AIG, with a straight face

On Wednesday, AIG refused a demand that it sue the federal government over unfair bailout terms.  How is it possible that AIG might, with a straight face, consider such a suit? Didn’t they just thank us for our contribution?   However shocking AIG’s participation in this suit might seem, AIG says it had no choice but to consider the demand from its former chief executive, Hank Greenberg. Is this true?

As many of you are no doubt aware, a derivative action is a suit brought by a shareholder on behalf of the company.  In order for a shareholder to usurp this role reserved for corporate management, a shareholder must first demand the directors bring suit.  Only after the board fails to take action may a shareholder bring a suit derivatively.  See,  Rule 23.1 of the Federal Rules. But, does AIG have an obligation to consider this action?

We tried this simple search on WestlawNext in Delaware:

liability for refusal to consider presuit demand

Our results address whether a plaintiff is excused from the demand requirement.  But, our top case law results recite the basic principle that a board’s decision not to take action on a pre-suit demand is subject to the business judgment rule. Citing a key case, Zapata Corp (430 A.2d 779), the court in Aronson v. Lewis noted:

…where demand on a board has been made and refused, we apply the business judgment rule in reviewing the board’s refusal to act pursuant to a stockholder’s demand.

Aronson v. Lewis, 473 A.2d 805, 813 (Del. 1984) overruled by Brehm v. Eisner, 746 A.2d 244 (Del. 2000)

AIG has been careful to point out that Delaware law requires them to make this consideration.  It’s a difficult marketing challenge.  Although the general public might hold a strong opinion on whether AIG might be “too big to fail,” few of us will confess a detailed familiarity with the intricacies of derivative actions and corporate governance.


Demand Letters

Generally these demands can be difficult to find but, Rule 23.1(b)(3) requires “that the complaint in a shareholder-derivative action allege with particularity the efforts made by plaintiff to obtain the action plaintiff desires from the board of directors.” See Wright and Miller,  FPP 183.   So, look for exhibits in complaints.  We found the following example by searching federal pleadings for 23.1 /p demand /p exhibit:

By letter dated May 23, 2008, in compliance with Rule 23.1 of the Federal Rules of Civil Procedure, Plaintiff, through counsel, made demands on BOAC’s Board to, inter alia, pursue through litigation, the claims alleged in this action and name as Defendants those identified above, among others responsible for the wrongdoing as alleged herein (the “Demand Letter”). A copy of the Demand Letter is attached as Exhibit “A.” The Board apparently treated the Demand Letter as if it had no material significance since, as of the date of this Complaint, four months after it was sent, the Board has neither responded to the Demand Letter nor taken the actions demanded therein.1Accordingly, Plaintiff’s demands have been effectively rejected by the Board.

P.E. LUCAS, Derivatively on Behalf of Bank of America Corporation, and its shareholders…, 2008 WL 5168452 (C.D.Cal.)


The Exhibit A referenced in the allegation can be found here: 2008 WL 6893654.


Related Action See Starr Int’l Co. v. Fed. Reserve Bank of New York, 2012 WL 5834852.


Fletcher Cyclopedia Reference

The Fletcher Cyclopedia (at 13 Fletcher Cyc. Corp. § 5969) cites Schick v. Amalgamated Clothing  for the idea that a board of directors has no obligation to take any specific type of action to respond to the demand:

The “demand” contemplated by Rule 23.1 is really a form of notice designed to afford to the corporation’s board an opportunity to consider the facts asserted and to exercise its business judgment whether to press any arguable claim the corporation may possess or to take other action. Zapata Corporation v. Maldonado,Del.Supr., 430 A.2d 779 (1981). The board has no obligation to take any specific type of action to comply with a demand under Rule 23.1. The board may, for example, ignore the demand, or it may take other action it deems appropriate if, in the exercise of its good faith judgment the circumstances indicate that the corporation’s interests would be served thereby. But, because a Rule 23.1 demand serves a notice function, it makes little difference with respect to the board’s duty, upon receiving information of the kind contained in the Union’s letter, whether the information comes from a stockholder or from another and thus it makes little sense to think in terms of “entitlement to make a demand.”

Schick Inc. v. Amalgamated Clothing & Textile Workers Union, 533 A.2d 1235, 1240 (Del. Ch. 1987)

Refusing Vaccines

It’s a hot topic among the parenting crowd, that’s for sure. I have friends and acquaintances who run the gamut on vaccination opinions; from those who don’t vaccinate at all, to partial/selected vaccinations, delayed vaccinations, and those who choose to fully vaccinate their kids.

A Vegan’s Beliefs

Now, the issue has come up in the realm of labor and employment law. Indiana University Health Goshen Hospital recently terminated employees for refusing the flu vaccine in late December, 2012. As far as we know, no claims have been filed but the IU nurses did claim medical and religious reasons for why they should be exempted from the hospital’s policy.

A recent federal court decision in Ohio touched on the issue of religious objections to vaccinations. An employee was discharged after refusing to be vaccinated for influenza as required by her employer, a children’s hospital. The employee had in previous years been granted a waiver to this requirement, because she claimed that, as a vegan, she could not ingest any animal or animal by-products. After being discharged, the employee filed suit against the employer, alleging religious discrimination and wrongful discharge.

The employer hospital moved to dismiss, but the court declined to dismiss, finding that the plaintiff’s beliefs in regards to veganism to be ones that could be “held with the strength of traditional religious views” in accordance to precedent. The court also notes, as did the plaintiff, that the Code of Federal Regulations definition of religious practices can include “moral or ethical beliefs as to what is right and wrong” as long as they are “held with the strength of religious views.” Chenzira v. Cincinnati Children’s Hosp. Med. Ctr., 1:11-CV-00917, 2012 WL 6721098 (S.D. Ohio Dec. 27, 2012)




Case Law

For related case law, try the following terms and connectors search on WestlawNext:

 sy,di(refus! +10 vaccin! innoculat!)

Many of the most relevant cases were older:

Anderson v. State, 84 Ga. App. 259, 65 S.E.2d 848 (1951) – Parents were found guilty of failing to enroll their children in school as a result of their refusal to allow them to receive required vaccinations. The parents objected to the vaccinations on religious grounds. The court here noted that “The refusal of the defendants here to have their children vaccinated amounted to a transgression of the rights of others.”

State v. Miday, 263 N.C. 747, 140 S.E.2d 325 (1965) – Defendant convicted of failure to vaccinate his child and failure to send his child to school. The court ultimately found that whether the father was justified in his religion-based refusal to vaccinate was a matter for a jury, and that “it is not necessary for a religious organization to forbid vaccination in order for its teachings to come within the meaning” of the statutory exemption for vaccination requirements.

Kolbeck v. Kramer, 46 N.J. 46, 214 A.2d 408 (1965) – Student was denied admission to a University due to his refusal to submit to smallpox vaccination. Student sued to compel admission, arguing that he objected to the vaccination on religious grounds, for which the University allowed an exemption to the vaccination requirement. The court upheld the trial opinion that the student had sufficiently proven his religious justification for refusing the vaccination.

I wanted to see more recent cases on these issues, so I filtered my cases by date. I decided to see how many results we get since January 1, 2000. There are 22 remaining cases. These include:

Boylan v. Matejka, 331 Ill. App. 3d 96, 770 N.E.2d 1266 (2002) – Navy veteran who received General Discharge under honorable conditions, one reason for which was his refusal to submit to an anthrax vaccine, was not eligible for a grant that was limited to veterans who had received an honorable discharge.

Adoption of Shelley, 55 Mass. App. Ct. 1115, 774 N.E.2d 686 (2002) – Court upheld finding of parental unfitness where (among other reasons), she had refused to allow her child to submit to necessary vaccinations.

Martin v. Donley, CIV.A. 11-1590 RBW, 2012 WL 3574048 (D.D.C. Aug. 21, 2012) – Former Air Force Reservist who had received general discharge due to his refusal to submit to a required vaccination requested that it be changed to honorable. Military board denied request, and court upheld decision, finding the decision to not be arbitrary and capricious.

Baetge-Hall v. Am. Overseas Marine Corp., 624 F. Supp. 2d 148 (D. Mass. 2009) – Medical officer on a maritime prepositioning ship sued former employer claiming retaliatory discharge after she refused to receive the smallpox or anthrax vaccinations. The court held “[t]erminating an employee for allegedly stating her intent to notify federal authorities about dangerous or harmful activities aboard a seagoing vessel raises significant public policy concerns” such that the plaintiff established a prima facie case for retaliatory discharge under maritime law for whistleblowing. But the court also held that the plaintiff’s refusal to take the vaccinations qualified as a non-retaliatory reason for her termination. The court addressed a variety of other issues, including evidence of disparate treatment.

Secondary Sources

Try a search using the title and preliminary fields:

ti,pr(vaccinat! innoculat!) & refus! /25 vaccinat! innoculat!

In my secondary source results, I see the following:

Compulsory Vaccination, 12 Yale L.J. 504 (1903)

Lea Ann Fracasso, Developing Immunity: The Challenges in Mandating Vaccinations in the Wake of A Biological Terrorist Attack, 13 DePaul J. Health Care L. 1, 2 (2010)

Ben Horowitz, A Shot in the Arm: What A Modern Approach to Jacobson v. Massachusetts Means for Mandatory Vaccinations During A Public Health Emergency, 60 Am. U. L. Rev. 1715 (2011)

Jay Gordon (FNd1), Parents Should Not Be Legally Liable for Refusing to Vaccinate Their Children, 107 Mich. L. Rev. First Impressions 95 (2009)

Christine Parkins, Protecting the Herd: A Public Health, Economics, and Legal Argument for Taxing Parents Who Opt-Out of Mandatory Childhood Vaccinations, 21 S. Cal. Interdisc. L.J. 437 (2012)

Daniel B. Rubin, Sophie Kasimow (FNd1), The Problem of Vaccination Noncompliance: Public Health Goals and the Limitations of Tort Law, 107 Mich. L. Rev. First Impressions 114 (2009)

Unintended Fatherhood? Kansas Court to Determine Sperm Donor’s Paternity

On Tuesday, January 8, a hearing in Shawnee County (Kansas) District Court is scheduled to determine whether a sperm donor may legally be determined to be the father—and, therefore, responsible for child support—of a child conceived via artificial insemination. See, e.g., 2012 WLNR 28090983.

In 2009, William Marotta answered a Craigslist ad for sperm donation placed by a lesbian couple—Jennifer Schreiner and Angela Bauer—who wished to conceive a child. The sperm donation resulted in the birth of a girl, now three years old. Schreiner and Bauer have since separated, and Schreiner, the birth mother, has sought financial assistance from the state of Kansas to care for the child. To lessen the state’s burden, the Kansas Department for Children and Families filed a petition last October requesting Marotta be named as the child’s legal father, under Kansas Statutes Annotated § 23-2208, which involves scenarios in which paternity may be presumed.

Marotta contends that subsection (f) of § 23-2208 applies to absolve him, as a sperm donor, of paternity. That subsection, rather than listing a paternity presumption like other subsections, mandates definitively that a sperm donor shall not be deemed the father of any child(ren) resulting from his donation, unless the donor and the woman agree to the contrary in writing. Not only did Marotta opt to forego a written instrument accepting paternity, he did the exact opposite in signing a written agreement with Schreiner and Bauer wherein Marotta disclaimed all parental rights and associated obligations.

But, importantly, § 23-2208(f) only mentions sperm donations “provided to a licensed physician.” Therefore, the state argues, the subsection does not apply to shield Marotta from fatherhood, because he, Schreiner, and Bauer failed to use a doctor in their efforts at artificial insemination. Indeed, the parties have admitted as much—that after agreeing to be a sperm donor, Marotta simply dropped off a container of semen at the couple’s house and the two women achieved the insemination themselves.

I will be curious to read of the conclusion reached by the Shawnee County District Court and the reasoning it used in so doing. One case that is likely to be addressed is In re K.M.H., 169 P.3d 1025 (Kan. 2007), where the Supreme Court of Kansas held Kansas Statutes Annotated § 38-1114(f) (later renumbered at § 23-2208(f)) applied to bar a sperm donor from seeking paternity. Like Marotta, the donor in In re K.M.H. did not deliver his semen sample to a medical professional. A licensed physician was involved, however, in the insemination process—the donor gave his container of sperm to the woman hoping to get pregnant, and she, in turn, provided it to the doctor who performed the insemination—and the court deemed this sufficient to bring the parties’ actions within the scope of § 38-1114(f).

In re K.M.H. gives a good overview on the development and state of paternity laws regarding sperm donation existing at the time of the opinion, both in Kansas and nationally. In re K.M.H. at 1033-39. But if you are interested in researching additional related decisions that have come out in the five years subsequent, you may find the following search of interest:

Query: status presum! relationship /5 parent! patern! matern! don! father! mother! & (sperm semen /7 donat! donor) (assist! artificial /5 reprod! fertil! conce! inseminat!) & (self /5 administer!) (#no #not #never #without fail! lack! /7 doctor physician surgeon “medical professional”) & DA(aft 10/26/2007)
Content: Cases
Jurisdiction: All State & Federal

The very first decision in the list of 52 resulting cases is E.E. v. O.M.G.R., 20 A.3d 1171 (N.J. Super. Ct. Ch. Div. 2011), wherein, faced with a similar statute to the one in Kansas, the New Jersey court found the state law, otherwise shielding a sperm donor from paternity, does not apply if a licensed doctor was not involved in the insemination.

Many states’ laws on this topic are derived from the Uniform Parentage Act (UPA). See, e.g., id. at 1174; In re K.M.H. at 1034. The UPA, as originally promulgated in 1973, mandated the involvement of a licensed physician if a sperm donor is to relinquish paternity. In re K.M.H. at 1034. Notably, however, the revised UPA deleted any such reference to doctors. Run the following searches to see for yourself:

Query: donor donat! semen sperm egg ova ovum /p doctor physician “medical professional”
Content: Uniform Parentage Act (1973)

Query: donor donat! semen sperm egg ova ovum /p doctor physician “medical professional”
Content: Uniform Parentage Act (2000) (Last Amended or Revised in 2002)

Lastly, for a listing of all state statutes on the topic that also include reference to doctor- or physician-inclusion in the process, try the following query:

Query: status presum! relationship /5 parent! patern! matern! father! mother! don! & (sperm semen egg ova ovum /7 donat! donor) (assist! artificial /5 reprod! fertil! conce! insemin!) & SD(doctor physician surgeon “medical professional”)
Content: Statutes & Court Rules
Jurisdiction: All States

Legislating Food Choice: Food Stamps & Obesity

Obesity rates have skyrocketed in the United States in recent years.  The Center for Disease Control has made a great deal of statistical information available.  Here,  we learn that more than a third of adults are categorized as obese.  While studies have not found a significant difference in obesity rates among men of different income levels, socioeconomic status does seem to play a part in the obesity rates of women. Women living at lower income levels, and with lower education levels are more likely to be obese (though most obese women are not necessarily low income).

The food stamp program, now known as the Supplemental Nutrition Assistance Program (SNAP), has been made a target for many who desire to address this growing issue.  One proposed change was to simply pay SNAP funds twice per month instead of once per month.  The idea is that this kind of program might encourage users to shop more frequently, and better spread the money out over the course of a month.   This way, SNAP participants aren’t running out of money at the end of the month, and then literally shopping on an empty stomach when they receive funds again the next month.

One of the more well publicized suggestions is to restrict the types of foods that can be purchased with SNAP funds. In 2010, NYC mayor Michael Bloomberg requested a two year moratorium on the ability to purchase sugary drinks with federal SNAP funds in NYC. Read the old New York Op-Ed on Westlaw here: 10/7/10 NYTIMESCOM 39. 

The USDA ultimately rejected Bloomberg’s request, indicating that it would be too difficult to put such restrictions into effect. The U.S. Department of Agriculture explained that it would be “impossibly complex” to determine what foods should be banned. (See 2011 WLNR 20052397) Other critics of the proposal argue that restricting the foods you can buy with SNAP funds stigmatizes recipients.


For current legislation, I ran the following search in all jurisdictions on WestlawNext:

restrict limit healthy food SNAP food stamps

My first result for Proposed & Enacted Legislation is a Mississippi bill that aims to direct the Department of Human Services to limit use of SNAP funds to the purchase of “healthy food and healthy beverage only.” 2012 MS S.B. 2293 (NS),  TITLE: S.N.A.P. (food stamp) purchases; direct DHS to limit to healthy food and beverages.

My next few results are more focused on addressing issues of fraud in relation to SNAP benefits. But, there’s also notice the following result from Pennsylvania: 2011 PA H.R. 59 (NS), TITLE: A Resolution memorializing the Congress of the United States to take action to safeguard the health of families who are eligible for food stamps by changing the way the Food Stamps Program is regulated.

This alternative advanced search delivered good results…

S.N.A.P. “Supplemental Nutrition Assistance Program” /p obesity


2011 NC H.B. 975 (NS), North Carolina House Bill, Titled: Promote Local/Healthy Food. Summary: AN ACT to work toward decreasing obesity among Supplemental Nutrition Assistance Program (SNAP) Participants by Increasing their participation in supplemental nutrition assistance program education (SNAP-ED) and Making fresh, locally grown produce available by increasing the acceptance of electronic BENEFITS TRANSFER (EBT) CARDS AT FARMERS MARKETS AND FOOD CO-OPS.

2011 IL H.B. 1399 (NS), Illinois House Bill, Title: DHS-FOOD STAMPS-CHILD OBESITY. Summary: Amends the Illinois Public Aid Code. Provides that in an effort to control the epidemic of childhood obesity, the Secretary of Human Services may seek a waiver from the United States Department of Agriculture to allow the State to specify certain foods that may and may not be purchased in Illinois with the benefits funded by the Supplemental Nutrition Assistance Program (SNAP) (formerly the Food Stamps Program). Requires the Secretary to consult with members of the General Assembly in developing the waiver and to obtain approval from the General Assembly before implementing the waiver.

2011 CA S.B. 471 (NS), California Senate Bill, Titled: CalFresh. This bill proposed to “prohibit recipients of CalFresh from purchasing with CalFresh benefits sweetened beverages containing more than 10 calories per cup, except that CalFresh benefits would be authorized to be used to purchase juice without added sugar, milk products, and milk substitutes, even if sweetened.”

On that last search, only one of the Proposed and Enacted Legislation results was actually a bill that was enacted, a Massachusetts  appropriation for obesity prevention and education.  The rest were proposed.

I’ve noticed at my local Farmer’s Markets that vendors will take SNAP benefits. I wonder how many results I would get in actual enacted legislation mentioning SNAP and farmer’s markets or food co-operatives. I want to open my search up now though, to include legislation from previous years. From the home page on WestlawNext, I click on “Proposed & Enacted Legislation.” Next, on the right hand side of the screen, under “Tools & Resources,” I click on Historical Enacted Legislation (Session Laws).

Now, I run a search in all historical enacted legislation (federal and state):

S.N.A.P. “Supplemental Nutrition Assistance Program” /250 “farmers market” (food /3 co-op!)

I get 5 federal results, and 4 state results. They include:

PUBLIC AID–FARMERS’ MARKET–TECHNOLOGY IMPROVEMENT PROGRAM, 2010 Ill. Legis. Serv. P.A. 96-1088 (H.B. 4756) (WEST) – Legislation aimed to increase access to fresh produce and other quality food products by allowing the program participants to redeem SNAP benefits at farmers’ markets. The legislation allows program funding to be used for purchasing or renting wireless terminals capable of processing SNAP benefits.

HEALTHY FOOD RETAIL ACT, 2009 La. Sess. Law Serv. Act 252 (S.B. 299) (WEST) – Louisiana legislation created to “provide for a financing program to stimulate investment in healthy food retail outlets in underserved areas of Louisiana…”

FOOD, CONSERVATION, AND ENERGY ACT OF 2008, PL 110–234, May 22, 2008, 122 Stat 923 – Discusses a pilot project to evaluate health and nutrition promotion in the Supplemental Nutrition Assistance Program. This can include projects to increase access to farmers markets through electronic redemption of SNAP benefits.

We can see a few ways here that legislators are attempting to address the obesity crisis, some controversial, like limiting the types of foods that can be purchased by SNAP recipients, and others arguably less so, like making it easier for recipients to utilize their benefits at farmers’ markets.


The searches above also deliver these secondary sources:

Michael Correll, “Getting Fat on Government Cheese: The Connection Between Social Welfare Participation, Gender, and Obesity in America,” 18 Duke J. Gender L. & Pol’y 45 (2010)

Joan R. Rothenberg, “In Search of the Silver Bullet: Regulatory Models to Address Childhood Obesity,” 65 Food & Drug L.J. 185 (2010)

Katherine Pratt, “A Constructive Critique of Public Health Arguments for Antiobesity Soda Taxes and Food Taxes,” 87 Tul. L. Rev. 73 (2012)

Colin Hector, “Nudging Towards Nutrition? Soft Paternalism and Obesity-Related Reform,” 67 Food & Drug L.J. 103 (2012)

For bill tracking options, view the Capitol Watch demo or call a Reference Attorney.

Hear No Evil, See No Evil, Speak No Evil

On November 13, 2012 a federal jury awarded $850,000 to bartender Karolina Obrycka. The verdict stemmed from a February 2007 attack Obrycka endured at the hands Anthony Abbate, an off-duty Chicago police officer at the time. Abbate, whose drunken actions were captured on video, went behind the bar at Jesse’s Short Stop Inn and proceeded to pummel Obrycka, a woman half his size. Afterward, Abbate is alleged to have threatened to plant cocaine and falsely charge Obrycka if she complained about the beating or released the video to the public. High-ranking members of the Chicago Police Department are also accused of facilitating an alleged cover up.  View the Complaint at Law at 2007 WL 1622093:


The issue of the cover-up was the most legally significant part of the case. In addition to damages awarded Obrycka, the jury specifically held the Chicago Police Department responsible due to an ongoing unofficial code of silence. The City of Chicago sought to vacate the judgment, agreeing to pay awarded damages regardless of whether the verdict was set aside. Opponents argued that vacating the judgment would allow officers to continue to hide behind a blue wall of silence. Specifically, Craig Futterman and Locke Bowman, law professor at the University of Chicago and Northwestern University, respectively, averred that the city should not be permitted to escape a finding that it covered up the misconduct of its officers by erasing the adjudication as if it never existed.

On December 20, 2012 U.S. District Court Judge Amy St. Eve refused to vacate that jury’s finding. (2012 WL 6642354) She relied on the fact that the City of Chicago chose to fight the suit instead of settling. Furthermore, Judge St. Eve noted that allowing the City to set aside the jury’s decision would set a bad precedent—one that could lead to the deterrence of settlements. However, she also reasoned that the facts of the Abbate case would limit her ruling’s applicability. The only issue remaining in the case is that of attorney’s fees. It’s estimated that Obrycka’s attorney will be awarded legal fees in the millions, a hefty price tag for misconduct.

The “Second City” might want to take a second look at its police culture.

Using variations of the phrase “blue wall” delivers relevant police misconduct results.  Try these searches on WestlawNext:

police “law enforcement” /p code “blue wall” /3 silence (186) Content: Cases Jurisdiction: All States

Plaintiff’s counsel faced an uphill battle establishing corroboration of sexual harassment given the chain-of-command within police departments (the “blue wall of silence”), the now-proven pattern of threats and intimidation used … Ferante v. Sciaretta, HNTL-584-02, 2003 WL 22048115 (N.J. Super. Ct. July 17, 2003)

police “law enforcement” /p code “blue wall” /3 silence (6) Content: Jury Verdicts & Settlements Jurisdiction: All States

The plaintiff further contended that the defendant and other officers engaged in a conspiracy to remain silent about the defendants actions pursuant to a blue code of silence policy within the department. McCoy v. Dean III, et al., JVR No. 389777

ti,pr(code “blue wall” /3 silence & police “law enforcement”) (8) Content: Secondary Sources Jurisdiction: All State & Federal

These results include documents from,  Police Misconduct: Law and Litigation:

In 1936, a leading police administration expert, August Vollmer, wrote: “It’s unwritten law in police departments that police officers must never testify against their brother officers.” This code of silence does more than prevent testimony. It mandates that no officer report another for misconduct, that supervisors not discipline officers for abuse, that wrongdoing be covered up, and that any investigation or legal action into police misconduct be deflected and discouraged. Police Misconduct: Law and Litigation § 11:17

Election of Speaker

There were a few  “protest votes” for Michelle Bachman, Eric Cantor, and others but John Boehner has been re-elected as Speaker of the House. To see how they voted, try this search:

ti(“election of speaker”) in the Congressional Record (CR).

Today is January 3rd and the most recent document in the Congressional Record is dated January 2nd.  The  relevant document will likely be available on Westlaw tomorrow, January 4th.

[Update:  This document is now available on Westlaw at 159 Cong. Rec. H2-02, 2013 WL 45508]