By Matthew C. Meiners

In Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund I, LLLP, the Delaware Court of Chancery held that in a merger under Delaware law, privilege over the absorbed corporation’s communications with its counsel, including those relating to acquisition by the surviving corporation, pass to the surviving corporation.

The case arose from a suit filed by Great Hill Equity Partners IV, LP, et al. (the “Buyer”), alleging that former shareholders and representatives of Plimus, Inc. (the “Seller”) fraudulently induced the Buyer to acquire Plimus, Inc. (“Plimus”). Plimus was the surviving corporation in the merger.

After the Buyer brought the suit, a full year after the merger, it notified the Seller that, among the files on the Plimus computer systems that the Buyer acquired in the merger, it had discovered certain communications between the Seller and Plimus’s then-legal counsel regarding the transaction. During that year, the Seller had done nothing to get these computer records back, and there was no evidence that the Seller took any steps to segregate these communications before the merger or excise them from the Plimus computer systems. Additionally, the merger agreement lacked any provision excluding pre-merger attorney-client communications from the assets of Plimus that were transferred to the Buyer. Nonetheless, the Seller asserted the attorney-client privilege over those communications on the ground that it, and not the surviving corporation, retained control of the attorney-client privilege that belonged to Plimus for communications regarding the negotiation of the merger agreement.


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By Matthew C. Meiners and Linda Perez Clark

The Supreme Court of Louisiana, in Ogea v. Merritt, 2013 WL 6439355 (La. 12/10/13), provided guidance regarding the personal liability of members of an LLC, reversing a lower court decision and finding a member of an LLC not personally liable for damages resulting from that member’s performance of a contract in the name of the LLC.

Travis Merritt, the sole member of Merritt Construction, LLC, signed a contract with Mary Ogea to build a home on an undeveloped parcel of land owned by Ms. Ogea. After problems with the foundation became apparent, Ms. Ogea filed suit against the LLC and against Mr. Merritt individually. Following trial, the district court rendered judgment against both Mr. Merritt, personally, and the LLC “in solido” for various items of damages. The district court found that Mr. Merritt personally performed some of the foundation work and failed to properly supervise the subcontractor who actually poured the concrete, providing grounds for Mr. Merritt’s personal liability. The court of appeal affirmed, but the Supreme Court then granted a writ to address the extent of the limitation of liability afforded to a member of an LLC.


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By David P. Curtis

Through House Bill 589 of the 2013 Regular Session, the Louisiana legislature amended article 966 of the Code of Civil Procedure, which, as of August 1, 2013, requires additional legwork by practitioners who seek to obtain a ruling or dismissal by summary judgment. The new rule requires the moving party to formally admit its evidence into the record for the purposes of that particular summary judgment motion. Thus, unlike in years past, the practitioner may no longer rely upon evidence “on file” in the record or evidence simply attached to the motion itself. Even under the 2012 amendments with similar language to HB589, at least one circuit recently held that the movant must formally admit its evidence in support of the motion at the hearing on the motion.

Article 966(B)(2) now states in pertinent part:

(2) The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions, together with the affidavits, if any, admitted for purposes of the motion for summary judgment, show that there is no genuine issue as to material fact, and that mover is entitled to judgment as a matter of law (underlined language is added by HB589).


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By J. Eric Lockridge and Benjamin M. Anderson

The U.S. Fifth Circuit Court of Appeals dealt a blow to secured creditors in a recent opinion affirming a successful “cramdown” reorganization plan in a commercial real estate (“CRE”) case. See In re Village at Camp Bowie I, L.P., — F.3d — (5th Cir. Feb. 26, 2013), 2013 WL 690497. The panel opinion in Bowie allowed a debtor in CRE bankruptcy case to intentionally delay paying trade debt that it had cash available to pay and to classify those trade creditors as “impaired” under Chapter 11 – thus giving a class of friendly creditors the ability to vote for the debtor’s plan of reorganization. The court expressly rejected the argument that “artificially impaired” creditors that a debtor could pay in full, like the trade creditors in Bowie, should not be allowed to vote on a Chapter 11 plan. The result in Bowie was a confirmed plan based on the vote of unsecured creditors owed $60,000 over the objection of the fully secured creditor owed $32 million.

In Bowie, the debtor financed the acquisition and development of land in Fort Worth (the “Property”) with equity capital and short-term promissory notes (the “Notes”). The Notes were secured by a first mortgage on the Property. The debtor’s development of offices and retail did not do as well as planned. After a series of modification agreements and forbearance agreements to extend the due dates for the Notes, the then-current holder of the Notes initiated foreclosure proceedings on the Property. The debtor filed its petition for relief under Chapter 11 of the Bankruptcy Code one day before the scheduled foreclosure sale, which stayed the foreclosure proceedings.
 


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By James R. "Sonny" Chastain

In its ruling of May 9, 2012, the Sixth Circuit Court of Appeals affirmed the district court’s conclusion that Maker’s Mark Distillery, Inc.’s registered trademark consisting of the signature red dripping wax seal is due protection. The Samuels Family founded the Maker’s Mark Distillery in Loretto, Kentucky, and has been producing whiskey since the Eighteenth Century. Bill Samuels formulated the recipe for the Maker’s Mark bourbon in 1953. His wife, Margie, conceived of the red dripping wax seal. The company has bottled bourbon for commercial sale under the Maker’s Mark name and has used a red dripping wax seal on the bottle since 1958. In 1985, Maker’s Mark registered a trademark for the dripping wax seal component of its trade dress which is described it as a “wax-like coating covering the cap of the bottle and trickling down the neck of the bottle in a freeform irregular pattern.”

In 1995, Jose Cuervo began producing premium tequila entitled “Reserva de la Familia.” The tequila bottle had a wax seal that was straight edged and did not feature drips. However, in 2001, Cuervo began selling its tequila in the United States in bottles with a red dripping wax seal similar to the seal of the Maker’s Mark bottle.
 


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By Esteban Herrera, Jr.

The March 22, 2012 Report and Recommendation from a federal magistrate judge in the case of Star Direct Telecom, Inc. v. Global Crossing Bandwidth, Inc., 2012 WL 1067664 (W.D.N.Y.) is a good reminder to everyone about taking evidence preservation obligations seriously.  In the case, the magistrate judge recommended that the plaintiff’s motion

By Amanda Stephens

Alternative Dispute Resolutions (“ADR”), such as arbitration or mediation, have become popular methods for settling disputes among parties today. Entities and individuals are more frequently choosing to forego the process of the traditional court system for the resolution of disputes by entering into agreements containing arbitration provisions. Arbitration is a method of

By Esteban Herrera, Jr.

In the e-discovery world, you need to be ready to make your case for using your proposed keyword search terms.

In the case of Custom Hardware Engineering & Consulting, Inc. v. Dowell, 2012 WL 10496, a dispute between the parties as to what search terms were to be used by the