543 Search Results

July 7, 2020 |
Gibson Dunn Named the 2020 New York Litigation Department of the Year

The New York Law Journal named Gibson Dunn as the General Litigation winner in its 2020 Litigation Department of the Year contest. The list was published on June 29, 2020. Acclaimed as a litigation powerhouse, Gibson Dunn and the members of the firm’s Litigation Practice Group have a long record of outstanding successes.  The members of our Litigation Practice Group are not just litigators, they are first-rate trial lawyers.  Each year, we try numerous cases to verdicts before juries, judges and arbitrators.  Our clients have trusted us to try their most significant disputes to verdict.  We have tried cases and argued appeals before the U.S. Supreme Court and state supreme courts in addition to federal and state courts across the United States involving almost every foreseeable area of controversy.  We also handle disputes before a wide variety of nonjudicial forums, from federal and state agencies to international arbitrations.

June 30, 2020 |
Directors’ duties in the age of COVID-19: where to from here?

London partner Susy Bullock is the co-author of “Directors' duties in the age of COVID-19: where to from here?" [PDF] published in the July/August 2020 issue of the Buttersworths Journal of International Banking and Financial Law.

June 30, 2020 |
Supreme Court Reins In, But Does Not Overturn, SEC’s Disgorgement Authority

New York partner Barry Goldsmith, Denver partner Frederick Yarger, and New York associate Jonathan Seibald are the authors of  "Supreme Court Reins In, But Does Not Overturn, SEC's Disgorgement Authority," [PDF] published by the New York Law Journal on June 25, 2020.

June 26, 2020 |
Best Lawyers in Germany 2021 Recognizes 19 Gibson Dunn Attorneys

Best Lawyers in Germany 2021 has recognized 19 Gibson Dunn attorneys as leading lawyers in their respective practice areas. Frankfurt attorneys recognized include: Alexander Klein – Banking and Finance Law; Jens-Olrik Murach – Competition/Antitrust Law, and Litigation; Dirk Oberbracht – Corporate Law, Mergers and Acquisitions Law, and Private Equity Law; Wilhelm Reinhardt – Corporate Law, and Mergers and Acquisitions Law; Sebastian Schoon – Banking and Finance Law; and Finn Zeidler – Arbitration and Mediation, Criminal Defense, and Litigation. Munich attorneys recognized include: Silke Beiter – Corporate Governance and Compliance Practice; Peter Decker – Banking & Finance, Private Equity Law, and Real Estate Law; Lutz Englisch – Corporate Governance and Compliance Practice, Corporate Law, Mergers and Acquisitions Law, and Private Equity Law; Ralf van Ermingen-Marbach – Criminal Tax Practice; Birgit Friedl – Restructuring and Insolvency Law; Ferdinand Fromholzer – Corporate Law, Mergers and Acquisitions Law, and Private Equity Law; Kai Gesing – Litigation; Markus Nauheim – Arbitration and Mediation, Corporate Law, Litigation, and Mergers and Acquisitions Law; Markus Rieder – Arbitration and Mediation, Corporate Governance and Compliance Practice, International Arbitration, and Litigation; Hans Martin Schmid – Real Estate Law; Benno Schwarz – Corporate Governance and Compliance Practice, Corporate Law, Criminal Defense, and Mergers and Acquisitions Law; Michael Walther – Competition/Antitrust Law; and Mark Zimmer – Corporate Governance and Compliance Practice, Criminal Defense, Labor and Employment, and Litigation. The list was published on June 26, 2020.

June 22, 2020 |
Benchmark Litigation Asia-Pacific Top 100 Women in Litigation Recognizes Two Partners

Benchmark Litigation named Hong Kong partners Kelly Austin and Elaine Chen to its inaugural 2020 list of the Asia-Pacific Top 100 Women in Litigation, which recognizes Asia-Pacific’s leading female trial lawyers. The list was published on June 18, 2020. Kelly Austin is the Partner-in-Charge of the Hong Kong office. Her practice focuses on government investigations, regulatory compliance and international disputes. She has extensive expertise in government and corporate internal investigations, including those involving the Foreign Corrupt Practices Act and other anti-corruption laws, and anti-money laundering, securities, and trade control laws. She also regularly guides companies on creating and implementing effective compliance programs. Elaine Chen represents companies and high-net-worth individuals in civil and commercial litigation and disputes, including a full range of banking, contractual, tort, companies, trust and tax matters. She has particular experience in tax, contentious probate and estate administration, mental health, private wealth, and boardroom and shareholders disputes. She has acted as legal adviser to many Hong Kong and overseas-listed corporations and financial institutions, and ultra-high net worth individuals and trusts and has wide-ranging experience in challenging big ticket litigation.

June 12, 2020 |
Best Lawyers in the United Kingdom 2021 Recognizes 12 Gibson Dunn Attorneys

Best Lawyers in the United Kingdom 2021 has recognized 12 Gibson Dunn attorneys as leading lawyers in their respective practice areas: Cyrus Benson – International Arbitration; Thomas Budd – Real Estate Finance; Gregory Campbell – Private Equity Law; James Cox – Employment Law; Patrick Doris – International Arbitration; Charlie Geffen – Mergers and Acquisitions Law, and Private Equity Law; Penny Madden – International Arbitration; Mitri Najjar – Corporate Law; Philip Rocher – Litigation; Alan Samson – Financial Services, Real Estate Finance, and Real Estate Law; Jeffrey Sullivan – International Arbitration; and Steve Thierbach – Capital Markets Law. The list was published on June 9, 2020.

June 1, 2020 |
Susy Bullock Rejoins Gibson Dunn as a Disputes Partner in London

Gibson, Dunn & Crutcher LLP is pleased to announce that Susy Bullock has rejoined the firm’s London office as a partner.  Bullock, formerly a Managing Director and Head of EMEA Litigation at UBS, will focus on helping clients, particularly those in the financial services sector, navigate a wide range of disputes and business and human rights issues. “We’re excited to welcome Susy back to Gibson Dunn,” said Ken Doran, Chairman and Managing Partner of Gibson Dunn.  “Susy is a highly regarded lawyer whose mix of private and in-house experience will prove invaluable for clients facing complex, high-stakes challenges.” “We’re very pleased that Susy is returning to our London team,” said James Cox, Co-Partner-in-Charge of the London Office.  “She was an outstanding associate during her time with us, and her success in-house is a reflection of her technical excellence, strong personality and natural leadership qualities.” “I’m thrilled to be back at Gibson Dunn,” said Bullock.  “I was privileged to work with a fantastic legal team and business partners during my time at UBS, as well as corporate social responsibility colleagues across the banking sector.  I look forward to using my in-house experience to support clients as they deal with commercial disputes and address corporate social responsibility and sustainability issues.” About Susy Bullock Before returning to Gibson Dunn as a partner, Bullock spent nearly six years at UBS from 2013 to 2019, beginning with a one-year secondment from the firm.  During her tenure at UBS, she served as Head of EMEA Litigation October 2017 to June 2019 and rose to the position of Managing Director.  She was an associate at Gibson Dunn from 2009 to 2014. Bullock gained a First Class law degree from the University of Cambridge in 2004.

May 13, 2020 |
A Glimpse Behind the Curtain: Insights to SEC Enforcement During the Pandemic and Tips for Mitigating Investigative Risk

Click for PDF In a speech on May 12, 2020, Steven Peikin, Co-Director of the U.S. Securities and Exchange Commission’s Division of Enforcement, provided insights on the Division’s enforcement priorities in light of the pandemic, as well as how the Division is managing the investigative process under remote work conditions.[1]  The remarks provide helpful guidance on how companies and financial institutions can mitigate risk of investigative scrutiny for financial shocks resulting from the pandemic. In response to the pandemic, the Enforcement Division has formed a Coronavirus Steering Committee, comprised of leadership from the Home and Regional Offices, the specialized units and the Office of Market Intelligence, to identify areas of potential misconduct and coordinate the Division’s response to COVID-19 related issues.  The below areas of regulatory focus provide a helpful roadmap for companies and financial institutions, and reinforce the guidance we provided in our prior alert, to reduce the risk of drawing scrutiny.

  • Insider Trading and Market Manipulation: The rapid and dramatic impact of the pandemic on the financial performance of companies increases the potential for trading that could be perceived as attributable to material non-public information.  The Steering Committee is working with the Division’s Market Abuse Unit to monitor announcements in industries particularly impacted by COVID-19 and to identify potentially suspicious market movements.
  • Accounting Fraud: As with other financial crises, the pandemic is likely to expose previously undisclosed financial reporting issues, as well as give rise to rapidly evolving financial reporting and disclosure challenges.  The Steering Committee is on the lookout for indications of potential disclosure and reporting misconduct.  In particular, the Steering Committee is reviewing public filings with an eye toward disclosures that appear out of step to companies in similar industries.  The Committee is also looking for  accounting that attempts to inaccurately characterize preexisting financial statement issues as coronavirus related.
  • Asset Management: Asset managers confront unique challenges created by the pandemic, including with respect to valuations, liquidity, disclosures, and the management of potential conflicts among clients and between clients and the manager.  The Steering Committee is working with the Division’s Asset Management Unit to monitor these issues, including failures to honor redemption requests, which could reveal other underlying asset management issues.
  • Complex Financial Instruments: As with prior financial crises, the pandemic may reveal risks inherent in various structured investment products.  The Steering Committee is working with the Division’s Complex Financial Instruments Unit to monitor complex structured products and the marketing of those products to investors.
  • Microcap Fraud: The Steering Committee is working with the Division’s Microcap Fraud Task Force and Office of Market Intelligence, and has suspended trading in the securities of over 30 issuers relating to allegedly false or misleading claims related to the coronavirus.
As we discussed in our prior alert, by understanding the issues that can give rise to regulatory scrutiny, and consulting with counsel on how to navigate the unique challenges, issuers and financial institutions can both lower the risk of being in a regulatory spotlight, as well as resolve regulatory inquiries more efficiently. Speaking more broadly on the Enforcement Division’s process during the pandemic, Peikin noted that the Division staff continues to remain engaged despite the new challenges of a remote work environment.  The Division staff has been directed to work with defense counsel and others to reach reasonable accommodations concerning document production, testimony, interviews and counsel meetings, given the challenges of the pandemic, but also cautioned that the staff will need to protect potential claims and won’t agree to an indefinite hiatus in investigations or litigations.  In particular, Peikin noted that in instances where defense counsel would not agree to tolling agreements, the Division will consider recommending that the Commission commence an enforcement action, despite an incomplete investigative record, and will rely on civil discovery to further support its claims. Predictably, the pandemic has already led to a marked increase in Enforcement investigations and whistleblower tips.  Since mid-March, the Division has opened hundreds of new investigations concerning issues related both to COVID-19 as well as traditional areas of investigation.  In addition, the Division has triaged more than 4,000 whistleblower tips since mid-March, a 35% increase over the same period last year.  Since March 23, the Commission has granted nine whistleblower awards, including one for over $27 million (though these awards were clearly in the pipeline long before the pandemic).  Nevertheless, the notable increase in whistleblower complaints further reinforces the guidance in our prior alert on how companies can manage the heightened risks of whistleblowers resulting from the pandemic. In sum, Peikin noted that while there is uncertainty ahead, the Enforcement Division expects the pandemic will result in increased enforcement activity as the market decline and volatility will lead to investigations of potential past misconduct as well as potential new misconduct. ____________________ [1]   See May 12, 2020 Keynote Address: Securities Forum West 2020, available at https://www.sec.gov/news/speech/keynote-securities-enforcement-forum-west-2020.
Gibson Dunn lawyers regularly counsel clients on the issues raised by this pandemic.  For additional information, please contact any member of the firm’s Coronavirus (COVID-19) Response Team, the Gibson Dunn lawyer with whom you usually work in the firm’s Securities Enforcement Practice Group, or the following authors: Mark K. Schonfeld – New York (+1 212-351-2433, mschonfeld@gibsondunn.com) Tina Samanta – New York (+1 212-351-2469, tsamanta@gibsondunn.com)   © 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

May 12, 2020 |
New York Appellate Division, First Department Lifts March 2020 Suspension Order, Reinstating Key Appellate Deadlines and Effectively Reopening the Court for New Appeals

Click for PDF New York State’s Appellate Division, First Department handles over 3,000 appeals each year—more than the number of appeals pending in eight of the federal appellate courts in 2019.  Its docket includes some of the most high-profile and significant commercial appeals in the State and the nation, as it reviews trial-level decisions issued by the Manhattan branch of the New York Supreme Court, Commercial Division.[1]  The Appellate Division is often the final word in a given case; the only courts that can review its decisions—the New York Court of Appeals (New York’s high court) and the U.S. Supreme Court—control their own dockets and take relatively few cases for consideration. On March 17, 2020, the First Department issued an order “suspend[ing] indefinitely and until further directive of the Court,” all perfection, filing, and other deadlines, except for matters that were already perfected for the May 2020 and June 2020 Terms of the First Department.[2]  The order essentially closed the Court to new appeals and left the First Department’s Fall calendar in COVID-19-related limbo.  But on May 8, 2020 the First Department rescinded the March 17, 2020 Order and reinstated “the deadlines for the remaining 2020 terms of the Court (September through December 2020 terms).”[3]  The First Department is in all material respects now back open for business for new appeals. The details of the May 8 Order are important for any party considering taking an appeal to the First Department.  And virtually any trial court-level decision or order, even if interlocutory, can be appealed to the Appellate Division under New York’s unusually broad appealability rules.  But failure to comply with the Court’s deadlines in some instances can result in a dismissal of the appeal.[4] First Department Filing Deadlines.  Filing deadlines for appeals in the First Department are driven by the First Department’s Term calendar and rules for “perfecting” appeals.  In general, an appeal is deemed “perfected” when the appellant’s brief, the record on appeal or the appendix, and the notice of argument are collectively filed with the First Department and served on the respondent.[5]  The First Department’s rules provide that, except where the Court has directed that appeal be perfected by a particular time, an appeal must be perfected within six months from the date of the notice of appeal.[6]  If an appellant fails to perfect the appeal within six months, or the deadline set forth in an applicable Court order, “the matter shall be deemed dismissed without further order.”[7]  However, the appellant can decide when to perfect the appeal within the allotted six-month period. The appellant must also perfect the appeal for a specific “Term” of the Court.  The First Department has monthly Terms from January through June and September through December, in advance of which the Court accepts submissions at set deadlines.[8]  Each Term in the calendar has a designated due date for the appellant to perfect the appeal, the respondent to serve and file the responding brief, and the appellant to serve and file the reply brief.[9]  The “Term” of the Court for which an appeal is perfected determines the month in which the Court will hear oral argument in the case.  Although appellants may perfect an appeal any day in which the Court is open, appellants frequently opt to perfect on the last filing day of a given Term, as this gives the appellant the maximum amount of time to work on opening papers while still being heard in the given Term, and doing so also gives respondent the fewest number of days to review the opening brief and file their responding brief. The March 17 & May 8 Orders and Perfection Deadlines.  The First Department’s March 17, 2020 Order “suspended indefinitely” all perfection, filing, and other appeal deadlines “until further directive of the Court,” except for matters that were already perfected for the May 2020 and June 2020 Terms of the First Department, the perfection deadlines for which had already passed as of March 17.[10]  That means that appellants considering filing any new appeals had no due dates to do so—effectively putting the First Department on a pandemic-induced pause.[11] Now, by reinstating the “deadlines for the remaining 2020 terms,” the May 8 Order effectively reopens the Court for new appeals.  Specifically, the perfection and filing deadlines for the upcoming September through December 2020 Terms, as set forth in the First Department’s calendar issued prior to the outbreak of COVID-19, are reinstated and will remain in effect.[12]  Namely, if an appealing party wants its case to be heard in the September Term (the next available Term), it needs to perfect by July 13, 2020; if it wants to be heard in the October Term, it needs to perfect by August 10, 2020.[13]  And importantly, the March 17 Order did not alter the pre-pandemic deadlines—essentially allowing the Court to return to its regular Fall schedule. While the First Department has reinstated its calendar for the remainder of the year, the requirement that parties file hard copy briefs, records, and appendices with the Court “continues to be suspended until further directive of this Court.”[14] Finally, due to the pandemic, oral argument for the May and June Terms was conducted via videoconference technology.  The Court has not yet provided information on the format for oral argument for the September through December 2020 Terms.  We anticipate that the Court will issue further orders in the coming months providing that information to litigants. Gibson Dunn is monitoring the situation with respect to the First Department and is available to assist with any questions. ____________________ [1]  Appellate Division, First Judicial Department, Supreme Court of the State of New York, http://www.courts.state.ny.us/courts/ad1/ (last visited May 12, 2020); see also Table B—U.S. Courts of Appeals Federal Judicial Caseload Statistics (March 31, 2019), Admin. Office of the U.S. Courts, https://www.uscourts.gov/statistics/table/b/federal-judicial-caseload-statistics/2019/03/31 (last visited May 12, 2020). [2]  Order In the Matter of the Temporary Suspension of Perfection, Filing and other Deadlines During Public Health Emergency, N.Y. App. Div. 1st Dep’t (Mar. 17, 2020), http://www.courts.state.ny.us/courts/ad1/PDFs/Temporary%20Suspension%20Order.pdf [hereinafter March 17 Order]. [3]  Order In the Matter of the Rescission of Temporary Suspension Order, N.Y. App. Div. 1st Dep’t (May 8, 2020), https://www.nycourts.gov/courts/AD1/PDFs/RescissionOrder.pdf [hereinafter May 8 Order]. [4]  22 N.Y.C.R.R. 1250.10(a).  The May 8 Order also sets a new deadline for filing responding and reply papers to motions that were returnable between March 16, 2020 and May 4, 2020, as discussed in more detail below. [5]  22 N.Y.C.R.R. 1250.9(a). [6]  22 N.Y.C.R.R. 1250.9(a), 1250.10(a). [7]  22 N.Y.C.R.R. 1250.10(a). [8]  2020 Calendar, New York Supreme Court, Appellate Division – First Department, https://www.nycourts.gov/courts/AD1/2020calendars.shtml (last visited May 12, 2020) [hereinafter 2020 Calendar]. [9]  Id. [10]  March 17 Order, supra note 2. [11]  Per the March 17 Order, appellants were still permitted to file opening papers initiating a new appeal, should they choose to do so, but those appeals would not be calendared and respondents’ deadlines for filing opposition papers would not be triggered. [12]  May 8 Order, supra note 3. [13]  2020 Calendar, supra note 8. [14]  May 8 Order, supra note 3.  The May 8 Order also set a new deadline for the filing of responding and reply papers on motions that were returnable between March 16, 2020 and May 4, 2020.  Motions in the appellate division include anything from motions to stay trial court proceedings pending appeal and motions for preferences (i.e., an expedited appeal).  Generally, a motion is “returnable” on the date that the motion will be heard by the Court.  The moving party may choose the specific return date, but motions should generally be made returnable at 10:00 a.m. on any Monday in which the Court is open.  22 N.Y.C.R.R. 1250.4(a)(1); CPLR 2214(b).  The deadlines for responding papers and reply papers, if any, are determined based on the return date.  22 N.Y.C.R.R. 1250.4(a)(4), (5); CPLR 2214(b).  The March 17 Order suspended all filing deadlines indefinitely, including the deadlines to file responding papers and reply papers to motions.  The May 8 Order reinstates applicable filing deadlines, and states that for motions that were made returnable between March 16, 2020 and May 4, 2020, the responding and reply papers must be filed by May 22, 2020.


Gibson Dunn’s lawyers are available to assist with any questions you may have regarding developments related to the COVID-19 outbreak. For additional information, please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Coronavirus (COVID-19) Response Team, or the following authors:

Akiva Shapiro - New York (+1 212-351-3830, ashapiro@gibsondunn.com) Lee R. Crain - New York (+1 212-351-2454, lcrain@gibsondunn.com) Grace E. Hart - New York (+1 212-351-6372, ghart@gibsondunn.com) Jason Bressler - New York (+1 212-351-6204, jbressler@gibsondunn.com)

© 2020 Gibson, Dunn & Crutcher LLP

Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

May 5, 2020 |
Benchmark Litigation Asia-Pacific 2020 Names Three Partners Hong Kong Stars

The 2020 edition of Benchmark Litigation Asia-Pacific has recognized three partners as stars in their respective practice areas: Kelly Austin was recognized as a star in Hong Kong White Collar Crime, and Brian Gilchrist and Elaine Chen were both recognized as stars in the Hong Kong Commercial and Transactions category. The Firm was also ranked in Tier 2 in the Hong Kong White Collar Crime - International Firms category. The rankings were published on May 4, 2020. Kelly Austin’s practice focuses on government investigations, regulatory compliance and international disputes.  She has extensive expertise in government and corporate internal investigations, including those involving the Foreign Corrupt Practices Act and other anti-corruption laws, and anti-money laundering, securities, and trade control laws.  She also regularly guides companies on creating and implementing effective compliance programs. Brian Gilchrist practices dispute resolution, with a focus on commercial litigation involving matters concerning banking, insurance, tax, employment, contentious probate, directors’ duties and minority shareholders’ rights. He is also an experienced advisor on regulatory matters and has handled both domestic and multijurisdictional arbitrations. Elaine Chen represents companies and high-net-worth individuals in civil and commercial litigation and disputes, including a full range of banking, contractual, tort, companies, trust and tax matters. Elaine has particular experience in tax, contentious probate and estate administration, mental health, private wealth, and boardroom and shareholders disputes.

May 1, 2020 |
The Constitutional Consequences of Governmental Responses to COVID-19:  The Right to Travel and the Dormant Commerce Clause

Click for PDF The COVID-19 pandemic has resulted in unprecedented governmental actions at the federal, state, and local levels.  Those actions have raised substantial constitutional questions.  In previous alerts, we discussed the constitutional implications of various proposed legislative and executive actions in response to COVID-19, including under the Takings, Contracts, Due Process, and Equal Protection Clauses of the U.S. Constitution.[1]  Here, we flag additional business-related constitutional questions raised by the government’s restrictions on travel, with a particular focus on the extent of a state’s authority to impose restrictions on out-of-state visitors and to restrict interstate travel.  As governments continue to take swift and often unprecedented action in response to the pandemic, additional novel constitutional challenges are likely to arise. As COVID-19 has spread, some state and local governments have erected checkpoints at which they stop, order quarantine of, and even turn away travelers arriving from states with substantial community spread of the virus.[2]  Other states have barred short-term rentals to individuals arriving from out of state, making it impractical to travel to those locations.[3]  And all over the country, states and localities have imposed significant restrictions on their own citizens’ ability to travel even within the state or locality.  While some state quarantine restrictions provide broad exceptions for travelers engaging in commerce, others do not, and in the latter group of states businesses may find routine commercial activity—e.g., interstate transport of goods and employee business travel—far more difficult to conduct.[4] These and similar restrictions implicate the constitutional right to travel.  That right—whose textual source has long remained “elusive”[5]—“embraces at least three different components[:]  the right of a citizen of one State to enter and to leave another State, the right to be treated as a welcome visitor rather than an unfriendly alien when temporarily present in the second State, and, for those travelers who elect to become permanent residents, the right to be treated like other citizens of that State.”  Saenz v. Roe, 526 U.S. 489, 500 (1999).  Under Supreme Court precedent, the right to travel is typically applied to an individual who wishes to travel—not necessarily to goods she wishes to transport.  But since commercial transport today depends in large part upon the movement of people—from the truck driver to the pilot—restraints on an individual’s right to travel necessarily inhibit the transport of goods. State laws implicate the right to travel where, inter alia, they deter, intend to impede, or utilize classifications that punish interstate travel.  Soto-Lopez, 476 U.S. at 903.  And a law that burdens the right to travel is unconstitutional “[a]bsent a compelling state interest.”  Dunn v. Blumstein, 405 U.S. 330, 342 (1972).[6]  In keeping with the right’s multifaceted nature, courts have relied on it to invalidate state restrictions in a variety of contexts.  See, e.g., Soto-Lopez, 476 U.S. at 911 (invalidating New York restriction of civil service preference to veterans entering armed forces while living in state); Mem’l Hosp. v. Maricopa Cty., 415 U.S. 250 (1974) (invalidating Arizona 1-year residency requirement for receiving nonemergency hospitalization or medical care); Crandall v. Nevada, 6 Wall. 35 (1868) (invalidating Nevada tax imposed on individuals leaving state by railroad, coach, or other vehicle transporting passengers for hire). Quarantine and travel restrictions may also raise related questions under the dormant Commerce Clause, which is more often litigated in the commercial context.  Although the Commerce Clause “is framed as a positive grant of power to Congress,” the Supreme Court has “long held that this Clause also prohibits state laws that unduly restrict interstate commerce.”  Tenn. Wine & Spirits Retailers Ass’n v. Thomas, 139 S. Ct. 2449, 2459 (2019).[7]  If a state law affirmatively discriminates against interstate transactions, it is presumptively invalid, passing constitutional muster only if its “purpose could not be served as well by available nondiscriminatory means.”  See Maine v. Taylor, 477 U.S. 131, 138 (1986); see also Granholm v. Herald, 544 U.S. 460 (2005).  If a law is nondiscriminatory, courts require that the law’s benefits to the state exceed its burden on interstate commerce.  See Taylor, 477 U.S. at 138.  But the dormant Commerce Clause doctrine admits two exceptions:  (i) state laws authorized by valid federal laws, and (ii) states acting as “market participants,” which covers distribution of state benefits and the actions of state-owned businesses.  See Ne. Bancorp v. Bd. of Governors of Fed. Reserve Sys., 472 U.S. 159, 174 (1985); White v. Mass. Council of Constr. Emp’rs, 460 U.S. 204, 206–08 (1983).[8]  Dormant Commerce Clause analysis is often fact-intensive, especially when the balancing test for nondiscriminatory laws is applied.  See Pike v. Bruce Church, 397 U.S. 137, 139–42 (1970). The more restrictive dormant Commerce Clause standard may well apply in the COVID-19 context, where certain quarantine requirements appear facially discriminatory by applying only to out-of-state travelers.  As a result, such requirements would be presumed invalid unless there are no available nondiscriminatory means that can advance its purposes.  While a high threshold, this test is not a death knell for the travel restrictions.  The Supreme Court and other courts have upheld discriminatory laws at times, with significant deference to the factual findings of lower courts.  See Taylor, 477 U.S. at 141, 146–48 (upholding Maine restriction on importation of out-of-state baitfish, finding no “clear[] err[or]” in the district court’s factual findings regarding the effects of baitfish parasites and non-native species on Maine’s wild fish population); see also Shepherd v. State Dep’t of Fish & Game, 897 P.2d 33, 41–43 (Alaska 1995) (holding that requirements giving hunting preferences to Alaska residents adequately promoted state interest in “conserving scarce wildlife resources for Alaska residents”). Any challenge under either the right to travel or the dormant Commerce Clause would likely be evaluated based on the breadth and severity of the restrictions on travel, the difference (if any) on the treatment of in-state and out-of-state residents, the exigencies and public health needs faced by the geographic area at issue, the impact on interstate commerce of the restrictions challenged, the feasibility and efficacy of alternative, narrower constraints on movement that just as successfully combat the spread of the virus, and whether quarantine requirements and other restrictions are properly calibrated to achieve their public-health objectives.  In addressing these issues, courts may also consider whether states are acting pursuant to federal law and, where it is the federal government that is acting, whether it is acting pursuant to the Spending Clause.  See U.S. Const. art. I, § 8, cl. 1. In evaluating challenges under both the right to travel and the dormant Commerce Clause doctrines, courts will look to the limited precedent arising in the context of quarantines.  In cases that generally pre-date modern jurisprudence on the right to travel and the dormant Commerce Clause, the U.S. Supreme Court has upheld quarantines—particularly those imposed pursuant to states’ police powers—for public health reasons.  In Compagnie Francaise de Navigation a Vapeur v. Board of Health of State of Louisiana, 186 U.S. 380 (1902), for example, the Court upheld a New Orleans ordinance prohibiting all domestic and foreign travelers—regardless of health status—from entering the city because of a yellow fever outbreak, noting that it was “not an open question” that state quarantine laws are constitutional, even where they affect interstate commerce.  Id. at 387.  On the other hand, some courts have rejected quarantine measures when imposed against individuals for whom the state had no reasonable basis to suspect individual infection or exposure to the disease.  See, e.g., In re Smith, 40 N.E. 497, 499 (N.Y. 1895) (rejecting Brooklyn quarantine of individuals who had refused smallpox vaccination as overbroad under New York health law which, because it affected “the liberty of the person,” was to be “construed strictly,” without explicitly referencing the right to travel). In the event that states’ quarantine requirements in response to COVID-19 face constitutional challenges, courts may be called upon to reconcile these lines of precedent—weighing the fundamental right to free travel and entitlement to equal treatment for out-of-state citizens against the compelling need to prevent the spread of contagion.  Courts will likely also consider precedent recognizing the states’ well-established “police power” in addressing public health crises.  See, e.g., Jacobson v. Massachusetts, 197 U.S. 11, 38 (1905) (upholding state’s mandatory vaccination during smallpox outbreak); Phillips v. City of New York, 775 F.3d 538, 542 (2d Cir. 2015) (relying on Jacobson in rejecting substantive due process and free exercise challenges to New York mandatory school vaccination requirement).  Courts may likewise consider the fact that quarantines necessarily require establishing boundaries, which logically may be drawn using existing state or municipal borders. Furthermore, in an environment in which states have adopted divergent approaches to quarantines and similar restrictions, courts may bear important principles of federalism in mind.  Nearly a century ago, Justice Brandeis lauded the states as “laborator[ies]” for “novel social and economic experiments,” New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932)—a famous phrase that may sound more literal than metaphorical today.  While the Constitution guarantees liberty in interstate travel and trade, it also seeks to protect the autonomy and creativity of the individual states.  And those principles may well conflict if, for instance, one state determines that more restrictive quarantine measures are appropriate than a sister state.  Resolution of any such conflict may require, as with many issues related to COVID-19, a challenging balance of individual liberty and federalism interests.  As federal, state, and local governments continue to restrict the movement of people and goods in response to COVID-19, it is unclear whether their actions will be challenged under the constitutional provisions outlined above, much less how those challenges would fare in court.  Nonetheless, constitutional constraints on governmental action remain significant.  Even in these unprecedented times, all levels of government must make sure to implement responses that grant proper deference to the principles and precedent underlying the constitutional provisions discussed above. _________________________   [1]  See Constitutional Implications of Government Regulation and Actions in Response to the COVID-19 Pandemic (Mar. 27, 2020), https://www.gibsondunn.com/constitutional-implications-of-government-regulations-and-actions-in-response-to-the-covid-19-pandemic/; Constitutional Implications of Rent- and Mortgage-Relief Legislation Enacted in Response to the COVID-19 Pandemic (Apr. 15, 2020), https://www.gibsondunn.com/constitutional-implications-of-rent-and-mortgage-relief-legislation-enacted-in-response-to-the-covid-19-pandemic/; New York Governor v. New York City Mayor:  Who Has the Last Word on New York City’s Business Shutdown? (Apr. 18, 2020), https://www.gibsondunn.com/new-york-governor-v-new-york-city-mayor-who-has-the-last-word-on-new-york-citys-business-shutdown/.   [2]  See, e.g., Fla. Exec. Order No. 20-86 (Mar. 27, 2020) (directing establishment of road checkpoints and mandating self-quarantine for travelers from states with substantial community spread of COVID-19), available at https://www.flgov.com/wp-content/uploads/orders/2020/EO_20-86.pdf; R.I. Exec Order No. 20-12 (Mar. 26, 2020), (requiring travelers from New York to self-quarantine for 14 days), available at http://www.governor.ri.gov/documents/orders/Executive-Order-20-12.pdf; see also Joe Barrett, Tourist Towns Say, ‘Please Stay Away,’ During Coronavirus Lockdowns, Wall St. J., Apr. 6, 2020 (discussing Florida Keys ban on visitors but not property owners, and Cape Cod petition to turn away visitors and nonresident homeowners from bridges that provide the only road access to the area), https://www.wsj.com/articles/tourist-towns-say-please-stay-away-during-coronavirus-lockdowns-11586165401?.   [3]  See, e.g., Fla. Exec. Order No. 20-87 (Mar. 27, 2020) (suspending certain vacation rentals on the basis that “vacation rentals and third-party platforms advertising vacation rentals in Florida present attractive lodging destinations for individuals coming into Florida”), available at https://www.flgov.com/wp-content/uploads/orders/2020/EO_20-87.pdf.   [4]  Compare, e.g., Fla. Exec. Order No. 20-86 (exempting “persons involved in any commercial activity” from self-quarantine requirement), with Second Supplementary Proclamation – COVID-19, Office of the Governor, State of Hawaii (Mar. 21, 2020) (exempting only “persons performing emergency response or critical infrastructure functions who have been exempted by the Director of Emergency Management” from Hawaii out-of-state self-quarantine requirement), available at https://governor.hawaii.gov/wp-content/uploads/2020/03/2003152-ATG_Second-Supplementary-Proclamation-for-COVID-19-signed.pdf.   [5]  Attorney Gen. of N.Y. v. Soto-Lopez, 476 U.S. 898, 902 (1986).  The right to travel “has been variously assigned to the Privileges and Immunities Clause of Art. IV, to the Commerce Clause, and to the Privileges and Immunities Clause of the Fourteenth Amendment.”  Id. (citations omitted); see also Jones v. Helms, 452 U.S. 412, 418 (1981) (“Although the textual source of this right has been the subject of debate, its fundamental nature has consistently been recognized by this Court.”).  The Supreme Court has also stated that the right is “part of the ‘liberty’ protected by the Due Process Clause of the Fourteenth Amendment.”  City of Chicago v. Morales, 527 U.S. 41, 53 (1999) (plurality opinion).   [6]  The Supreme Court has distinguished the constitutional right to interstate travel from the freedom to travel abroad; the former is “virtually unqualified,” while the latter is “no more than an aspect of the ‘liberty’ protected by the Due Process Clause [and] can be regulated within the bounds of due process.”  Haig v. Agee, 453 U.S. 280, 306–07 (1981) (quoting Califano v. Aznavorian, 439 U.S. 170, 176 (1978)).   [7]  In recent years, “some Members of the [Supreme] Court have authored vigorous and thoughtful critiques” of the dormant Commerce Clause.  Tenn. Wine, 139 S. Ct. at 2460 (collecting opinions of Justices Gorsuch, Scalia, and Thomas).  “But,” the Court noted last term, “the proposition that the Commerce Clause by its own force restricts state protectionism is deeply rooted in our case law.”  Id.   [8]  Where governmental actions are challenged on a basis other than the dormant Commerce Clause (e.g., the Due Process Clause), other considerations may of course be relevant to an analysis of the action’s constitutionality.


Gibson Dunn’s lawyers are available to assist with any questions you may have regarding these developments.  For additional information, please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Coronavirus (COVID-19) Response Team or its Appellate or Public Policy practice groups, or the following authors: Akiva Shapiro - New York (+1 212.351.3830 , ashapiro@gibsondunn.com) Avi Weitzman – New York (+1 212-351-2465, aweitzman@gibsondunn.com) Patrick Hayden - New York (+1 212.351.5235, phayden@gibsondunn.com) Alex Bruhn* - New York (+1 212.351.6375, abruhn@gibsondunn.com) Jason Bressler - New York (+1 212.351.6204, jbressler@gibsondunn.com) Parker W. Knight III* - New York (+1 212.351.2350, pknight@gibsondunn.com) * Not admitted to practice in New York; currently practicing under the supervision of Gibson, Dunn & Crutcher LLP. © 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

April 30, 2020 |
Gibson Dunn Ranked in Legal 500 EMEA 2020

The Legal 500 EMEA 2020 has recommended Gibson Dunn in 19 categories in Belgium, France, Germany and UAE.  The firm was recognized in Competition – EU and Global in Belgium; Administrative and Public Law, Data Protection, Dispute Resolution – Commercial Litigation, Industry Focus – IT and the Internet, Insolvency, International Arbitration, Mergers and Acquisitions, Private Equity and Tax in France; Antitrust, Compliance, Corporate, Corporate – M&A Large Deals (€500m+), Corporate – M&A Mid-Size Deals (-€500m), Internal Investigations, and Private Equity in Germany; and Corporate and M&A and Investment Funds in UAE. Dubai partner Chézard Ameer, Paris partners Ahmed Baladi and Jean-Pierre Farges, and Munich partner Benno Schwarz were all recognized as Leading Individuals. Frankfurt partner Dirk Oberbracht and Dubai partner Chézard Ameer were also recognized in The Legal 500’s Hall of Fame. Paris of counsel Vera Lukic was listed as a Rising Star. The publication also recommended 37 Gibson Dunn attorneys in their respective practice areas, with some listed in more than one category.

April 27, 2020 |
Supreme Court Holds That The Federal Government Must Reimburse Health Insurers For $12 Billion In Losses

Click for PDF Decided April 27, 2020 Maine Community Health Options v. United States, Nos. 18-1023, 18-1028, 18-1038

Today, the Supreme Court held 8-1 that Congress failed to effectively repeal the government’s obligation to make more than $12 billion in payments to insurers under the Patient Protection And Affordable Care Act risk corridors program, and insurers may sue to recover the missed payments. 

Background: The Patient Protection And Affordable Care Act (“ACA”)—President Obama’s signature health care reform legislation—established “exchanges” on which previously uninsured individuals could purchase health insurance. To mitigate the risk to insurers and encourage them to participate in the new exchanges, the ACA created a three-year “risk corridors” program. Under the program, insurance companies that paid more in health care costs than they received in premiums would receive funds from the government to offset a fixed portion of their losses, while insurance companies that collected more in premiums than they paid in costs would pay back a fixed portion of their profit to the government.

After insurance companies had provided coverage and had set future premium rates, the Department of Health and Human Services announced that it would administer the program in a budget-neutral manner, using “payments in” from profitable insurers to make “payments out” to insurers who suffered losses. Congress later enacted language in an appropriations law limiting other sources of funding for payments out. Insurance companies who suffered losses on the exchanges sued the government in the Court of Federal Claims alleging that they were owed billions of dollars collectively in additional payments out. The Federal Circuit held that the insurers had received all payments due under the program because the appropriations law had “repealed or suspended” the government’s obligation to make additional payments.

Issue: Did Congress limit the government’s obligation to make payments to insurers under the ACA’s risk corridors program by enacting an appropriations law restricting the sources of funds available to satisfy that obligation?

Court's Holding: No. Although Congress may enact legislation repealing its obligation to make future payments, Congress did not clearly repeal its obligation under the ACA to make risk corridor payments, and the health insurers properly brought suit for damages under the Tucker Act in the Court of Federal Claims.

“Th[e] holdings reflect a principle as old as the Nation itself: The Government should honor its obligations.

Justice Sotomayor, writing for the Court

What It Means:
  • The ruling means that insurers can seek more than $12 billion in damages for missed payments under the risk corridors program, to be paid from the Judgment Fund—a standing appropriation by Congress of funds available to pay "final judgments, awards, compromise settlements, and interest and costs” awarded against the federal government. 31 U.S.C. § 1304(a)(1).
  • The decision recognizes that “Congress can create an obligation directly through statutory language” that is “neither contingent on nor limited by the availability of appropriations or other funds.” For the same reason, Congress's decision to cut funding for an obligation does not necessarily repeal the obligation absent manifest evidence of intent to repeal.
  • The decision also clarifies the circumstances under which the government may be sued under the Tucker Act to enforce a statutory obligation. The Tucker Act waives the government’s immunity to monetary claims “founded . . . upon . . . any Act of Congress or . . . upon any express or implied contract with the United States,” 28 U.S.C. § 1491(a)(1), but does not create a cause of action. The Court endorsed longstanding Federal Circuit precedent holding that a statute’s use of the phrase “shall pay” “often reflects congressional intent ‘to create both a right and a remedy’ under the Tucker Act.”

The Court's opinion is available here.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Supreme Court.  Please feel free to contact the following practice leaders:

Appellate and Constitutional Law Practice

Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com Mark A. Perry +1 202.887.3667 mperry@gibsondunn.com Miguel A. Estrada +1 202.955.8257 mestrada@gibsondunn.com
Thomas G. Hungar +1 202.887.3784 thungar@gibsondunn.com Matthew D. McGill +1 202.887.3680 mmcgill@gibsondunn.com

Related Practice: Litigation

Richard J. Doren +1 213.229.7038 rdoren@gibsondunn.com Geoffrey Sigler +1 202.887.3752 gsigler@gibsondunn.com

April 27, 2020 |
Best Practices for Texas Lawyers Negotiating Over Email

Dallas partners Andrew LeGrand and Trey Cox and associate Thomas Molloy are the authors of "Best Practices for Texas Lawyers Negotiating Over Email," [PDF] published by Texas Lawyer on April 24, 2020.

April 27, 2020 |
Debra Wong Yang Named Among 2020 Top Women Attorneys in Los Angeles

The Los Angeles Business Journal named Los Angeles partner Debra Wong Yang among its Top Women Attorneys in Los Angeles, who were “singled out for exceptional legal skill and achievement across the full spectrum of responsibility, exemplary leadership as evidenced by the highest professional and ethical standards, and for contributions to the Los Angeles community at large.” The list was published on April 27, 2020. Debra Wong Yang is Chair of the Crisis Management Practice Group. Drawing on her depth of experience and record of success, Yang focuses part of her practice on strategic counseling.  She leads critical representations, both high profile and highly confidential, involving a wide variety of industries, economic sectors, regulatory bodies, law enforcement agencies, global jurisdictions and all types of proceedings. She also has a strong background in addressing and resolving problems across the white collar litigation spectrum, including through corporate and individual representations, internal investigations, crisis management and compliance.

April 24, 2020 |
When a Commercial Contract Doesn’t Have a Force Majeure Clause: Common Law Defenses to Contract Enforcement

Click for PDF The rapid spread of the COVID-19 pandemic, and stringent government orders regulating the movement and gathering of people issued in response, continues to raise concerns about parties’ abilities to comply with contractual terms across a variety of industries.  As discussed previously here, force majeure clauses may address parties’ obligations under such circumstances.  Even without force majeure clauses, depending on the circumstances parties may seek to invalidate contracts or delay performance under the common law based on COVID-19.  To assist in considering such issues, we have prepared the following overview.  As the analysis of the applicability of any of the doctrines below is fact-specific and fact-intensive, this overview is intended only as a starting point.  We encourage you to reach out to your Gibson Dunn contact to discuss specific questions or issues that may arise. Impossibility of Performance  The doctrine of impossibility is available where performance of a contract is rendered objectively impossible.[1]  In assessing whether impossibility of performance applies to your situation and your contract, it is useful first to determine whether the jurisdiction applicable to your contract or dispute has codified the doctrine.  As in California, the statutory language might provide guidance to or place limitations on its applicability.[2] A party seeking to invoke the impossibility doctrine under common law must show that the impossibility was produced by an unanticipated event and the event could not have been foreseen or guarded against in the contract.[3]  Courts have held that impossibility of performance during times of emergency or disaster has generally excused performance on the basis of governing law, governmental regulations, or the disruption of transportation or communication networks.  However, the economic consequences of those events do not necessarily permit a claim of impossibility. A handful of cases from the early 20th century which discuss epidemics in connection with school closures and resulting performance failures under teacher contracts are divided on whether performance was excused.[4]  Federal courts have excused performance for impossibility where, in times of war, manufacturers prioritized governmental orders issued under the Defense Production Act.[5]  In the wake of the September 11, 2001 terrorist attacks, courts excused performance resulting from the effective lockdown of communications in New York City.[6] In New York, the doctrine is narrowly construed and is limited to specific circumstances, including “the destruction of the means of performance by an act of God, vis major, or by law.”[7]  Thus, it will be necessary to evaluate the impact of any governmental orders relating to COVID-19, or any applicable court orders, to assess their impact on any given contract.  The First Appellate Division of New York previously found that performance of music recording and management contracts was objectively impossible after a court ordered that the parties could not have any contact with each other.[8]  There, the means of performance was made impossible by operation of law—the court’s order that the parties cease contact. By contrast, historically, performance has not been excused where the impossibility or difficulty was caused “only by financial difficulty or economic hardship, even to the extent of insolvency or bankruptcy.”[9]  Certain New York courts have rejected claims of impossibility related to an economic downturn with the explanation that “the risk of changing economic conditions or a decline in a contracting party’s finances is part and parcel of virtually every contract.”[10] Commercial Impracticability of Performance As with impossibility, the doctrine of commercial impracticability may also be available where performance is rendered impracticable.  The treatment and availability of commercial impracticability varies significantly across states, with some treating it as its own standalone defense and others including it under the umbrella of the impossibility defense.[11]  But regardless of the form it takes, many states that recognize commercial impracticability as a defense have adopted the Restatement (Second) of Contracts Section 261, or similar language, which provides that a party’s duty to perform under a contract is excused where “performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made.”[12]  Looking to Section 261 for guidance, one Hawaii court found that fear and uncertainty in the aftermath of the September 11, 2001, by themselves, were insufficient grounds for showing impracticability.[13] As in the case of the doctrine of impossibility, the impracticability at issue must be the product of unforeseen events.  In general, mere economic loss or hardship is insufficient to render performance impracticable because courts generally treat it as foreseeable.[14]  However, in some circumstances the defense may be available where performance “can only be done at an excessive and unreasonable cost.”[15] The Uniform Commercial Code, which has been adopted as law in most states, covers commercial contracts, including contracts related to the sale and leasing of goods, commercial paper, banking transactions, letters of credit, auctions and liquidations of assets, storage and bailment of goods, securities, financial assets and secured transactions.  For a transaction governed by the UCC, the defense of commercial impracticability may apply where performance “has been made impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made.”[16]    Frustration of Purpose The doctrine of frustration of purpose may be available where “a change in circumstances makes one party’s performance virtually worthless to the other,” thereby frustrating the principal purpose in making the contract.[17]  Whether or not frustration of purpose applies depends on the precise wording of the contract but, in any event, the frustration itself must be “substantial.”[18]  Or, in other words, “the frustrated purpose must be so completely the basis of the contract that, as both parties understood, without it, the transaction would have made little sense.”[19] Similar to the doctrines of impossibility and impracticability, frustration of purpose is applied narrowly and is limited to instances where the event rendering the contract valueless is unforeseeable.[20]  It has been most commonly applied by courts upon the death or incapacity of a person necessary for performance, the destruction or deterioration of a thing necessary for performance, or a change in the law that prevents a person from performing.[21] Moreover, as with the doctrine of impossibility, frustration of purpose does not usually apply merely “because it becomes more economically difficult to perform.”[22]  For example, a New York federal district court rejected an argument that losses prevented the defendant from being able to pay the plaintiff because “[t]he application of the frustration of purpose doctrine in such circumstances would ‘place in jeopardy all commercial contracts.’”[23]   Consequences of Successful Defense  If one of the above defenses were deemed to apply, the duties of the party asserting the defense may be discharged.[24]  However, if impossible or impracticable performance were temporary in duration, these doctrines generally would excuse performance only for so long as the disabling condition persisted.  In addition, if performance were excused, courts could potentially grant quantum meruit claims of the counterparty, in order to equitably adjust for gains and losses sustained by the parties.  This could require the excused party to reimburse the counterparty for expenses incurred in expectation of the performance.[25] We expect all of these doctrines to be tested in the context of the COVID-19 pandemic and the associated governmentally mandated shutdowns and other actions.  We will continue to monitor developments in this regard and are available to discuss if you have any questions.    [1]   See Kel Kim Corp. v. Central Mkts., 70 N.Y.2d 900, 902 (1987).    [2]   For example, under the California Civil Code, performance is excused when a party “is prevented or delayed by an irresistible, superhuman cause, or by the act of public enemies of this state or of the United States, unless the parties have expressly agreed to the contrary.”  Cal. Civ. Code § 1511(2).    [3]   Kel Kim Corp., 70 N.Y.2d at 902; see also, e.g., Citadel Builders, LLC v. Transcon. Realty Inv’rs, Inc., 2007 WL 1805666, at *4 (E.D. La. June 22, 2007) (noting that although hurricanes are foreseeable events in New Orleans during the summer, impossibility defense was available because Hurricane Katrina and her aftermath “devastated th[e] area in ways beyond what anyone predicted”); Gregg School Tp., Morgan Cty. v. Hinshaw, 76 Ind. App. 503 (Ind. App. Ct. 1921) (performance excused due to legally mandated school closure related to Spanish Influenza).    [4]   Phelps v. School District No. 109, Wayne County, 302 Ill. 193, 198 (1922) rejected the defense on the basis that the closure had been foreseeable.  Gregg School Tp., Morgan County, 76 Ind. App. 503, however, excused performance because the law of the land (which allowed closure of schools) was part of every contract.    [5]   Eastern Air Lines, Inc. v. McDonnell Douglas Corp., 532 F.2d 957, 996 (5th Cir. 1976); U.S. for Use and Benefit of Caldwell Foundry & Mach. Co. v. Texas Const. Co., 224 F.2d 289, 293 (5th Cir. 1955).    [6]   See, e.g., Bush v. Protravel Int’l, Inc., 192 Misc.2d 743, 750 (N.Y. Civ. Ct. 2002) (acknowledging impossibility defense may be available where communications and transportation networks damaged by September 11, 2001 terrorist attack in New York City).    [7]   Kolodin v. Valenti, 115 A.D.3d 197, 200 (N.Y. App. Div. 1st Dep’t 2014).    [8]   Id.    [9]   407 E. 61st Garage, Inc. v. Savoy Fifth Ave. Corp., 23 N.Y.2d 275, 281 (N.Y. 1968); see also Stasyszyn v. Sutton E. Assocs., 161 A.D.2d 269, 271 (N.Y. App. Div. 1st Dep’t 1990) (absent an express contingency clause “compliance is required even where the economic distress is attributable to the imposition of governmental rules and regulations” rendering performance more costly “or the inability to secure financing”).   [10]   Route 6 Outparcels, LLC v. Ruby Tuesday, Inc., 27 Misc. 3d 1222(A) (N.Y. Sup. Ct. Albany Cty. 2010), aff’d, 88 A.D.3d 1224 (N.Y. App. Div. 3d Dep’t 2011); Urban Archaeology Ltd. v. 207 E. 57th St. LLC, 68 A.D.3d 562, 562 (N.Y. App. Div. 1st Dep’t 2009) (doctrine not available because “economic downturn could have been foreseen or guarded against in the [contract]”).   [11]   Courts in New York and California both treat impracticability as a form of the impossibility defense.  See Axginc Corp. v. Plaza Automall, Ltd., 2017 WL 11504930, at *8 (E.D.N.Y. Feb. 21, 2017), aff’d, 759 F. App’x 26, 29 (2d Cir. 2018) (New York courts do not recognize “commercial impracticability as a separate defense to the doctrine of impossibility; rather, impracticability is treated as a type of impossibility and construed in the same restricted manner.”); Emelianenko v. Affliction Clothing, 2011 WL 13176615, at *28 (C.D. Cal. June 7, 2011) (“The enlargement of the meaning of ‘impossibility’ as a defense [] to include ‘impracticability’ is now generally recognized.”).   [12]   E.g., LECG, LLC v. Unni, 2014 WL 2186734, at *6 (N.D. Cal. May 23, 2014), aff’d, 667 F. App’x 614 (9th Cir. 2016) (California); Waddy v. Riggleman, 216 W. Va. 250, 258 (W. Va. 2004) (West Virginia); Tractebel Energy Mktg., Inc. v. E.I. Du Pont De Nemours & Co., 118 S.W.3d 60, 65 (Tex. App. 14th Dist. 2003) (Texas); Step Plan Servs., Inc. v. Koresko, 12 A.3d 401, 414 (Pa. Super. Ct. 2010) (Pennsylvania).   [13]   OWBR LLC v. Clear Channel Comm’cs, Inc., 266 F. Supp. 2d 1214, 1222 (D. Haw. 2003) (analyzing impracticability doctrine in context of contract containing force majeure provision).   [14]   See, e.g., Karl Wendt Farm Equip. Co. v. Int’l Harvester Co., 931 F.2d 1112, 1117 (6th Cir. 1991) (dramatic downturn in farm equipment market causing defendant to go out of business did not excuse unilateral termination of its dealership agreements due to commercial impracticability).   [15]   Emelianenko, 2011 WL 13176615, at *28; see also City of Vernon v. City of Los Angeles, 45 Cal.2d 710, 720 (1955).   [16]   U.C.C. § 2-615(a); see also, e.g., Cal. Com. Code § 2615 (codifying language of U.C.C. § 2-615).   [17]   PPF Safeguard, LLC v. BCR Safeguard Holding, LLC, 85 A.D.3d 506, 508 (N.Y. App. Div. 1st Dep’t 2011) (citing Restatement (Second) of Contracts § 265 (1981)).  The Restatement (Second) of Contracts § 265 provides that “[w]here, after a contract is made, a party’s principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary.”  The Restatement commentary further explains that Section 265 requires that (1) the purpose that is frustrated was a “principal purpose” in making the contract, such that without it the transaction “would make little sense”; (2) the frustration is substantial; and (3) the non-occurrence of the frustrating event was a basic assumption on which the contract was made.  Restatement (Second) of Contracts § 265, cmt. a.   [18]   Crown IT Servs., Inc. v. Koval-Olsen, 11 A.D.3d 263, 265 (N.Y. App. Div. 1st Dep’t 2004).   [19]   Id.   [20]   Crown IT Servs., 11 A.D.3d at 265; A + E Television Networks, LLC v. Wish Factory Inc., 2016 WL 8136110, at *12 (S.D.N.Y. Mar. 11, 2016); Warner v. Kaplan, 71 A.D.3d 1, 6 (N.Y. App. Div. 1st Dep’t 2009) (frustration of purpose “is not available where the event which prevented performance was foreseeable and provision could have been made for its occurrence”).   [21]   Bayou Place Ltd. P’ship v. Alleppo’s Grill, Inc., 2020 WL 1235010, at *8 (D. Md. Mar. 13, 2020); see also Warner, 71 A.D.3d at 6.   [22]   A + E Television Networks, 2016 WL 8136110, at *13.   [23]   Id. (quoting 407 E. 61st Garage, Inc., 23 N.Y.2d at 282).   [24]   In the event that a court rejects such defenses, a party found to be in breach of a contract may still raise the counterparty’s failure to mitigate its damages as an alternative defense or option for reducing any prospective damages award.  See U.S. Bank Nat. Ass’n v. Ables & Hall Builders, 696 F. Supp. 2d 428, 440-41 (S.D.N.Y. 2010) (“In a breach of contract action, a plaintiff ordinarily has a duty to mitigate the damages that he incurs. If the plaintiff fails to mitigate his damages, the defendant cannot be charged with them.”).   [25]   D & A Structural Contractors Inc. v. Unger, 25 Misc.3d 1211(A) (N.Y. Sup. Ct. Nassau Cty. 2009).


Gibson Dunn’s lawyers are available to assist with questions you may have regarding developments related to the COVID-19 outbreak.  We regularly counsel clients on issues raised by this pandemic in the commercial context.  For additional information, please contact any member of the firm’s Coronavirus (COVID-19) Response Team, the Gibson Dunn attorney with whom you work, or the following authors: AUTHORSShireen Barday, Mary Beth Maloney, Rahim Moloo, Hannah Kirshner, and Robert Banerjea © 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

April 24, 2020 |
Gibson Dunn Earns 84 Top-Tier Rankings in Chambers USA 2020

In its 2020 edition, Chambers USA: America’s Leading Lawyers for Business awarded Gibson Dunn 84 first-tier rankings, of which 31 were firm practice group rankings and 53 were individual lawyer rankings. Overall, the firm earned 302 rankings – 84 firm practice group rankings and 218 individual lawyer rankings. Gibson Dunn earned top-tier rankings in the following practice group categories: National – Antitrust National – Antitrust: Cartel National – Appellate Law National – Corporate Crime & Investigations National – FCPA National – Outsourcing National – Product Liability: Consumer Class Actions National – Real Estate National – Retail: Corporate & Transactional National – Securities: Regulation CA – Antitrust CA – IT & Outsourcing CA – Litigation: Appellate CA – Litigation: General Commercial CA – Litigation: Securities CA – Litigation: White-Collar Crime & Government Investigations CA – Real Estate: Zoning/Land Use CA (Los Angeles & Surrounds) – Employee Benefits & Executive Compensation CA – Real Estate: Northern California CA – Real Estate: Southern California CO – Litigation: White-Collar Crime & Government Investigations CO – Natural Resources & Energy DC – Corporate/M&A & Private Equity DC – Labor & Employment DC – Litigation: General Commercial DC – Litigation: White-Collar Crime & Government Investigations NY – Litigation: General Commercial: The Elite NY – Real Estate: Mainly Corporate & Finance NY – Technology & Outsourcing TX – Antitrust This year, 156 Gibson Dunn attorneys were identified as leading lawyers in their respective practice areas, with some ranked in more than one category. The following lawyers achieved top-tier rankings:  D. Jarrett Arp, Michael Bopp, Theodore Boutrous, Jessica Brown, Jeffrey Chapman, Linda Curtis, Michael P. Darden, Patrick Dennis, Mark Director, Thomas Dupree, Scott Edelman, Miguel Estrada, Stephen Fackler, Sean Feller, Eric Feuerstein, Amy Forbes, Stephen Glover, Richard Grime, Peter Hanlon, Hillary Holmes, Daniel Kolkey, Brian Lane, Jonathan Layne, Ray Ludwiszewski, Karen Manos, Randy Mastro, Cromwell Montgomery, Stephen Nordahl, Theodore Olson, Richard Parker, William Peters, Tomer Pinkusiewicz, Jesse Sharf, Orin Snyder, George Stamas, Beau Stark, Charles Stevens, Daniel Swanson, Steven Talley, Helgi Walker, Robert Walters, F. Joseph Warin, Debra Wong Yang, and Meryl Young.