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Legal Report


Corruption. The Delaware Supreme Court has upheld a lower court ruling ordering Wal-Mart Stores Inc. to share documents related to its internal probe of Mexican bribery allegations with a shareholder.

IBEW is a retirement system that pro­vides benefits to electrical workers in Indiana and is a stockholder of Wal-Mart, which has a subsidiary named Wal-Mart de Mexico (WalMex) in which Wal-Mart owns a controlling interest. In April 2012, The New York Times ran an article titled "Vast Mexico Bribery Case Hushed Up by Wal-Mart After Top-Level Struggle," which described a scheme of illegal bribery payments made to Mexican officials at the direction of then-WalMex CEO Ed­u­ardo Castro-Wright between 2002 and 2005. The Times article also said that Wal-Mart executives were aware of the conduct by September 21, 2005, and suggested that Wal-Mart's responses were deficient.

On June 6, 2012, IBEW sent Wal-Mart a letter asking to inspect a wide range of documents related to the bribery allegations described in the article. IBEW wanted to review the documents to inves­tigate mismanagement in connection with the Times' allegations, to determine whether a cover-up took place, and to ascertain what details were shared with the Wal-Mart board of directors.

Seven days later, Wal-Mart responded to the letter and made minutes, agendas, and presentations available to the IBEW board, including its existing policies related to its Foreign Corrupt Practices Act (FCPA) compliance. Most of these documents, however, were highly redacted without any explanation. Wal-Mart also declined to provide documents that it determined were not necessary and essential to IBEW's request along with documents that were protected by attorney-client privilege and the work-product doctrine.

In August 2013, IBEW filed a complaint in Delaware's Court of Chancery, alleging deficiencies with Wal-Mart's confidentiality designations and redactions in the documents it produced. IBEW also claimed that certain documents within the scope of its request were not produced. Later that month, Wal-Mart shared additional documents with IBEW, which included less redacted materials and reasons for the redactions that remained.

Included in those documents were depositions of Wal-Mart records custodians. These depositions referenced documents that IBEW believed should have been disclosed but weren't, such as memos written by a current senior officer. When IBEW requested them, Wal-Mart moved for a protective order to prevent sharing them, alleging that the deposition notices encompassed "virtually every document that might relate in any way to the WalMex allegations."

In a hearing, the Court of Chancery granted the protective order and restricted the scope of the depositions. Wal-Mart was then required to review documents, locate any additional materials, interview current and former employees, and then provide IBEW with more information and an updated privilege log. However, IBEW said that Wal-Mart didn't comply with the court's ruling, and the parties went to trial.

IBEW won the case and Wal-Mart appealed the verdict. The case was taken up by Delaware's Supreme Court, which upheld the chancery ruling requiring Wal-Mart to produce additional documents, including ones whose content is privileged or protected by the work-product doctrine. Citing a previous case, the court ruled that stockholders of a corporation can "invade" its attorney-client privilege to "prove fiduciary breaches by those in control of the corporation" by showing good cause. (Wal-Mart Stores, Inc., v. Indiana Electrical Workers Pension Trust Fund IBEW, Supreme Court of Delaware, No. 614, 2014)

Firearms. A federal judge has struck down the Washington, D.C., law that prohibits individuals from carrying handguns in public for self-defense. Citing a U.S. Supreme Court ruling that struck down the district's firearms ban in 2010, the judge wrote that there is "no longer any basis on which this court can conclude that the District of Columbia's total ban on the public carrying of ready-to-use handguns outside the home is constitutional under any level of scrutiny."

In the district, by statute, individuals are not allowed to carry—openly or concealed—handguns on their person without a license. Also, D.C. law allows the district's police chief to issue licenses to carry handguns to individuals, including nonresidents, but the district did not historically issue these licenses.

In 2009, a group of D.C. residents filed suit and challenged D.C. practices on issuing licenses to carry handguns on their person. They alleged that "by requiring a permit to carry a handgun in public, yet refusing to issue such permits and refusing to allow the possession of any handgun that would be carried in public," the district maintained a complete ban on carrying a handgun in public by almost everyone.

The residents also claimed that the district's laws generally banning carrying handguns in public violated their Second Amendment rights. They held that the district's practice of "generally refusing" to register firearms of nonresidents violated their rights to travel and equal protection under the law.

Attorneys representing the district countered the residents' argument, saying that the city's handgun regulation "is squarely in the mainstream and eminently reasonable, minimally intruding on the right…to bear arms for the protection of 'hearth and home,' while at the same time safeguarding public safety under traditional police powers."

In his ruling, Senior U.S. District Judge Frederick Scullin, Jr., sided with the residents and wrote that the district "appears to be the only jurisdiction that still has such a complete ban on the carrying of ready-to-use handguns outside the home."

Following the ruling, the D.C. government enacted a new permitting process, which went into effect on October 22. (Palmer v. District of Columbia and Cathy Lanier, U.S. District Court for the District of Columbia, No. 1:09-CV-1482, 2014)


Discrimination. U.S. President Barack Obama has signed an executive order giving employment protection to gay and transgender workers in the federal government and its contracting agencies. Under the order, federal contractors cannot fire or refuse to hire someone on the basis of their sexual orientation or gender identity.

"America's federal contracts should not subsidize discrimination against the American people," Obama said after signing the order, which did not include an exception for religious groups and amends previous executive orders signed by President Lyndon B. Johnson.

Labor laws. U.S. President Barack Obama signed an executive order that requires companies bidding for federal contracts worth more than $500,000 to disclose any previous labor law violations from the preceding three years.

The executive order also prohibits companies with federal contracts worth more than $1 million from forcing employees into arbitration to settle accusations of sexual assault or harassment. Additionally, contractors must incorporate this same requirement into subcontracts worth more than $1 million.


Cybersecurity. The U.S. House of Representatives has passed two measures designed to combat cyberattacks on critical infrastructure by distributing threat information and developing new technologies to support the Department of Homeland Security's (DHS) cybersecurity workforce.

Known as the National Cybersecurity and Critical Infrastructure Protection Act, H.R. 3696 would require the secretary of homeland security to conduct cybersecurity activities, including sharing situational awareness information among federal entities to enable real- time, integrated, and operational actions across the government in regards to cybersecurity. The bill would also require the secretary to designate critical infrastructure sectors and recognize, for each sector, a Sector Coordinating Council and at least one Information Sharing and Analysis Center.

The House also passed H.R. 2952, which requires the secretary to provide Congress with a strategic plan to guide the overall direction of federal physical security and cybersecurity technology research and development efforts for protecting critical infrastructure. The secretary would also give Congress a report on the use of public-private research and development for accelerating technology development for critical infrastructure protection.

Both bills will now move to the Senate Homeland Security and Governmental Affairs Committee.

Trafficking. The U.S. House of Representatives has passed a bill that would enhance human trafficking awareness training for federal government personnel. The bill (H.R. 4449) would require distance learning courses for personnel, briefings for all ambassadors and deputy chiefs, and annual reminders to personnel at diplomatic and consular State Department posts on human trafficking. These annual reminders would also include information on problems, threats, methods, and warning signs of human trafficking.

U.S. Rep. Sean Maloney (D-NY) introduced the bill, which has 12 cosponsors, and is now being reviewed by the Senate Foreign Relations Committee.


United Kingdom

Data collection. The United Kingdom has enacted the Data Retention and Investigatory Powers Act 2014. The new law allows the government to require Internet and telephone companies to collect and store data on their customers' communications for up to 12 months.

While the data is being stored, it can be accessed by the police, public security services, and various public bodies throughout the United Kingdom. The data, however, does not reveal the content of communications.


Terrorism. Pakistan has enacted new powers for the country's security forces to combat terrorism within the nation. Called the Protection of Pakistan Bill 2014, the measure allows security forces to shoot suspects on sight, arrest suspects without a warrant, and withhold information about where detainees are being held or what they are being charged with.

The new law also doubles the maximum prison sentence for those convicted of terrorism offenses to 20 years and al­lows security forces to hold suspects for up to 60 days. Security forces are allowed to search buildings without a warrant as long as they justify their actions to a special judicial magistrate within two days of a search.

The law is temporary and is only authorized until July 2016.