ZipTracker: Delivery Lawsuits

Hi ZipLawyer! I'm Ludo Lugnani and this is a subscriber-only newsletter called ZipTracker where we cover court cases and deals which law firms have been advising on to make you stand out in applications and interviews and develop your Commercial Awareness!

Today's newsletter is a 10 min read:

• ⚖️ In Court: Court cases featuring Leigh Day, Eversheds Sutherland, White & Case, Akin Gump, Milbank. Clyde & Co, Womble Bond Dickinson and Osborne Clarke.
• 🤝 Deals Time: Deals featuring Dentons, Sidley Austin, Fieldfisher and Clifford Chance.

⚖️ In Court

Amazon's Workers

In Short: In August 2022, a group of approximately 1,200 delivery drivers filed a group action claim against various UK Amazon companies and subcontracting delivery firms, claiming holiday pay, the national minimum wage, the right to employment particulars, breach of contract, and unauthorized deductions from wages. Amazon's UK arm argued that the claim should be dismissed as the drivers are not employed by Amazon directly, but rather by contracting companies.

Key Points to note:

1. Employment Status: One of the key points in this case is the employment status of the delivery drivers. The key issue is whether they are employed by Amazon or by the contracting companies that provide delivery services to Amazon. This is important because employees have certain rights, such as the right to the national minimum wage, the right to paid holiday, and the right to receive employment particulars. If the drivers are found to be employees of Amazon, they would be entitled to these rights.
2. Contractual Relationship: Another important point is the contractual relationship between the drivers and Amazon. Amazon's lawyers argue that there is no direct contract between Amazon and the drivers, and that the drivers are employed by the contracting companies. This is significant because if there is no direct contractual relationship between Amazon and the drivers, it may be more difficult for the drivers to claim that they are employees of Amazon.
3. Uber Case Comparison: Amazon's lawyers have compared this case to the landmark UK Supreme Court ruling in February 2021 on Uber drivers' relationship with the ride-hailing app. In that case, the Supreme Court ruled that Uber drivers were workers rather than independent contractors, and were therefore entitled to certain employment rights. The lawyers for Amazon argue that this case is different because Amazon is the customer of the delivery companies, rather than the employer of the drivers.

Who advised on this?

• The delivery drivers bringing the lawsuit are represented by Ben Cooper KC of Old Square Chambers instructed by Leigh Day.
• Amazon is represented by Jason Galbraith-Marten KC of Cloisters, instructed by Eversheds Sutherland.

⚖️ In Court

Selling Debts

In Short: Adler Group, a Luxembourg-based company with 26,000 residential properties under management, is facing financial difficulties due to the impact of COVID-19 pandemic and the downturn in the property market. The group does not have the available cash to pay off the AGPS debt by the April 27 maturity date, so it proposed raising approximately €937.5 million to repay the debt. However, raising this sum would contravene provisions in its other agreements. A recent Court ruling allowed Adler to kick off key restructuring meetings with its creditors before Easter holidays in hopes to procure new cash to avoid insolvency.

Key Points to note:

1. Financial troubles: The case highlights the impact of the COVID-19 pandemic and downturn in the property market on Adler Group's financial standing. To make matters worse, the company has also been accused of artificially inflating the balance sheet in October 2021. The case indicates the importance of constantly reviewing financial agreements and ensuring the company is well-positioned to handle market uncertainties.
2. The impact of new debt on existing agreements: The group does not have the available cash to pay off its subsidiary's (AGPS Bondco PLC) debt by the April 27 maturity date, so it proposed raising approximately €937.5 million to repay the debt and "partly for liquidity purposes elsewhere in the group." However, raising this sum would contravene provisions in its other agreements. Therefore, the subsidiary, AGPS, and creditors met and discussed whether to alter provisions of their debt agreements in order to secure close to a billion euros in new debt to pay off another series of notes set to mature on April 27.
3. Urgent Matters: Judge Mann gave the order for the meetings to go ahead, noting the "urgency of the matter" and the "very tight timetable" required to address it. The case emphasises the importance of acting quickly and efficiently when facing financial difficulties to avoid insolvency. It also highlights the significance of working with creditors to reach an agreement and restructure debts to avoid default.

Who advised on this?

• AGPS Bondco PLC is represented by David Allison KC, Ryan Perkins and Annabelle Wang of South Square, instructed by White & Case.
• An Ad Hoc Group of Opposing creditors are represented by Tom Smith KC and Adam Al-Attar of South Square, instructed by Akin Gump Strauss Hauer & Feld.
• A Steering Committee of Creditors is represented by Felicity Toube KC and Henry Phillips of South Square, instructed by Milbank.

⚖️ In Court

Renewable Indemnities

In Short: Drax Smart Generation Holdco (Drax), a renewable energy company, has been granted permission by the High Court to increase its claim against Scottish Power Retail Holdings (SPR). for alleged losses connected to its purchase of a Scottish Power hydroelectric and gas portfolio in 2018. Drax claims that Scottish Power failed to correctly transfer rights to a Kent power project (Damhead Creek II) during a £702 million deal for VPI Power (VPI), causing Drax to incur significant losses. Drax now seeks £8.1 million in losses that it would have incurred in arranging a new option with the land's owner, Uniper UK.

Key Points to note:

1. Duty to Indemnify: One key point from this case is the importance of a duty to indemnify in a sale and purchase agreement to protect against potential losses.. A duty to indemnify refers to an obligation to compensate for losses suffered by the other party due to a specified event or circumstance. In this case, Drax claims that Scottish Power has a duty to indemnify it for losses it incurred as a result of Scottish Power's failure to correctly transfer rights to the Damhead Creek II project.
2. Breach of Contract: Another key point is the significance of a breach of contract claim. Drax had asked the court to allow it to set out losses under this claim as the difference between what it paid for VPI and its true value, which it contends is lower because it could not benefit from the Damhead Creek II option. However, the judge refused this application for amendment as it did not comply with the terms of the deal and did not have a reasonable chance of success. This highlights the importance of ensuring that any breach of contract claim complies with the terms of the agreement and has a reasonable chance of success.
3. Value of Portfolio: The final key point is the importance of accurately valuing a portfolio in a sale and purchase agreement. Drax had originally claimed £107,600 for legal costs for negotiating the acquisition of the rights under the land agreement, but it has now upped its indemnity claim to £8.1 million. However, the judge ruled that its characterisation of loss differed too much from what it had initially set out in a notice it sent to Scottish Power as part of their agreement. This highlights the importance of accurately valuing a portfolio in a sale and purchase agreement to avoid potential disputes later on.

Who advised on this?

• Drax is represented by David Quest KC and Philip Hinks of 3VB instructed by Clyde & Co.
• Scottish Power is represented by Sa'ad Hossain KC and Joyce Arnold of One Essex Court Instructed by Womble Bond Dickinson (UK).

⚖️ In Court

Missing Commissions

In Short: Daniel Johnston, a former customer success manager, filed a claim at the Employment Tribunal stating that Veritas Technologies owed him £273,548 in commission that he had not received. Johnston argued that the amount was unlawfully deducted from his wages after Veritas recalculated his commission entitlement. But the company denied the allegation, saying Johnston had been paid all that was due to him and that it was permitted to adjust his commission payment based on terms in the commission policies. Both employment tribunals found that Veritas had not acted unlawfully.

Key Points to note:

1. Contractual interpretation: The case highlights the importance of contractual interpretation in employment law. Judge Fairley's decision was based on a proper construction of the terms of the contract and on the findings of fact made by the Employment Tribunal. The judgment emphasizes the need for parties to carefully draft contracts to avoid ambiguity and clearly define the terms of commission entitlement.
2. Commission policies: The case also sheds light on the role of commission policies in determining an employee's entitlement to commission. Veritas was permitted to adjust Johnston's commission payment based on the terms in the commission policies. The judgment highlights the need for employers to have clear commission policies in place that are regularly reviewed and updated to reflect changing circumstances.
3. Review of commission entitlement: The case highlights the importance of conducting a review of an employee's commission entitlement when circumstances change. Veritas conducted a review of Johnston's commission entitlement after a new contract with HSBC meant his commission would far outstrip expectations. The data company concluded there was an error in Johnston's performance measures and amended the quota, saying the amount of commission he was actually due should be recalculated on that basis.

Who advised on this?

• Daniel Johnston is represented by Kenneth McGuire of 42 Bedford Row, instructed by Ergo Law.
• Veritas Technologies (UK) Ltd. is represented by Hugh Olson of Arnot Manderson Advocates, instructed by Osborne Clarke.

🤝 Deals Time

Recharge your Batteries

Summary: Recharge Industries, an Australian technology company, has acquired Britishvolt, a British lithium-ion battery manufacturer, out of administration. Recharge Industries is owned by a US hybrid fund, Scale Facilitation, and the acquisition will enable the Australian company to create the UK's first gigafactory to produce batteries for electric vehicles on a large scale. Britishvolt faced funding difficulties, which caused it to halt construction of a factory in August, and the company fell into administration in January.

Key Points to note:

1. Creation of the UK's first gigafactory: The acquisition of Britishvolt by Recharge Industries will enable the creation of the UK's first gigafactory, which will produce batteries for electric vehicles on a large scale. This is significant because it will help Britain meet its net-zero emissions target and provide local jobs. The gigafactory will support the development of technology and infrastructure needed for the UK's energy transition.
2. Acquisition out of administration: The acquisition of Britishvolt by Recharge Industries was carried out through administration, with Ernst & Young LLP acting as administrator. This is significant because administration is a process that enables the sale of a business as a going concern, which means that the business can continue operating and its employees can transfer to the new owner. This is often a preferable option to liquidation, which involves the sale of assets and the closure of the business.

Who advised on this?

• Dentons advised Britishvolt.
• Sidley Austin advised Recharge Industries.

🤝 Deals Time

Place Shares, Get Money

Summary: SigmaRoc PLC, a UK-based quarried materials specialist, has successfully raised approximately £30 million through a shares placing. The company plans to use the proceeds to fund acquisitions and investments, with the aim of expanding its operations and cutting its carbon footprint. SigmaRoc has placed more than 55.5 million new shares, each worth 54 pence, which represents a premium of approximately 1.8% on the company's mid-market closing price of 53 pence on Wednesday 22 February.

Key Points to note:

1. Acquisition and Investment: SigmaRoc plans to use the proceeds of the share placing to fund acquisitions and investments. Acquisitions are a common way for companies to grow and expand, by buying other businesses and incorporating their assets and operations into their own. Investment in new projects and technologies can also help companies to grow and stay competitive. In this case, SigmaRoc plans to make 10 potential acquisitions in the near-term and launch four projects targeting growth and cutting the company's carbon footprint.
2. Share Placing: The shares placing involves the sale of newly issued shares in SigmaRoc to investors, with the aim of raising funds for the company. Share placings are a way for companies to raise capital quickly, but they can also dilute the value of existing shares, as the total number of shares increases. In this case, SigmaRoc has successfully placed more than 55.5 million new shares, each worth 54 pence.
3. Carbon Footprint: SigmaRoc plans to use some of the funds raised through the share placing to invest in projects that will help to cut the company's carbon footprint. This is a significant consideration in today's business landscape, as companies are under increasing pressure to reduce their carbon emissions and contribute to the fight against climate change. In this case, SigmaRoc estimates that the four projects targeting growth and cutting the company's carbon footprint will generate a total of approximately £6 million in profit after tax annually if they are completed.

Who advised on this?

• Fieldfisher advised SigmaRoc PLC.

🤝 Deals Time

Banking Bargains

Summary: Axis Bank, an Indian private lender, has purchased Citigroup's consumer banking business in India for $1.4 billion. The acquisition includes credit cards, retail banking, wealth management, and consumer loans operations, providing Axis with access to 1.8 million cards and 2.4 million Citibank customers. Citi's decision to sell its consumer banking businesses across Asia, Europe, and the Middle East is part of its strategy to exit the local retail market.

Key Points to note:

1. Expansion: The acquisition of Citibank's consumer businesses in India by Axis Bank provides Axis Bank with access to 1.8 million cards and 2.4 million Citibank customers, allowing Axis Bank to expand its customer base and strengthen its market position in the Indian banking industry.
2. New strategy: Citi's decision to sell its consumer banking businesses across Asia, Europe, and the Middle East is part of its strategy to exit the local retail market. This decision reflects a trend among global banks to focus on their core businesses and divest non-core businesses to improve profitability.

Who advised on this?

• Clifford Chance advised Citigroup.

⭐ Bonus Story

Arm's going to America

You may have seen that Arm, a British semiconductor giant, decided to list its shares solely in New York instead of returning to the London Stock Exchange. This is significant for several reasons.

Firstly, Arm is considered a crown jewel of Britain's tech industry and its decision to list only in the US is a blow to the UK's aspirations to attract more tech companies to its stock exchange. This is especially significant given that the UK has been actively trying to attract more tech companies to list in London, and the Financial Conduct Authority even tweaked listing rules to make it easier for tech companies to list in the UK.

Secondly, Arm's decision to list in the US comes after talks with the British government and regulators, which means that the UK was unable to persuade Arm to return to London. This sends a signal that the UK may be losing its attractiveness as a destination for tech companies to list their shares.

Thirdly, the fact that Arm is owned by Japan's SoftBank Group and is only listing in the US after failing to sell to rival Nvidia Corp. shows that international mergers and acquisitions in the tech industry are becoming increasingly complex and subject to regulatory scrutiny, as evidenced by the Federal Trade Commission's blocking of the Nvidia deal.