May 20, 2010

SNAP JUDGMENTS

John Palmer

Jurors jump back

With continuing high unemployment and people focused on keeping their jobs, courts are running into difficulties holding onto jurors more than a day or two, reports an article in the Los Angeles Times. In an action being heard in the Los Angeles County Superior Court, one juror's outburst emboldened other jury members to express disdain for the case and raised concerns about their ability to be fair, leading both parties to let the judge decide the outcome. Jury consultants and courtroom administrators note that more hardship claims are being made by potential jurors, especially by those involved with long cases. According to court statistics, more than a quarter of all qualified jurors were released on hardship grounds in 2009. "The economic situation has really put attorneys and judges in an awkward position of having to say to someone who is the sole wage earner in a family or someone who is self-employed and doesn't get paid when they don't work that they have to serve, and we have more and more of those," said Jaine E. Fraser, a psychologist and jury consultant. People on the edge tend to be more sympathetic with victims bringing suit, so excluding them from the jury on hardship grounds can disadvantage plaintiffs, Fraser said. However, she noted, it's also risky to force people into jury service that will cut into their paychecks.

A report card for E-Verify

E-Verify is failing to catch more than half the number of unauthorized workers it checks, a research company has found, reports the Associated Press. The online tool is used voluntarily by employers to help certify that employees are legally authorized to work in the United States by running a worker's information against Homeland Security and Social Security databases. According to Westat, a research company that evaluated the system for Homeland Security, the program wrongly clears illegal workers about 54 percent of the time. The good news is that legal workers were correctly identified 93 percent of the time. However, previous studies have not quantified how many immigrants were fooling the E-Verify system. Senator Charles E. Schumer of New York, who is writing the Democrats' immigration bill, said that E-Verify being inaccurate so often shows that it is an inadequate tool. "This is a wake-up call to anyone who thinks E-Verify is an effective remedy to stop the hiring of illegal immigrants," Schumer said. (More information on this topic appears in "The Administration's New Work Site Enforcement Initiatives: Focus on Employer Compliance Will Increase Audits and Investigations," by Elise Fialkowski, Business Law Today, January/February 2010, Volume 19, Number 3)

Copy machine covertness

Lawyers are familiar with uncovering e-mail and other electronically stored information under e-discovery, but what about information from copy machines? An article in Out-of-the-Box Lawyering (a legal blog found at www.outoftheboxlawyering.com) notes that today's copy machines and printers have a hard drive similar to those found in PCs and laptops. These machines automatically store on their hard drive any document that has been printed or copied. The fact that sensitive data may be stored on the machine's hard drive presents a series of issues, including discovery matters, as well as security concerns that could result in a data breach. The blog states, "Usually when several copies of a document are needed, the document is scanned just once and the copies are made from the file that has been saved on the hard disk. The data can be accessed by removing the hard drive from the printer or copy machine and connecting it to a PC or an erasure station. There are no existing standards which state how the data on these devices should be permanently removed. However the same measures must be practiced as when erasing computer hard drives." Ethics issues and discovery opportunities are also present regarding fax machines that retain digital versions of faxes having either been sent or received. According to Kim Komando, a columnist and radio host on technical issues, when retiring an old copier, the hard drive should always be removed in the owner's presence and handed over for disposal. (For a series of relevant articles, see the Business Law Today mini-theme on e-discovery, September/October 2007, Volume 17, Number 1.)

Asset-based lending on the rise

With the effects of the recession still being felt, more companies are returning to asset-based lending, reports an article in FINS.com. According to the Commercial Finance Association, an industry trade group, asset-based lending, excluding mortgages, grew by 8.3 percent to almost $600 billion in 2008. Preliminary surveys for 2009 show possible double-digit percent increases in lending for that year. At the same time, syndicated lending in 2009 plummeted 39 percent, according to Dealogic. Since asset-based lenders focus on collateral instead of creditworthiness, they do deals that traditional lenders may shy away from. In asset-based lending, equipment, inventory, accounts receivable, and other liquid assets are used to secure the loan.

M&A leading the way

A recent survey by Deloitte reports that companies in many industries will rely increasingly on M&A to help drive revenue growth and bottom-line performance. Fifty-two percent of executives responding to the survey expect M&A to add more than 5 percent to revenue growth on a compound annual basis over the next two to five years. Comparatively, average annual revenue growth of the S&P 500 was approximately 4 percent over the past 10 years. The executives feel that their corporate development teams will play a key role in contributing to the next growth phase, and, accordingly, corporate development has become critical to their overall success.

The organic police

An Associated Press article reports that the Agriculture Department, according to an internal department investigation, has failed to enforce penalties against some companies that falsely marketed foods as organic. A report by the agency's inspector general states that the agency needs to step up enforcement against businesses that sell products under the "USDA Organic" label but do not meet government standards required to do so. The report said that while the department has improved the integrity of the organic program in recent years, it needs to better handle complaints about potential violators. Further, the department failed to monitor some companies it had already identified as improperly marketing their products as organic. The report revealed that in some cases, it took up to 32 months for the department to issue an enforcement action while the companies continued to falsely market their products. The report also said the department was slow in processing complaints about the program and that agents who certified organic operations were not adhering to a consistent application of the rules. (More information on this topic appears in "Seeing Red over 'Green': The Fight over 'Organic,' 'Natural,' and 'Sustainable,'" by Ricardo Carvajal and Riëtte, Business Law Today, May/June 2009, Volume 18, Number 5.)

John Palmer