The Machinery Law Blog

The Value of a Lawsuit Avoided

9/19/2017

All business development professionals stress that service providers must demonstrate the value of their services. That can be difficult in the legal profession. One of the most difficult concepts to demonstrate is the value of a lawsuit avoided. This is particularly true for the uninitiated, i.e., those who have been lucky enough never to have experienced one. Let me try to explain it.

In over 30 years, I have litigated just about every type of civil business dispute. As I have written elsewhere, companies should not avoid every dispute. Frivolous claims should be defended and substantial legitimate debts and claims should be pursued. Most disputes can be resolved without litigation, but sometimes litigation is the only option.

But I also serve as primary outside counsel for a number of small and medium-sized businesses. Many of these are machinery manufacturers or sellers. In the latter role, a main focus is trying to keep clients out of litigation. Although nothing is foolproof, the risk of litigation can be diminished by favorable (and clear) contracts, terms and conditions, and employee training. And it sure doesn't hurt to take care of customers and, for lack of a better way of putting it, to avoid doing stupid things.

As the economy has improved, it seems businesses are both taking greater risks and not paying attention to others. My perception is also that business people are plunging forward with less appreciation of the risks of litigation and without considering the value of a lawsuit avoided. This is not wise.

In considering the value of a lawsuit avoided, it is notable that the uninitiated invariably equate that the cost of a lawsuit with the cost of the legal fees spent to bring it or defend it. That is not correct, because legal fees are only part of the equation.

Lawsuits are disruptive, particularly for small and medium-sized businesses. Instead of spending their time on productive endeavors, management and employees will be involved in meeting with the lawyers, gathering documents, helping answer written discovery requests, sitting for depositions and perhaps attending court hearings. The result is often a loss of focus that may translate into decreased revenues.

In some instances, litigation leads to public relations problems, which may cause further distraction and loss of business. Many business owners and managers often overlook the stress of being involved in litigation, which can be substantial. Some people tolerate it well, others have sleepless nights. Litigation typically takes a long time. In most metropolitan areas, lawsuits will take well over a year to get to trial.

What should business owners do? As indicated, nothing is foolproof, but there are steps that should be taken to lessen the risk:

Document substantial business relationships with professionally drafted contracts. Contracts define and distribute risk. Depending on the nature of the contract, important risk distributing and limiting provisions may include warranties, indemnities, limitations of liability, and forum selection or arbitration clauses.
If it is not practical to have a contract for certain transactions, have professionally drafted terms and conditions. Terms and conditions can limit risks in somewhat the same manner as a contract.
Make sure you have an insurance program that is matched to your business risks. This is absolutely critical in the machinery business. It is a prudent practice to review insurance coverage at least once a year, as well as when entering a new line of business. Find an insurance professional who will take the time to understand your business.
Deal with business issues in a prompt and business-like manner. If you sell products and there is a valid warranty claim, take care of it. Although there are always difficult people out there, most people do not expect perfection in a business relationship. If there is a problem, most people will be satisfied if it is dealt with in a straight-forward and fair manner.
If you have situation that may lead to a claim, notify your lawyer and your insurance professional immediately. Your lawyer may be able to help avoid a claim, or at least make sure your company is best positioned to defend it. Insurance companies may deny coverage for late notice, and may be successful. The rules vary from state to state. It is best not to let notice even possibly become an issue.
As always, consult qualified professionals in your jurisdiction.

Note: A version of this article also appeared on my LinkedIn feed on the same date it was posted here.

Five Common Legal Mistakes

2/6/2016

Many machinery companies are small and medium-sized companies. Many are family owned. Many are leaders in innovation. This post covers five common legal mistakes that my firm often sees when we are asked to help small and medium-sized businesses. I first wrote this post a couple of weeks ago for LinkedIn. I hope it is useful to you.

1. Failure to have means of resolving intra-company disputes. People who genuinely like each other often go into business together. Hopefully, they have formed a corporation or limited liability company (LLC) to help protect their personal assets. Many times, however, the founders never consider what will happen if they later have a fundamental disagreement regarding the business, probably because they think it will never happen. To make matters worse, many people go into business on a "50/50" basis, which probably means there is no effective way to resolve disputes. There are many ways good lawyers can make sure that there is never an impasse while making sure the rights of the owners are protected, but it requires some planning before a dispute arises.

2. Failure to have an exit strategy. This is a variation of the first issue. When founders start a business, they rarely contemplate the possibility that one of them may wish to exit the business in the future. What if one owner wants to sell and the other does not? What if one owner wants to sell to someone who is incompatible with the other founder? Again, there are many ways these issues can be fairly addressed, but the issue should be considered before the issue arises.

3. Failure to protect intellectual property. Many new companies are successful because of a great idea: a new business model, new product, or new software. Unfortunately, many do not take simple steps to protect the most important thing they own (or think they own): their intellectual property (IP). The failure to have proper non-disclosure agreements, development agreements, employment agreements, and other basic protections can literally result in the loss of the company's "crown jewels." Note: Trying to protect IP without professional help is almost always a non-starter.

4. Failing to have proper terms and conditions of sale. Terms and conditions of sale should reflect the risk level a company wishes to assume in doing business. Unfortunately, many companies sell with no terms and conditions of sale, or with "home made" terms. Failing to have proper terms and conditions can result in making unintended warranties and assuming unintended liabilities. Having proper terms and conditions will not eliminate risk, but, in the event of a dispute, they often make the difference between winning and losing.

5. Signing the company's life away. Many small and medium-sized companies do business by signing whatever contract a larger company proposes. Needless to say, it is rare for a company to propose a fair and balanced contractual terms. On the contrary, "boilerplate" contracts are often draconian. Boilerplate contract terms often include unlimited indemnities (many not covered by insurance), lengthy warranties, a right to terminate for convenience with no recourse, and more. The key mistake is assuming that contractual terms are non-negotiable. Most of the time, they are. And, if the other party refuses to negotiate terms, consider whether it is worth pursuing the business in the first place. To quote an old mentor: "Some of the best deals are the ones we didn't make."

These five basic legal mistakes can be easily avoided. A more fundamental mistake is assuming the company cannot afford legal help to deal with these issues. There are very few certainties in the law or life in general, but one of the closest is that it always costs less to deal with these issues by proper planning than later in litigation. Cost is an issue, but it can usually be resolved in a frank up-front discussion with your lawyer.

Why Machinery Companies Should Consider Cyber Insurance

1/18/2016

Most machinery companies are small and medium-sized companies. As is the case with many such companies, many have probably overlooked cyber risks, with the thought being that hacking affects only large financial services companies, health care companies, and retailers. This would be a mistake. Surveys show that most hacks are on small and medium-sized companies and that the risk is growing.

Further, in today's world, everything is networked. Recent publications stress the risk of hacks to industrial control systems, automobiles, and even medical devices. If your company was a victim, would its insurance respond? To begin considering that question, here are my initial thoughts, provided by my post on the Policyholder Law Blog from last July.

Note, however, that cyber attacks on machinery companies raise additional issues, such as whether claims resulting in third-party bodily injury or death or property damage will be covered. Stay tuned for more information on those issues.

Here is the earlier post from the Policyholder Law Blog:

We live in a world where hack attacks and cyber breaches are common. In addition to the well-publicized Target and Sony breaches, the federal government just admitted it experienced a breach involving over 20 million individuals, and that included highly sensitive security clearance forms.

The risk is not limited, however, to large companies or the government. Almost every business relies on electronically-stored information in one way or another. But if your company experienced a data breach and was sued, your insurance would cover it, wouldn't it?

The short answer is "maybe, but maybe not." Commercial General Liability ("CGL") policies provide the most common liability coverage for businesses. Most CGL policies are written on forms written by the Insurance Services Office ("ISO"), an organization that prepares insurance policy forms for the insurance industry.

The CGL policy used to be called "comprehensive general liability" coverage, but that nomenclature changed in the 1980s. Today, CGL policies are neither that comprehensive nor that general. I have written about the ever-shrinking CGL policy on prior occasions.

In the realm of data breach risks, policyholders have had some luck--but hardly universal luck--in finding coverage under CGL policies. For example, some insureds have been able to recover under "Coverage B" for "personal and advertising injury," which is often defined to include the "offense" of “oral or written publication, in any manner, of material that violates a person’s right of privacy.” The results, however, have been far from uniform. The insurance companies tend to fight these claims hard, and sometimes they win.

More importantly, since 2001, ISO has repeatedly either modified the CGL coverage form or prepared endorsements for CGL policies designed to restrict or eliminate claims for data breaches. An endorsement is simply an amendment to a policy that can either expand or restrict coverage. When a policy contains such restrictive provisions, it becomes even harder to recover.

Unfortunately, my experience is that many businesses have no idea what their policies contain. They do not know, for example, whether their CGL policy, which they may have been faithfully renewing for many years, has been changed to limit coverage for cyber-related risks.

There is not all bad news. If an insured knows about the restrictions, it may be possible for a savvy agent or broker to eliminate restrictive endorsements. Many carriers now also offer stand-alone cyber coverage. ISO has also now promulgated forms for add-on cyber coverage.

This is still, however, an evolving area of insurance. The new policy forms differ greatly. It is difficult to compare offerings. There has also not been much experience with how carriers will, as a practical matter, handle claims. There are indications, however, that some carriers will take aggressive coverage positions even for these specially-designed products.

For now, policyholders will want to assess their risks, and review their coverage. They may want to consider discussing additional coverage options with a broker, and, if necessary, a coverage attorney.

Equipment Sales Contracts: The "Big Five"

11/18/2015

I have for many years represented companies--many of them international companies or their subsidiaries--in negotiating and drafting equipment sales contracts, also referred to as machinery supply contracts. The underlying sales typically involve complex transactions with large expenditures and performance over an extended period of time. Installation is often not completed until ten to twenty-four months after the contract is signed.

In most equipment supply contracts, both parties have a lot on the line. The buyer is making a substantial expenditure on equipment it plans to own and operate for many years--an estimated useful life of twenty-five years is not uncommon--and that it anticipates will increase its production and profitability. The seller is devoting substantial resources to the project, typically reserving space in its workshops and production facilities and potentially passing on other projects. Financially, one bad project for a seller can make a bad year. Further, because most sellers sell production equipment to a limited number of buyers, the seller's reputation is on the line even more so than in other transactions.

For these reasons, making sure the sales contract is both clear and fair to both parties is especially important. Although some inexperienced purchasing departments want to try to put all risks and responsibilities on the seller, that can be short-sighted. First, most supply contracts involve a team effort between the buyer and seller. For example, the buyer will typically be responsible for preparing the site, the foundations, the factory building, and will often be responsible--either directly or through a contractor--for supplying the labor for installation of the equipment. Second, because of the long expected life of production equipment, the buyer will in all probability need the seller's expertise on many occasions for repair, maintenance, and upgrade of the equipment. Simply stated, a mutually beneficial approach is almost always best.

With that background, and although equipment supply contracts often go on for many pages, the big issues in contracts always seem to boil down to the following, which I loosely refer to as the "Big Five." Although other issues will probably arise, the "Big Five" will for sure.

1. The Sales Price and Payment Security. These issues are largely business issues. International companies need to understand, however, that typical practices in Europe, for example, may not apply here. U.S. customers may resist providing a letter of credit or other payment security. There are other options for payment security, but they need to be thought through and understood before signing the contract.

2. Warranty Obligations and Remedies. Warranty obligations should be clearly stated, as should the remedies for warranty claims. From the seller's perspective, it is important to disclaim implied warranties. Failing to do so can result in unintended warranty obligations over a longer period of time than anticipated. Disclaimers should always be drafted by counsel. Remedies should also be clearly stated. If the intended remedy is for the seller to repair or replace defective components at its expense during the warranty period--typically a reasonable alternative--it should be specified.

Performance warranties--sometimes referred to as performance guarantees--require special attention. The warranted production criteria should be carefully specified, along with defined performance testing procedures. Remedies for the performance warranty should be carefully considered and negotiated.

3. Indemnity Obligations. Indemnity obligations are always demanded by buyers, but are seldom fully understood. Essentially, a party providing an indemnity is agreeing to "hold harmless" the other party from claims and demands. Certain indemnity provisions are reasonable, but many are not. Many corporate buyers seek what I refer to as "anything bad" indemnities. Such provisions seek to require the seller to indemnify the buyer if anything bad happens even if the seller is completely without fault. Indemnity obligations should be reasonable and should reflect the responsibilities assumed by the parties. As noted above, most equipment installations involve a mutual effort, so mutual responsibilities should normally apply. Ideally, indemnity obligations should be backed by insurance, which is to the benefit of both the buyer and seller. In most instances, it is possible negotiate a reasonable indemnity provision, but this should be left to experienced counsel.

4. Limitations of Liability. Limitations of liability come in a number of forms. In equipment sales, it is customary to exclude liability for incidental and consequential damages, including the buyer's lost profits. Liability caps are also common. These provisions are necessary for a simple reason: Machinery suppliers will not be able to stay in business for very long if they are potentially liable for underwriting their customers' profits.

5. Dispute Resolution. Many parties do not consider dispute resolution until the last minute, and dispute resolution provisions are thus often not carefully considered or negotiated. These provisions can be especially important for international companies. A international supplier will be understandably wary of the U.S. civil litigation system and may insist that all disputes be resolved by international arbitration under well-established rules (e.g., ICC, ICDR, AAA, JAMS or others). Domestic suppliers also need to pay attention to dispute resolution, and beware of provisions that, for example, require all disputes to be resolved in the customer's home court system.

Of course, many other issues may come into play in a complex equipment sale. However, the "Big Five" surely will. Sellers should carefully evaluate the Big Five and develop a risk profile that sets forth risks they are willing to assume, and, equally importantly, risks they are not willing to assume. Experienced counsel can assist in developing a risk profile. Once the risk profile is developed, sellers and their counsel need to stick to it during negotiations.

Written byJohn Watkins

Unintended Warranties with Unintended Consequences

6/23/2014

Most machinery companies and manufacturers think they understand their own warranty obligations based on their standard warranty language or policy. For example, a company may assume its warranty obligations are limited to repairing or replacing the machinery for a period of one year following installation because that is its standard warranty policy. Under such circumstances, a company's warranty may be limited to the warranty policy, but it also may not.

Business people tend to have a number of misconceptions about warranties, starting with the fundamental issue of what a warranty is. Business people tend to assume that a warranty is a piece of paper entitled "Limited Warranty," or a written contractual provision captioned "Limited Warranty."

The legal definition of "warranty," however, is not so limited. Under the Uniform Commercial Code ("UCC"), which has been adopted in almost every state, an express warranty can be created in a number of ways. Under UCC Section 313, an express warranty can be created by "any affirmation of fact or promise made by the seller which relates to the goods and becomes part of the basis of the bargain ..." or "any description of the goods which is made part of the basis for the bargain ..." or "any sample or model which is made part of the basis of the bargain ..." In each instance, the resulting warranty is that the goods will conform to the affirmation of fact, description, or sample. However, mere statements of opinion or commendation--sometimes referred to as "puffing"--do not create warranties.

What does this mean in the real world? It means that statements in sales literature, product descriptions, quotations, or sales analyses may create unintended warranties. This can be a particular problem when sales people use "consultative" selling techniques designed to identify and meet the customer's needs and solve the customer's problems. Complex machinery and equipment sales often involve consultative selling.

In addition to potential express warranties, the UCC also provides for the creation of implied warranties. Generally, the important implied warranties are the "implied warranty of merchantability" and the "implied warranty of fitness for a particular purpose." The implied warranty of merchantability, set forth in UCC Section 314, essentially provides that goods will conform the the contract description and are fit for the ordinary purposes for which the goods are used.

The implied warranty of fitness for a particular purpose is set forth in UCC Section 315: "Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, there is unless excluded or modified ... an implied warranty that the goods shall be fit for such purpose." Again, this creates potential issues for consultative selling.

A major potential problem with implied warranties is this: Implied warranties almost never come into play unless the customer has had a problem--or says it has had a problem--with the product. Using "20/20 hindsight," the customer's lawyer can try to mold the vague implied warranties to conform to the legal position that the lawyer is advocating.

There is, however, some good news. In commercial transactions, the UCC usually allows the parties to define their obligations by their contract. This typically includes the right to define warranty obligations, to disclaim implied warranties, and to limit remedies. However, the UCC provides particular standards for disclaiming and limiting implied warranties. Preparing the contract documents or terms and conditions should be left to a professional. Note that consumer goods may be subject to different rights and obligations.

Here are some warning signs that a machinery or equipment supplier may be assuming unintended warranty risks:

(1) The supplier sells by purchase order only without professionally prepared terms and conditions;

(2) The supplier routinely accepts or fails to object to the customer's terms and conditions;

(3) The supplier fails to document substantial orders in written contracts that define the warranty obligations, disclaim implied warranties, and provide for limited and exclusive remedies.

Nothing in this post is meant to suggest that suppliers should not stand behind their products. Customers expect and are entitled to receive a warranty on the products they purchase. However, those warranty rights should be carefully defined and understood by both parties, as should the seller's obligation in the event of a warranty claim.

A prudent supplier cannot anticipate remaining in business for the long run if it accepts unlimited--and unintended--warranty risks.

It goes without saying that the usual caveats to this post apply: (1) this post is for information only; (2) even though the UCC is widely adopted, it may be different in your state or may be interpreted differently; (3) your company's particular circumstances should always be considered; and (4) seek legal advice from an experienced lawyer in your jurisdiction.

Indemnity Clauses in Machinery Supply Contracts: The Basics

1/25/2014

One of the most misunderstood yet contentious provisions in negotiating machinery supply contracts is the indemnity clause. This post will cover some of the basic considerations, but please remember that each situation is different, and that legal review of any indemnity clause by an experienced attorney is important.

What Is an Indemnity Clause? An indemnity clause – also called a “hold harmless” provision -- is a contractual agreement that shifts risk or liability from one party to the other. In essence, when a party gives an indemnity, it agrees to be responsible for claims asserted against the other party. Indemnity provisions can be narrow -- limited to a very carefully defined set of claims -- or they can broadly apply to almost any claim. The most controversial indemnity provisions seek to require one party to assume responsibility for all claims of any type or nature relating to the performance of the contract, even if the liability resulted from the negligence or fault of the indemnified party.

Why Do Parties Demand Indemnity Provisions? Contracting parties seek indemnity provisions for many reasons, some completely legitimate, and some less so. When a customer purchases machinery that must be installed by the manufacturer at the customer’s plant, the customer wants to be sure that the manufacturer will exercise due care to avoid damage to persons or property while working at the plant, and will be responsible if the manufacturer's personnel are at fault in causing property damage or injuries. Few would dispute these are legitimate concerns.

Many companies, particularly large companies, try to use indemnity clauses as part of their overall risk management program. These companies may have increased the self-insured retentions (SIR) in their insurance policies to $1,000,000 or more to decrease their insurance premiums. (An SIR is roughly equivalent to a deductible). In such instances, a company may try to use indemnity clauses to try to cover the gap created by the SIR.

Companies looking to cover an SIR or simply trying to shift as much responsibility as possible will often demand extremely broad indemnity provisions. These provisions in essence seek to shift the risk to the manufacturer if anything bad happens relating to the equipment -- before, during or after installation -- regardless of whether the manufacturer is at fault. These indemnities even include claims resulting from the customer’s fault. These types of indemnities are controversial.

Because very broad indemnity provisions are controversial, many states have enacted anti-indemnity statutes. These statutes were often adopted at the request of the construction industry (particularly subcontractors). These statutes limit the enforcement of indemnity provisions that apply to claims resulting from the fault (sometimes only the sole negligence) of the party to be indemnified. These statutes vary substantially in their scope and application. Further, because they were adopted for the construction industry, they may not apply to the installation of machinery. In order to determine whether an anti-indemnity statute exists and applies, it is necessary to research the law of the state applicable to the contract.

Basic Considerations Regarding Indemnity Clauses. Relying on the possible application of an anti-indemnity statute to avoid an indemnity clause is probably not an optimal strategy. In most instances, negotiating a reasonable indemnity clause the manufacturer can live with is preferable. From the point of view of a machinery supplier, here are some of the basic considerations that apply to giving indemnity clauses to customers:

·       Indemnity clauses should apply to third-party claims. The proper scope of an indemnity is to provide protection against claims by third parties against the indemnified party. Risks and responsibilities of the contracting parties regarding performance can and should be addressed in other provisions specifying the parties’ respective scope of work, the manufacturer’s warranties, etc.

·       Indemnity clauses should not be open-ended. If possible, an indemnity provision should apply only to a particular part of the project – typically installation or other activities performed at the customer’s site – or should at least have a time limit.

·   Indemnity clauses should insurable and insured. If a manufacturer unfortunately has an indemnity claim, it wants that claim to be covered by its liability insurance. As a general matter, liability insurance applies to third party claims (see above) for bodily injury or property damage. Accordingly, indemnity clauses should be limited to such third party claims and should be fault based. Before agreeing to an indemnity clause, it is a good idea to run the contractual language by the manufacturer’s insurance agent or broker to confirm that insurance should apply in the event of a claim.

One of the best tips for negotiating an indemnity clause is to insist that the indemnity clause be mutual. A mutual indemnity clause could, for example, provide that each party will indemnify the other from third party claims for bodily injuries or property damage caused by the fault of the indemnifying party. Often, the other party’s view of what is fair and reasonable changes when they are also asked to provide indemnification.

One final note: Remember that when a manufacturer is negotiating an indemnity clause with a subcontractor or subsupplier, the manufacturer is acting as the customer. As such, the roles are reversed. However, a key concern should be making sure that the subcontractor’s obligations are backed by its liability insurance.

U.S. Supreme Court Limits Assertion of Extra-Territorial Claims in U.S. Courts

1/16/2014

Note: Due to the process of settling in to my new law firm and teaching a class at the University of Georgia Law School, I have not been able to keep up with this blog. I promise there will be a better effort in 2014! The following post is about a new U.S. Supreme Court case that limits the ability of U.S. courts to hear cases against machinery companies and manufacturers that involve allegations having no connection to the forum (the state in which the lawsuit is filed).

On January 14, 2014, the U.S. Supreme Court decided Daimler AG v. Bauman (Case No. 11-965). In Daimler, the Court held that Daimler AG could not be sued in federal court in California based on allegations that “Mercedes-Benz Argentina (MB Argentina), an Argentinian subsidiary of Daimler, collaborated with state security forces during Argentina’s 1976-1983 ‘Dirty War’ to kidnap, detain, torture, and kill certain MB Argentina workers, among them, plaintiffs or persons closely related to plaintiffs.” The plaintiffs sought to assert various federal and California law claims. The alleged wrongful acts -- which are simply charges in a lawsuit and not proven -- had no California connection and the plaintiffs were not California residents.

Nevertheless, the plaintiffs sought to maintain jurisdiction in California based on contacts that Mercedes-Benz USA, LLC (“MBUSA”) maintained in California. MBUSA is an indirect subsidiary of Daimler that purchases automobiles from Daimler in Germany, imports them, and then distributes them through independent dealerships throughout the U.S., including California. MBUSA’s sales in California were significant. MBUSA also maintained a number of facilities in California. Based on these allegations, a divided Ninth Circuit Court of Appeals previously ruled that the plaintiffs could maintain jurisdiction based on the theory that MBUSA was Daimler’s “agent.”

The Supreme Court disagreed. The Court explained that the due process clause of the U.S. Constitution permits courts to exercise jurisdiction only where maintenance of the suit does not offend traditional notions of fair play and substantial justice. Under the Court’s modern jurisprudence, this test further divides into cases involving “specific jurisdiction” or “general jurisdiction.” “Specific jurisdiction” involves cases where the defendant has continuous and systematic contacts with the forum, and the defendant’s activities gave rise to the liabilities involved in the suit. “General jurisdiction” involves cases where the defendant has regular and systematic connections with the forum that are so substantial that the defendant can be considered “at home” in the jurisdiction, and thus can be sued in the forum for all purposes, regardless of whether the suit involves activities of the defendant that gave rise to the litigation.

Daimler tested the limits of general jurisdiction. The Court first discussed whether MBUSA’s contacts could be imputed to Daimler. The Court expressed skepticism regarding the “agency” theory and rejected it as applied. The Court then held that, even if the MBUSA contacts were imputed to Daimler, the test for general jurisdiction would not be satisfied. Noting that general jurisdiction is normally predicated on a corporation’s state of incorporation or principle place of business, the Court explained that “the inquiry … is not whether a foreign corporation’s in-forum contacts can be said to be in some sense continuous and systematic, it is whether that corporation’s affiliations with the State are so continuous and systematic as to render [it] essentially at home in the forum State.” (internal quotations omitted). The Court ruled that the fact that MBUSA had substantial sales in California did not meet this test as applied to Daimler.

The Court also noted that considerations of international comity supported its conclusion. “Other nations do not share the uninhibited approach to personal jurisdiction advanced by the Court of Appeals in this case. … Considerations of international rapport thus reinforce our determination that subjecting Daimler to the general jurisdiction of courts in California would not accord with the ‘fair play and substantial justice’ due process demands.”

The impact of Daimler remains to be seen. Because the Court’s decision is based on the due process clause of the U.S. Constitution, it is binding precedent in in all U.S. courts, federal or state. Most cases, however, are based on the assertion of specific jurisdiction, in which the defendant’s activities have some relationship to the liabilities upon which the suit is based, such as selling a product to a resident of the forum state that causes an injury in the state. As the Court noted, jurisdiction in cases involving specific jurisdiction can be predicted on rather limited connections with the forum state. The impact of Daimler is thus most likely to be in cases in which the alleged liabilities have no relationship to the forum state, particularly when those claims are brought against international companies.

A New Chapter: Joining Thompson Hine LLP

5/25/2013

After spending nearly three years at Barnes & Thornburg's Atlanta office, I have begun a new chapter of my career and have joined the Atlanta office of Thompson Hine LLP as a partner. This is a very exciting and important change for me for two primary reasons.

First, the Atlanta office of Thompson Hine is managed by Russ Rogers. Russ is an old and dear friend who began his career in Atlanta working for me as an associate at Long Aldridge & Norman in the 1990s. Russ was the best lawyer I ever worked with, and we had a great deal of success as he rose through the ranks and made partner. Even after Russ made partner, we continued to work together when possible. After we both concluded several years ago that our careers were better served by joining other firms, we continued to collaborate. Russ and I had always hoped that we could end up practicing under the same roof again, and the stars finally aligned to make that possible.

Second, although a large part of my practice involves advising business clients (especially machinery and equipment companies, many of which are international companies) on sales contracts, non-disclosure agreements, insurance, risk management and other matters, I continue to concentrate on complex commercial litigation. I began my career as a litigator, and litigation, arbitration, mediation, and dispute resolution are mainstays in my practice. Thompson Hine's Atlanta office has over 15 lawyers who focus on litigation at many different experience levels. For the past several years, I have lacked support from senior associates and junior partners on litigation matters. It is important for clients (and for me) to have reliable back-up. Thompson Hine provides that.

This change should in no way be viewed as a knock on Barnes & Thornburg. It is a great firm, and it has been a great place to work. I have many friends at BT and hope to be able to work with them in the future. It simply boils down to a judgment that, at this point in my career, and given the mix of attorneys at the respective Atlanta offices, Thompson Hine is a better fit for me.

In terms of what I will be doing, the focus should be largely the same: Representing domestic and international companies in business matters, and also focusing on commercial litigation, arbitration, mediation and dispute resolution. My litigation practice will continue to involve disputes involving insurance coverage, trade secrets, municipalities, financial institutions, contracts, corporations, LLCs, shareholders, and other matters.

I do look forward to working with younger attorneys, and serving as a resource for them, while they serve as a resource for my clients and me. Over the years, many younger lawyers I have worked with have matured into really fine attorneys. Playing just a small part in their success is very rewarding. I really look forward to returning to being a teacher and mentor, which is exactly what I should be doing at this stage of my career.

My friend and partner from BT, Roy Hadley, is also joining Thompson Hine. Roy works with some of my clients, and I work with some of his. Roy will be a strong addition to Thompson Hine's corporate and technology teams, and will ensure that my business clients also have support and back-up.

In addition to Russ, I know many of the attorneys in the Thompson Hine office, and all of the people at the firm have been very supportive and welcoming. It already feels like home.

Strategic Considerations in Litigation

3/24/2013

My work with machinery companies involves efforts to help them stay out of litigation and arbitration. However, sometimes litigation is unavoidable.

I started practicing law many years ago as a litigator and continue to handle litigation and arbitration. Last week, Lexis/Nexis, the large legal publisher, published a white paper I wrote on strategic considerations in business litigation.

A copy of the white paper can be accessed on my firm's website through this link.

The Power of Saying "No"

2/1/2013

Machinery suppliers often face terms and conditions prepared by their customers that are totally one-sided and that are said to be non-negotiable. What to do? Do not overlook the power of saying "no."

Machinery sellers recognize that they are going to have to agree to terms that require them to stand behind their products, which will include a reasonable warranty and other provisions that provide the customer with assurance that the seller will perform and a reasonable remedy if the seller does not. That does not mean that a seller should agree to provisions that in effect require the seller to insure the customer against anything bad that may happen.

It is important for sellers to understand that terms and conditions are probably enforceable and that there are consequences and risks in accepting unreasonable terms. Sellers should thus establish limits regarding the amount of contractual risk they are willing to accept and then must be willing to stick to those limits.

If a customer insists on terms that contain unreasonable provisions, a seller has to be willing to say "no" and walk away from the transaction. Saying "no" does not have be be done in an unpleasant or combative manner. The seller should explain why the term is unacceptable and should also explain what alternative provision the seller is willing to accept.

Saying "no" does not always result in losing the transaction. Some customers will simply not believe you until you show you are willing to walk away, and will then come back to the table.

It is of course possible that a seller will lose some transactions. However, a transaction based on unreasonable terms from a customer unwilling to talk about them is probably not a good way to start a business relationship.

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