In Jinnaras v. Alfant, decided on May 5, 2016, the New York Court of Appeals rejected a proposed settlement of a shareholder class action, where the proposed settlement would have deprived out-of-state class members of a “cognizable property interest” by failing to provide a mechanism for class members residing
First Department Finds Forum Selection Clause in Earlier Agreement Valid Despite Later Agreement Providing for Arbitration
In a 3-2 split decision, a New York appellate court determined that a forum selection clause providing for litigation in New York courts had not been explicitly terminated and thus trumped agreements to submit to arbitration in London provided in later contracts that cancelled the previous one. Thus, the appellate panel for the First Department in New York reversed a lower court decision and directed the parties in Garthon Business, Inc., et al. v. Stein, et al., to proceed with their claims in court as opposed to arbitration in London.
The Most Overlooked Exception to Attorney-Client Privilege
In-house counsel often communicate with corporate management under the assumption that these communications are protected by the attorney-client privilege— absent some type of unusual and extraordinary circumstance, such as waiver of the privilege or the crime-fraud exception. A surprising number of both in-house and outside counsel, however, are unfamiliar with the longstanding “fiduciary exception” to the attorney-client privilege. Forty-five years ago, in Garner v. Wolfinbarger, the Fifth Circuit allowed the attorney-client privilege of a corporation to be pierced by the corporation’s shareholders upon a showing of “good cause.” While some courts have rejected this approach, a New York appellate court recently joined other courts, including the Delaware Supreme Court (see Wal-mart Stores, Inc. v. Indiana Electrical Workers Pension Trust Fund) in adopting it.
New York’s Appellate Division Reinstates Attorney General’s Statutory Fraud Claim Against “Trump University”
In State of New York v. Trump Entrepreneur Initiative LLC, New York’s Appellate Division recently denied a motion by Donald Trump’ organization to dismiss a fraud claim brought by the New York Attorney General (“AG”) under Executive Law § 63(12). Aside from the fame, or perhaps notoriety, of the respondents, Trump is noteworthy in two other respects. First, the Court’s interpretation of Executive Law § 63(12) suggests that it is easier for the AG to establish a violation of that law than a common law fraud claim (although the Court concluded that the two claims should be treated alike for statute of limitations purposes). Second, in reaching its conclusion, the Appellate Division flatly overruled one of its own decisions – an extreme rarity.