Morgan Stanley Ordered to Pay $519K to Retired Couple

Originally published by P. Clarkson Collins Jr..

A Financial Industry Regulatory Authority (FINRA) arbitration panel has awarded $519,000 to Stephen and Brenda Balock in their investor fraud claim against Morgan Stanley (MS). The couple contends that that one of the firm’s brokers, Tim J. Prouty, placed their funds in investments that were complex and inappropriate for them, causing them to lose money in eight accounts between 2012 and 2015. They filed their claim against Morgan Stanley in 2016.

The Balocks began working with Prouty after Stephen’s employer, the Public Service Co. of New Mexico, compelled him into early retirement due to downsizing. He had never worked with a broker before then.

The couple wanted to invest in certificates of deposit. Instead, Prouty placed them in a Morgan Stanley investment advisory program that involved more complex investments, such as options contracts, derivates, junk bonds, and exchange-traded funds. In their investor claim against Morgan Stanley, the Balocks made a number of allegations, including the following:

• Breach of fiduciary duty
• Negligent misrepresentation
• Unsuitability
• Deceptive trade practices
• Negligent supervision
• Control personal liability

The Balocks argued that Morgan Stanley did not supervise the investments chosen by Prouty, who allegedly acted as if the couple were sophisticated investors rather than unseasoned investors and retirees. The claimants believe that their portfolio could have gained $519,000 more than what it had made during the period at issue if only their investment were placed in more traditional securities, including equities and bonds.

Morgan Stanley disagrees with the FINRA arbitration panel ruling and claims that it was the Balocks who wanted to get involved in the more complex investments. The broker-dealer claims that no wrongdoing took place.

Unsuitable Investments

Some investments are too risky and volatile, especially for the retail investor or typical retiree. If you are an inexperienced investor, it is important that your financial adviser not only takes steps to make sure that an investment is right for you, but that you understand what you are getting into, including the risks you may be exposing yourself to financially.

If you were in Morgan Stanley’s advisory program and purchased such risky investments as junk bonds, options, or ETFs, please reach out to the securities attorneys at Shepherd, Smith, Edwards & Kantas. Our law firm has a team of attorneys and consultants with more than 100 years of combined experience in the securities industry and securities law. We use that experience to help investors recover wrongful losses through FINRA arbitration or other legal processes. All communications will be kept strictly confidential and your consultation will be done with no charge or obligation to you.

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Non-Disclosure Agreements

Originally published by Austin TX Business Law Blog.

Non-disclosure agreements are used to restrict the disclosure of confidential information and trade secrets that a person may have acquired or had access to during the course of his or her employment. An employer uses a non-disclosure agreement to protect the dissemination of key company information by a person after an employee has left the company. It is a restricted covenant intended to protect the company from its own confidential information being used against it later on.

What is a Non-Disclosure Agreement?

Unlike a non-compete agreement, a non-disclosure, when properly drafted, is not designed to restrict a former employee from competing with his or her former employer. Even with a non-disclosure agreement in place, a former employee is free to use any general knowledge and skills acquired at the former place of employment to set out and start a new business or work with a competitor. The non-disclosure prevents the employee from disclosing confidential company information and trade secrets, much more specific things than general skills and information used and acquired during the course of employment.

However, in some cases, a non-disclosure agreement may be overly broad. When a non-disclosure agreement places too many restrictions on what can be used after a person leaves the place of employment, it can be construed as a non-compete agreement. When a non-disclosure agreement restricts the use of general knowledge and skills gained from a person’s experiences with a company, then it surpasses the true intent of a non-disclosure agreement. A non-disclosure agreement is only meant to protect trade secrets and confidential information.

Texas courts are especially sensitive to non-compete agreements, so a company can run into trouble if the non-disclosure agreement they use is overtly broad to the point that it should really be classified as a non-compete agreement. In fact, this type of agreement will rarely be enforced. Texas courts look at these types of agreements as unfair restraints on trade. Fights over the enforceability of non-compete agreements are far more common than fights over the enforceability of non-disclosure agreements.

While non-compete agreements are far more contentious than no-disclosure agreements, a valid non-disclosure agreement will still be upheld even if it was coupled with an unenforceable non-compete agreement. Additionally, common law may restrict an employee’s ability to disclose trade secrets even if there is no valid non-disclosure agreement. The common law imposes a duty on employees and former employees to not disclose the trade secrets of an employer.

Texas Corporate and Business Law Protecting Trade Secrets

Creating a non-disclosure agreement that will properly protect your company’s trade secrets and confidential information is critical. The agreement must run a fine line between providing adequate protection without being overly broad and risking a court finding it to be unenforceable. The Kumar Law Firm is here to protect your company’s trade secrets and confidential information by working with you to design the optimal non-disclosure agreement. For all of your business’s legal needs, contact us today.

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Top 10 from Texas Bar Today: Attorney-Client Privilege, No-Poach Agreements, and Good-Faith-Efforts

Originally published by Joanna Herzik.

To highlight some of the posts that stand out from the crowd, the editors of Texas Bar Today have created a list from the week’s blog posts of the top ten based on subject matter, writing style, headline, and imagery. We hope you enjoy this installment.

10. Apple Leaving the Eastern District Of Texas to Escape Patent Trolls – Burford Perry, LLP in Houston

9. Texas Railroad Commission Sued to Force Regulation of Pipeline Route – John McFarland @TXOilGasLawPro of Graves Dougherty Hearon & Moody in Austin

8. An Evolution of Google Artificial Intelligence: Virtual Assistant Privacy Concerns – Peggy Keene of Klemchuk LLP @K_LLP in Dallas

7. New Tax Provisions Significantly Impact Treatment of Trusts in Divorce – Law Office of Carey Thompson, PC in Fort Worth

6. Win: Clarification of standard for temporary orders in modification suit – Michelle O’Neil of O’Neil Wysocki Family Law @ONeilWysocki in Dallas

5. Government Seeks to Collect $1.1 Million for Unreported Swiss Accounts – Law Office of Kunal Patel, PLLC in Houston

4. DFW Airport Immune from Suit for Alleged Breach of “Good-Faith-Efforts” Agreement – Lyndon F. Bittle of Carrington Coleman Sloman & Blumenthal LLP @ccsblaw in Dallas

3. According to the Supreme Court of Texas, the Attorney-Client Privilege Remains Intact When Clients Are Expert Witnesses – Okin Adams LLP @OkinAdams in Houston

2. Are No-Poach Agreements Becoming Extinct? – Stephen Fox and Theanna Sedlock of Sheppard Mullin Richter & Hampton in Dallas

1. A Salty Season Finale for ‘Bull’ Offers Great Tips for Witness Examination – Kacy Miller @CourtroomLogic of CourtroomLogic Consulting, LLC in Dallas and Fort Worth

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Judge Confirms $734M Arbitration Award in Vantage Deepwater, Petrobras Drilling Dispute

Originally published by Texas Lawyer.

Two oil and gas companies clashed in federal court in Texas over whether a contract between them was obtained through alleged bribery, revealed through “Operation Car Wash, a massive public corruption investigation in Brazil.

       

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Stories of Recovery: I believe in hope for the hopeless

Originally published by Guest Blogger.

Editor’s note: TLAP offers confidential assistance for lawyers, law students, and judges with substance abuse or mental health issues. Call TLAP at 1-800-343-8527 (TLAP) or find more information at tlaphelps.org.

What did I do last night? Who is mad at me? What did I do at work yesterday afternoon? Did I commit malpractice? Surely, a client will sue me soon. I wonder if anyone knew I was drunk when I came back to court after lunch last week. I am not going to drink today. Maybe I should end it all. If being a lawyer weren’t so stressful, I wouldn’t have to drink like I do. Screw it; I’ll quit drinking tomorrow.

Those thoughts, or some variation of them, came to my head every day in the last years of my drinking. I imbibed a fair amount in college, and my drinking progressed rapidly in the brief time between getting my undergraduate degree and attending law school. Drinking was fun, and it fit in well with the lifestyle of my early 20s. I quickly discovered that being a law student was not compatible with my style of drinking, and as a result, I found myself able to quit on my own. Not drinking at all during that first year proved a wise decision: I finished in the top 10 percent of my class. I started consuming again during my second year, but I was drinking wine only. I didn’t think it was a big deal and was able to maintain my grades.

After law school, I got a job with a 100-plus firm. I ratcheted up my drinking during that time—it was a great stress reliever. I didn’t drink much in the daytime during the week, but my weekends were packed with all sorts of excuses to start in the morning. Brunch was a great one. I began to realize, though, that I couldn’t have just one or two drinks. On the rare occasion when I did, I would become irritable or obsessed with getting home and away from the people I was with so I could drink the way I wanted—which was more. By “more” I mean all. I eventually left the firm and went to work for myself. It was magical. I did not have a boss to look over my shoulder. In fact, my boss thought it was OK to have a little drink in the morning to help ease the hangover. Gone was the time of drinking to party or relieve stress; I wanted oblivion to drown out how intolerable my life was becoming. And, down it went for a couple more years.

I showed up on the doorsteps of Alcoholics Anonymous with dozens of failed, or failing, personal relationships, my business in the gutter, operating on credit and living on borrowed time with a few clients I still had and a case of delirium tremens. (The convulsions and fainting had ended but my hands still shook quite a bit.) I wanted to end my life but did not have the courage, and I realized that alcohol was going to take at least 20 more years to do the job for me. I couldn’t keep living life as I had been living it, and I couldn’t stop drinking, not for anyone or anything. I handed my relationships, money, law practice, and those hard years of law school all over to alcohol without a second thought—and it ruined me. However, in the face of all this evidence, it was nonetheless difficult to convince myself to darken the door of an AA meeting.

At my first meeting, I heard people talking about alcohol in the same manner as I thought about alcohol. I couldn’t believe these people existed. I thought I was the only one who counted everyone else’s drinks at the table, who thought it was ridiculous to only have a few drinks, or who thought it incredulous to stop drinking because “I’m starting to feel the alcohol.” (Note: That is when you start drinking faster and more, in my book.) These AA people, who didn’t look like I had imagined they would, also talked about their antics in a comical tone and were able to laugh at how they used live, while at the same time speaking surprisingly reverently about the problems that active alcoholics face. I decided I would give it a try. I met someone in my first few meetings who told me to start reading the “Big Book” (AA’s term of endearment for Alcoholics Anonymous, the group’s basic text from where it gets its name) and introduced me to the person who would become my sponsor. At first, I did not believe AA would work for me, but I did believe it worked for the people at the AA meetings—and that was enough for me to try.

It has been a few years since that initial meeting. Both my professional life and personal life are better than I could ever have imagined. In sobriety, I have met a core group of other sober lawyers. I never imagined, though I should have, that there are so many lawyers who are recovered drunks. Some of these people I met in the rooms of Alcoholics Anonymous, others through the Texas Lawyers’ Assistance Program. The most important change in my life is that instead of being crippled by fear and totally devoid of hope, I’m engaged in my own life in a hopeful and healthy manner. The rainbows and unicorns of Pollyanna thinking are not a part of my everyday life, but at the same time, I don’t wake up with my hands shaking and wondering if a judge or client realized I was drunk yesterday. I am learning, slowly but surely, how to live a balanced life. To borrow from Brett Dennen, I believe in hope for the hopeless, and I have AA to thank for that.

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Win: Clarification of standard for temporary orders in modification suit

Originally published by Michelle O'Neil.

The 2nd Court of Appeals in Fort Worth issued a very important opinion today in a big win for O’Neil Wysocki’s appellate team on Michelle O’Neil and Karri Bertrand. The underlying order awarded Father the exclusive right to determine the children’s primary residence without regard to geographic restriction and gave each parent the independent right to make educational decisions. Mother filed to modify the orders and sought temporary orders in the modification suit. The trial court left the primary designation with Father but ordered the children to be enrolled in the Mother’s school district. In the intial hearing, the trial court made no finding of significant impairment, but later entered such finding.

This issue has been an open question in modification litigation, as to the meaning of Texas Family Code section 156.006, but is now determined.

In 2017, the Legislature changed 156.006 to include “or the effect of changing or eliminating the geographic area within which a conservator must maintain the child’s primary residence”. Based on this language, the 2nd Court of Appeals held today that limiting the school district within which the children must attend school such order had the effect of changing the primary designation. Thus, the elevated standard — significant impairment — would apply to make such changes in a temporary hearing in a modification suit.

Because section 156.006(b) precludes a trial court from issuing
an order effecting a change in the designation of the person having the right to
designate the children’s primary residence without evidence triggering a statutory
exception to this prohibition, the trial court abused its discretion by effectively
creating a geographic area in which Father must maintain the children’s primary
residence [by restricting the designation of the school].

Read the entire opinion here: Wells opinion

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Holy Smoke! Health Care Employers Must Abate Surgical Smoke Hazards in the Operating Room

Originally published by Seyfarth Shaw LLP.

By Benjamin D. Briggs, James L. Curtis, Adam R. Young, Ariel D. Fenster, and Craig B. Simonsen

Seyfarth Synopsis: Smoke produced during surgical procedures is carcinogenic and can carry pathogens. Employers who fail to abate surgical smoke hazards may face liability from employee injuries and OSHA citations.

Surgical smoke is created during numerous surgical and medical procedures. As NIOSH has explained, “during surgical procedures using a laser or electrosurgical unit, the thermal destruction of tissue creates a smoke byproduct. Research studies confirmed that this smoke plume can contain toxic gases and vapors such as benzene, hydrogen cyanide, and formaldehyde, bioaerosols, dead and live cellular material (including blood fragments), and viruses. At high concentrations the smoke causes ocular and upper respiratory tract irritation in health care personnel, and creates visual problems for the surgeon. The smoke has unpleasant odors and has been shown to have mutagenic potential.”

Sources report that surgical smoke has similar carcinogenic properties to cigarette smoke. The smoke vapors can also carry pathogens, such as infectious bacteria and viruses. Finally, dense surgical smoke can distract surgeons and staff, obscure a surgeon’s vision, and result in disruptive coughing while the surgeon is holding surgical instruments. Consequently, smoke can result in injuries and illnesses to the patient, physician, or operating room staff, including exposures to blood borne pathogens.

The hazards posed by surgical smoke can be abated through the use of a local exhaust ventilation (LEV) system — local suction or overhead exhaust — as well as through Personal Protective Equipment (PPE), in the form of antiviral surgical masks. However, there may be widespread underutilization of these abatements. NIOSH’s Health and Safety Practices Survey of Healthcare Workers, summarized in Secondhand Smoke in the Operating Room? Precautionary Practices Lacking for Surgical Smoke, Am. J. Ind. Med. (Nov. 2016), 59(11):1020-1031, reported that 4,533 survey respondents reported exposure to surgical smoke: “4,500 during electrosurgery; 1,392 during laser surgery procedures. Respondents were mainly nurses (56%) and anesthesiologists (21%). Only 14% of those exposed during electrosurgery reported local exhaust ventilation (LEV) was always used during these procedures, while 47% reported use during laser surgery. Those reporting LEV was always used were also more likely to report training and employer standard procedures addressing the hazards of surgical smoke. Few respondents reported use of respiratory protection.”

Numerous reports indicate that operating room personnel continue to demonstrate a lack of knowledge of these hazards and lack of compliance with recommendations for evacuating smoke during surgical procedures.

OSHA and Tort Liability

Under the OSH Act’s General Duty Clause, health care employers have a general duty to address recognized hazards with a feasible means of abatement. Federal OSHA announced an enforcement position on the issue of surgical smoke, explaining in a Standard Interpretation Letter that employers could be liable for unabated exposures to surgical smoke. Further, under OSHA state plans that require an Injury and Illness Prevention Plan (such as California and Washington State), employers are required to train employees on the hazards in their workplaces. States such as Rhode Island and Colorado have taken it a step further enacting “Surgical Smoke Evacuation Laws” which require facilities to adopt and implement policies that prevent human exposure to surgical smoke via the use of a surgical smoke evacuation systems. Accordingly, health care employers who fail to train perioperative personnel on abatements for surgical smoke face potential OSHA liabilities. Employees and patients who suffer from a cancer or infectious disease at the workplace could similarly bring worker’s compensation or, in limited circumstances, tort claims.

Accordingly, it is imperative that health care employers implement means and methods to control surgical smoke and provide appropriate training to employees on the issue. Failure to do so can result in significant legal liabilities.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Health Care Group, Workplace Safety and Health (OSHA/MSHA) Team, Workplace Counseling & Solutions Team, or the Workplace Policies and Handbooks Team.

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