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Oklahoma City real estate attorney Sally Hasenfratz featured in The Oklahoman

crew-okc-logo-choice-smallerOklahoma City real estate attorney and Phillips Murrah Director, Sally A. Hasenfratz, was featured in the business section of The Oklahoman newspaper on Saturday, July 2.

Oklahoma real estate attorney Sally Hasenfratz

Sally A. Hasenfratz is a Director and a member of the Firm’s Real Estate, Tax and Family Wealth and Business Succession Practice Groups. She represents individuals and both privately-held and public companies in a wide range of transactional matters.

The article, written by real estate editor Richard Mize, is also available online at NewsOK.com and features a video interview about the formation of CREW OKC. Hasenfratz co-founded the organization with Julie Kriegel, vice president at Wiggin Properties, and she will serve at the first president.

CREW (Commercial Real Estate Women) Network is a national organization. Hasenfratz and Kriegel successfully initiated the local Oklahoma City chapter and assembled a board of influencers, including Jane Jenkins, president and CEO of Downtown Oklahoma City Inc. and Cathy O’Connor, president of the Alliance for Economic Development of Oklahoma City Inc.

From the story:

“Sally and I met and we hand-picked who we thought would be the best people to be on the board of directors,” Kriegel said. “We spent most of last summer and fall taking them to lunch and recruiting all of them, so we have this terrific board of directors.”

Hasenfratz said it was worth the effort.

“We’re pretty proud of the board members. We’ve got a stellar group,” she said.

Read the whole story and see Richard’s video here.

See the original story about the CREW OKC local chapter by clicking here.

Limiting Liability in the Oilfield

By Catherine L. Campbell and Thomas G. Wolfe.
This scholarly article is originally published in the Oklahoma Bar Journal– Jan. 16, 2016– Vol. 87 No. 2.


Parties are free to contract in any way they see fit so long as their contract does not violate public policy. Likewise, the parties to a contract may agree to allocate the risks of loss between them — including pre-performance exoneration of a negligent service provider from the consequences of its own negligence — if their consent to such risk allocation is mutual.

Limiting Liability in the Oilfield

Click to read full article @ okbar.org

Oklahoma courts judge the existence of mutuality of consent, in part, by determining whether the parties enjoy sufficiently-equal bargaining power. This inquiry depends on the importance of the requested service to the economic well-being of the party seeking the service, and the nature of the market providing that service. On the one hand, courts are more likely to conclude that a customer seeking a service it wants but does not need in a market with numerous providers is on equal footing with the service provider. On the other, a customer seeking a necessary service offered by few providers, or offered by many providers that demand similarly onerous contract terms, has no power to allocate risks in a way more beneficial to it. The choice between accepting unfavorable terms hoping nothing goes wrong or declining the necessary service altogether is no choice at all.

These principles apply to oilfield service contracts. Undoubtedly, the economic risks in the oilfield are high. Although pre-service allocation of the risks is preferable, only a negotiated — and thus mutually agreed allocation of risks based upon equality of bargaining power — will pass judicial muster.

THE OKLAHOMA LAW IN GENERAL

A basic premise of Oklahoma law, and indeed contract law in general, is that parties are free to contract as they see fit,1 as long as the contract is not contrary to law or violative of public policy.2 However, Oklahoma prohibits contracts that attempt to exempt a contracting party from responsibility for its own fraud, willful injury to persons or property, gross negligence or that otherwise violate public policy.3

Oklahoma distinguishes between various risk-shifting tools — broadly characterized as “exculpatory provisions,”4 — including limitation of liability clauses, indemnity provisions and exculpatory clauses. Because under certain circumstances exculpatory provisions are valid and enforceable, they are ubiquitous in modern commercial life. Oklahoma courts enforce exculpatory clauses only if: 1) they “clearly and unambiguously” exonerate the defendant with respect to the claim; 2) there exists no significant difference in the bargaining power between the contracting parties; and 3) enforcement will not otherwise violate public policy.5 While an exculpatory provision need not mention the word “negligence” to be valid,6 the agreement to exculpate must be clear from an examination of the entire contract.7 An exculpatory clause is sufficiently clear and unambiguous when it identifies the party to be indemnified and the nature and extent of damages.8

As for equality in bargaining, courts have traditionally concluded that public policy forbids enforcement of exculpatory provisions in 1) bailment contracts, 2) employment contracts, 3) contracts with common carriers, 4) contracts with innkeepers and 5) utilities contracts.9 In these instances, courts perceive that the service provider enjoys vastly superior bargaining power over the consumer. Not incidentally, these service providers often use adhesion contracts — “standardized contract[s] prepared entirely by one party to the transaction for the acceptance of the other.”10 Adhesion contracts are take-it-or-leave-it since “the services that are the subject of the contract cannot be obtained except by acquiescing to the form agreement.”11 By definition, the parties to an adhesion contract do not share equal bargaining positions.12

That a contract is one of adhesion (with the consequent presumption of lack of equal bargaining power) is not sufficient, standing alone, to invalidate an exculpatory provision. Instead, Oklahoma courts require evidence of something more than a slight disparity in bargaining power between the parties to nullify an exculpatory provision. When the disparity of bargaining power renders the freedom to contract illusory, an exculpatory clause is unenforceable.

In Trumbower v. Sports Car Club of America, Inc.,13 the court recognized guidelines for determining whether the contracting parties enjoy relatively equal bargaining positions. First, courts should “generally consider categories of individuals rather than a particular individual.”14 Second, courts must weigh “the importance which the subject matter of the contract has for the physical or economic well-being of the party agreeing to release the other party.”15 And, the court must consider “the existence and extent of competition among [service providers] measured by the amount of free choice the [consumer].”16

Applying Trumbower, Oklahoma courts have enforced exculpatory provisions when the activity at issue is a hobby or sport.17 Moreover, the releasing party is not forced to use a particular vendor or, ultimately, to engage in the activity.18 Correspondingly, Oklahoma courts have approved exculpatory provisions where the contracting party presumably had wide choice in service providers.19

Some jurisdictions presume that commercial parties generally enjoy equal bargaining power while assuming that ordinary consumers do not.20 However, Oklahoma law mandates that courts consider the economic realities of the transaction, not the parties’ relative sophistication. Each case stands on its own facts.21

OKLAHOMA LAW AS APPLIED TO OILFIELD SERVICE CONTRACTS
All or some variation of the recognized risk-shifting mechanisms — releases, limitation of liability clauses, and indemnity provisions — “are widespread in oilfield contracts” since, like most businesses, providers and consumers of oilfield services benefit from assuring clear allocation of risks at the outset of the contractual relationship.22 Some oilfield contracts contain indemnity provisions (also known as knock-for-knock provisions) that require each party to assume all risk associated with its equipment and personnel regardless of fault.23  Often, the parties contemplate that they will insure their respective contractual obligations.24  Other oilfield contracts treat service providers more favorably.25 Finally, operators may use master service agreements with contractual terms favorable to them and which allow them to contract with service providers before any work is performed, ideally permitting the parties to negotiate terms in a lower pressure environment.26

Oilfield exculpatory clauses are typically clearly delineated and, in any case, are well known in the industry.27 Therefore, courts may conclude that such agreements “clearly and unambiguously” exonerate the intended party. Nonetheless, as three cases applying Oklahoma law demonstrate, because pre-work risk allocation in the oilfield is legally appropriate only when it results from relative arm’s length bargaining, the economic reality of the bargaining positions between the parties is the paramount consideration.

In Mohawk Drilling Co. v. McCullough Tool Co.,28 while performing “specialized” work on Mohawk’s well, McCullough lost equipment downhole requiring Mohawk to rework the well. The purchase order stated that McCullough “shall not be held liable or responsible for any loss, damage or injury” to the well resulting from the work it performed.29 The evidence showed that, because other companies that could have performed the same specialized work used contracts containing similar exculpatory language, the well owner could not obtain the necessary service without exculpating the service provider.30 Although Mohawk predates Schmidt,31 the Mohawkcourt employed the same factors — economic necessity of the requested service and availability of the service in the market free of exculpatory provisions — in determining that McCullough “enjoyed much greater bargaining strength” so that the exculpatory contract was “against [Oklahoma] public policy.”32

More than 30 years later, in Kinkead v. W. Atlas Int’l, Inc.,33 Kinkead orally contracted with Western to remove the drill string when it became impacted in the borehole. Before Kinkead executed a written work order, Western lost the drill string in the casing which ultimately resulted in abandonment of the well. First, since the evidence showed that the exculpatory language at issue was common in the industry, the court rejected Kinkead’s argument that the oral agreement with Western did not contain the same exculpatory language as the written agreement.34 Second, Western offered evidence that Kinkead could have contracted with other companies that either did not require, or would have negotiated to remove or modify, similar exculpatory language. Consequently, impliedly weighing the same factors as the Mohawk court, the court concluded that the evidence was sufficient to sustain the jury verdict for Western.35

Finally, in Arnold Oil Props., LLC v. Schlumberger Tech. Corp.,36 Arnold contracted with Schlumberger, whose contract contained both a knock-for-knock indemnity provision and a limitation of liability clause. The court concluded that the evidence at trial was sufficient to support the jury’s determination that Arnold and Schlumberger were in unequal bargaining positions because: 1) the service was “critical” to Arnold’s operations; 2) a limited number of providers could perform the services and/or most if not all providers used similar exculpatory language; and 3) the exculpatory terms of three other providers’ contracts were non-negotiable.37 The court further noted that Schlumberger’s contract did not permit the customer to bargain for a higher limit on liability.38

A review of cases applying Oklahoma law reveals that chief among the factors to be resolved in determining whether to enforce an exculpatory provision in an oilfield contract is the number of service providers and whether most, if not all, service providers demand inclusion of similarly burdensome exculpatory provisions. If providers in the market insist on the same contractual provisions, without meaningful negotiation and as a pre-condition to performing economically essential services, the contract clause is unenforceable. The size and sophistication of the provider relative to the customer is not pertinent to the inquiry. Though the customer may eventually opt to accept the offered terms from the provider rather than pay a higher contract price, it must be given a meaningful opportunity to do so. In the absence of the opportunity to negotiate terms, there is no mutual consent.

Oklahoma is not alone in recognizing the fundamental importance of economic reality in oilfield risk allocation. According to USA Today, as of Dec. 31, 2011, Texas had the most oil reserves of any state in the country while Louisiana had the 10th highest.39 To level the playing field between powerful producers and the less powerful contractors who, though forced to indemnify the producers against their own negligence could not procure insurance to adequately cover the risk, both states enacted statutes that generally void oilfield indemnity clauses.40 Louisiana and Texas made public policy choices based not on the contracting parties’ knowledge and sophistication, but on the perceived inequality of bargaining between equally sophisticated commercial entities. Though not codified in statute, Oklahoma law is similar.

CONCLUSION
Undoubtedly, form contracts and industry custom reflect past economic conditions in the oilfield; but, the market for oilfield services is far from static. In recent years, oil and gas production in the United States has markedly increased. During periods of lower production service providers may be more willing to compete for work and more willing to accept greater risk. It is equally true that, during periods of higher production, demand for services outstrips supply, increasing competition for scarce resources. These market factors are magnified when the services provided are highly specialized — which means a decreased number of available service providers.

Oklahoma case law prudently elevates economic realities over industry custom. Where the service purchaser’s ability to obtain an essential service is limited either because there are few providers and/or because most providers require acceptance of the same non-negotiable exculpatory language, exculpatory agreements may be unenforceable. Thus, in terms of commercial entities, knowledgeable in the field, the decisive factor is not whether the exculpatory language is unequivocally clear. Instead, at issue is the economic reality underlying the presumed freedom of the parties to strike a deal.

In Oklahoma no party is forced to insure against risks for which it was not afforded a chance to bargain. It is unfair to shift the burden of loss to the operator when it has no power to protect itself. Oklahoma case law is clear: each party to a contract must be allowed to balance the risks against the cost of the service provided. A contract which deprives the party of its freedom to negotiate risk allocation likely violates Oklahoma law.

1. E. Cent. Elec. Coop. v. Pub. Serv. Co., 1970 OK 80, 469 P.2d 662, 664.
2. Ball v. Wilshire Ins. Co., 2009 OK 38, 221 P.3d 717, 724, 726.
3. OKLA. STAT. tit. 15, §212.
4. Schmidt v. United States, 1996 OK 29, 912 P.2d 871, 874.
5. Kinkead v. W. Alliance Int’l, 1993 OK CIV APP 132, 894 P.2d 1123, 1128.
6. See Estate of King v. Wagoner County Bd. of County Comm’rs, 2006 OK CIV APP 118, 146 P.3d 833, 844.
7. Otis Elevator Co. v. Midland Red Oak Realty, Inc., 483 F.3d 1095, 1105 (10th Cir. 2007).
8. Mercury Inv. Co. v. F.W. Woolworth Co., 1985 OK 38, 706 P.2d 523, 530.
9. Stacy A. Silkworth, Note: The Pilotage Clause: Albatross of Admiralty Law, 64 B.U. L. Rev. 823, 848-49 (July 1984); see, e.g., Sun Oil Co. v. Dalzell Towing Co., 287 U.S. 291, 294 (1932); Bisso v. Island Waterways Corp., 349 U.S. 85, 90-91 (1955).
10. Bilbrey v. Cingular Wireless, L.L.C., 2007 OK 54, 164 P.3d 131, 135.
11. Wilson v. Travelers Ins. Co., 1980 OK 9, 605 P.2d 1327, 1329.
12. See, e.g., Max True Plastering Co. v. U.S. Fid. & Guar. Co., 1996 OK 28, 912 P.2d 861, 864.
13. 428 F. Supp. 1113, 1117 (W.D. Okla. 1976).
14. Id. (citation omitted).
15. Id. See also 57A Am. Jur. 2d Negligence §62 (noting that “a seller must offer a service that is usually deemed essential in nature”).
16. Id. See also Allen v. Michigan Bell Tele. Co., 171 S.W.2d 689, 692 (Mich. App. 1969) (“[W]here goods and services can only be obtained from one source, or several sources on non-competitive terms, the choices of one who desires to purchase are limited to acceptance of the terms offered or doing without. Depending on that nature of the goods or services and the purchaser’s needs, doing without may or may not be a realistic alternative.”).
Additionally, the Trombower approach is consistent with the RESTATEMENT (SECOND) OF TORTS §496B. Comment j states that “disparity in bargaining power may arise from the defendant’s monopoly of a particular field of service, from the generality of the use of contract clauses insisting upon assumption of the risk by all those engaged in such a field, so that the plaintiff has no alternative possibility of obtaining the service without the clause; or it may arise from the exigencies of the needs of the plaintiff himself, which leave him no reasonable alternative to the acceptance of the offered term.”
17. See Schmidt, supra at n. 4, 912 P.2d at 873 n. 7, 874 n. 18 (recreational horseback riding); Manning v. Brannon, 1998 OK CIV APP 17, 956 P.2d 156, 159 (parachuting); Martin v. A.C.G., Inc., 1998 OK CIV APP 148, 965 P.2d 995, 997 (health club). These activities are not “necessary or important to [the contracting party’s] physical or emotional well-being,”Manning, 956 P.2d at 159.
18. Martin, 965 P.2d at 997.
19. Rodgers v. Tecumseh Bank, 1988 OK 36, 756 P.2d 1223, 1226 (noting that a commercial loan agreement was not an adhesion contract since borrowers have a choice of loan providers, and the evidence showed that the parties actually negotiated the terms of the agreement in an arms-length transaction).
20. See, e.g., Henry Heide, Inc. v. WRH Prods. Co., Inc., 766 F.2d 105, 109 (3d Cir. 1985).
21. Elsken v. Network Multi-Family Security Corp., 1992 OK 136, 838 P.2d 1007, 1010; Thompson v. Peters, 1994 OK CIV APP 97, 885 P.2d 686, 688; Trumbower, supra at n. 13, 428 F. Supp. at 1117; Kinkead, supra at n. 5, 894 P.2d at 1128.
22. Chesapeake Operating, Inc. v. Nabors Indus., USA, Inc., 94 S.W.3d 163, 167-68, 180 (Tex. App. 2002).
23. Id. at 167. The Association of International Petroleum Negotiators (AIPN) 2002 International Model Well Services Contract indemnity provisions state that the indemnities are non-fault. See Chidi Egbochue & Herbert Smith, “Reviewing ‘Knock for Knock’ Indemnities Following the Macondo Well Blowout,” http://goo.gl/yJY9SG.
24. The AIPN 2002 International Model Well Services Contract allows the parties to arrange for self-insurance or insurance.See Egbochue & Smith, supra n. 23. Similarly, the IADC form drilling contract recognizes that the parties may allocate risk via the purchase of insurance; Andrew R. Thomas, “Service Contracts in the Oil and Gas Industry,” Energy Policy Center, Levin College of Urban Affairs Cleveland State University, December 2013, at 4. http://goo.gl/1be1EN.
As the court, in Appalachian Ins. Co. v. McDonnell Douglas Corp., 262 Cal. Rptr. 716, 731 (Cal. Ct. App. 1989), noted in a complex commercial case:
[I]t was not commercially unreasonable for the parties to agree [Customer] would obtain insurance to protect it against the risk of loss rather than to have [Contractor] warrant performance….As a practical matter, it was a question of whether [Customer] wanted to directly pay for insurance by obtaining insurance itself or indirectly pay for insurance by requiring [Contractor] obtain the insurance and give a warranty.
In Appalachian Ins. Co., Western Union hired McDonnell Douglas, one of two companies providing the service, to launch a communications satellite. Western Union chose McDonnell Douglas as the cheaper and more reliable option though both companies were available to launch on Western Union’s schedule. Id. at 729. Importantly, despite the limited number of service providers in the highly specialized market, the parties negotiated the terms of their contract including the exculpatory language. Id. The evidence showed that the contract resulted from an arms-length transaction between equals. See also Chi. Steel Rule & Die Fabricators Co. v. ADT Security Sys., 763 N.E.2d 839, 845 (Ill. Ct. App. 2002) (observing that there existed no evidence of disparate bargaining power between the commercial entities when 1) the provider was not the only alarm system provider in the market, and 2) the parties’ contract allowed the customer to pay more so that the provider would assume more risk indicating that the customer had the opportunity to negotiate to shift the risk).
25. See Thomas, supra at n. 24, at 4 (noting that the International Association of Drilling Contractors form drilling contract generally favors drillers by placing responsibility for damages to the rig on the operator).
26. See William W. Pugh & Harold J. Flanagan, “Master Service Agreements and Risk Allocation: In Whose Good Hands Are You?” https://goo.gl/2QW901; Thomas, supra at n. 24, at 1.
27. Kinkead, supra at n. 5, 894 P.2d at 1126.
28. 271 F.2d 627, 632 (10th Cir. 1959).
29. Id. at 629.
30. Id. at 632.
31. Schmidt, supra at n. 4, 912 P.2d at 874.
32. Id. (citing an unpublished Oklahoma Supreme Court case in predicting how the Oklahoma courts would rule on the issue).
33. 1993 OK CIV APP 132, 894 P.2d 1123.
34. Id. at 1127-28.
35. Id. at 1128.
36. 672 F.3d 1202 (10th Cir. 2012).
37. Id. at 1208.
38. Id. at 1209.
39. Paul Ausick & Michael B. Sauter, “The 10 Most Oil-Rich States,” USA Today, Aug. 3, 2013, http://goo.gl/zBHfTW.
40. See Louisiana Oilfield Indemnity Act, LA REV. STAT. ANN. §9:2780 and Texas Oilfield Anti-Indemnity Act, TEX CIV. PRAC. & REM. CODE ANN. §127.001. et seq. See also Fontenot v. Chevron U.S.A., 676 So.2d 557, 562 (La. 1996) andKen Petroleum Corp. v. Questor Drilling Corp., 24 S.W.3d 344, 348 (Tex. 2000). While top-10 producers New Mexico and Wyoming also enacted similar statutes (New Mexico Oilfield Anti-Indemnity Act, N.M. STAT ANN. §56-7-2 and Wyoming Oilfield Anti-Indemnity Act, WYO STAT. §30-1-131 et seq.), both did so to promote worker safety. Pina v. Gruy Petroleum Mgmt. Co., 136 P.3d 1029, 1033 (N.M. 2006) Union Pac. Res. Co. v. Dolenc, 86 P.3d 1287, 1292 (Wyo. 2004).

ABOUT THE AUTHORS
Thomas G. Wolfe is the managing partner at Phillips Murrah law firm in Oklahoma City, where his litigation practice is focused on complex business cases including product liability, oil and gas, mass tort and class action defense. He has served on the Oklahoma Association of Defense Counsel Board of Directors and is a master of the William J. Holloway Jr. American Inn of Court.

Catherine L. Campbell is a director and shareholder at Phillips Murrah law firm in Oklahoma City. She is an experienced appellate attorney whose practice is focused on commercial litigation and labor and employment matters. She has represented clients in state and federal courts of appeal in more than 100 cases including representing law enforcement agencies in civil rights actions.

Who gets Grandma’s Twitter? Ownership, rights to Internet-based materials

Clay Ketter

Clayton D. Ketter is a litigator whose practice involves a wide range of business litigation including financial restructurings and bankruptcy matters.

By Clay Ketter
Guest Column in The Journal Record
Originally published Sept. 3, 2014

The amount of material we store in the so-called cloud has seen amazing growth. Be it a Web-based email account, iTunes music collection, or a blog dedicated to humorous pictures of cats, each of us has information we value that is solely accessible through the Internet.

Issues of ownership and rights to these Internet-based materials can be tricky. What happens to these rights once a person dies? In the past, family members may have wondered who would inherit the family silver. Now, issues may arise as to not only who gets Grandma’s Twitter account, but whether the account is even transferable.

Oklahoma is a pioneer as to these issues. A statute in effect since 2010 gives an executor the power to take control over social networking, blogging, instant messaging or email accounts following the owner’s death. Oklahoma’s statute, though, predates the explosion of cloud computing and leaves open issues such as how or if digital assets can be conveyed.

Delaware recently became the first state to pass comprehensive legislation aimed at addressing what happens to digital assets. House Bill 345 provides that, upon one’s death, digital assets are to be treated the same as physical assets and gives an executor broad authority to take control of and transfer them. The law applies not just to Web-based accounts, but to video, images, and other digital materials.

gravestone-failwhaleHowever, the Delaware law states that it is subject to certain provisions contained in end user license agreements. Signing up to a new digital account typically requires agreeing to a user agreement. Given the length and complexity of these agreements, it’s a fair assumption that people often agree to the terms without having read the actual agreement. If one were to read the agreement, they would find that typically they are not acquiring the actual digital asset, but instead a limited license to use the asset. For example, when you purchase a song on iTunes, you are actually buying a license.

Therefore, all you effectively end up owning is the personal right to listen to the song. Even under the Delaware statute, upon one’s death, that limited license would prevent the song from being transferred.

You may want to think twice before amending your will to leave a relative your iTunes library. That is, unless you dislike them.

Tort reform shows how Oklahoma product liability law evolves

This Gavel to Gavel guest column, originally published in The Journal Record on June 4, 2015, contains insights by Phillips Murrah attorney Cody Cooper concerning Oklahoma Product Liability Law. Cody Cooper contributed to “An Overview of Oklahoma Product Liability Law,” co-authored by Phillips Murrah Directors Tom Wolfe and Lyndon Whitmire for the April 2015 edition of the Oklahoma Bar Journal.
View Cody Cooper’s attorney profile here.


Cody J. Cooper is an associate attorney with Phillips Murrah whose practice is concentrated in commercial litigation, product liability, and intellectual property.

Cody J. Cooper is an attorney with Phillips Murrah whose practice is concentrated in commercial litigation, product liability, and intellectual property.

Exploding gas cans, scolding-hot coffee, misfiring rifles, popping exercise balls and sticking gas pedals. What do these things have in common? Each of these products was the center of some of the most memorable product liability lawsuits.

Since Kirkland v. General Motors, the Oklahoma Supreme Court has recognized product liability claims and the law has continued to grow and evolve.

For simplicity’s sake, law develops primarily in two ways: the Oklahoma Legislature enacts statutes and case law is developed from courts’ opinions applying those statutes.

The Oklahoma Legislature creates the statutes by which claims and parties are governed and this has an obvious, direct impact in Oklahoma product liability actions.

Oklahoma courts then interpret these statutes and apply them in product liability lawsuits. The courts’ decisions provide guiding authority on issues and allow parties to understand how laws will be applied in the future.

Both play critical roles, but can lead to conflict over how the law will ultimately operate. Such is the case currently with tort reform. In the past few years, wide-ranging legislative changes have caused conflict and consternation at the Capitol and in the courtroom.

Tort reform statutes have had widespread implications in product liability lawsuits, including caps on potential recoverable damages, providing substantial protection for product sellers, requiring plaintiffs to provide medical records, and shielding manufacturers from claims regarding inherently unsafe products.

In 2009, the Oklahoma Legislature passed House Bill 2818 (the 2009 Act), followed by a 2011 statute amending many parts of the 2009 Act. In 2013, several individual cases held tort reform unconstitutional, which led to the Oklahoma Supreme Court striking the entire act as being unconstitutional for violation of the single-subject rule that requires that laws only address a single subject – to prevent logrolling. Later that year, the Oklahoma Legislature through a special session, modified and revived many of the laws struck down by the Oklahoma Supreme Court and enacted new ones.

The clash between legislators and Oklahoma courts make it difficult for parties to understand what the future holds for product liability law in Oklahoma. The only certainty is that the law will continue to evolve.

 

 

Avoiding the b-word: The many faces of financial restructuring

Clay Ketter’s guest column, Gavel to Gavel, originally published in The Journal Record  on Mar. 11, 2015.
View Clay Ketter’s attorney profile here.


Clayton D. Ketter is a litigator whose practice involves a wide range of business litigation in both federal and state court, including extensive experience in financial restructurings and bankruptcy matters.

Clayton D. Ketter is a litigator whose practice involves a wide range of business litigation in both federal and state court, including extensive experience in financial restructurings and bankruptcy matters.

The current price of crude oil is sure to make people use language that is inappropriate in polite conversation. As news of idled rigs, layoffs and credit defaults becomes a daily occurrence, the use of the b-word is sure to come up more and more. Of course, I’m referring to that nasty little 10-letter word, bankruptcy.

The stigma that once surrounded a bankruptcy filing has subsided as multiple high-profile companies such as American Airlines, General Motors and the Los Angeles Dodgers have entered the bankruptcy process and emerged as stronger, more viable businesses. Despite these successes, one group that has been gradually shunning the use of the b-word is, surprisingly, bankruptcy attorneys. Yes, the people most familiar with the ins and outs of the Bankruptcy Code, rather than announce themselves as bankruptcy experts, are instead asking to be referred to as financial restructuring specialists. This is particularly true for those attorneys that focus on businesses, as opposed to individuals, facing financial difficulties.

At first glance, it would appear that a rebranding effort is the motivation for this shift. Bankruptcy may suggest failure, death, layoffs and closings. Financial restructuring, comparatively, signifies repair and rebirth of a business. Although marketing has played a part, it fails to explain the whole story. The use of the phrase “financial restructuring” reflects the reality that debtors and creditors facing financial stress have many options at their disposal, not just bankruptcy.

Workouts, divestitures, mergers and asset sales are just some of the tools that a financial restructuring professional may utilize to assist debtors and creditors in resolving financial difficulties. Options also include a bankruptcy filing, whether it be a Chapter 11 reorganization or a Chapter 7 liquidation. However, a bankruptcy filing is not always the right choice. Depending on the circumstances, it often makes sense to avoid the time and expense of a formal proceeding, and instead resolve matters out of court. The title of financial restructuring attorney reflects the fact that multiple options are available to address and repair economic trouble, not just bankruptcy.

Should crude oil prices remain depressed, we are certain to see the b-word used more frequently. However, it’s important to remember that, depending on the circumstances, a more conservative approach may be better.

Overcome obstacles to profiting from expiring patents

patent-stamp

Patent maintenance fees have led patent holders to abandon an increasing number of patents.

The recent increases in patent maintenance fees has led many patent holders to abandon an increasing number of patents because the cost of maintaining a large portfolio is becoming too high. Selling patents that are about to lapse is one option, however, doing so presents two primary concerns: lack of investment in expiring patents and litigation pricing, according to News 9.

U.S. patents must be renewed three times during their lifetime. Maintenance fees are due after the issue date of the patent every 3.5 years, 7.5 years and 11.5 years. Maintenance fees escalate at each renewal portion. Small entities are entitled to a 50 percent discount on maintenance fees and micro entities receive 75 percent off patent maintenance. These fees can be paid up to six months prior to their due date. Patents are not abandoned until a six-month grace period ends at years 4, 8 and 12 respectively. Patents can be renewed during their grace period for $160.

Most buyers will not pay a significant price for patents that are nearing their expiration date, for the same reason we are less likely to buy products in the store that are close to their “sell by” date. Also, in many circumstances, buyers may decide to enforce the patent, sometimes resulting in costs to the patent holder, making selling a patent for a lower five figure price undesirable.

To overcome transaction costs of selling patents for a low sale price, the patent holder must lower the transaction cost. This can be done by using the same negotiated patent purchase agreement for repeated transactions. Once the first transaction is completed, the patent holder and buyer can use the same patent purchase agreement for future transactions.

The second concern is primarily driven by the sale price of the patent. Most companies would be comfortable in selling the patent if the sale price of the patent significantly exceeded the cost of responding to discovery. In many respects, discovery issues in patent litigation are no different from discovery issues that arise in all other cases.

While it may not be realistic to sell a single patent nearing expiration for significant revenue, selling groups of these patents can generate significant revenues and responding to discovery for those few patents is manageable.

By selling groups of patents to the same buyer throughout the year, a patent owner can virtually eliminate the transaction costs while generating six figure annual revenue from patent assets that would otherwise soon become worthless.

Firm adopts family for Oklahoma Family Network

Attorneys at Phillips Murrah wrapped gifts for Oklahoma Family Network.

From left: Bobby Dolatabadi, Jennifer Miller, Dave Rhea, Dawn Rahme, Melissa Gardner, Liz Mobley, Josh Edwards and Monice Ybarra.

OKLAHOMA CITY – Attorneys at Phillips Murrah hosted a gift wrapping party on Dec. 18 to wrap donations for the Oklahoma Family Network. The firm raised $4,000 for the 2014 holiday season.

“The attorneys and legal professionals at Phillips Murrah recognize that community service and philanthropy are important components of our profession and we seek out opportunities that would allow us to make a positive impact on our local community,” said Monica Y. Ybarra, attorney at Phillips Murrah. “Our partnership with the Oklahoma Family Network is a great way to have a direct impact in the lives of Oklahoma families dealing with special health care needs and disabilities. Through OFN, we are able to connect with families in need and provide much-needed essential items…as well a little fun!”

The Oklahoma Family Network serves families whose members are critically ill or have other health issues or disabilities. Phillips Murrah has raised funds to buy gifts for families and provide funds to OFN for emergency medical bills, food shopping, utility payments, etc. for years.

“This event is a fulfilling opportunity for the whole firm to get involved and go beyond the practice of law to help struggling Oklahoma families that do not have the means to celebrate Christmas,” said Cody J. Cooper, attorney at Phillips Murrah. “By giving gifts to families in need, the families are able to celebrate Christmas when they wouldn’t otherwise and the parents get peace of mind knowing that their children will have presents under the tree. It helps them take focus away from their struggles, even if only for a day.”

PM Director Bob Sheets discusses fracking ban on NPR

Phillips Murrah Director Robert N. Sheets participated in a broadcast interview with StateImpact Oklahoma / KGOU reporter Joe Wertz regarding using local referendums to ban hydraulic fracturing.

This interview was broadcast in early November, 2014 and can be seen in its entirety at the StateImpact Oklahoma website.

To listen, click on the player below:

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Excerpt:

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Bob Sheets

Property Rights

In Oklahoma, local officials have the authority to regulate and restrict oil and gas activity within city limits, an ordinance that enforced a fracking ban would likely draw an immediate legal challenge, says Robert Sheets, a land-use and natural resources attorney at the Phillips Murrah law firm in Oklahoma City.

“That’s what the cities are going to have to look at: Are they taking a property right from an individual by saying, ‘You cannot drill, you cannot frack on this property.’”

The energy industry has deep roots in Oklahoma, and many of the property laws themselves were written with oil and gas interests in mind. Sheets says the justification for an outright ban would have to be steep and defendable in court, especially if royalty owners argue that fracking is necessary to produce their oil and gas property.

“You’re probably going to end up with that rational basis test,” Sheets says. “Is there a rational basis for what they’re doing?”

Bob is a commercial litigator, director and one of the firm’s founders. He represents construction and energy industry clients in a broad range of real estate, land use and business litigation matters. You can view his attorney profile page HERE.

About StateImpact: StateImpact seeks to inform and engage local communities with broadcast and online news focused on how state government decisions affect your lives.