Wisconsin public employee collective bargaining statute amendments declared unconstitutional

A teachers’ union sought declarative and injunctive relief against the governor, claiming that statutory amendments dealing with municipal employees’ collective bargaining rights and payroll deductions of dues and pension contributions were unconstitutional.

The trial court declared the statute unconstitutional. Madison Teachers v. Walker (Wisconsin Circuit Ct 09/14/2012)

(1) Certain portions of the statute violated the free speech clauses of the Wisconsin and US constitutions. Although there is no constitutional right to collective bargaining, the statute imposes burdens on the speech and associational rights of employees represented by unions which burdens are not imposed on other employees. They cannot negotiate wage increases greater than the cost of living, they cannot pay dues by payroll deductions solely because the dues go to labor organizations. A ban on fair share agreements means that union members bear the cost of bargaining for non-members who receive the befits of bargaining. Requiring unions to be recertified annually burdens members with the full costs of the election.

(2) The trial court applied strict scrutiny to the equal protection claims because of the infringement on speech rights. The statute creates two classes of employees (represented and non-represented), and the defendants “offer no defense of the statute that would survive strict scrutiny.”

(3) Certain portions of the statute violated the Wisconsin constitution’s home rule amendment, violated the constitutional bar on impairment of contracts, and deprived employees of property without due process.

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Source: http://www.lawmemo.com/blog/2012/09/wisconsin_publi.html

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Sandusky’s Post-Sentence Motions Rejected, Setting Stage for Appeal

The judge who presided at convicted child molester Jerry Sandusky’s trial has rejected all of his post-sentence motions, ruling that the former Penn State assistant football coach was not prejudiced by the amount of time he had to prepare for trial and that the court properly charged the jury. The denial of a request for a new trial sets the stage for an expected appeal to the Pennsylvania Superior Court.

Source: http://www.law.com/jsp/law/sign_me_in.jsp?article=http://www.law.com/jsp/pa/PubArticlePA.jsp?id=1202586306349&rss=newswire

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Suffolk and the BITAHR Film Festival

Dean Seidman, a member of Suffolk Law’s faculty and an Associate Dean, discusses the law school’s support of the Boston Initiative to Advance Human Rights and its 2012 Film Festival. Learn more at bitahr.org and bitahrfilmforum.org.

Source: http://legaltalknetwork.com/podcasts/suffolk-law/2012/02/suffolk-and-the-bitahr-film-festival/

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SEC not liable for sleeping through Madoff fraud

The Ninth Circuit has dismissed a suit against the U.S. government for failing, through the SEC, to stop Bernard Madoff from bilking investors out of more than $60 billion. The panel upheld a lower court’s conclusion that it lacked jurisdiction to hear the claims, which attempted to assert a “discretionary function” exemption to the government’s waiver of sovereign immunity under the Federal Tort Claims Act.

Source: http://www.law.com/jsp/law/sign_me_in.jsp?article=http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202586331375&rss=newswire

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Domestic Drones and Privacy Law

On February 14, 2012, President Obama signed the Federal Aviation Administration Modernization and Reform Act into law. This Act requires the FAA to allow others to fly drones, including law enforcement agencies, private companies and even individual hobbyists, over American neighborhoods. Lawyer2Lawyer co-hosts and attorneys, Craig Williams and Bob Ambrogi, talk to the experts, Ryan Calo, Director for Privacy and Robotics, for the Center for Internet and Society at Stanford Law School and Jennifer Lynch, a staff attorney with the Electronic Frontier Foundation, about drones, transparency, public safety and the potential impact on privacy law.

Source: http://legaltalknetwork.com/podcasts/lawyer-2-lawyer/2012/05/domestic-drones-and-privacy-law/

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Student Loan Management for Lawyers

Stressed about your student loans from law school? On The Legal ToolKit, host Jared Correia, Law Practice Management Advisor with Mass. LOMAP, joins Heather Jarvis, student loan expert and former capital defense attorney, to discuss student loan management. Heather offers her insight on consolidation, Public Service Loan Forgiveness, Income Based Repayment and how lawyers can reduce, or better manage their payments.

Source: http://legaltalknetwork.com/podcasts/legal-toolkit/2012/01/student-loan-management-for-lawyers/

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Moscow court postpones posthumous hearing for Russia whistleblower

[JURIST] A Moscow court on Monday postponed the preliminary hearing for the posthumous trial of Russian whistleblower Sergei Magnitsky. Magnitsky’s defense lawyer was appointed by the court after his family and lawyers refused to attend the trial, claiming the charges against Magnitsky were politically motivated [Reuters report]. Magnitsky was jailed on tax evasion and fraud charges. He died while in jail in 2009, with relatives claiming that he did not receive adequate treatment for his poor health. Russian authorities maintain…

Source: http://jurist.org/paperchase/2013/01/moscow-court-postpones-posthumous-hearing-for-russia-whistleblower.php

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Delaware Has No Per Se Rule Against “Don’t Ask, Don’t Waive” Standstill Provisions, But Boards Must be Careful in Using Them

By John Stigi, John Tishler, and Edwin Astudillo

In In re Ancestry.com Inc. Shareholder Litigation, C.A. No. 7988-CS, Chancellor Strine of the Delaware Chancery Court held that Delaware has no per se rule against “don’t ask, don’t waive” standstill provisions, but cautioned that boards using “a powerful tool like that” need to deploy it consistent with their fiduciary duties. This decision comes less than three weeks after another Delaware judge (Vice Chancellor Laster) enjoined a target company from enforcing a “don’t ask, don’t waive” standstill provision in In re Complete Genomics, Inc. Shareholder Litigation, C.A. No. 7888-VCL.

“Don’t ask, don’t waive” standstill provisions prohibit the counterparty potential bidder from making a non-public request that the target company waive the terms of the standstill provision. They have become common in the public company auction process. Chancellor Strine’s ruling provided needed guidance to boards of public company targets, potential bidders and their respective advisors with respect to the use and enforceability of such standstill provisions. As a result, we believe public company targets will continue to negotiate for “don’t ask, don’t waive” standstill provisions as a tool designed to maximize shareholder value in a well-structured auction process.


On November 27, 2012, in Complete Genomics, Vice Chancellor Laster enjoined a target company from enforcing a “don’t ask, don’t waive” standstill provision and analogized it to a "no-talk" provision in a merger agreement, albeit that the standstill provision only applied to the bidder that was bound by it. The court noted that Delaware courts have deemed no-talk provisions impermissible because by agreeing to them a board would be violating its duty to take care to be informed of all material information reasonably available. Vice Chancellor Laster held that by agreeing to the “don’t ask, don’t waive” standstill — which prevented the board from knowing whether a bidder that did not win the auction is willing to offer a higher price despite its contractual agreement not to do so — the Complete Genomics board impermissibly limited its ability to discharge its ongoing statutory and fiduciary obligations to properly evaluate a competing offer, disclose material information and make a meaningful merger recommendation to its stockholders. The court issued an injunction even though there was no indication that the counterparty to the applicable standstill agreement intended to make a topping bid.

Commentators were concerned that Vice Chancellor Laster’s ruling in Complete Genomics, if broadly adopted, could affect the way public company auctions are conducted. Target companies often seek a “don’t ask, don’t waive” standstill to help run an orderly auction process where the bidders that are invited to participate in the process are incentivized to submit their highest bid prior to the seller signing and announcing the deal. If auction bidders read the court’s ruling as assuring themselves a last look, they could be incentivized to not put their full bid on the table or to stand back rather than bid against themselves.

What Happened?

Just three weeks later, on December 17, 2012, in Ancestry.com, Chancellor Strine recognized that “don’t ask, don’t waive” standstills may be properly used by sellers “as a gavel, to impress upon the people that it has brought into the process the fact that the process is meaningful; that if you’re creating an auction, there is really an end to the auction for those who participate. And therefore, you should bid your fullest because if you win, you have the confidence of knowing you actually won that auction at least against the other people in the process.” Chancellor Strine cautioned, however, that directors must “be darn careful” when using these types of standstills. His ruling highlighted that neither the CEO nor the board was informed about the potency of the provision, and he noted that it was not clear whether the banker was even aware of it. Chancellor Strine also stated that if “don’t ask, don’t waive” standstills are going to be used, stockholders need to be aware that there are a group of potential bidders who are contractually prohibited from submitting a topping bid. The court enjoined the Ancestry.com stockholder meeting until proper disclosure was made.

Now What?

In Ancestry.com, Chancellor Strine recognized the value-maximizing purpose of effectively employed “don’t ask, don’t waive” standstills in a well-structured auction process, but cautioned that there use will be subject to careful review. His ruling should give public company boards comfort that as long as they are well informed of the effect that “don’t ask, don’t waive” standstills have on potential bidders who are bound by them, and the directors believe that such standstills will help maximize value for stockholders, such standstills can be used.

From a disclosure perspective, if a “don’t ask, don’t waive” standstill provision is used, stockholders should be informed that although a bidder who did not participate in the auction process may submit a topping bid, stockholders should not assume that the potential bidders who did participate in the process and who are subject to the standstill will be able to do so.

What if you have questions?

For any questions or more information on these or any related matters, please contact any attorney in the firm’s corporate practice group. A list of such attorneys can be found by clicking the “ATTORNEYS” tab on the left-hand side of this page.

John P. Stigi III (310.228.3717; jstigi@sheppardmullin.com), John D. Tishler (858.720.8943, jtishler@sheppardmullin.com), and Edwin Astudillo (858.720.7468, eastudillo@sheppardmullin.com) participated in drafting this posting.


This update has been prepared by Sheppard, Mullin, Richter & Hampton LLP for informational purposes only and does not constitute advertising, a solicitation, or legal advice, is not promised or guaranteed to be correct or complete and may or may not reflect the most current legal developments. Sheppard, Mullin, Richter & Hampton LLP expressly disclaims all liability in respect to actions taken or not taken based on the contents of this update.

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US Senators unveil immigration reform plan

[JURIST] A group of eight senators from both parties released a framework [text, PDF] Monday of comprehensive immigration [JURIST backgrounder] reform legislation that they plan to introduce by March. The framework focuses on four “pillars” that the legislation will include: creating a path to citizenship for current unauthorized immigrants, contingent upon securing the borders; reforming the immigration system to ease the way for immigrants who will bolster the US economy or are a part of an existing US family and…

Source: http://jurist.org/paperchase/2013/01/us-senators-unveil-immigration-reform-plan.php

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Gone Clio with Attorney Michael J. P. Schewe

On this edition of Gone Clio, Clio co-founder Jack Newton talks with special guest, Attorney Michael J. P. Schewe of Schewe Law LLC. Michael talks about his passion for employment-related issues, the pros and cons of starting your own law firm, and how Clio makes him confident when a malpractice issue comes up.

Source: http://legaltalknetwork.com/podcasts/gone-clio/2012/08/gone-clio-with-attorney-michael-j-p-schewe/

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