8)).

Ce n'est que dans certains cas que la cour peut imposer un plan à une classe de créanciers qui ne consentent pas (cf. §1129(b)). La première condition est qu'au moins une classe de créanciers (lésés par le plan) ait approuvé ledit plan. Le consentement d'un créancier qui est en même temps un "insider" n'est à cet égard pas compté.

La loi donne une définition exemplaire de l'"insider", que la jurisprudence a complété. A la notion de personne "qui contrôle l'entité" s'est ajoutée la notion de personne dont la transaction avec l'entreprise débitrice ne s'est pas faite dans un rapport d'égalité ("at arm's length"). Cependant, la Cour ne s'est pas occupée en l'espèce de l'adéquation de dite définition. Elle ne s'est occupée que de la question de savoir si l'autorité précédente, le 9è Circuit fédéral, avait appliqué un standard de révision correct de la décision de première instance (la cour fédérale des faillites). La Cour juge que le 9è Circuit a appliqué à juste titre le critère de la "clear error" et non le critère "de novo". S'agissant de la question, non résolue ici, de la définition de l'"insider", les Juges Sotomayor, Kennedy, Thomas et Gorsuch font part, dans une opinion concurrente, de leurs doutes s'agissant de la définition jurisprudentielle donnée à ce jour au terme "insider".

Texas v. New Mexico, On Exceptions To Report Of Special Master, Docket No. 141, Orig.

Compact clause: Congressional ratification: Original jurisdiction: Foreign affairs: Intervention (proc.):

Our analysis begins with the Constitution. Its Compact Clause provides that “no State shall, without the Con­sent of Congress, . . . enter into any Agreement or Com­pact with another State.” Art. I, §10, cl. 3. Congress’s approval serves to “prevent any compact or agreement between any two States, which might affect injuriously the interests of the others.” Florida v. Georgia, 17 How. 478, 494 (1855). It also ensures that the Legislature can “check any infringement of the rights of the national govern­ment.”  J. Story, Commentaries on the Constitution of the United States §1397, p. 272 (1833) (in subsequent editions, §1403). So, for example, if a proposed interstate agreement might lead to friction with a foreign country or injure the interests of another region of our own, Congress may withhold its approval. But once Congress gives its consent, a compact between States—like any other federal statute—becomes the law of the land. Texas v. New Mexico, 462 U. S. 554, 564 (1983).

Our role in compact cases differs from our role in ordi­nary litigation. The Constitution endows this Court with original jurisdiction over disputes between the States. See Art. III, §2. And this Court’s role in these cases is to serve “as a substitute for the diplomatic settlement of contro­versies between sovereigns and a possible resort to force.” Kansas v. Nebraska, 574 U. S. ___, ___ (2015) (slip op., at 6) (quoting North Dakota v. Minnesota, 263 U. S. 365, 372–373 (1923)). As a result, the Court may, “in this singular sphere, . . . ‘regulate and mould the process it uses in such a manner as in its judgment will best pro­mote the purposes of justice.’” 574 U. S., at ___–___ (slip op., at 6–7) (quoting Kentucky v. Dennison, 24 How. 66, 98 (1861)).

Using that special authority, we have sometimes per­mitted the federal government to participate in compact suits to defend “distinctively federal interests” that a normal litigant might not be permitted to pursue in tradi­tional litigation. Maryland v. Louisiana, 451 U. S. 725, 745, n. 21 (1981). At the same time, our permission should not be confused for license. Viewed from some sufficiently abstract level of generality, almost any com­pact between the States will touch on some concern of the national government—foreign affairs, interstate com­merce, taxing and spending. No doubt that is the very reason why the Constitution requires congressional ratifi­cation of state compacts. But just because Congress en­joys a special role in approving interstate agreements, it does not necessarily follow that the United States has blanket authority to intervene in cases concerning the construction of those agreements.

(U.S.S.C., March 5, 2018, Texas v. New Mexico, On Exceptions To Report Of Special Master, Docket No. 141, Orig., J. Gorsuch, unanimous)

Les accords entre états sont soumis à la ratification du Congrès fédéral (Cst féd. Art. I, §10, cl. 3). Le but étant d'éviter l'entrée en vigueur d'accords qui porteraient atteinte aux intérêts d'états tiers, du Gouvernement fédéral, ou de nature à provoquer des frictions avec un état étranger. Une fois l'approbation du Congrès donnée, l'accord acquiert force de droit fédéral.

Les litiges relatifs à ces accords sont à porter devant la Cour Suprême fédérale, qui fonctionne ici comme instance unique avec plein pouvoir d'examen.

Dans ces affaires, la Cour peut autoriser le Gouvernement fédéral à participer à la procédure pour défendre des intérêts fédéraux distincts.

Heller Ehrman LLP v. Davis Wright Tremaine LLP, S236208

Law partnerships: Partnership (dissolution): Property interest: Vested rights: Fees (contingency basis): Fees (hourly basis): Jewel Waiver: Chapter 11: Common law:

(…) Does a dissolved law firm retains a property interest in (…) legal matters (matters on an hourly basis) that are in progress –– but not completed –– at the time of dissolution?

(…) Under California law, a dissolved law firm has no property interest in legal matters handled on an hourly basis, and therefore, no property interest in the profits generated by its former partners’ work on hourly fee matters pending at the time of the firm’s dissolution. The partnership has no more than an expectation that it may continue to work on such matters, and that expectation may be dashed at any time by a client’s choice to remove its business. As such, the firm’s expectation — a mere possibility of unearned, prospective fees — cannot constitute a property interest. To the extent the law firm has a claim, its claim is limited to the work necessary for preserving legal matters so they can be transferred to new counsel of the client’s choice (or the client itself), effectuating such a transfer, or collecting on work done pretransfer.

Heller’s dissolution plan included a provision known as a Jewel waiver. Named after the case of Jewel v. Boxer (1984) 156 Cal.App.3d 171 (Jewel), the provision purported to waive any rights and claims Heller may have had “to seek payment of legal fees generated after the departure date of any lawyer or group of lawyers with respect to non-contingency/non-success fee matters only.” The waiver was intended as “an inducement to encourage Shareholders to move their clients to other law firms and to move Associates and Staff with them, the effect of which will be to reduce expenses to the Firm-in-Dissolution.” By its express terms, the waiver governed only those matters billed on a non-contingency –– that is continual, or hourly –– basis.

(…) In the meantime, Heller filed for bankruptcy under chapter 11 of the United States Bankruptcy Code. When Heller’s plan of liquidation was approved, the bankruptcy court appointed a plan administrator who became responsible for pursuing claims to recover assets for the benefit of Heller’s creditors.

(…) We granted the Ninth Circuit’s request that we resolve the question of what property interest, if any, a dissolved law firm has in the legal matters, and therefore the profits, of cases that are in progress but not completed at the time of dissolution.

(…) Our policy of encouraging labor mobility while minimizing firm instability. It accomplishes the former by making the pending matters, and those that work on them, attractive additions to new firms; it manages the latter by placing partners who depart after a firm’s dissolution at no disadvantage to those who leave earlier.

(…) In Osment v. McElrath (1886) 68 Cal. 466 and Little v. Caldwell (1894) 101 Cal. 553, we confronted situations in which law firms dissolved with contingency matters pending. In both cases, we held that the fees generated by one partner in completing the matters were to be shared equally with the former partner (or his estate). (Osment, supra, 68 Cal. at p. 470; Little, supra, 101 Cal. at p. 561.) We thus rejected the argument that the lawyers who personally completed the matters were entitled to a greater share of the fees than stipulated to in the partnership agreements.

California partnership law was codified in 1929 when the Legislature adopted the Uniform Partnership Act (UPA). The UPA preserved many common-law principles, including the rules elucidated in Osment and Little. (See Jacobson v. Wikholm (1946) 29 Cal.2d 24, 27–28 (Jacobson).) The First District Court of Appeal then added further gloss when it interpreted UPA in the case of Jewel v. Boxer, supra. In Jewel, partners of a dissolved law firm sued their former partners who had been handling “most of the active personal injury and workers’ compensation cases.” (Jewel, supra, 156 Cal.App.3d at p. 175.) The suing partners sought their shares of the fees from these cases, arguing that they were entitled to the same fees as prevailed during the partnership.

The Jewel court ruled in favor of the plaintiffs. It reasoned that the former partners were not entitled “to extra compensation for services rendered in completing unfinished business,” where “extra compensation” was compensation “which is greater than would have been received as the former partner’s share of the dissolved partnership.” (Jewel, supra, 156 Cal.App.3d at p. 176 & fn. 2.) Accordingly, without an agreement to the contrary, any attorney fees generated from matters pending when the law firm dissolved were “to be shared by the former partners according to their right to fees in the former partnership, regardless of which former partner provides legal services in the case after the dissolution.” (Id. at p. 174.)

Subsequent Court of Appeal decisions consistently applied Jewel’s holding to contingency fee cases. (See, e.g., Fox v. Abrams (1985) 163 Cal.App.3d 610, 612–613; Rosenfeld, Meyer & Susman v. Cohen (1987) 191 Cal.App.3d 1035, 1063.) Such widespread application of Jewel was confined to the contingency fee context, however. Only in 1993 did a Court of Appeal expressly interpret Jewel to encompass matters the dissolved law firm had been handling on an hourly basis. (See Rothman v. Dolin (1993) 20 Cal.App.4th 755, 757–759.) To this day, Rothman remains the only published California opinion to apply Jewel to the hourly fee context, and it did so before UPA was revised. Three years after Rothman, the Legislature again revised partnership law by replacing UPA with RUPA. (See Corp. Code, § 16100 et. seq.) RUPA made several changes to the default rules of California partnership law.

(…) Since the enactment of RUPA, no California court has, in a published opinion, resolved whether there remains a basis for holding that a partnership has a property interest in legal matters pending at a firm’s dissolution. The last time we took up the issue was in Osment and Little. More recent is the intermediate appellate decision in Jewel, although that, too, was issued before the passage of RUPA and implicated only contingency fee matters. We thus consider with fresh eyes the question posed to us by the Ninth Circuit.

(…) The circumstances giving rise to a property interest, in turn, include not only familiar arm’s-length transactions but also certain sufficiently reliable expectations, such as unvested retirement benefits. (E.g., In re Marriage of Green (2013) 56 Cal.4th 1130, 1140– 1141 [“Nonvested retirement benefits are certainly contingent on various events occurring — such as continued employment — but this does not prevent them from being a property right for these purposes.”].) In this case, we consider the question of whether a sufficiently strong expectation exists in the context of a law firm partnership performing hourly work on legal matters. We find that it does not. A property interest grounded in such an expectation requires a legitimate, objectively reasonable assurance rather than a mere unilaterally-held presumption (See Bd. of Regents v. Roth (1972) 408 U.S. 564, 577).

(…) (See, e.g., General Dynamics Corp. v. Superior Court (1994) 7 Cal.4th 1164, 1174–1175, 1172 (General Dynamics) [stating that it is “bedrock law” that a client has the right “to sever the professional relationship [with its attorney] at any time and for any reason,” although carving out a limited exception for in-house counsel whose relationship with the client is not a “ ‘one shot’ undertaking”].)

While Heller was a viable, ongoing business, it no doubt hoped to continue working on the unfinished hourly fee matters and expected to receive compensation for its future work. But such hopes were speculative, given the client’s right to terminate counsel at any time, with or without cause. As such, they do not amount to a property interest. (Civ. Code, § 700; In re Thelen LLP (2014) 20 N.E.3d 264, 270–271 [“no law firm has a property interest in future hourly legal fees because they are ‘too contingent in nature and speculative to create a present or future property interest’ ”].) Dissolution does not change that fact, as dissolving does not place a firm in the position to claim a property interest in work it has not performed — work that would not give rise to a property interest if the firm were still a going concern. A dissolved law firm therefore has no property interest in the fees or profits associated with unfinished hourly fee matters. The firm never owned such matters, and upon dissolution, cannot claim a property interest in the income streams that they generate. This is true even when it is the dissolved firm’s former partners who continue to work on these matters and earn the income — as is consistent with our partnership law.

So, with the exception of fees paid for work fitting the narrow category of winding up activities that a former partner might perform after a firm’s dissolution, a dissolved law firm’s property interest in hourly fee matters is limited to the right to be paid for the work it performs before dissolution. Consistent with our statutory partnership law, winding up includes only tasks necessary to preserve the hourly fee matters so that they can be transferred to new counsel of the client’s choice (or the client itself), to effectuate such a transfer, and to collect on the pretransfer work. Beyond this, the partnership’s interest, like the partnership itself, dissolves.

(Cal. S.C., March 5, 2018, Heller Ehrman LLP v. Davis Wright Tremaine LLP, S236208)

Une étude d'avocats est-elle titulaire, après sa dissolution, d'un "property interest" portant sur les affaires en cours (facturées selon un tarif horaire), et sur les honoraires qu'elles génèrent après dissolution ?

En droit californien, une étude d'avocats dissoute, en phase de liquidation, n'est pas titulaire d'un "property interest" s'agissant des affaires traitées à un tarif horaire. De la sorte, elle n'est pas non plus titulaire d'un tel intérêt sur les honoraires générés après dissolution, dans ces dossiers, par les anciens associés. Même avant dissolution, l'étude n'a que l'expectative de pouvoir continuer à travailler dans les affaires en cours, et cette expectative peut être contrariée en tout temps par le choix du client de résilier le mandat. Dite expectative ne saurait constituer un "property interest" : elle ne permet, après dissolution, que d'entreprendre contre rémunération le travail nécessaire au bon transfert du dossier et de procéder au recouvrement des honoraires dus avant le transfert.

Dans deux décisions anciennes, Osment v. McElrath (1886) 68 Cal. 466 et Little v. Caldwell (1894) 101 Cal. 553, la Cour Suprême de Californie a jugé que dans des dossiers rémunérés autrement que selon le système du tarif horaire, l'avocat qui continuait de traiter le dossier après dissolution de l'ancienne étude devait partager ses honoraires avec l'avocat (ou sa succession) qui le traitait avant dissolution. Les honoraires devaient ainsi être partagés comme si l'étude n'avait pas été dissoute, en conformité avec le contrat de collaboration des anciens associés de l'étude dissoute. Cela sauf accord contraire entre les anciens associés (cf. Jewel v. Boxer (1984) 156 Cal.App.3d 171 (Jewel)).

Le "partnership law" californien a été codifié en 1929, et a conservé de nombreux principes de la Common law, y compris les principes énoncés par les deux décisions précitées Osment et Little.

La décision Jewel a été reprise de manière réitérée par les cours d'appel, mais seulement dans le contexte d'honoraires calculés autrement que selon le tarif horaire. Une seule décision d'une seule cour d'appel a repris Jewel dans le cadre du tarif horaire (Rothman v. Dolin (1993) 20 Cal.App.4th 755, 757–759). Trois ans après Rothman, le législateur a révisé le droit du "partnership", remplaçant UPA par RUPA.

Depuis l'entrée en vigueur de ce nouveau droit, aucune décision publiée des cours de Californie n'a jugé si le droit révisé permettait de retenir l'existence d'un "property interest" en faveur d'une étude dissoute et portant, après dissolution, sur les affaires en cours et sur les honoraires générés après dissolution.

La Cour juge en l'espère qu'un "property interest" peut être reconnu si l'expectative du droit qui lui est lié est suffisamment solide. Tel est le cas par exemple d'un droit futur reconnu par un contrat bilatéral, ou de rentes de retraite dont les montants ne sont pas encore certains. Mais tel n'est pas le cas s'agissant d'honoraires d'avocats à verser selon un tarif horaire. Des honoraires futurs pour un travail qui n'a pas encore été accompli ne sont en rien acquis. Le client peut en effet résilier le mandat en tout temps, avec ou sans motif (est citée la fameuse décision Bd. of Regents v. Roth (1972) 408 U.S. 564, 577). Dès lors, une étude en dissolution n'est pas titulaire d'un "property interest" s'agissant des honoraires portant sur du travail effectué après dissolution. Elle n'était déjà pas titulaire d'un tel intérêt avant dissolution, et la dissolution ne change pas cet absence d'intérêt. Cela même si le travail après dissolution est entrepris par un ancien associé du "partnership" en dissolution. Le "partnership" en dissolution a tout de même droit au paiement de ses honoraires pour le travail, après dissolution, lié au transfert du dossier au nouveau conseil ou au client lui-même. Les honoraires liés au travail accompli avant la dissolution sont également dus.

Alvarado v. Dart Container Corp. of California, S232607

Labor law: Overtime work: Wage Orders: Manufacturing industry: Industrial Welfare Commission: Preemption (labor law):

California has a longstanding policy of discouraging employers from imposing overtime work. For nearly a century, this policy has been implemented through regulations, called wage orders, issued by the Industrial Welfare Commission (IWC). These wage orders are issued pursuant to an express delegation of legislative power, and they have the force of law. (See Martinez v. Combs (2010) 49 Cal.4th 35, 52–57 [setting forth a brief history of the IWC].) The IWC’s wage orders originally protected only women and children, but since the 1970s, they have applied to all employees, regardless of gender. (See Stats. 1973, ch. 1007, § 8, p. 2004; Stats. 1972, ch. 1122, § 13, p. 2156; see generally Industrial Welfare Com. v. Superior Court (1980) 27 Cal.3d 690, 700– 701.) The specific wage order applicable here is Wage Order No. 1, governing wages, hours, and working conditions in the manufacturing industry, but wage orders covering other industries contain analogous restrictions.

Traditionally, Wage Order No. 1 has required the payment of an overtime premium for, among other things, any work in excess of eight hours in a day. In 1998, the IWC modified several wage orders, including Wage Order No. 1, and by doing so it partially eliminated the eight-hour-day rule, thus permitting employers to offer flexible hours within a 40-hour workweek without having to pay an overtime premium. (See IWC Order No. 1-98 Regulating Wages, Hours, and Working Conditions in the Manufacturing Industry <https://www.dir.ca.gov/iwc/Wageorders1998/IWCArticle1.pdf> [as of March 5, 2018].) The Legislature responded swiftly by enacting the Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999, and the IWC’s wage orders were then modified again, this time to conform to the 1999 act. Thus, the obligation to pay an overtime premium is now found in both statutory law (see Lab. Code, § 510) and in the wage orders of the IWC. (See Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1026; Reynolds v. Bement (2005) 36 Cal.4th 1075, 1084.)

Subject to exceptions that are not relevant here, Wage Order No. 1 provides that an employer is obligated to pay an overtime premium for work in excess of eight hours in a day, 40 hours in a week, or for any work at all on a seventh consecutive day. (IWC Order No. 1-2001 Regulating Wages, Hours and Working Conditions in the Manufacturing Industry, subd. 3 <https://www.dir.ca.gov/iwc/IWCArticle1.pdf> [as of March 5, 2018] (IWC Wage Order No. 1-2001).) Such work must be compensated at 1.5 times the employee’s “regular rate of pay,” stepping up to double the “regular rate of pay” if the employee works in excess of 12 hours in a day or in excess of eight hours on a seventh consecutive working day. (Cal. Code Regs., tit. 8, § 11010, subd. 3(a)(1).)

As noted, Labor Code section 510 imposes similar requirements. Thus, for overtime work, an employee must receive a 50 percent premium on top of his or her regular rate of pay, and in some cases, the employee must receive a 100 percent premium.

These requirements are more protective of workers than federal law, which does not require premium pay for workdays in excess of eight hours. Moreover, it is well settled that federal law does not preempt state law in this area, and therefore state law is controlling to the extent it is more protective of workers than federal law. (See, e.g., Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 566–568 (Tidewater); see also Morillion v. Royal Packing Company (2000) 22 Cal.4th 575, 592; Skyline Homes, Inc. v. Department of Industrial Relations (1985) 165 Cal.App.3d 239, 250–251 (Skyline Homes).)

The DLSE is the state agency charged with enforcing California’s labor laws, including the IWC wage orders. (Lab. Code, §§ 21, 61, 95, 98 et seq., 1193.5.) Of course, enforcement of a law, especially an ambiguous law, necessarily requires interpretation of that law, and with the benefit of many years’ experience, the DLSE has developed numerous interpretations of California’s labor laws, which it has compiled in a series of policy manuals. (See Tidewater, supra, 14 Cal.4th at p. 562.) We explained in Tidewater that the DLSE’s policy manuals “reflect ‘an effort to organize . . . interpretive and enforcement policies’ of the agency and ‘achieve some measure of uniformity from one office to the next.’ The DLSE prepared its policy manuals internally, however, without input from affected employers, employees, or the public generally.” (Ibid.) The most recent version of the DLSE’s manual is published online. (See DLSE, The 2002 Update of the DLSE Enforcement Policies and Interpretations Manual (Revised) (April 2017) <http://www.dir.ca.gov/dlse/DLSEManual/dlse_enfcmanual.pdf> [as of March 5, 2018] (DLSE Manual).)

(…) In the main text, we refer to the state policy discouraging employers from imposing overtime work. We recognize, of course, that some employees desire overtime work, often because it is compensated at a premium rate. We do not intend our opinion to bar employees from choosing to work overtime when such opportunities are made available. Nonetheless, state policy clearly favors the eight-hour workday and the 40-hour workweek, doing so by requiring employers to pay premium wages for work in excess of those limits, thereby creating an incentive for employers to hire additional workers rather than to increase the hours of existing workers. In other words, the state’s policy is not focused solely on ensuring adequate compensation for workers; rather, it is also focused on making the eight-hour workday and the 40-hour workweek the norm, and making overtime work the exception. This point is reflected, for example, in the uncodified provisions of the Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999, which state: “The eight-hour workday is the mainstay of protection for California’s working people”; “numerous studies have linked long work hours to increased rates of accident and injury”; “family life suffers when either or both parents are kept away from home for an extended period of time on a daily basis”; and “the Legislature . . . reaffirms the state’s unwavering commitment to upholding the eight-hour workday as a fundamental protection for working people.” (Stats. 1999, ch. 134, § 2, p. 1820.)

(Cal. S.C., March 5, 2018, Alvarado v. Dart Container Corp. of California, S232607)

Le droit du travail californien et les heures supplémentaires. La politique officielle de l'état de Californie est de décourager l'imposition d'heures supplémentaires, sans toutefois empêcher l'employé qui le peut et le veut de travailler davantage. Cette politique est mise en œuvre depuis près d'un siècle par des décisions administratives ("Wage Orders") que rend l'"Industrial Welfare Commission". A l'origine, ces décisions ne protégeaient que les femmes et les enfants, mais depuis les années 1970, elles s'appliquent à tous les employés. La décision relevante en l'espèce est "Wage Order No. 1", qui traite des conditions de travail dans la "manufacturing industry".

Dite décision a été modifiée plusieurs fois : www.dir.ca.gov/iwc/Wageorders1998/IWCArticle1.pdf
Elle est en outre à lire en parallèle avec la loi elle-même (cf. Code du travail, §510).

Sauf exceptions qui ne s'appliquent pas ici, "Wage Order No. 1" dispose que l'employeur est tenu de payer un montant supplémentaire pour du travail qui excède 8 heures par jour, ou 40 heures par semaine, ou pour du travail accompli un septième jour consécutif aux 6 précédents : cf. IWC Wage Order No. 1-2001 www.dir.ca.gov/iwc/IWCArticle1.pdf

Ce travail supplémentaire doit ainsi être rémunéré à un taux de 1,5, qui passe à 2 si l'employé travaille plus de 12 heures dans une même journée ou s'il travaille plus de 8 heures pendant la septième journée consécutive (cf. Cal. Code Regs., tit. 8, § 11010, subd. 3(a)(1)).

Le droit fédéral du travail n'est pas autant à l'avantage de l'employé. Mais dans cette matière, le principe de préemption en faveur du droit fédéral ne s'applique pas.

En Californie, l'administration compétente s'agissant de la bonne application du droit du travail est la DLSE (Division of Labor Standards Enforcement : www.dir.ca.gov/dlse/). Elle a émis un manuel qui interprète ce droit, disponible ici : The 2002 Update of the DLSE Enforcement Policies and Interpretations Manual (Revised) (April 2017) : http://www.dir.ca.gov/dlse/DLSEManual/dlse_enfcmanual.pdf

Alvarado v. Dart Container Corp. of California, S232607

Retroactivity: Public policy: Administration of justice:

(…) At oral argument, defendant’s counsel urged that if we rule for plaintiff, our holding should be given prospective application only. We recently noted in Williams & Fickett v. County of Fresno (2017) 2 Cal.5th 1258, 1282, that fairness and public policy sometimes weigh against the general rule that judicial decisions apply retroactively. Prospective application might be appropriate, for example, “when a judicial decision changes a settled rule on which the parties below have relied.” (Ibid.) In this regard, the reasonableness of the parties’ reliance and the effect retroactivity will have on the administration of justice are key considerations. (Ibid.) (…) In short, defendant cannot claim reasonable reliance on settled law.

(Cal. S.C., March 5, 2018, Alvarado v. Dart Container Corp. of California, S232607)

La Cour n'acceptera de rendre un dispositif avec effet dans le futur plutôt qu'avec effet rétroactif que dans des circonstances restrictives. Le plus souvent, ces circonstances seront données si le Jugement consiste en un revirement de jurisprudence, mais pour autant que les parties se soient raisonnablement fiées à l'état de la jurisprudence jusqu'audit Jugement. L'intérêt public et l'administration de la justice sont également considérés.

Heller Ehrman LLP v. Davis Wright Tremaine LLP, S236208

Winding up: Dissolution: Partnership:

Winding up is “the process of completing all of the partnership’s uncompleted transactions, of reducing all assets to cash, and of distributing the proceeds, if any, to the partners.” (Gregory, The Law of Agency and Partnership (3d ed. 2001) § 227, p. 368.)

Under RUPA, “a person winding up a partnership’s business may preserve the partnership business or property as a going concern for a reasonable time, prosecute and defend actions and proceedings, whether civil, criminal, or administrative, settle and close the partnership’s business, dispose of and transfer the partnership’s property, discharge the partnership’s liabilities, distribute the assets of the partnership pursuant to Section 16807, settle disputes by mediation or arbitration, and perform other necessary acts.” (Corp. Code, § 16803, subd. (c).)

But, in case of a dissolved law firm: with the exception of fees paid for work fitting the narrow category of winding up activities that a former partner might perform after a firm’s dissolution, a dissolved law firm’s property interest in hourly fee matters is limited to the right to be paid for the work it performs before dissolution. Consistent with our statutory partnership law, winding up includes only tasks necessary to preserve the hourly fee matters so that they can be transferred to new counsel of the client’s choice (or the client itself), to effectuate such a transfer, and to collect on the pretransfer work. Beyond this, the partnership’s interest, like the partnership itself, dissolves.

(Cal. S.C., March 5, 2018, Heller Ehrman LLP v. Davis Wright Tremaine LLP, S236208)

Dissolution et liquidation d'un "partnership" : référence de doctrine en matière de liquidation. Application de Cal. Corp. Code, § 16803, subd. c) et 16807. Les opérations de liquidation d'une étude d'avocats sont substantiellement plus réduites que celles mentionnées par les références précitées. Elles ne concernent guère que les procédés liés au paiement des honoraires de l'associé qui s'occupe de la liquidation, ainsi que les procédés liés au recouvrement des honoraires dus avant dissolution, permettant la remise du dossier au nouveau conseil ou au client lui-même.

Heller Ehrman LLP v. Davis Wright Tremaine LLP, S236208

Noncompete agreement: Competition: Fiduciary duty: Law partnership: Partnerships: Attorney:

(…) This weighing of equities is evident in a case like Howard v. Babcock (1993) 6 Cal.4th 409, 412, where we deemed enforceable a law partnership’s noncompete agreement, which imposed a reasonable cost on departing partners who competed with the firm. In doing so, we sought “to achieve a balance between the interest of clients in having the attorney of choice, and the interest of law firms in a stable business environment.” (Id. at p. 425.)

(…) (Under our partnership law, partners cannot compete with their firm during the partnership, even for “the most remunerative cases.” (Jewel, 156 Cal.App.3d at p. 179; Corp. Code, § 16404, subd. (b)(3) [stipulating that partners have a fiduciary duty “to refrain from competing with the partnership in the conduct of the partnership business before the dissolution of the partnership”].) Our law also makes clear that the duty to refrain from competing with the partnership only pertains to the period before dissolution. (Corp. Code, § 16404, subd. (b)(3); Sen. Com. on Judiciary, Analysis of Assem. Bill 583 (1995-1996 Reg. Sess.) as amended June 5, 1996, p. 7 [indicating that “a partner is free to compete . . . upon dissolution” since “the duty not to compete only applies to the ‘conduct of the business’ and not to the ‘winding up’ ”].) This temporal limit, perhaps counterintuitively, readily advances the spirit of RUPA’s prohibition against competition during the life of the partnership. When partners know they may freely compete after a firm dissolves, they have less reason to compete during the life of the partnership.)

(Cal. S.C., March 5, 2018, Heller Ehrman LLP v. Davis Wright Tremaine LLP, S236208)

Sociétés de personnes, "partnerships", prohibition de concurrence : le droit californien prévoit que les associés ne peuvent pas faire concurrence à leur étude, cela pendant toute la durée du "partnership", considérant l'existence d'un devoir de fidélité. Dite prohibition prend fin avec la dissolution de l'étude. De la sorte, pendant la phase de liquidation, la concurrence est possible.

Cependant, les clauses de prohibition de concurrence entre associés, s'appliquant hors contexte de dissolution, peuvent être admises par la Cour, après analyse au cas par cas. L'analyse prend notamment en compte l'intérêt du client à choisir son avocat et l'intérêt de l'étude au maintien d'un environnement professionnel stable.