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Weekly News Roundup: Amazon Workers Strike on Prime Day, Big Companies Fail to Report Deforestation Role

Here are the stories you might have missed last week in the world of corporate law. Read


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Weekly News Roundup: Spain to End Unpaid Overtime, EEOC Files Gender Discrimination Suits

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Weekly News Roundup: Wildfire Settlement, Cross-border Litigation, Deutsche Bank Investigation

Here are the stories you might have missed this week in the world of corporate law. Read


In Brief

Today's Top Story

Cathay Pacific CEO Resigns After China Backlash Over Hong Kong Protests

Hong Kong's flag carrier Cathay Pacific Airways said its chief executive, Rupert Hogg, has resigned, after the airline came under fire from Beijing over its employees taking part in antigovernment protests, reports the Wall Street Journal (16 August, Khan). Hogg, who has been CEO since 2017, is stepping down "to take responsibility as a leader of the company in view of recent events," Cathay said in a statement. The company said Paul Loo, its chief customer and commercial officer, has also resigned. Both executives have been replaced. Augustus Tang, the head of Hong Kong Aircraft Engineering Company, will take over as the carrier's new chief. The surprise announcement occurred amid mounting Chinese regulatory scrutiny of the Hong Kong flag carrier over the involvement of its employees in the city’s protests. The carrier has been shrouded in controversy for days after some of its employees participated in protests against Hong Kong’s government, including a pilot who was charged for rioting. China said last week that it would not allow Cathay flights crewed by people who have taken part in "illegal demonstrations, protests, and violent attacks" to use its airspace, a rule the airline said it would follow. Some companies and individuals in China, one of Cathay’s biggest markets, called for boycotts against the airline. China's aviation authority also said earlier this week that it met with Merlin Swire, the billionaire head of Cathay's biggest shareholder, Swire Pacific.

From "Cathay Pacific CEO Resigns After China Backlash Over Hong Kong Protests"
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Legal Actions

Walmart Must Face Narrowed Whistleblower Case Over Pharmacy Billings

US Magistrate Judge Nancy Joseph in Milwaukee has significantly narrowed a whistleblower lawsuit accusing Walmart of defrauding Medicare through various schemes at its pharmacies. However, Reuters (14 August, Raymond) reports the judge said Walmart must face a claim it dispensed less drugs than it actually billed the government. Joseph ruled that former Walmart pharmacist Jennifer Buth had plausibly alleged that the retailer billed the federal Medicare insurance program for medications that it did not really dispense.

From "Walmart Must Face Narrowed Whistleblower Case Over Pharmacy Billings"
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Regulatory Developments

Labor Dept. Moves to Expand Religious Exemption for Hiring and Firing

The US Labor Department said Wednesday that it is seeking to loosen restrictions on federal contractors who may want to make employment decisions on religious grounds, reports the New York Times (15 August, Scheiber). Labor released a statement affirming its commitment to "the broadest protection of religious exercise recognized by the Constitution and other laws," but rights advocates are cautioning that the move could lead to taxpayer-funded discrimination. Naomi Goldberg, the policy research director at a pro-LGBT think tank, said the expanded rules could allow federal contractors to fire unmarried pregnant workers, unmarried cohabitating workers, LGBT workers, and workers who cannot or will not sign a statement of faith. Patricia Shiu, who oversaw compliance for federal contractors in the Obama administration, cast doubt on the necessity of the move and worried that it would erode civil rights protections for workers. Jennifer Pizer of Lambda Legal, an LGBT advocacy group, concurred. "If you want to work for the public, with public money, you have to be willing to employ the public," Pizer said. But proponents of the change argued that the expanded guidelines are necessary to align rules for federal contractors with broader civil rights rules for all companies in the United States. The public has 30 days to comment on the Labor proposal before the department can issue a final version. The Labor announcement comes just months before the Supreme Court will hear three cases during which Trump administration lawyers will argue about the breadth of civil rights law as it relates to employers discriminating on religious grounds.

From "Labor Dept. Moves to Expand Religious Exemption for Hiring and Firing"
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Vietnam Aims to Sell Stakes in Nearly 100 State Firms by End of 2020

The Vietnamese government said Thursday that it plans to sell stakes in almost 100 state-owned firms by the end of 2020 in an attempt to speed up its privatization process, reports Reuters (15 August, Vu). For the last few years, Vietnam has been selling stakes in state companies to improve the companies' performance and bring money in, but sales have slowed in recent times. Vietnam's new push for sales will include up to 35 percent stakes in companies like Agribank, the country's biggest bank by assets, as well as Vietnam National Coal-Mineral Industries Holding Corp. and Vietnam Northern Food Corp. Meanwhile, the government said it would sell up to 50 percent stakes in MobiFone, Vietnam Posts and Telecommunications Group, and Vietnam National Chemical Group. The government is looking to sell 100 percent of Vietnam Paper Corp. and two power-generating units of Vietnam Electricity Group.

From "Vietnam Aims to Sell Stakes in Nearly 100 State Firms by End of 2020"
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Governance

Burford Reassigns CFO After Concerns Over Marriage to CEO

Burford Capital reassigned its finance chief, who is married to the chief executive, following investors’ concerns about their relationship, reports the Wall Street Journal (15 August, Maurer). Elizabeth O'Connell will now become chief strategy officer. Jim Kilman, who most recently served as vice chairman of Morgan Stanley Investment Banking, has agreed to take the CFO position immediately. US short seller Muddy Waters recently accused Burford Capital of poor corporate governance and mismarking the value of legal cases it invests in. Muddy Waters cited the Burford executives' marriage as a prime example of poor governance in its report.

From "Burford Reassigns CFO After Concerns Over Marriage to CEO"
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Board/Management Relations

E*Trade CEO Replaced by COO

E*Trade Financial CEO Karl Roessner has stepped down after less than three years at the reins, reports AdvisorHub (14 August). Roessner was appointed chief executive in September 2016 after serving as E*Trade's general counsel for the previous seven years. He has agreed to stay on as an advisor to the company until the end of December. Roessner has been succeeded by COO Michael A. Pizzi, effective immediately. Pizzi has been with E*Trade since 2013, serving as chief financial officer and chief risk officer before becoming COO.

From "E*Trade CEO Replaced by COO"
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Labor and Employment

Mars, Nestle, Other Food Companies Face Complaints of Forced Labor at Palm Oil Supplier

Palm oil, an ingredient found in many packaged foods, typically flies under the radar, but recent allegations about the working conditions at a Malaysian palm oil company have brought it into an unwelcome spotlight, reports the Washington Post (15 August, Whoriskey). The Malaysian company, FGV Holdings Berhad, is one of the world's largest producers of palm oil, but it faces legal petitions seeking to exclude its palm oil from the United States following reports that it subjects migrant workers to forced labor. The three groups seeking to cut off support for FGV are arguing that the company lured migrants to plantations and provided intolerable treatment, like forcing the migrants to accrue debt, confiscating their passports, forbidding them from leaving the farms, and providing them with contracts in languages they do not understand. One group alleged that FGV may have used child labor. FGV specifically denied the child labor accusation, but did not address the other allegations. Judy Gearhart, the executive director of the International Labor Rights Forum, one of the three groups seeking to block FGV, said that conditions at FGV facilities have been well-known for years. Even so, companies like Procter & Gamble, Mars, Nestlé, Hershey, Pepsi, and Mondelez have continued to buy palm oil from FGV. A Hershey official confirmed that the company is looking elsewhere for palm oil, while Mars and Nestlé said they have asked FGV to address the complaints.

From "Mars, Nestle, Other Food Companies Face Complaints of Forced Labor at Palm Oil Supplier"
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Technology

LGBTQ+ Creators File Lawsuit Charging YouTube With Discrimination

In a federal lawsuit, a group of LGBTQ+ video creators charged YouTube with discriminating against their content, reports Engadget (15 August, Fisher). The suit alleges that YouTube deploys "unlawful content regulation, distribution, and monetization practices that stigmatize, restrict, block, demonetize, and financially harm the LGBT plaintiffs and the greater LGBT community." The plaintiffs contend that YouTube's algorithms and human reviewers likely single out and remove content featuring such words as "gay" and "lesbian."

From "LGBTQ+ Creators File Lawsuit Charging YouTube With Discrimination"
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Cybersecurity

Tokyo Games' Corporate Sponsors Begin Drills to Counter Potential Cyberattacks

The Japan Times (14 August) reports that corporate sponsors of next summer's Tokyo Olympics have ramped up their preparations to deal with potential cyberattacks. Hackers took down a state government website prior to the 2016 Rio de Janeiro Games and triggered a systems failure before the opening ceremonies of the 2018 Pyeongchang Winter Games. Tokyo sponsors are determined to have a robust cybersecurity strategy protecting the games. Recently, a total of 57 corporate sponsors sent risk management and information technology representatives to a meeting for a cyberattack drill. Those representatives had to respond to a simulation that involved ransomware and identity fraud. Fujitsu, which designed the simulation, also provided a service that cuts any computer suspected to be the victim of a cyberattack from a company's network, theoretically isolating hackers.

From "Tokyo Games' Corporate Sponsors Begin Drills to Counter Potential Cyberattacks"
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Food and Beverage

Food Groups' Fight Over Wheat Manipulation Re-Erupts

Mondelez International, Kraft Heinz, and the US Commodity Futures Trading Commission (CFTC) renewed a long-running dispute just hours after a federal judge formally concluded it, reports the Financial Times (15 August, Meyer). The fight began in 2015, when the CFTC accused Mondelez and Kraft of manipulating the US wheat futures market back in 2011 when the two companies were still joined together. The CFTC alleged that the two companies, at that time called just Kraft Foods, ended up with US$5.4 million as a result of the manipulation. The case went before Judge Robert Blakey of the US District Court in Chicago. All three parties agreed to settle in March, and Blakey awarded the CFTC with a US$16 million penalty from Mondelez. But one of the conditions of the settlement was that the CFTC could not publicly comment about the case—and Mondelez and Kraft seethed after the regulator announced the deal. "We strongly disagree with the CFTC's statements, which blatantly violate and misrepresent the terms and spirit of the consent order, and will be seeking immediate relief from the courts," the companies vowed in separate statements. Meanwhile, individual members of the CFTC were not banned from releasing statements, and two of them took advantage of that to criticize the gag clause in the settlement.

From "Food Groups' Fight Over Wheat Manipulation Re-Erupts"
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Transportation

Latin American Airline Group Notifies US Authorities of Foreign Bribery Investigation

The Latin American airline group Avianca Holdings announced Thursday that it notified the US Department of Justice and the Securities and Exchange Commission that it is investigating whether it has violated US foreign bribery law. In addition to notifying the US government, Avianca notified the financial superintendent of Colombia, where it is also listed, reports the Wall Street Journal (15 August, Tokar). In its securities filing, Avianca said that it gave free tickets and upgrades to government officials, and admitted that senior management officials and even board members were involved in the illicit travel upgrades. The US Foreign Corrupt Practices Act prohibits companies with ties to the United States from bribing foreign government officials in any way. Avianca is listed on a US stock exchange, and therefore is beholden to follow the guidelines laid out in the Foreign Corrupt Practices Act. In the past, DOJ and SEC have reached settlements with airline companies that provided free travel to government officials. Avianca said in its filing that it hired an outside law firm to investigate when it found out about the free tickets and upgrades in 2017. Since then, Avianca has instituted new rules and policies to prevent similar actions in the future.

From "Latin American Airline Group Notifies US Authorities of Foreign Bribery Investigation"
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Trade Issues

South Korea President Calls for Talks to End Trade Row With Japan

South Korean President Moon Jae-in said Thursday that his government was willing to sit down with Japan for talks to end the countries' escalating trade dispute, reports the Associated Press (15 August, Tong-Hyung). Moon made his comments in a nationally televised speech marking the 74th anniversary of the liberation of Korea during World War II. He said that countries that experience early success in a given sector or industry should not "kick the ladder away" from other nations trying to achieve similar success, adding that his country would "gladly join hands" with Japan if they could sit down to talk through their dispute. South Koreans have expressed anger recently at what they perceive as Tokyo's decision to target their economy by weaponizing trade. Moon used tougher rhetoric on Japan earlier in the week, but softened his stance Thursday as experts suggested that Japan's trade moves may not damage the South Korean economy as much as previously thought.

From "South Korea President Calls for Talks to End Trade Row With Japan"
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