t l a b REPORT ASSOCIATION OF BUSINESS ORANGE COUNTY Q&A with the Honorable Arthur Nakazato By Tu-Quyen Pham

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Volume XV No. 1 a b TRIAL ASSOCIATION OF BUSINESS REPORT t l LAWYERS ORANGE COUNTY Winter 2013 Q&A with the Honorable Arthur Nakazato By Tu-Quyen Pham [Editorial Note: Judge Nakazato earned his J.D. in
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Volume XV No. 1 a b TRIAL ASSOCIATION OF BUSINESS REPORT t l LAWYERS ORANGE COUNTY Winter 2013 Q&A with the Honorable Arthur Nakazato By Tu-Quyen Pham [Editorial Note: Judge Nakazato earned his J.D. in 1978 from Temple University School of Law where he served on the law review, and his B.A. in 1975, cum laude, from University of Pittsburgh. His parents, to whom he attributes his success, are former WWII internees who stressed education, hard work, and honor. Judge Nakazato was the first Japanese American in the continental United States to become a federal magistrate judge in He has survived a rare form of lymphoma and has been honored by numerous organizations in recent years, including the Orange County Women Lawyers Association, the National Asian Pacific American Bar Association and the Southern California Chinese Lawyers Association. Judge Alicemarie Stotler even called 2010 the Year of the Nakazato. ] Q: You started both the Orange County Asian American Bar Association and the Orange County Japanese American Lawyers Association. What motivated you to do that? A: I just felt that it would be a nice way to meet some -Continued on page 4- - IN THIS ISSUE - Q&A with Hon. Arthur Nakazato... Pg. 1 Opening the Floodgates: Riverisland s Reversal of the Pendengrass Limitation To the Fraud Exception to the Parol Evidence Rule... Pg. 1 President s Message... Pg. 2 The Foreign Corrupt Practices Act Guidance... Pg. 3 Advising Clients about Social Media... Pg. 3 Opening the Floodgates: Riverisland s Reversal of the Pendergrass Limitation to the Fraud Exception to the Parol Evidence Rule By Taylor R. Dalton Your client s agreement has fallen apart and now you are headed toward litigation. The contract clearly lays out the terms of the agreement, and even states that the parties have relied on their own investigation and understanding in reaching the agreement. Now your client is hit with a suit containing fraud claims and the other side wants to bring in evidence that your client misrepresented the terms contained in the agreement to prove its fraud. What to do? At first you may think you can use the parol evidence rule to shield your client and stop the flood of parol evidence early on in the case. But, under the current state of the law, the parol evidence rule may not save you from stopping the evidence from coming in and having your contract dispute submerged by the dispute over your client s fraud. Your client may now wonder what the point was of having a written agreement laying out all the terms? The California Supreme Court recently expanded the scope of the fraud exception to the parol evidence rule. Riverisland Cold Storage Inc., et al, vs. Fresno-Madera Production Credit Association (January 15, 2013) (S190581). The Riverisland decision reversed its own precedent from nearly seventy-eight years ago. See Bank of America etc. Assn. v. Pendergrass (1935) 4 Cal.2d 258. The decision s implications for practicing civil litigators cannot be understated. Previously, an integrated contract could be a bar to promissory fraud allegations when the statements allegedly underlying the promissory fraud contradicted or were at odds with the written contract language. The Riverisland decision reverses this line of caselaw for a host of reasons, which will more likely than not permit plaintiffs to survive demurrer and summary judgment based on memories of conversation. The fraud ex- -Continued on page 5- The President s Message By Mark D. Erickson We are excited for 2013 at ABTL and it is an honor and a privilege to serve as president of our Orange County chapter this year. I recognize that Melissa McCormick has set the standard high as outgoing president as we seek to continue the ABTL tradition of educational programs that encourage discourse between the bench and bar. We thank Melissa for her commitment and service. I am fortunate to have a great Executive Committee this year with Jeff Reeves as Vice-President; Michele Johnson as Treasurer; and Scott Garner as Secretary. Linda Sampson continues her above and beyond service as Executive Director and our chapter is privileged to have the committed support of our federal and state judiciary on our Board of Governors, Judicial Advisory Council, and as program speakers. The opportunities for quality interaction with the bench through ABTL are unrivaled and we appreciate the valuable insight that they provide to our membership. Our Orange County chapter welcomes the Honorable Thomas J. Borris of the Superior Court to our Judicial Advisory Council in Judge Borris continues as Presiding Judge of Orange County Superior Court, a position he has held since We also welcome three new members to the Board of Governors: James Carter, a partner in the Labor & Employment Section of Paul Hastings. He counsels and defends employers in all aspects of employment law, including discrimination, harassment, wrongful termination, retaliation, wage and hour claims, class action cases, and breach of contract claims. Todd Friedland, a partner in the law firm of Stephens Friedland. Todd s practice focuses on commercial litigation and strategic counseling including complex contract disputes, class actions, unlawful business practices, trade secrets, business torts, real estate and appellate matters. Todd was also just elected the secretary of the Orange County Bar Association. John Holcomb, a partner in the firm of Knobbe Martens Olson & Bear. John is a litigation partner specializing in intellectual property litigation, including trademarks, patents and copyrights. -Continued on page E. Chapman Avenue, #443 Orange, CA Phone: MARK D. ERICKSON, President JEFFREY H. REEVES, Vice President MICHELE D. JOHNSON, Treasurer SCOTT B. GARNER, Secretary BOARD OF GOVERNORS: Hon. Gail A. Andler Hon. Andrew P. Banks James P. Carter Hon. James Di Cesare Hon. Kim G. Dunning Mark A. Finkelstein Todd G. Friedland Hon. Richard D. Fybel Paul L. Gale Alan A. Greenberg John W. Holcomb Karla J. Kraft Charles S. Krolikowski Daniel M. Livingston Thomas S. McConville Elizabeth C. McKeen Hon. Steven L. Perk Hon. Peter J. Polos (Ret.) Daniel A. Sasse Maria Z. Stearns Hon. Nancy Wieben Stock Adina L. WItzling JUDICIAL ADVISORY COUNCIL: Hon. Theodor C. Albert Hon. Richard M. Aronson Hon. Thomas J. Borris Hon. Thierry P. Colaw Hon. James Di Cesare Richard D. Fybel Hon. Andrew J. Guilford Hon. Charles A. Margines Hon. Linda S. Marks Hon. Gregory Munoz Hon. Kirk H. Nakamura Hon. Kathleen E. O Leary Hon. Glenda Sanders Hon. James V. Selna Hon. Josephine Staton Tucker PAST PRESIDENTS: Donald L. Morrow Thomas R. Malcolm Robert E. Palmer Hon. Andrew J. Guilford Jeffrey W. Shields Michael G. Yoder Dean J. Zipser Hon. Sheila B. Fell Gary A. Waldron James G. Bohm Martha K. Gooding Richard J. Grabowski Sean P. O Connor Darren O. Aitken Melissa R. McCormick EXECUTIVE DIRECTOR Linda A. Sampson ABTL EDITORIAL COMMITTEE Editor Adina L. Witzling Assistant Editor William C. O Neill Editorial Coordinator Atticus N. Wegman The statements and opinions in the ABTL-Orange County Report are those of the contributors and not necessarily those of the editors or the Association of Business Trial Lawyers of Orange County. All rights reserved. 2 The Foreign Corrupt Practices Act Guidance: A Useful (But Not Perfect) Resource for Dealing with Enforcement Actions Advising Clients About Social Media By Andrea Bird By Thomas S. McConville and Christina Von der Ahe Ready or not, social media matters when it comes to litigation. In this article, I outline issues to consider when advising clients on how to deal with social media, including updating retention policies, adding social media to litigation holds, carefully drafting social media requests in discovery, and authenticating data for admission into evidence. Introduction On November 14, 2012, the U.S. Department of Justice ( DOJ ) and the U.S. Securities and Exchange Commission ( SEC ) issued a 120-page Resource Guide to the U.S. Foreign Corrupt Practices Act. The Resource Guide, the first of its kind and a self-proclaimed unprecedented undertaking, claims that its goal is to provide helpful information to enterprises of all shapes and sizes from small businesses doing their first transactions abroad to multi-national corporations with subsidiaries around the world. DOJ & SEC, FCPA: A Resource Guide to the U.S. Foreign Corrupt Practices Act ( Resource Guide ) at Foreword (Nov. 14, 2012). To an extent, the Resource Guide achieves that goal, because it provides a comprehensive summary of the positions that the DOJ and SEC have been taking in FCPA enforcement actions to date. Unfortunately, the Resource Guide is also sure to disappoint industry groups and FCPA practitioners, who asked for something clearer, newer, and binding on the federal agencies tasked with enforcing the Foreign Corrupt Practices Act. On this front, many perceive the Resource Guide as coming up short. This article provides a summary of some of the main provisions of the Resource Guide, along with some background information on enforcement actions under the Foreign Corrupt Practices Act. 1. Social Media Matters Social media sites are a fairly recent development Facebook has only been around for eight years, and Twitter for six and even five years ago most litigators would not have guessed that social media would ever play a big role in litigation. But in 2011, technology research company Gartner, Inc. estimated that by 2012, half of all companies will have been asked to produce social networking site content in ediscovery requests. (Gartner, Inc., Press Release (February 17, 2011), available at id= ) As of 2011, fifty-eight percent of Fortune 500 companies maintained a Facebook page, and sixty-two percent used Twitter. (UMass Dartmouth Center for Marketing Research, The 2011 Fortune 500 and Social Media Adoption: Have America's Largest Companies Reached a Social Media Plateau?, available at studiesandresearch/2011fortune500/.) These numbers are only for official Twitter accounts and Facebook feeds accounts of employees are not included. Given these statistics, it is not surprising that so many companies are involved, or soon will be involved, with discovery of social media. Accordingly, if your clients have not had to deal with discovery of social media yet, it is a foregone conclusion that they will need to deal with it some day soon, so now is the time to prepare for that eventuality. 2. Before Disputes Arise, Clients Should Update Retention Policies Unless you look forward to scrambling at the last minute to respond to discovery requests and explaining why your clients have no record of deleted Twitter and Facebook posts, now is the time to talk to your clients about preserving social media. Because social media is in its infancy, most companies have not updated their retention policies to include the methods for capturing and storing it. Even if litigation is not yet foreseeable, getting ahead of the curve by updating reten-continued on page 11- History of the Enforcement of the FCPA The United States Foreign Corrupt Practices Act ( FCPA or Act ), 15 U.S.C. 78dd-1, et seq., was enacted in 1977 in response to Congressional concern regarding U.S. corporate bribery of foreign officials. The Act sought to curb such behavior in two main ways: (1) by making it unlawful to pay foreign officials for the -Continued on page 83 -Q&A: Continued from page 1- other attorneys who were also Asian and had similar backgrounds. We could compare notes and see what everybody else was doing and have another resource. Q: What was the size of the Asian-American community at the time when you started these organizations, compared to now? A: It was smaller, so there weren t quite as many of us. But there were still a significant number of attorneys of Asian descent that were living and practicing in Orange County. Several attorneys, some of whom I already knew and others I did not, expressed an interest in forming a group and I thought it was a nice way to meet other people. I had already been active in the Orange County Bar Association at the time. Consequently, that is how I think they found me and at that point I decided, yeah, why not? Q: How important do you think being part of a bar association is for lawyers today? A: I think it s important to participate and be involved in the legal community because it is the quickest and fastest way for both new and old lawyers to just keep in touch with people who are actively involved in the community. Lawyers who are generally involved with the bar associations are usually people who are also involved in other community organizations. Q: How early in your career did you know you wanted to become a judge? A: I didn t start out ever planning to be a judge. I enjoyed being a lawyer, but then as I progressed in my legal career, I did feel that I had pretty much done what I had sought out to accomplish. Also, I did really enjoy the time I appeared in federal court. When I got involved with the Orange County Bar Association I eventually ended up chairing the Federal Court Committee and becoming a Ninth Circuit lawyer delegate for our district and I thought it would be nice to be part of the court and to have a career that was both one where I could become a public servant and also pursue my interest in law at a 100% level, free of administrative matters or having to deal with some of the more unpleasant aspects of practicing law. Q: Do you have any advice for young lawyers today who aim to be a judge one day? 4 A: Well, number one, they need to be substantively good lawyers. The judicial selection process at both the state and federal levels are very good about screening. They carefully look at every applicant and they generally tend to focus on attorneys who have a good reputation as a lawyer. That is something that you need to develop fundamentally number one. Then, after you have demonstrated that you do have the substantive skills, you also need to again make sure people know who you are and that you have a reputation as a good attorney. One of the best ways to do that is to get involved with the bar associations. Q: For young attorneys who appear in the courtroom for the first time, do you have any advice for us, especially in your courtroom? A: There is nothing like preparation. You will know when you are prepared because as you do your research and get yourself familiar with the relevant facts with respect to whatever motion or case that you are going to try, you will know because you won t become reliant on your notes. If you have to rely on your notes for everything, then you are not prepared. Notes become a distraction. You have to be able to look the judge in the eye and when the judge asks a question, be able to answer immediately because you know the case. Q: Can you describe your judicial philosophy, the way you approach being a judge? A: I just try to make sure that I am reaching the right result based upon the facts. I don t go in with any preconceived agendas. I think my philosophy is to just be practical and realistic and to do the right thing. I don t worry about a decision I ultimately make as long as I feel that I ve done my research and I ve looked at the matter objectively. Once I ve done that, I am very comfortable in making a decision. Q: Is there anything you know now as a judge that you wish you had known when you were a practicing attorney? A:. Probably just the nature of the workload. It actually is quite heavy in this district. It does require you to work quickly. It does require you to be very focused and extremely organized, and I have always been organized so I have that advantage. I have also been a fast reader so that helps too. But I would say the level of work, it s the volume. Some judges have likened it to taking a sip from a fire hose, and it is, but once you get used to it, like anything else, it s manageable. -Continued on page 5- -Q&A: Continued from page 4- Q: If you weren t a judge or a lawyer, had you ever considered any other careers? A: Yes. For a long time I thought I would be an orthodontist because I am extremely good with my hands and I am fairly creative when it comes to making things. But when I was in college I dislocated my jaw during wrestling practice and I went to the dental school to get my jaw worked on. I had seen in the waiting room some patients that had some pretty awful looking teeth and looked like maybe gum infections. I was sitting in the chair talking to the student dentist who was working on me and I made a comment about the other patients and the student said, Well that s my next patient after you. That did it for me. I said no, I can t do this. So that is when I decided to look for a different career. Q: How did you fall into law after that? A: I enjoyed theoretical-type thinking. I majored in Economics and English Literature, so I enjoyed reading. I also enjoyed analyzing things and somebody once said, Well, you know, maybe you ought to consider looking at becoming a lawyer. And I thought, Hmm, that s a good idea, that is a good way to delay going out in the real world for three more years. And that is what I ended up doing. The ABTL thanks Judge Nakazato for his time. Tu-Quyen Pham is an associate in the Orange County office of Gibson, Dunn & Crutcher LLP. -Parol Evidence Rule: Continued from page 1- ception to the parol evidence rule can now allow commercial disputes to be flooded with evidence of fraud. The Parol Evidence Rule and Evidence Code 622 The parol evidence rule is a well-established principle of common law of which any first year law student should have a basic understanding. However, despite the rule s notoriety, confusion abounds regarding its intricacies. In California, the parol evidence rule is codified in Code of Civil Procedure section 1856 and Civil Code section The parol evidence rule generally prohibits the introduction of either oral or written extrinsic evidence to vary, alter, or add to the terms of an integrated written agreement. The rationale behind the rule is that a written integrated contract establishes the terms of the agreement between the parties and evidence that contradicts the written terms is irrelevant. The integrated agreement is the writing that constitutes the final expression of one or more terms of the agreement. The California Evidence Code also includes a conclusive presumption that follows the same rationale behind the parol evidence rule. Evidence Code 622 states: The facts recited in a written instrument are conclusively presumed to be true as between the parties thereto, or their successors in interest; but this rule does not apply to the recital of a consideration. An instrument, as described in the code, is a written legal document that defines rights, duties, entitlements, or liabilities, such as a contract. The provision only applies to essential facts contained in the writing, thus as a corollary, extrinsic evidence of nonessential facts may be admitted. This code provision essentially codifies the doctrine of estoppel by contract as between the parties to the instrument. Thus, because the facts in the written instrument are presumed true, no evidence can be received to the contrary. The two doctrines, the parol evidence rule and Evidence Code 622, have been linked and the doctrines have developed side-by-side. The doctrines serve as protectors of agreements that have been reduced to ink and paper. But with any time-tested doctrine, both are fraught with exceptions and exceptions to the exceptions. The Pre-Riverisland Fraud Exception and Exceptions to the Exception Code of Civil Procedure 1856 describes when the parol evidence rule does and does not apply, such as when the agreement itself is in dispute, to explain an extrinsic ambiguity, or to otherwise interpret the terms of the agreement. -Continued on page 6-5 -Parol Evidence Rule: Continued from page 5- Most importantly here, the section prov
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