Close X
Attorney Spotlight

In addition to Mark Manner's busy corporate legal practice, he has established himself as a respected and avid astronomer. Read more>

Search

Close X

Experience

Search our Experience

Experience Spotlight

On December 1, 2016, Parker Hannifin Corporation and CLARCOR Inc. announced that the companies have entered into a definitive agreement under which Parker will acquire CLARCOR for approximately $4.3 billion in cash, including the assumption of net debt. The transaction has been unanimously approved by the board of directors of each company. Upon closing of the transaction, expected to be completed by or during the first quarter of Parker’s fiscal year 2018, CLARCOR will be combined with Parker’s Filtration Group to form a leading and diverse global filtration business. Bass, Berry & Sims has served CLARCOR as primary corporate and securities counsel for 10 years and served as lead counsel on this transaction. Read more here.

CLARCOR
Close X

Thought Leadership

Enter your search terms in the relevant box(es) below to search for specific Thought Leadership.
To see a recent listing of Thought Leadership, click the blue Search button below.

Thought Leadership Spotlight

Blueprint for an IPO

Companies go public to raise capital to fuel growth, pay down debt and provide liquidity to shareholders. Although all issuers and offerings are different, the basic process of going public remains relatively constant. Blueprint for an IPO identifies the key players, details the process and identifies the obligations companies will face after going public.

Read now

Chris Lazarini Analyzes Enforcement of Exculpatory Clauses

Securities Litigation Commentator

Publications

May 1, 2017

Bass, Berry & Sims attorney Chris Lazarini analyzed the court's enforcement of an exculpatory clause in the context of a Trading Advisory Agreement. Where parties elect to include exculpatory clauses in their contracts, such clauses will be narrowly construed and will not be enforced unless the wording is unmistakable and clearly describes what the party is contracting away.

Chris provided the analysis for Securities Litigation Commentator (SLC). The full text of the analysis is below and used with permission from the publication. If you would like to receive additional content from the SLC, please visit the SLC website to sign up for the newsletter.

RQSI Global Asset Allocation Master Fund, Ltd. vs. Apercu International PR LLC, No. 16-5559 (6th Cir., 3/27/17) 

*Under Kentucky law, a gross negligence claim requires that the defendant acted with malice, willfulness, or with such an utter and wanton disregard of the rights of others that malice or willfulness may be assumed.

**Where parties elect to include exculpatory clauses in their contracts, such clauses will be narrowly construed and will not be enforced unless the wording is unmistakable and clearly describes what the party is contracting away. 

In early 2015, RQSI entered a Trading Advisory Agreement ("TAA") with Apercu, under which Apercu was to trade stock futures and options on margin. To facilitate the activity, RQSI opened a margin account at Societe Generale ("SG"). RQSI instructed Apercu and its principal officer to keep the margin balance in the $600,000 to $700,000 range, as it intended to close the account at year-end. Volatility in the options markets caused the margin balance to balloon and, in August 2015, SG issued a $42 million margin call. RQSI terminated Apercu, borrowed money to meet the margin call, and liquidated the portfolio. This suit followed, with RQSI alleging gross negligence, fraud, and breach of contract by Apercu and its principal officer. RQSI alleged multiple categories of damages resulting from Defendants' actions.

The TAA had two damages provisions. Under Section 2, Defendants bore no liability to RQSI for losses, damages, costs, or expenses related to SG's actions. Section 8 limited Defendant's liability to losses caused by its gross negligence or willful misconduct. The district court dismissed all claims, finding that RQSI had waived losses related to the maintenance of the margin account under Section 2 of the TAA, and had not alleged malice sufficient to meet the standard for gross negligence under Section 8.

Conducting a detailed analysis, the Court reverses on the gross negligence and breach of contract claims, finding that RQSI stated a plausible malice claim by alleging that Defendants acted contrary to its instructions in retaliation against the stated intent to close the account at year-end. The Court reverses on some fraud claims, and affirms on others, drawing distinctions between facts and opinions.

The Court next finds the district court's analysis of RQSI's damages categories inadequate. First, applying Kentucky contract law, the Court holds that Section 2 of the TAA takes priority over Section 8, as Section 2 is more specific. Then, the Court considers which of RQSI's damages categories may be precluded by Section 2's waiver. Exculpatory clauses, it teaches, should be narrowly construed and their wording must be clear, so that a knowledgeable party knows what he is contracting away. If liability is proven, the district court should assess whether the claimed damages arose out of RQSI's relationship with SG (in which case they would be waived) or stemmed from Defendants' gross negligence or willful misconduct (in which case they would not be). If the damages result from both the relationship with SG and Defendants' actions, the Court continues, those damages are recoverable. The Court remands the matter to the district court. 

While the appeal was pending, the CFTC sued Apercu's principal officer. RQSI asked the Court to take judicial notice of the CFTC proceedings and requested leave to amend its complaint. Defendants opposed, and the Court declines to rule, sending it back to the district court with a reminder that leave to amend should be freely granted when justice so requires.


Related Professionals

Related Services

Notice

Visiting, or interacting with, this website does not constitute an attorney-client relationship. Although we are always interested in hearing from visitors to our website, we cannot accept representation on a new matter from either existing clients or new clients until we know that we do not have a conflict of interest that would prevent us from doing so. Therefore, please do not send us any information about any new matter that may involve a potential legal representation until we have confirmed that a conflict of interest does not exist and we have expressly agreed in writing to the representation. Until there is such an agreement, we will not be deemed to have given you any advice, any information you send may not be deemed privileged and confidential, and we may be able to represent adverse parties.