Industry Description The grocery industry (SIC 5411, NAICS 7445110) consists of retail locations selling food products. There are almost 65,000 grocery and supermarket locations across the U.S., according to Census data.[1] U.S. supermarkets and grocery stores generate annual revenues of approximately $491 billion.[2] A typical grocery store is about 46,000 square feet in size and [...]
Lost compensation is a common element of economic damages in personal injury, medical malpractice, wrongful termination, failure to promote and other similar torts. Economists or CPAs are generally engaged as independent damage experts to calculate lost compensation because of their unique skill set in addressing such losses. However, these experts are often employed only after [...]
March 2013 The Seventh Circuit decided Espenscheid vs. DirectSat, Inc., (No. 12-1943, February 4, 2013), upholding the district court’s decision to not certify a class of employees containing wage and hour law violations. The ruling is notable as class certification was denied because the class members had different amounts of claimed work that had not [...]
March 2013 Seventh Circuit Judge Richard Posner is one of the foremost legal scholars in the United States, particularly on economic matters. He has written numerous influential opinions and almost forty books on law and economics, teaches at the University of Chicago Law School, and is widely respected in the legal community. And two of [...]
March 2013 The article, “Chocolate Consumption, Cognitive Function, and Nobel Laureates” recently published in the New England Journal of Medicine (NEJM), demonstrates that even published research may contain errors. The author, Franz H. Messerli, examines the correlation between countries’ chocolate consumption per capita and Nobel laureates per 10 million people. The linear relationship is strong, [...]
February 2013 The IRS has had a whistleblower program for decades, but it was not widely used and not much was paid to whistleblowers. However, the efforts to improve the program are bearing fruit. The current program is outlined on www.irs.gov, where information is available regarding the purpose of the program, how to make a [...]
February 2013 Data is valuable. The question is once you have it, how can you use it? Data analytics uses processes to extract and evaluate information from large data sets and identify potential areas of risk, fraud, or error. Among the often used data analytics activities is benchmarking or trending of data. Developing these strategies [...]
February 2013 With the government perspective that obtaining tax dollars now is good and we can worry about later…well later, the American Taxpayer Relief Act of 2012 allows workers with regular 401(k) account balances to move them into a Roth 401(k). The conversion allows a shifting of the timing (and generally the amount) of taxes [...]
Description of the Industry The newspaper publishing industry (SIC 2711-98, NAICS 511110) is engaged in the production of daily, weekly, and bi-weekly newspapers as well as Internet news services. The U.S. newspaper industry includes about 5,000 companies earning combined annual revenue of about $35 billion with the top 50 companies controlling about 80 percent of [...]
Description of the Industry The U.S. magazine and periodical industry (SIC 2721, NAICS 511120) includes general interest magazines, trade publications, and academic periodicals. The magazine and periodical industry generates approximately $37 billion in revenue each year.[1] Approximately 68% of this total is generated from sales and advertising in general interest periodicals, 17% is from financial, [...]
Description of the Industry The book publishing industry (SIC 5111, NAICS 511130) is engaged in the production of books. Publishing companies carry out the design, editing, marketing, and distribution of books. Publishers may distribute books in print, audio, or, increasingly, electronic form. Textbooks make up the largest segment of book sales, followed by adult trade [...]
Description of the Industry The U.S art dealer industry (NAICS 453920, SIC 5999), includes approximately 23,000 businesses nationwide and generates almost $9 billion in revenues each year. Art dealers, including art galleries, are retail businesses that buy and sell art. In addition to galleries, auction houses and dealers without gallery space are also included in [...]
January 2013 The False Claims Act, 31 U.S.C. § 3729 et seq., allows penalties of $5,500 to $11,000 per claim and triple damages against those who knowingly submit or causes the submission of a false or fraudulent claim to the United States government. In December, the Department of Justice (DOJ) released a statement bragging about [...]
January 2013 Electronic data comprises a large portion of discovery and provides efficiencies in searching and manipulating the data for further analysis. Establishing a protocol for retention of electronic information and e-discovery of electronically stored information (ESI) is a critical step toward ensuring that relevant data is preserved and ultimately produced. It is important that [...]
Description of Industry Advertising agencies (SIC 7310, 7311; NAICS 541810) are traditionally known to prepare and place advertisements through magazines, newspapers, the internet, television and radio. However, globalization of the industry has led many agencies to expand their suite of services. Many advertising firms now offer media planning, market research, graphic design, media buying and [...]
Description of the Industry The U.S hair and beauty salon industry (NAICS 812112, SIC 7231), includes approximately 250,000 shops nationwide and accumulates approximately $20 billion in revenues each year. The salon industry is dominated by small, single-owner establishments, although chains and franchises have become increasingly common. The industry is highly fragmented, with the 50 largest [...]
December 2012 “Who Wants to be a Millionaire” is an American game show that is based on the UK program of the same name. When ABC contracted for the show in North America, the program and concept were already successful. The showed aired on Disney’s ABC in primetime for three years, and has been in [...]
December 2012 In a unanimous opinion, the California Supreme Court clarified that trial courts may use either California Evidence Code Sections 801(b) or 802 to admit or exclude the expert’s testimony. Potentially, the Opinion widens California judicial authority to exclude expert testimony by placing California closer to the federal Daubert standard and the majority of [...]
November 2012 Plaintiffs often desire short cuts to damage measurements. Given the cost of using experts employing proper methods and data, the temptation is obvious. For example, business valuation programs are commonly available that will spit out a result once the user inputs a few financial statistics for the subject company. Why pay thousands of [...]
November 2012 The U.S. Justice Department (DOJ) and Securities and Exchange Commission (SEC) jointly published a much anticipated guidance on the U.S. Foreign Corrupt Practices Act (FCPA). Entitled “A Resource Guide to the U.S. Foreign Corrupt Practices Act”, the “Guide” is 120 pages long, and is significantly more comprehensive than its predecessor, the “Lay Person’s [...]
October 2012 The Administrative Review Board (ARB) for the U.S. Department of Labor (DOL) recently issued a decision regarding the scope of the whistleblower protections under Sarbanes-Oxley Act of 2002 (SOX). In Spinner vs. David Landau and Associates, SOX’s whistleblower protections were extended to employees of contractors of publicly-traded companies. In the Spinner case, the [...]
October 2012 In a decision having significant impact, the Sixth Circuit ruled that payments to employees as part of a severance program are not subject to tax under the Federal Insurance Contributions Act, or FICA. The IRS is fighting the decision. Employers should file protective claims before the statute of limitations runs out. The case involves [...]
October 2012 In re: Apple vs. Motorola, the parties sued each other for patent infringement involving smartphones. Seventh Circuit Judge Richard Posner, sitting by designation, threw out all damage witnesses for both parties on Daubert motions. Then, since both parties lacked damages testimony, he dismissed both cases with prejudice. Interestingly, Judge Posner did not allow [...]
September 2012 In LaserDynamics v. Quanta Computer, Case No. 11-1440 (Aug. 30, 2012) the U.S. Court of Appeals for the Federal Circuit overturned an $8.5 million lump sum jury award and remanded the case for a new damages trial. The Federal Circuit addressed three issues of interest to the calculation of reasonable royalties. The Appellate [...]
September 2012 This week, the Securities and Exchange Commission (SEC) released a report required by Section 917 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The study’s legislative mandate includes addressing: “the existing level of financial literacy among retail investors, including subgroups of investors identified by the Commission; methods to improve the timing, [...]
August 2012 In a quick settlement over Iranian-related illegal conduct, Standard Chartered Bank (SCB) agreed on August 14 to pay $340 million in a settlement with the New York State Department of Financial Services (DFS). The DFS settlement allows SCB to continue operating in New York, but requires an on-site monitor who will report directly [...]
August 2012 The Ninth Circuit decided a taxation case of first impression involving whether a qui tam or whistleblower recovery provides a taxable capital gain from a sale of property, or ordinary taxable income. The District Court in Los Angeles, and the Ninth Circuit both agreed with the IRS that the higher rate of taxation [...]
July 2012 In July 2012, the Financial Accounting Standards Board (FASB) voted to drop a controversial project that would have required companies to disclose more about contingent losses, including most notably those arising from litigation. The now-withdrawn proposal would have required significant additional disclosure of litigation. The vast majority of those commenting on the proposal [...]
June 2012 Patent law (35 U.S.C. § 284) allows for lost profits in patent infringement cases, but requires damages of at least a reasonable royalty even if lost profits cannot be substantiated. The determination of a reasonable royalty is most often done through a hypothetical negotiation which attempts to ascertain the royalty upon which the [...]
June 2012 On June 13, 2012, after more than a year of deliberation, the International Accounting Standards Board (IASB) and U.S. Financial Accounting Standards Board (FASB) agreed on an approach for accounting for leases that generally will be simpler to implement than some of their earlier and more controversial proposals. The Boards plan to release [...]
June 2012 MF Global Inc. filed the eighth-largest U.S. bankruptcy on Monday October 31, 2011. MF Global would ultimately report the shortfall in customer accounts at $891,465,650 as of close of business Friday, October 28, 2011. The SIPA Trustee for MF Global indicates that the total shortfall may be as large as $1.6 billion. On [...]
January 2013 Option contracts existed as early as ancient Greece. Aristotle wrote in his Politics how Thales made a fortune in option contracts for olive presses. Thales, who previously was poor, forecasted that the olive harvest would be exceptionally good the next fall season. Being confident in his predictions, he offered a deal to olive-press [...]
May 2012 In Newell Rubbermaid, Inc. vs. The Raymond Corporation (No. 10-3912, April 3, 2012), the Sixth Circuit evaluated the trial court’s exclusion of Plaintiff’s expert testimony, and related successful defendant motion for summary judgment because of a failure to have minimally-required expert witness evidence. In upholding the trial court’s exclusion under the abuse of [...]
April 2012 In Tussey vs. ABB. Inc. (Case No. 2:06-CV-04305-NKL, March 31, 2012), a United States District Court for the District of Western Missouri decided an important case regarding common fees and revenue sharing within 401(k) plans. The case imposed extensive liability on the plan sponsor, resulting in $36.9 million of damages, plus Plaintiff’s attorneys’ [...]
April 2012 AOL announced the sale of over 800 patents and patent applications to Microsoft, and a non-exclusive license covering the rest of its retained patent portfolio. The sale price is $1.056 billion in cash. The sale includes the stock of an AOL subsidiary, which allows AOL to offset the patent sales against a loss [...]
March 2012 After a jury trial, ATA Airlines (ATA) won a nearly $66 million verdict against Federal Express Corporation (FedEx). FedEx appealed that ruling. In ATA Airlines, Inc. v. Federal Express Corp., No. 11-1382 (7th Cir. Dec. 27, 2011), a distinguished panel consisting of Justices Easterbrook, Posner, and Wood criticized the complex damages analysis accepted [...]
March 2012 Reasonable compensation questions affect millions of closely-held corporations whose owners actively participate in the business. The issue involves how much payroll taxes are due from the earnings of the business. Amounts not characterized as salary are reported as S-corporation income on the shareholder’s personal tax return, where it is not subject to payroll [...]
February 2012 Regression analyses are commonly used in litigation because of their ability to ascertain both liability and damages. However, the ability to communicate this relatively sophisticated statistical analyses to a layperson (e.g., jury) can be challenging to some experts. We present two practical applications that demonstrate regression’s power to answer real world questions/puzzles. Why [...]
February 2012 “If you’re going to play the game, boy, ya gotta learn to play it right” From “The Gambler”, famously recorded by Kenny Rogers Multiple articles have been written regarding a ruling in re: Duran v. US Bank National Association, California Court of Appeal, 1st Appellate Dist., (February 6, 2012), which incorrectly claim that [...]
February 2013 Regression analysis is a statistical technique that is commonly used in litigation because of its unique ability to ascertain both liability and damages. Specifically, litigation invariably involves questions of (i) whether event x caused event y, and (ii) if so, how much did y change because of x. As regression is used more [...]
February 2012 By a 3-2 vote, the Department of Labor's Administrative Review Board (ARB) limited the jurisdiction of the Sarbanes-Oxley Act (SOX) whistleblower protection outside the United States. The case is Villanueva v. Core Laboratories, NV, ARB No. 09-108, ALJ No. 2009-SOX-6 (ARB Dec. 22, 2011) (en banc). The ARB received multiple amicus briefs setting [...]
December 2011 Is Christmas becoming more expensive? For the first time ever, the cost of the gifts featured in the Christmas carol, “Twelve Days of Christmas,” totals more than $100,000. Financial services company, PNC Wealth Management, just released its 28th annual estimate of the “Christmas price index”, a whimsical economic indicator that tallies the prices [...]
November 2011 Lost profits are typically understood to yield higher damages than reasonably royalties, but this is not always the case. Higher reasonable royalty damages most frequently occurs when the patent holder (inventor) is not in a position to exploit the invention by manufacturing the product himself. In such event, (i) the inventor cannot make [...]
November 2011 The District Court appointed an independent expert on the issue of damages pursuant to Rule 706 of the Federal Rules of Evidence. The public may learn about the Court-appointed damage expert’s conclusion as early as this week, since the independent expert’s report is due on November 14, 2011. No doubt, the District [...]
November 2011 When a minority interest in a privately-held company is transferred, a discount from the value of the entire company is calculated to reflect the lack of marketability of such an interest. These marketability discounts are important in many estate plans and related transfers. These discounts for lack of marketability (DLOM) should be calculated [...]
October 2011 In early September 2011, a trial court ordered a new trial involving a jury verdict in which Oracle obtained a $1.3 billion verdict from SAP. By all accounts, Oracle’s verdict is the largest ever awarded for copyright infringement. In lieu of a new damages trial, Oracle can accept a remitter of $272 million [...]
October 2011 On October 9, 2011, Governor Brown signed into law Senate Bill 459 regarding independent contractors. The law significantly increases the risks and penalties for misclassifying workers as independent contractors by imposing significant penalties on employers found to have engaged in a misclassification, as well as on non-lawyer advisors (like accountants) who advise an [...]
October 2011 Many small businesses attempt to save taxes and employee benefit cost by classifying their workers as independent contractors. When business owners classify workers as independent contractors they do not pay the employer’s share of Social Security and Medicare costs, state employer taxes, state unemployment insurance taxes, and workers’ compensation insurance premiums. Independent contractors [...]
September 2011 In September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2011-08, entitled “Testing Goodwill for Impairment”. This amends guidance in Generally Accepted Accounting Principles (GAAP) Topic 350 involving goodwill and other intangible assets. Because early adoption is allowed, and the new guidance significantly simplifies the current procedures, expect the new [...]
September 2011 Undocumented workers in the United States received refundable tax credits totaling $4.2 billion in 2010, an amount which is dramatically higher than occurred previously. An audit by the Treasury Inspector General for Tax Administration recommended changes in how these payments are made. The IRS dismissed the recommendations, saying (without support) that they did [...]
Industry Description The dental industry is generally defined as the professional and licensed practice of preventing, diagnosing and treating diseases, injuries, and malformations of the teeth, jaw, and mouth. The dental industry is highly fragmented, consisting mostly of sole practitioners that practice general dentistry. Typical dental offices have one dentist, two oral hygienists and one [...]
Updated February 2021 When calculating damages covering future periods, the future amounts must be reduced to present value to account for the time value of money. In many cases, economic damage calculations in personal injury, wrongful death, and employment cases use discount rates that are too low. Consequently, the calculated damages pertaining to future periods [...]
July 2007 Calculating patent infringement damages just got harder, and the allowable damages a lot larger. The Court of Appeals for the Federal Circuit (CAFC) hears all patent law appeals from any of the United States district courts. In an important ruling that changes the range of possible patent damages, the CAFC ruled a “reasonable [...]
April 2010 Most businesses assume that payments they receive from an entity in bankruptcy for post-petition transactions can be kept. A new bankruptcy case instructs those doing business with entities in bankruptcy to exercise more caution than commonly occurs. Suppliers should not make post-petition sales until their customer in bankruptcy provides a cash collateral order [...]
October 2009 A recent study published in the Journal of Empirical Legal Studies finds that fully 61% of plaintiffs who reject a settlement offer and proceed to trial obtain less money than if they had settled. Defendants made the wrong decision in 24% of the cases. This is substantially different than a 50%/50% error rate [...]
October 2009 Starting in 2010, taxpayers at any income level can convert regular IRAs to Roth accounts. Roth accounts have easy-to-understand advantages and disadvantages. Roth advantages include tax-free income and no required minimum distributions. But, taxes must be paid on all initial contributions to a Roth account, including immediate additional taxation on conversions from a [...]
September 2009 Beginning in November 2009, the Internal Revenue Service (IRS) will begin audits under its latest National Research Program (NRP). The IRS started the NRP in 2001 to measure the “tax gap.” The tax gap is the difference between taxes that are voluntarily reported, versus the taxes the IRS estimates are actually owed with [...]
August 2009 On June 29, 2009, Governor Schwarzenegger signed into law "The Electronic Discovery Act" (California Assembly Bill AB 5). The law took immediate effect as an urgent measure, "in order to eliminate uncertainty and confusion regarding the discovery of electronically stored information" (ESI). Approximately half of the states now have separate statutes that specifically [...]
August 2009 Whistleblowers have had a difficult time obtaining the protection afforded under Sarbanes-Oxley (SOX) Section 806. This is largely because the Department of Labor (DOL), who administers whistleblower complaints, has taken positions hostile to employees seeking protection under SOX’s whistleblower provisions. For example, see DOL Rewrites Sox Whistleblower Provision to a New Employer-Friendly Standard. There is [...]
June 2009 Existing accounting guidance permits companies to report transfers of portions of financial assets as sales. The off-balance-sheet entities that enabled banks to keep securitized assets and other activities off their financial statements will now need to be included on their sponsor’s consolidated financial statements. An important accounting change which will be finalized this [...]
April 2013 Troubled company restructurings are complex endeavors. To be successful, a company must fix both the challenges that caused the problem in the first place, and create revisions to the debt that accumulated from past transactions. Most companies are ill-equipped to address even one of these two problems without assistance from financial advisors experienced [...]
March 2011 A Lone Pine order is a case management device in which the judge requires the plaintiff to make a prima facie showing of injury, causation, and/or damages. Its purpose is to simplify or eliminate cases to lessen the burdens on the courts and defendants. In a Lone Star order, plaintiffs are required to [...]
September 2008 According to records maintained by the Department of Labor (DOL), the government has ruled in favor of whistleblowers 17 times out of 1,273 complaints filed since 2002. Another 841 cases have been dismissed. This data comes from Richard Moberly, a University of Nebraska law professor who has recently had his statistics reported by [...]
September 2008 One of the differences between the presidential candidates is their tax policies. Current tax rates arise from two pieces of legislation supported by and signed into law by President Bush during his first term, as follows: The Economic Growth and Tax Relief Reconciliation Act of 2001 lowered ordinary income tax rates for individuals. [...]
July 2005 In two rulings issued in June 2005, the California Supreme Court interpreted the U.S. Supreme Court guidance on punitive damages. It was the first time in at least two decades that the California Supreme Court addressed punitive damages. The rulings were as follows: Courts could consider the defendant's conduct towards people other than [...]
June 2008 Last week, Judge Leslie Tchaikovsky, a bankruptcy judge in the Northern District of California (National City Bank v. Hill, United States Bankruptcy Court, Northern District of California, Case No. A.P. 07-4106 (May 28, 2008)) issued a ruling that could have enormous impact on future lending practices and workouts in the current subprime meltdown. [...]
May 2007 California’s Fourth Appellate District certified for publication a significant decision addressing the constitutionality of punitive damages awards. In a decision that will apply to the majority of business tort cases, the Court ruled when: “… the conduct in question only involves economic damage to a single plaintiff who is not particularly vulnerable, an [...]
May 2008 The prestigious Advanced Practices Council (a unit within the Society of Information Management) recently released a report entitled “Information Lifecycle Management Concepts, Practices and Values". The report is based on a year-long study of 345 IT and storage managers. It provides worthwhile insights for anyone endeavoring to develop better electronic storage practices. Why [...]
April 2008 In December 2007, the Financial Accounting Standards Board (FASB) issued SFAS 141R, "Business Combinations". The statement is the first major result of the joint convergence agreement between the FASB and the International Accounting Standards Board (IASB). The IASB’s comparable financial reporting standard (Standard 3) was issued in January 2008. Having a common set [...]
March 2008 On February 20, 2007, Philip Morris won a (perhaps temporary) victory when the U.S. Supreme Court reversed a $79.5 million punitive damage verdict award involving the death of a single Oregon smoker. The case is the first since the 2003 ruling in re: State Farm vs. Campbell. The State Farm case specified that punitive damage awards [...]
April 2007 The Supreme Court ruled that a qui tam informant cannot receive compensation if he lacked “direct and independent knowledge of the information upon which his allegations were based.” The Court’s ruling substantially increases the risk faced by a qui tam plaintiff, and therefore lessens the financial incentive for potential whistleblowers to come forward. [...]
February 2011 U.S. Department of Health and Human Services (HHS) released its required annual Health Care Fraud and Abuse Control Program report. The report showed that the government’s health care fraud prevention and enforcement efforts recovered more than $4 billion in taxpayer dollars in fiscal year 2010. This is the highest annual amount ever recovered. [...]
February 2013 Opinion polls (surveys) are used extensively to understand almost everything that cannot be looked up as a scientific fact. Polls are reported everyday on subjects ranging from what flavor toothpaste kids like most (Colgate probably already funded this poll), to what voters think is the best way to get out of an economic [...]
February 2007 The Tax Relief and Health Care Act of 2006, signed into law on December 20, 2006, amended the Internal Revenue Code to provide increased rewards for turning in tax cheats. In February 2007, the IRS named the first director of its new Whistleblower Office. Expect this existing but now expanded IRS program to [...]
September 2006 The Pension Protection Act of 2006 is aimed at improving defined benefit plans, but it also contains important unrelated changes affecting charitable contributions. Some of these contribution rules will affect practically everyone. Under current law, taxpayers are not required to obtain a receipt for contributions under $250. Effective January 1, 2007 (for calendar [...]
October 2012 There are hidden complexities in the implementation of a seemingly simple provision of the Sarbanes-Oxley Act ("SOX"). Because of this hidden complexity, many companies have done little to address its provisions. Most of the thousands of law firm articles written about SOX provide nothing more than a brief recital of the law, with [...]
June 2005 Lawyers issuing legal confirmation letters to their client's auditor will have one more item to consider. No later than December 31, 2005, companies with future environmental cleanup obligations may (depending upon the practices previously adopted) face a major change. Because the new rule requires complex judgments and estimates, lawyers and their clients should [...]
August 2004 Sarbanes-Oxley Act (SOX) Section 301(4) requires all public companies to establish a means to collect, retain, and resolve claims regarding accounting, internal accounting controls and auditing matters. The system must allow for such concerns to be submitted anonymously. SOX provides significant protections to whistleblowers, and severe penalties to those that retaliate against them. [...]
August 2003 In late July 2003, the Securities and Exchange Commission (SEC) released a staff study required by Section 108(d) of the Sarbanes-Oxley Act. The study strongly recommends that accounting standards be developed using a principles-based approach. In several prior articles, we encouraged this change. Although the full impact will take years to occur, the [...]
July 2003 Wilmer Cutler & Pickering and PriceWaterhouseCoopers recently released a survey that analyzes economic crimes caused by internal corporate fraud. The results should be interesting to lawyers charged with implementing, investigating, or recovering fraud losses. Important findings include: Internal frauds threaten most businesses. Worldwide, 37 percent of the over 3600 companies surveyed reported significant [...]
July 2008 Initial commentators of the U.S. Supreme Court’s ruling on punitive damages involving the Exxon Valdez oil spill (Exxon Shipping v. Baker, No. 07-219) claim that the ruling pertains only to federal maritime law. While the Supreme Court ultimately expressed its conclusion regarding maritime law, most of the ruling was a general discussion of [...]