Books


New York Business Litigation

By David Marriott

Add To Cart


New York Business Litigation, edited by David R. Marriott, brings together 15 preeminent attorneys as chapter authors in this brand new New York deskbook published by the New York Law Journal.

 

Each chapter is authoritative in its treatment of both black letter law in the text and supporting case or statutory authority in footnotes. Whether you are drafting pleadings, drafting legal memoranda for motions or marshalling evidence for trial, you will want to reference the collective expertise of these notable lawyer authors.

 

Chapters include:

Directors & Officers Liability, Partnership Liability,Oppressed Minority Shareholders, SEC Section 10(b) and Rule 10b 5, Antitrust, Restrictive Covenants, RICO and OCCA, Tortious Interference with Contract, Business Fraud, Unfair Competition, Privacy Protections, Employment Litigation, LLCs, Breach of Contract, Trade Secrets. The book is also issued in searchable e-pub format, viewable on a variety of tablets, and contains links to cases, statutes, and other authoritative content.

 


Your purchase today includes this title in EPUB format. The e-book is viewable on Apple iPad or iPhone, SONY Reader, Barnes & Noble NOOK®, Adobe® Digital Editions. The digital edition is in EPUB format, with hyperlinks to the full text of cases, statutes and other authoritative content. You will receive your e-book through email when payment has been received. For further information please call Maria Rosario at 973-642-0075 or email MRosario@alm.com


    Subscriptions to books are auto-renewed to avoid disruptions in service. Print editions must be returned within 30 days in resalable condition for refund. For downloadable eBook products, a refund will be granted if the eBook has not been downloaded.

  • Availability: Available
  • Brand: New York Law Journal Books
  • Product Type: Books
  • Edition: 0
  • ISBN: 978-1-57625-834-7
  • Pub#/SKU#: NYBUSLIT15
  • Pub Date: 11/20/2014

Chapters Authors Include: Gregory A. Markel, Cadwalader, Wickersham & Taft LLP; Paul Spagnoletti, Davis Polk & Wardwell, LLP; Robyn F. Tarnofsky, Paul, Weiss, Rifkind, Wharton & Garrison LLP; Jonathan K. Youngwood, Simpson, Thacher & Bartlett LLP; Karin A. DeMasi, Cravath, Swaine & Moore LLP; M. Alexander Bowie, II, Day Pitney LLP; Katya Jestin, Jenner & Block LLP; Teena-Ann Sankoorikal, Cravath, Swaine & Moore LLP; Mei Lin Kwan-Gett, Wilkie, Farr & Gallagher LLP; Peter Macdonald, Wilmer Hale; Randi W. Singer, Weil, Gotshal & Manges LLP; Howard Z. Robbins, Proskauer Rose LLP; William Wallace, Clifford Chance LLP; John S. Kiernan, Debevoise & Plimpton; Anthony Sammi, Skadden, Arps, Slate, Meagher & Flom LLP.

Author Image David R. Marriott is a partner in Cravath Swaine & Moore LLP's Litigation Department. His practice focuses on litigation, generally business litigation and litigation in the areas of intellectual property, securities and antitrust.

Chapters Authors Include: Gregory A. Markel, Cadwalader, Wickersham & Taft LLP; Paul Spagnoletti, Davis Polk & Wardwell, LLP; Robyn F. Tarnofsky, Paul, Weiss, Rifkind, Wharton & Garrison LLP; Jonathan K. Youngwood, Simpson, Thacher & Bartlett LLP; Karin A. DeMasi, Cravath, Swaine & Moore LLP; M. Alexander Bowie, II, Day Pitney LLP; Katya Jestin, Jenner & Block LLP; Teena-Ann Sankoorikal, Cravath, Swaine & Moore LLP; Mei Lin Kwan-Gett, Wilkie, Farr & Gallagher LLP; Peter Macdonald, Wilmer Hale; Randi W. Singer, Weil, Gotshal & Manges LLP; Howard Z. Robbins, Proskauer Rose LLP; William Wallace, Clifford Chance LLP; John S. Kiernan, Debevoise & Plimpton; Anthony Sammi, Skadden, Arps, Slate, Meagher & Flom LLP.

CHAPTER 1:.... Directors & Officers Liability
Gregory A. Markel, Cadwalader, Wickersham & Taft LLP

CHAPTER 2:.... Partnership Liability
Paul Spagnoletti, Davis Polk & Wardwell LLP

CHAPTER 3:.... Oppressed Minority Shareholders
Robyn F. Tarnofsky, Paul, Weiss, Rifkind, Wharton & Garrison LLP

CHAPTER 4:.... Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b 5
Jonathan K. Youngwood, Simpson, Thacher & Bartlett LLP

CHAPTER 5:.... Antitrust
Karin DeMasi, Cravath, Swaine & Moore LLP*

CHAPTER 6:.... Restrictive Covenants under New York Law
M. Alexander Bowie, II, Day Pitney LLP

CHAPTER 7:.... RICO and OCCA
Katya Jestin, Jenner & Block LLP

CHAPTER 8:.... Tortious Interference with Contract in New York
Teena-Ann Sankoorikal, Cravath, Swaine & Moore LLP

CHAPTER 9:.... Business Fraud
Mei Lin Kwan-Gett, Willkie Farr & Gallagher LLP

CHAPTER 10:.. The Lanham Act and Unfair Competition in New York
Peter Macdonald, WilmerHale

CHAPTER 11:.. Privacy Protections
Randi W. Singer, Weil, Gotshal & Manges LLP

CHAPTER 12:.. Employment Law Litigation
Howard Z. Robbins, Proskauer Rose LLP

CHAPTER 13:.. Limited Liability Companies
William Wallace, Clifford Chance LLP

CHAPTER 14:.. Breach of Contract
John S. Kiernan, Debevoise & Plimpton LLP

CHAPTER 15:.. Trade Secrets
P. Anthony Sammi, Skadden, Arps, Slate, Meagher & Flom LLP

Chapter 1: Directors & Officers Liability................................................. 1

1-1      Introduction............................................................................ 1

1-2      Duties of a Director or Officer.......................................... 1

1-2:1      General Obligations of Directors and Officers....................... 1

1-2:1.1     Duty of Care...................................................... 2

1-2:1.2     Duty of Loyalty.................................................. 3

1-2:2      Reliance on Reports by Experts and by Third
Parties and on Records..................................................... 3

1-2:3      The Business Judgment Rule............................................. 5

1-3      Types of Claims against Directors
and Officers............................................................................ 6

1-4      Direct Actions......................................................................... 7

1-5      Class Actions.......................................................................... 8

1-6      Shareholder Derivative Suits............................................. 9

1-6:1      Derivative Suits Defined.................................................... 10

1-6:2      Demand Futility............................................................... 13

1-6:3      Demand Refused............................................................. 15

1-6:4      Standing......................................................................... 17

1-6:5      Special Litigation Committees.......................................... 18

1-6:6      Derivative Versus Direct Actions....................................... 20

1-7      Breach of Fiduciary Duty.................................................... 22

1-8      Usurping Corporate Opportunities................................. 27

1-9      Purchase and Sale of Stock Based on
Inside Information................................................................. 30

1-10    Waste of Corporate Assets.............................................. 31

1-11    Corporate Liability for the Acts
of a Principal......................................................................... 32

1-12    Limitations on Liability Set Forth in the Certificate of Incorporation         33

1-13    Ratification............................................................................. 34

1-14    Indemnification...................................................................... 34

1-14:1    Indemnification of the Corporation..................................... 34

1-14:2    Indemnification of Directors and Officers............................ 35

1-15    Insurance............................................................................... 38

1-16    Criminal Liability of Persons Acting or Under a Duty to Act for Corporations   39

1-17    Director Conflicts of Interest......................................... 39

Chapter 2: Partnership Liability........................................................... 41

2-1      Introduction........................................................................... 41

2-2      New York Partnership Law................................................ 42

2-3      Liability Among Partners.................................................... 43

2-3:1      Fiduciary Duties.............................................................. 44

2-3:1.1     Duty of Loyalty................................................ 45

2-3:1.2     Duty of Good Faith........................................... 46

2-3:2      Partner’s Rights and Interest
in the Partnership............................................................ 46

2-3:3      Partnership Versus Personal Property............................... 47

2-3:4      Suits Among Partners..................................................... 49

2-3:5      Dissolution..................................................................... 51

2-3:6      Accounting..................................................................... 54

2-3:7      Appointment of a Receiver................................................ 55

2-3:8      Minority Partners............................................................. 56

2-3:9      Fiduciary Duty of Partners Upon Dissolution...................... 57

2-4      Liability to Third Parties...................................................... 58

2-4:1      Acts Which Bind the Partnership...................................... 58

2-4:2      Liability for Tortious Acts of Partners................................. 59

2-4:3      Liability for Breach of Contract.......................................... 61

2-4:4      Ratification..................................................................... 62

2-4:5      Proving the Existence of a Partnership.............................. 63

2-4:6      Partnership by Estoppel................................................... 65

2-4:7      New Partners.................................................................. 67

2-4:8      Withdrawing Partners...................................................... 68

2-4:9      Liability to Third Parties Upon Dissolution.......................... 68

2-5      Registered Limited Liability Partnerships....................... 70

2-5:1      Introduction and Governing Law........................................ 70

2-5:2      Partner Liability............................................................... 71

2-5:3      Eligibility Requirements................................................... 72

2-5:4      Formation....................................................................... 72

2-5:5      Post-Formation............................................................... 73

2-5:6      Registered Foreign Limited Liability Partnerships
(“RFLLPs”)...................................................................... 73

2-6      Limited Partnerships............................................................ 74

2-6:1      Introduction..................................................................... 74

2-6:2      Article 8 Limited Partnerships........................................... 75

2-6:2.1     Governing Law................................................. 75

2-6:2.2     Formation........................................................ 76

2-6:2.3     Rights and Liabilities of General
Partners.......................................................... 77

2-6:2.4     Rights and Liabilities of Limited
Partners.......................................................... 78

2-6:2.5     Serving as Both a General
and Limited Partner.......................................... 79

2-6:3      Article 8A Limited Partnerships........................................ 80

2-6:3.1     Governing Law................................................. 80

2-6:3.2     Major Changes to Prior Limited
Partnership Law............................................... 80

2-6:3.2a    Importance of the Partnership
Agreement Over the Certificate
of Limited Partnership....................... 81

2-6:3.2b    Extension of Business
Corporation Procedures
to Limited Partnerships..................... 82

2-6:3.2c    Clarification of Limited Partner
Liability to Third Parties..................... 82

2-6:3.2d    Flexibility in Creation
of Financial Structure........................ 83

2-6:3.2e    Merger and Consolidation.................. 84

2-6:3.2f     Clarification of Law
Governing Foreign
Limited Partnerships......................... 84

2-6:4      Derivative Actions............................................................ 84

2-6:5      Determining Partnership Property..................................... 85

2-6:5.1     Profits, Losses and Distributions....................... 85

2-6:5.2     Return of Contributions..................................... 85

2-6:5.3     Assignment of Partnership Interest.................... 86

2-6:6      Dissolution..................................................................... 86

2-6:6.1     Article 8.......................................................... 86

2-6:6.2     Article 8-A....................................................... 87

2-7      Joint Ventures....................................................................... 87

2-7:1      Introduction..................................................................... 87

 

 

2-7:2      Formation....................................................................... 88

2-7:3      Post-Formation............................................................... 88

Chapter 3: Oppressed Minority Shareholders...................................... 91

3-1      Introduction........................................................................... 91

3-2      Common Law Dissolution..................................................... 93

3-3      Statutory Conditions Precedent and Judicial Construction of BCL §§ 1104-a and 1118     95

3-3:1      Statutory Conditions Precedent........................................ 95

3-3:2      Illegal, Fraudulent, or Oppressive Conduct
Under BCL § 1104-a(1).................................................... 96

3-3:3      Looting, Wasting, or Diverting Corporate
Assets Under BCL § 1104-a(2)......................................... 99

3-3:4      Buy-Out Rights Under BCL § 1118.................................... 99

3-4      Remedies............................................................................... 101

3-4:1      Interim Remedies.......................................................... 101

3-4:2      Remedies in Common Law Dissolution
Actions......................................................................... 102

3-4:3      Remedies in Dissolution Actions Under
BCL § 1104-a................................................................ 102

3-4:3.1     Alternatives to Dissolution............................... 102

3-4:3.2     Dissolution.................................................... 103

3-5      Valuation of Shares.......................................................... 104

3-5:1      Valuation Assumptions.................................................. 105

3-5:2      Valuation Techniques..................................................... 105

3-5:2.1     Market Value................................................. 106

3-5:2.2     Net Asset Value............................................. 106

3-5:2.3     Investment Value............................................ 107

3-5:3      Marketability and Minority Discounts
and Interest................................................................... 108

3-5:3.1     Marketability Discounts.................................. 108

3-5:3.2     Minority Discounts and Acquisition Premiums.. 110

3-5:3.3     Interest.......................................................... 111

Chapter 4: Section 10(b) of the Securities Exchange
Act of 1934 and Rule 10b-5.............................................................. 113

4-1      Introduction......................................................................... 113

4-2      Elements of Rule 10b5 Generally:
Plaintiffs’ Prima Facie Case.............................................. 115

4-3      Private Right of Action under Rule 10b5...................... 117

4-4      Standing: Plaintiff Must Be Actual Purchaser or Seller of Securities     118

4-4:1      Exceptions to Purchaser/Seller Designation..................... 119

4-4:1.1     Suit for Injunctive Relief................................... 119

4-4:1.2     “Pledge Doctrine”........................................... 119

4-4:1.3     “Forced Seller” Doctrine.................................. 120

4-4:1.4     Right of Shareholders to Sue
Derivatively.................................................... 121

4-4:2      Relationship Required Between Plaintiff
and Defendant............................................................... 122

4-5      Element: Manipulative, Deceptive
or Fraudulent Conduct..................................................... 122

4-5:1      Misstatements.............................................................. 123

4-5:2      Nondisclosure and Omissions........................................ 124

4-5:3      Opinions, Forecasts, Predictions, or Projections.............. 127

4-5:4      Mismanagement or Breach of Fiduciary Duty................... 129

4-5:5      Market Manipulation...................................................... 130

4-5:6      Insider Trading and Release of Non-Public
Market Information......................................................... 134

4-6      Element: Materiality.......................................................... 137

4-7      Element: Scienter............................................................... 139

4-7:1      Actual Intent Evidenced through Motive
and Opportunity............................................................. 142

4-7:2      Strong Circumstantial Evidence of Conscious Misbehavior or Recklessness 145

4-8      Element: In Connection with the Purchase
or Sale.................................................................................. 149

4-9      Element: By Means of the Mails,
Interstate Commerce, or National
Securities Exchange........................................................... 151

4-10    Elements: Reliance and Causation.................................. 153

4-10:1    Proving Reliance............................................................ 154

4-10:1.1    Misrepresentation Claims................................ 155

4-10:1.2    Omission Claims: Rebuttable
Presumption of Reliance................................. 156

4-10:1.3    “Justifiable” or “Reasonable”
Reliance........................................................ 156

4-10:1.4    FraudontheMarket Theory.......................... 157

4-10:2    Proving Loss Causation.................................................. 158

4-10:2.1    “Reasonably Foreseeable” Requirement........... 159

4-11    Potential Persons Liable.................................................. 160

4-11:1    Must Have “Ultimate Authority” Over
Contents of Statement to Be “Maker”.............................. 160

4-11:2    Aiders and Abettors....................................................... 161

4-12    Practice and Procedure Considerations...................... 162

4-12:1    Statute of Limitations..................................................... 162

4-12:2    Jurisdiction and Venue................................................... 163

4-12:3    Proof Issues.................................................................. 164

4-13    Remedies............................................................................... 164

4-13:1    “Actual Damages,” i.e., “OutofPocket” Loss.................. 164

4-13:2    “BenefitoftheBargain”................................................ 165

4-13:3    Restitution and Rescission............................................. 166

4-13:4    Injunctive Relief............................................................. 166

4-13:4.1    Prejudgment Interest...................................... 166

4-13:5    Punitive Damages Unavailable........................................ 167

4-13:6    Multiple Defendant Issues.............................................. 168

4-14    Defenses, Plaintiff Does Not Establish
Prima-Facie Case.................................................................. 168

4-14:1    Misrepresentation or Omission: No “Fraud
by Hindsight”................................................................. 168

4-14:2    Misrepresentation or Ommission: No “Fraud
After the Fact”............................................................... 169

4-14:3    NonMateriality Defenses............................................... 170

4-14:3.1    “Truth on the Market”...................................... 170

4-14:3.2    “Bespeaks Caution”........................................ 171

4-14:4    Lack of Scienter Defenses.............................................. 172

4-14:4.1    Acted in Good Faith....................................... 172

4-14:4.2    Good Faith Reliance on Advice
of Counsel..................................................... 172

4-14:5    “In Connection With” Purchase or Sale
of Securities Defenses................................................... 173

4-14:5.1    Plaintiff Not the Actual Purchaser
(or Seller)...................................................... 173

4-14:5.2    Instrument Is Not a “Security”
as a Matter of Law.......................................... 174

4-14:6    Lack of Reliance Defenses............................................. 175

4-14:6.1    Plaintiff Knew of Misrepresentation
or Omission at Time of Purchase or Sale.......... 176

4-14:6.2    Plaintiff Failed to Exercise Due
Diligence....................................................... 176

4-14:6.3    Sophistication and/or Experience
of Plaintiff Precluded Reliance......................... 177

4-14:6.4    Written Warnings or Disclaimers..................... 178

4-14:7    Lack of Causation Defenses........................................... 178

4-14:7.1    Plaintiff Failed to Properly Mitigate Damages.... 179

4-15    Other Defenses................................................................... 180

4-15:1    Statute of Limitations..................................................... 180

4-15:2    Laches and Estoppel..................................................... 181

4-15:3    Waiver.......................................................................... 182

4-16    Related or Alternative Actions...................................... 183

4-16:1    Other Federal Actions.................................................... 183

4-16:1.1    Section 11 of the Securities Act
of 1933.......................................................... 183

4-16:1.2    Section 12(a)(2) of the Securities
Act of 1933.................................................... 186

4-16:1.3    Section 20(a) Controlling Person Liability
for Violations of Section 10(b)
or Rule 10b
5................................................ 187

4-16:1.4    Section 17(a) of the Securities
Act of 1933.................................................... 188

4-16:2    New York Statutory Schemes and Common
Law Causes of Action.................................................... 189

4-16:2.1    Relation to the Martin Act............................... 189

               4-16:2.1a  No Private Right of Action................ 190

4-16:2.1b  New York Attorney General
May Bring Action............................ 191

4-16:2.1c  Scienter and Reliance Not Required.. 191

4-16:2.2    Relation to New York Executive Law
§ 63(12)......................................................... 192

4-16:2.3    Relation to New York Common
Law Claims.................................................... 193

4-16:2.3a  Fraudulent Misrepresentation
and Fraudulent Concealment............ 193

4-16:2.3b  Negligent Misrepresentation............. 194

Chapter 5: Antitrust............................................................................ 197

5-1      Introduction......................................................................... 197

5-2      Statutory Overview........................................................... 198

5-2:1      Federal Law.................................................................. 198

5-2:2      The Donnelly Act........................................................... 200

5-3      Sherman Act......................................................................... 201

5-3:1      Sherman Act § 1........................................................... 201

5-3:1.1     Scope........................................................... 201

5-3:1.2     Concerted Action........................................... 202

5-3:1.2a    Parallel Conduct
and Oligopoly................................. 202

               5-3:1.2b    Pleading......................................... 203

5-3:1.3     Rule of Reason.............................................. 204

               5-3:1.3a    Rule of Reason Analysis.................. 204

               5-3:1.3b    Quick Look..................................... 206

5-3:1.4     Per Se Rule................................................... 206

5-3:1.5     FTAIA........................................................... 207

5-3:2      Sherman Act Section 2.................................................. 209

5-3:2.1     Monopolization............................................... 209

5-3:2.2     Monopoly Power............................................ 210

5-3:2.2a    Definition of the Relevant Market....... 210

5-3:2.2b    Indirect Evidence
of Monopoly Power.......................... 212

5-3:2.3     Exclusionary Conduct..................................... 215

               5-3:2.3a    Predatory Pricing............................ 217

               5-3:2.3b    Refusals to Deal............................. 218

               5-3:2.3c    Price Squeezes.............................. 219

               5-3:2.3d    Product Innovation........................... 221

               5-3:2.3e    Monopoly Leveraging....................... 222

5-3:2.3f     Standards-Setting
Organizations (SSOs)..................... 223

5-3:3      Attempted Monopolization.............................................. 224

5-3:3.1     Anticompetitive Conduct................................. 224

5-3:3.2     Specific Intent to Monopolize........................... 225

5-3:3.3     Dangerous Probability of Achieving Monopoly Power       225

5-3:3.4     Conspiracy to Monopolize............................... 226

5-3:3.5     Statute of Limitations...................................... 228

5-4      Clayton Act.......................................................................... 228

5-4:1      Section 3...................................................................... 229

5-4:1.1     Elements....................................................... 229

5-4:1.2     Tying Arrangements....................................... 229

5-4:1.2a    Intersection with Sherman
Act § 1........................................... 230

               5-4:1.2b    Evolution of Doctrine........................ 231

               5-4:1.2c    Market Power................................. 233

               5-4:1.2d    Aftermarket Goods.......................... 234

5-4:1.3     Exclusive Dealing........................................... 235

5-4:1.4     Group Boycotts/Refusals to Deal..................... 236

5-4:2      Section 4...................................................................... 236

5-4:2.1     Antitrust Standing.......................................... 237

5-4:3      Section 16.................................................................... 239

5-4:4      Section 7...................................................................... 240

5-4:4.1     Overview........................................................ 240

5-4:4.2     Jurisdiction and Standing ............................... 241

5-4:4.3     Horizontal Merger Guidelines........................... 242

5-4:4.4     Relevant Product and Geographic
Markets......................................................... 244

5-4:4.4a    Defining the Relevant
Product Market............................... 244

5-4:4.4b    Defining the Relevant
Geographic Market.......................... 246

5-4:5      Section 8...................................................................... 247

5-4:6      Statute of Limitations..................................................... 247

5-5      Federal Trade Commission Act........................................ 248

5-5:1      Introduction................................................................... 248

5-5:2      Unfair Methods of Competition........................................ 249

5-5:3      Unfair and Deceptive Trade Practices.............................. 250

5-5:4      Exemptions and Defenses.............................................. 250

5-5:5      Administrative Hearing Process...................................... 251

5-6      The Robinson-Patman Act.................................................. 252

5-6:1      Price Discrimination....................................................... 254

5-6:2      Affirmative Defenses...................................................... 257

5-6:3      Other Prohibitions Under the R-P Act.............................. 258

5-7      Donnelly Act........................................................................ 260

5-7:1      Basic Provisions of the Donnelly Act............................... 261

5-7:1.1     Concerted Action Requirement........................ 261

5-7:1.2     Monopolization and Attempted Monopolization.. 262

5-7:1.3     Price Discrimination....................................... 263

5-7:1.4     Horizontal and Vertical Agreements................. 263

5-7:1.5     Exemptions and Immunity from Liability........... 264

5-7:1.5a    Legislative and Judicial Exemptions.. 264

               5-7:1.5b    Witness Immunity........................... 264

5-7:1.6     Standing and Jurisdiction................................ 264

5-7:1.6a    Public and Private Rights
of Action........................................ 264

5-7:1.6b    No Extraterritorial
Application..................................... 265

5-7:2      Federal Preemption....................................................... 265

5-7:3      Penalties and Damages................................................. 266

5-7:4      Statutes of Limitations................................................... 267

5-8      Conclusion........................................................................... 267

Chapter 6: Restrictive Covenants Under New York Law..................... 269

6-1      Introduction......................................................................... 269

6-1:1      Definition...................................................................... 270

6-1:2      Types of Restrictive Covenants....................................... 271

6-1:2.1     Noncompete Covenants.................................. 271

6-1:2.2     Nondisclosure Covenants................................ 271

6-1:2.3     Nonsolicitation Covenants............................... 272

6-1:2.3a    Nonsolicitation
of Customers.................................. 272

6-1:2.3b    Nonsolicitation of Employees
of Former Employer......................... 272

6-1:2.4     Restrictions Placed on the Seller
of a Business................................................. 274

6-1:2.5     Invention Assignments.................................... 275

6-1:3      Purpose of Restrictive Covenants.................................... 275

6-1:3.1     Public Policy................................................. 275

6-2      Case Law Governing the Enforcement
of Restrictive Covenants................................................. 277

6-2:1      Absence of Statutory Law.............................................. 277

6-2:2      Court of Appeals Decisions Regarding
Reasonableness............................................................ 278

6-2:3      Expansion of the Reasonableness Factors...................... 278

6-3      Components of Reasonableness.................................... 279

6-3:1      Element 1: The Restrictive Covenant Must
be Necessary to Protect a Legitimate Interest
of the Employer............................................................. 280

6-3:1.1     Protecting Trade Secrets, Confidential Information, and Customer Lists    280

6-3:1.2     Limiting the Solicitation
of Customers................................................. 283

6-3:1.3     Limiting Competition from Former Employees with Unique or Extraordinary Services or Skills         285

6-3:2      Elements 2 and 3: Duration and Geographic Scope Must Be Proportional to Protected Interest          287

6-3:2.1     Duration........................................................ 287

6-3:2.2     Geographic Reach.......................................... 288

6-3:3      Element 4: The Restrictive Covenant
May Not Be Unreasonably Burdensome
to the Former Employee................................................. 289

6-3:3.1     The Restriction Cannot Be Unduly Harsh
or Oppressive to the Former Employee............. 289

6-3:3.2     Employee Choice Doctrine.............................. 290

6-3:3.2a    Employment Relationship
Ended by Employee........................ 290

6-3:3.2b    Employment Relationship
Ended by Employer......................... 290

6-3:4      Element 5: The Restrictive Covenant
Must Not Harm the General Public.................................. 291

6-3:5      Other Considerations in Evaluating
the Reasonableness of the Restrictive Covenant............... 292

6-3:5.1     Salary........................................................... 292

6-3:5.2     Consideration................................................. 292

6-4      Applicability to Specific Professions............................ 293

6-4:1      Health Care Professionals.............................................. 294

6-4:2      Salespersons................................................................ 295

6-4:3      Independent Contractors................................................ 296

6-4:4      Lawyers........................................................................ 296

6-5      Remedies for Violation of a Restrictive Covenant..... 297

6-5:1      Generally...................................................................... 297

6-5:2      Enforceability of Arbitration Agreements.......................... 297

6-5:3      Injunctive Relief............................................................. 298

6-5:3.1     Preliminary Injunctions.................................... 299

6-5:3.2     Permanent Injunctions.................................... 299

6-5:4      Damages...................................................................... 300

6-5:4.1     Calculation.................................................... 300

6-5:4.2     Liquidated Damages Clauses.......................... 300

6-5:5      Partial Enforcement....................................................... 301

6-6      Defenses to Enforcement................................................ 302

6-6:1      Statute of Limitations and Jurisdiction Issues................... 303

6-6:2      Waiver.......................................................................... 303

6-6:3      Lack of Consideration.................................................... 304

6-6:4      Unconscionability.......................................................... 304

6-6:5      Effect of Employee’s Involuntary Discharge
Under a Contract........................................................... 305

6-7      Other Issues Related to Restrictive Covenants......... 306

6-7:1      Tortious Interference...................................................... 306

6-7:2      Antitrust....................................................................... 306

Chapter 7: RICO and OCCA................................................................ 307

7-1      Introduction......................................................................... 307

7-2      RICO......................................................................................... 307

7-2:1      Overview....................................................................... 307

7-2:2      RICO Elements: 18 U.S.C. § 1962.................................. 309

7-2:2.1     Statutory Elements........................................ 309

7-2:2.2     Enterprise...................................................... 310

7-2:2.2a    Associated-in-Fact
Enterprises..................................... 312

7-2:2.2b    Enterprise-Defendant
Distinction...................................... 314

7-2:2.3     Conduct or Participate in the Affairs
of the Enterprise............................................. 316

7-2:2.4     Predicate Acts............................................... 318

7-2:2.5     Pattern of Predicate Acts................................ 321

               7-2:2.5a    Relatedness................................... 322

               7-2:2.5b    Continuity....................................... 323

7-2:3      Standing Under § 1964(c): The Civil RICO Claim............... 326

7-2:3.1     Overview........................................................ 326

7-2:3.2     “Clear and Definite” Damages
Requirement.................................................. 327

7-2:3.3     Substantive RICO Violations
and Causation................................................ 328

7-2:3.3a    Section 1962(a): Use or Investment of Income Derived from Racketeering Activity           328

7-2:3.3b    Section 1962(b): Acquisition or Maintenance of an Enterprise through a Pattern of
Racketeering Activity....................... 330

7-2:3.3c    Section 1962(c): Conduct or Participate in the Enterprise’s Affairs         330

7-2:3.3d    Section 1962(d): RICO Conspiracy... 330

7-2:3.4     Aiding and Abetting a RICO Violation............... 332

7-2:3.5     Extraterritorial Application of RICO................... 333

7-2:4      Criminal Penalties and Civil Remedies............................. 334

7-2:4.1     Criminal Penalties.......................................... 334

7-2:4.2     Civil Remedies............................................... 334

7-2:5      Jurisdiction and RICO Filing Prerequisites........................ 336

7-2:5.1     Personal Jurisdiction and Venue...................... 336

7-2:5.2     Judicial Filing Prerequisite............................... 337

7-2:5.3     Statute of Limitations...................................... 337

7-3      Enterprise Corruption: Article 460.00............................ 338

7-3:1      Overview....................................................................... 338

7-3:2      Elements of Enterprise Corruption................................... 341

7-3:3      Criminal Enterprise........................................................ 341

7-3:3.1     Criminal Enterprise: Common Purpose
of Engaging in Criminal Conduct...................... 342

7-3:3.2     Criminal Enterprise: Ascertainable
Structure Distinct From a Pattern
of Criminal Activity.......................................... 343

7-3:3.3     Criminal Enterprise: Continuity of Existence, Structure, and Criminal Purpose       345

7-3:3.4     Intent and Relationship to the Criminal Enterprise 347

7-3:4      Pattern of Criminal Activity............................................. 347

7-3:4.1     Timeliness..................................................... 348

7-3:4.2     Continuity...................................................... 348

7-3:4.3     Relatedness.................................................. 351

7-3:5      Predicate Crimes........................................................... 352

7-3:6      Defendant Must “Participate” in the Pattern
of Criminal Activity......................................................... 354

7-3:7      Specific OCCA Crimes: Operation; Investment; Acquisition 355

7-3:8      The Interests of Justice.................................................. 355

7-3:9      Criminal Punishment and Other OCCA Remedies............. 356

7-3:10    Additional Procedural and Jurisdictional Issues................ 358

7-3:10.1    OCCA Jurisdiction.......................................... 358

7-3:10.2    Who May Prosecute; Formal Requirements
to Bring an OCCA Action................................ 359

Chapter 8: Tortious Interference with Contract in New York.............. 361

8-1      Introduction......................................................................... 361

8-2      Elements of Tortious Interference
with Contract in New York............................................... 362

8-2:1      Valid Enforceable Contract Between Plaintiff
and Third Party.............................................................. 363

8-2:2      Defendant had Actual Knowledge of the Contract.............. 364

8-2:3      Defendant’s Intentional Conduct Caused the Third Party’s Breach of Contract Without Justification     365

8-2:3.1     Defendant’s Conduct Must Be More
Than Mere Negligence.................................... 366

8-2:3.2     Defendant Procured the Breach
Without Justification....................................... 366

8-2:3.3     Plaintiff Must Allege “But For” Causation.......... 368

8-2:4      Plaintiff Incurred Damages as a Result
of Third Party’s Breach................................................... 370

8-2:4.1     Injury and Time-Barred Claims......................... 370

8-3      Elements of Tortious Interference
with Economic Relations................................................... 371

8-3:1      Business Relationship with Third Party............................ 373

8-3:1.1     Specific Business Relationship........................ 373

8-3:1.2     Defendant’s Knowledge
of Relationship............................................... 373

8-3:2      Interference with Business Relationship........................... 374

8-3:3      Intended Purpose of Harming Plaintiff
or Use of Dishonest, Unfair, or
Improper Means............................................................ 374

8-3:3.1     Wrongful or Improper Means............................ 375

8-3:3.2     Intentional Harm to Plaintiff.............................. 376

8-3:4      Injury to Business Relationship Caused
by Interference.............................................................. 377

8-3:4.1     “But For” Causation........................................ 377

8-3:4.2     Injury............................................................. 377

8-4      Defenses to Tortious Interference
with Contract...................................................................... 378

8-4:1      Economic Interest Defense............................................. 379

8-4:1.1     Defendant Must Have a Concrete,
Pre-Existing Economic Interest....................... 379

8-4:1.2     Actions Taken to Protect Economic
Interest.......................................................... 380

8-4:1.3     Acted with Malice or Fraudulent
or Illegal Means.............................................. 380

8-4:1.4     Caselaw Finding Valid Economic
Interest Defense............................................. 381

8-4:2      Attorney-Client Relationships as a Defense...................... 381

8-5      Defenses to Tortious Interference
with Economic Relations................................................... 382

8-5:1      Defendant’s Status as Competitor: “Professional Persuasion” 382

8-5:2      Interference with Indefinite Term Contracts....................... 383

8-5:3      Interference with At-Will Employment
Contracts...................................................................... 383

8-6      Application in Caselaw...................................................... 384

8-6:1      Employment Contracts.................................................. 384

8-6:2      Real Estate Broker Prospective Contracts....................... 384

8-6:3      Mergers and Acquisitions............................................... 385

Chapter 9: Business Fraud................................................................. 387

9-1      Introduction......................................................................... 387

9-2      Fraud Claims Under Common Law.................................... 387

9-2:1      Common Law Fraud....................................................... 387

9-2:1.1     Scienter........................................................ 388

               9-2:1.1a    Knowledge..................................... 388

9-2:1.1b    Recklessness or Gross
Negligence..................................... 389

9-2:1.2     Reliance........................................................ 390

9-2:1.3     Statements of Future Performance
or Opinion...................................................... 390

9-2:1.4     Securities Fraud............................................. 391

9-2:2      Equitable Fraud............................................................. 392

9-2:3      Fraudulent Concealment................................................ 393

9-2:4      Constructive Fraud......................................................... 394

9-2:5      Negligent Misrepresentation........................................... 394

9-2:6      Aiding and Abetting....................................................... 396

9-2:7      Conspiracy................................................................... 397

9-3      Causation.............................................................................. 397

9-4      Burdens of Proof and Presumptions............................ 398

9-5      Damages and Remedies...................................................... 399

9-5:1      Choice of Legal or Equitable Remedies............................ 399

9-5:2      Legal Remedies............................................................ 400

9-5:2.1     Compensatory Damages................................. 400

9-5:2.2     Punitive Damages.......................................... 401

9-5:3      Third Party Remedies.................................................... 402

9-6      Defenses............................................................................... 402

9-6:1      Defending a Claim of Fraud............................................. 402

9-6:2      Asserting Fraud as an Affirmative Defense....................... 404

9-7      Pleading Requirements..................................................... 404

9-7:1      Must Plead Fraud with Particularity................................. 404

9-7:2      Statute of Limitations..................................................... 405

Chapter 10: The Lanham Act and Unfair Competition in New York.... 407

10-1    Introduction......................................................................... 407

10-2    Marks..................................................................................... 408

10-2:1    Trademark.................................................................... 408

10-2:1.1    Distinctiveness and Abercrombie factors.......... 409

               10-2:1.1a  Generic Marks................................ 410

               10-2:1.1b  Descriptive Marks........................... 411

               10-2:1.1c  Suggestive Marks........................... 412

               10-2:1.1d  Arbitrary/Fanciful Marks................... 412

10-2:2    Distinguishing Marks..................................................... 414

10-2:2.1    Generic vs. Descriptive................................... 415

               10-2:2.1a  Secondary Meaning........................ 416

10-2:2.2    Descriptive vs. Suggestive............................... 416

10-2:3    Service Mark................................................................. 417

10-2:4    Collective Mark.............................................................. 418

10-2:5    Certification Mark.......................................................... 418

10-3    Trade Dress......................................................................... 419

10-4    Trademark Protection/Infringement.............................. 420

10-4:1    Mark Ownership/Priority Rights....................................... 421

10-4:1.1    Defenses to Incontestability............................ 422

10-4:2    Infringement.................................................................. 422

10-4:2.1    Likelihood of Confusion Test............................ 423

               10-4:2.1a  Post-Sale Confusion........................ 424

               10-4:2.1b  Initial Interest Confusion................... 425

10-4:2.2    Use in Commerce and Online
Advertising..................................................... 426

10-4:3    Contributory Infringement................................................ 427

10-4:4    Losing Protections......................................................... 428

10-4:4.1    Cancellation................................................... 428

10-4:4.2    Abandonment................................................ 430

10-5    Cybersquatting................................................................... 431

10-6    Other Unfair Competition.................................................. 432

10-7    False Designation of Origin.............................................. 435

10-7:1    Passing Off/Palming Off................................................. 435

10-7:2    Trade Dress Infringement................................................ 436

10-7:2.1    Distinctiveness/Secondary Meaning................. 437

10-7:2.2    Likelihood of Confusion................................... 439

10-7:2.3    Functionality.................................................. 440

10-7:3    Color............................................................................ 441

10-7:4    False Advertising........................................................... 441

10-7:4.1    False or Misleading Statements...................... 442

10-7:4.2    Likely to Mislead or Deceive............................ 443

10-7:4.3    Materiality..................................................... 443

10-7:4.4    State Law Deceptive Acts and False Advertising 443

10-7:5    Dilution......................................................................... 444

10-7:5.1    Blurring......................................................... 445

10-7:5.2    Tarnishment................................................... 446

10-8    Defenses............................................................................... 446

10-8:1    Fair Use....................................................................... 446

10-8:2    Laches......................................................................... 447

10-8:3    Unclean Hands.............................................................. 448

10-8:4    Abandonment................................................................ 449

10-9    Damages/Remedies.............................................................. 449

10-9:1    Injunctions.................................................................... 449

10-9:2    Monetary Relief............................................................. 450

10-9:2.1    Attorney’s Fees............................................. 451

 

Chapter 11: Privacy Protections......................................................... 453

11-1    Introduction......................................................................... 453

11-1:1    History......................................................................... 454

11-1:2    Exclusive Statutory Right............................................... 455

11-1:3    New York Does Not Recognize Common
Law Privacy Rights........................................................ 456

11-2    Statutory Right of Privacy: Civil
Rights Law §§ 50-51............................................................... 456

11-2:1    Elements of Violation of Right of Privacy Claim................. 457

11-2:1.1    Use of Name, Portrait, Picture, or Voice........... 458

11-2:1.2    For Advertising or Trade Purposes................... 460

               11-2:1.2a  Advertising Purposes....................... 460

               11-2:1.2b  Purposes of Trade........................... 461

11-2:1.3    Without Written Permission............................ 461

11-2:1.4    Procedural Matters......................................... 462

               11-2:1.4a  Jurisdiction..................................... 462

               11-2:1.4b  Statute of Limitations...................... 463

               11-2:1.4c  Burden of Proof............................... 463

               11-2:1.4d  Standing........................................ 464

11-2:2    No Common Law Right of Publicity in New York............... 464

11-2:2.1    New York Civil Rights Law §§ 50-51................. 465

11-2:2.2    Limited to Name, Portrait, Picture
or Voice........................................................ 465

               11-2:2.2a  No Protection for Persona................ 465

11-2:2.2b  No Protection for Fictional Characters 465

11-2:2.2c  No Postmortem Right
of Publicity..................................... 465

11-2:2.3    False Endorsement Under Federal
Lanham Act................................................... 466

11-2:2.4    Nonprofit Organizations................................... 469

11-2:3    Defenses and Exceptions............................................... 470

11-2:3.1    Newsworthiness............................................. 470

               11-2:3.1a  Matter of Public Interest................... 471

               11-2:3.1b  Real Relationship............................ 472

11-2:3.2    Incidental Use................................................ 474

11-2:3.3    Artistic Use................................................... 475

11-2:3.4    Exempted Uses............................................. 475

11-2:4    Remedies..................................................................... 476

11-2:4.1    Injunction....................................................... 476

11-2:4.2    Actual Damages............................................ 476

11-2:4.3    Exemplary Damages...................................... 476

11-3    Data Privacy......................................................................... 477

11-3:1    Data Breach Notification................................................. 477

11-3:2    Protection of Social Security Numbers............................ 479

11-3:3    Use of Credit and Debit Cards......................................... 479

11-3:4    Internet Security and Privacy.......................................... 479

11-3:5    Recent Developments.................................................... 480

11-4    Other Specific Privacy Provisions................................. 480

11-4:1    Confidentiality of Personnel Records of Certain
Law Enforcement and Court Officers................................ 480

11-4:2    Prohibition on Disclosing Identity of Victims
of Sexual Offenses........................................................ 481

11-4:3    Prohibition on Disclosing Certain Medical
Records........................................................................ 481

11-4:4    Surveillance.................................................................. 482

11-4:4.1    Unlawful Surreptitious Surveillance................... 482

11-4:4.2    Wiretapping................................................... 483

11-4:4.3    Eavesdropping............................................... 483

11-4:5    Social Networks............................................................ 483

11-4:6    “Do Not Call” Registry.................................................... 484

Chapter 12: Employment Law Litigation............................................ 485

12-1    Introduction......................................................................... 485

12-2    The New York State Human Rights Law.......................... 486

12-2:1    Overview....................................................................... 486

12-2:2    Forms of Discrimination; Elements and Burdens
of Proof......................................................................... 487

12-2:2.1    Disparate Treatment....................................... 487

12-2:2.2    Disparate Impact............................................ 489

12-2:2.3    Discriminatory Harassment............................. 490

12-2:2.4    Retaliation..................................................... 491

12-2:2.5    Failure to Accommodate
Disabilities..................................................... 492

12-2:3    Enforcement................................................................. 493

12-2:3.1    Procedure...................................................... 493

12-2:3.2    Statute of Limitations...................................... 494

12-2:4    Remedies..................................................................... 494

12-2:4.1    Economic Damages....................................... 494

               12-2:4.1a  Back Pay....................................... 494

               12-2:4.1b  Front Pay....................................... 495

12-2:4.2    Compensatory Damages................................. 496

12-2:4.3    Equitable Remedies....................................... 497

12-2:4.4    Mitigation of Damages.................................... 498

12-2:4.5    Punitive Damages.......................................... 499

12-2:4.6    Attorney’s Fees............................................. 499

12-2:4.7    After-Acquired Evidence.................................. 499

12-2:5    Related Federal Laws.................................................... 500

12-2:5.1    Title VII of the Civil Rights Act
of 1964.......................................................... 500

12-2:5.2    Age Discrimination in Employment
Act............................................................... 501

12-2:5.3    Americans with Disabilities Act....................... 502

12-2:6    Related Local Laws....................................................... 503

12-2:6.1    New York City Human Rights Law................... 503

12-2:6.2    New York Correction Law................................ 504

12-3    Whistleblower Protection.............................................. 505

12-4    Protection of Lawful Political
or Recreational Activities................................................ 507

12-5    Employment Contracts..................................................... 508

12-5:1    Overview....................................................................... 508

12-5:2    Express Contracts......................................................... 508

12-5:3    Implied Contracts.......................................................... 510

12-5:3.1    Implied-in-Law Contracts................................. 510

12-5:3.2    Implied-in-Fact Contracts................................ 511

12-5:3.3    Oral Assurances............................................ 514

12-5:4    Employee Handbooks.................................................... 515

12-5:5    Implied Covenant of Good Faith and Fair
Dealing......................................................................... 516

12-5:6    Cause for Discharge...................................................... 517

12-5:7    Remedies..................................................................... 517

12-6    Tort Claims in the Employment Context......................... 518

12-6:1    Overview....................................................................... 518

12-6:2    Intentional Infliction of Emotional Distress........................ 519

12-6:3    Negligence.................................................................... 520

12-6:3.1    Negligent Misrepresentation............................ 520

12-6:3.2    Negligent Hiring.............................................. 521

12-6:3.3    Negligent Retention........................................ 522

12-6:3.4    Negligent Supervision..................................... 523

12-6:3.5    Negligent Training........................................... 523

12-6:3.6    Negligent Infliction of Emotional
Distress........................................................ 524

12-6:4    Tortious Interference with Contractual Relations................ 524

12-6:5    Fraudulent Inducement................................................... 525

12-6:6    Defamation................................................................... 525

12-7    Arbitration of Employment Claims................................. 527

Chapter 13: Limited Liability Companies........................................... 529

13-1    Introduction......................................................................... 529

13-1:1    History and Purpose of the Limited
Liability Company.......................................................... 529

13-1:1.1    The Doctrine of Limited Liability....................... 530

13-1:2    Management and Governance......................................... 531

13-2    Governing Law..................................................................... 531

13-2:1    The New York Limited Liability Company Law.................. 531

13-2:2    The Operating Agreement............................................... 531

13-2:3    Federal Common Law and Delaware LLC Law.................. 533

13-3    Member and Manager Liability......................................... 534

13-3:1    Fiduciary Duties of Managers......................................... 534

13-3:2    Fiduciary Duties of Promoters......................................... 535

13-3:3    Fiduciary Duties: Release of Liability............................... 535

13-3:4    Duty of Care and Loyalty................................................ 536

13-3:5    Derivative Actions.......................................................... 536

13-3:6    Member Right to Inspect Books and Records................... 538

13-3:7    Indemnification.............................................................. 539

13-3:8    Compulsory Capital Calls............................................... 540

13-3:9    Appointment and Removal of Managers........................... 540

13-3:10  Arbitration..................................................................... 541

13-3:11  Attorney-Client Privilege................................................. 542

13-4    Third Party Liability............................................................ 542

13-4:1    Liability of Members and Managers to Third
Parties......................................................................... 542

13-4:1.1    Liability for Participation in Torts Committed by the LLC  543

13-4:1.2    Liability for Improper Distributions.................... 543

13-4:1.3    Piercing the LLC Veil...................................... 544

13-5    Disassociation and Dissolution....................................... 545

13-5:1    Events Giving Rise to Claim for Dissolution...................... 545

13-5:1.1    Dissolution of the Unprofitable LLC................... 547

13-5:1.1a  Judicial Dissolution of the Unprofitable LLC     547

13-5:1.2    Judicial Dissolution When Continued Operation Is Impractical      548

13-5:1.3    Dissolution by Consent................................... 549

13-5:2    Member Expulsion......................................................... 549

13-5:3    Rights of Disassociated Member..................................... 549

13-5:4    Right to Equitable Liquidation and Accounting.................. 550

13-5:5    Rights to Recover Principal Investment............................ 550

13-5:6    Mergers........................................................................ 551

13-5:6.1    Freeze-Out Mergers and Appraisal
Rights........................................................... 551

13-6    Foreign LLCs......................................................................... 552

13-6:1    Application for Authority to Do Business
in New York.................................................................. 552

13-6:2    Doing Business Without a Certificate.............................. 553

13-6:3    Foreign Professional Service Limited Liability Companies.. 554

Chapter 14: Breach of Contract.......................................................... 557

14-1    Introduction......................................................................... 557

14-2    Elements of Contract Formation................................... 557

14-2:1    Offer and Acceptance.................................................... 558

14-2:1.1    Offer.............................................................. 558

14-2:1.2    Acceptance................................................... 559

14-2:2    Mutual Assent and Intent To Be Bound............................ 560

14-2:2.1    Definiteness................................................... 561

14-2:3    Consideration................................................................ 563

14-2:3.1    Valid Consideration........................................ 563

14-2:3.2    Lack of Consideration..................................... 563

14-3    Principles of Contract Interpretation......................... 564

14-3:1    Intent of the Parties....................................................... 564

14-3:2    Reasonable Expectations of the Parties.......................... 564

14-3:3    The Contract as a Whole................................................ 565

14-3:4    Ambiguous Contracts.................................................... 565

14-3:5    Parol Evidence Rule and Merger Clauses......................... 566

14-4    Challenges to the Enforcement
of a Contract...................................................................... 568

14-4:1    Unconscionability.......................................................... 568

14-4:2    Fraud........................................................................... 569

14-4:2.1    Fraud in the Inducement................................. 569

14-4:2.2    Fraud in the Factum....................................... 570

14-4:3    Mistake........................................................................ 571

14-4:3.1    Mutual Mistake.............................................. 571

14-4:3.2    Unilateral Mistake.......................................... 572

14-4:3.3    Mistake of Law............................................... 572

14-4:4    Economic Duress.......................................................... 572

14-5    Rescission and Reformation............................................ 573

14-5:1    Rescission.................................................................... 573

14-5:2    Reformation.................................................................. 574

14-5:3    Statute of Limitations..................................................... 575

14-5:4    Pleading Requirements.................................................. 576

14-6    Breach................................................................................... 576

14-6:1    Overview....................................................................... 576

14-6:2    Types of Breach............................................................ 576

14-6:2.1    Anticipatory Breach........................................ 576

14-6:2.2    Failure to Perform........................................... 577

14-6:2.3    Delay in Performance..................................... 577

14-6:2.4    Breach of the Implied Covenant
of Good Faith and Fair Dealing........................ 578

14-6:3    Statute of Limitations..................................................... 578

14-6:4    Standing....................................................................... 579

14-6:5    Waiver of Breach........................................................... 579

14-6:6    Excuses for Failure to Perform........................................ 580

14-6:6.1    Impossibility.................................................. 580

14-6:6.2    Frustration of Purpose.................................... 581

14-6:6.3    Force Majeure................................................ 581

14-6:6.4    Waiver........................................................... 581

14-6:6.5    Breach by Other Party.................................... 582

14-6:6.6    Failure of Condition Precedent......................... 583

14-7    Damages................................................................................ 583

14-7:1    Overview....................................................................... 583

14-7:2    Types of Damages......................................................... 584

14-7:2.1    Expectancy Damages.................................... 584

               14-7:2.1a  Overview......................................... 584

14-7:2.1b  General vs. Consequential Damages. 586

               14-7:2.1c  Lost Profits..................................... 587

14-7:2.2    Reliance Damages......................................... 589

14-7:2.3    Restitution Damages...................................... 590

14-7:2.4    Nominal Damages.......................................... 591

14-7:2.5    Punitive Damages.......................................... 591

14-7:2.6    Liquidated Damages....................................... 592

14-7:2.7    Quantum Meruit Damages............................... 593

14-7:3    Mitigation...................................................................... 594

14-7:4    Specific Performance as an Alternative
to Damages.................................................................. 594

14-7:5    Limitations on Liability................................................... 595

Chapter 15: Trade Secrets................................................................. 597

15-1    Introduction......................................................................... 597

15-2    Definition of a Trade Secret............................................ 598

15-2:1    No Universally Accepted Definition.................................. 598

15-2:1.1    The Six-Factor Restatement Test.................... 598

15-2:1.2    Secrecy Is Required....................................... 599

15-2:1.3    Retained Knowledge or
“Casual Memory”............................................ 601

15-2:1.4    Confidential Does Not Mean
Trade Secret.................................................. 602

15-2:1.5    Ephemeral Information Is Not
a Trade Secret............................................... 602

15-2:2    Commonly Asserted Trade Secrets................................. 603

15-2:2.1    Customer Lists.............................................. 603

15-2:2.2    Pricing and Costs Information.......................... 604

15-2:2.3    Compilation of Public Data.............................. 605

15-2:2.4    Software and Algorithms................................. 606

15-2:2.5    Business Methods, Plans and Strategic Information....... 608

15-3    Misappropriation of Trade Secrets............................... 608

15-3:1    Elements of Misappropriation.......................................... 608

15-3:1.1    Possession of Trade Secret............................ 609

15-3:1.2    Improper Use or Acquisition
of Trade Secret.............................................. 609

15-3:2    Specific Identification Required....................................... 610

15-3:3    Statute of Limitations..................................................... 611

15-3:3.1    Misappropriation as a Continuing
Tort............................................................... 612

15-3:4    Remedies..................................................................... 613

15-3:4.1    Preliminary Injunctive Relief............................. 615

               15-3:4.1a  Actual Misappropriation................... 616

15-3:4.1b  Doctrine of Inevitable
Disclosure...................................... 616

15-4    Protecting Trade Secrets During
Litigation............................................................................... 618

15-4:1    Confidentiality Orders..................................................... 618

15-4:2    In Camera Review and Sealing of Records....................... 619

15-5    Trade Secrets and New York’s Freedom
of Information Law............................................................. 619

15-5:1    FOIL Generally.............................................................. 619

15-5:2    Exemption from Disclosure............................................. 620

Table of Cases................................................................................... 623

Index................................................................................................. 743