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WeeklySEpTEmbEr 14, 2012

Four Ways Plaintiffs’ Lawyers Leverage Google to Stir Food-Safety Fears

Michael Volkov & Julie Grohovsky: Two Views on Whistleblowers, Dodd-Frank, & the False Claims Act

Game-Changer: Qatar Plays Historic Role in Glencore’s Bid for Xstrata

Fred Krebs on the Role of General Counsel

richard S. Levick, Esq.Originally Published on Fastcompany.com

Despite the fact that America’s food safety

infrastructure is the most efficient and ef-

fective in the world, the International Food

Information Council Foundation’s 2012 Food

and Health Survey found that only 20 per-

cent of Americans are “very confident” in

food supply safety. At the same time, one

in six U.S. consumers has stopped buying a

particular food or beverage brand because

of safety concerns in the last twelve months.

Given the rash of high-profile food recalls

we’ve seen since 2007, the figure is under-

standable, even if it isn’t backed up by hard

facts. Spinach, tomatoes, peanuts, lettuce,

ground beef, and a host of other kitchen table

staples all experienced significant incidence of

contamination in the last five years. The result-

ing consumer anxiety got so bad in 2009 that

Americans actually put their food safety fears

on par with worries about the War on Terror.

That’s a compelling statistic—and it ought to

make farmers and food manufacturers won-

der if there’s something else that is contrib-

uting to Americans’ fear of food. Even at the

2010 height of salmonella, listeria, and E. coli

outbreaks, the U.S. Centers for Disease Control

and Prevention released data showing that

only one in every 125 million meals served in

the U.S. had the potential to make a consumer

Four Ways PlaintiFFs’ laWyers leverage google to stir

Food-saFety Fears

Weekly

fatally ill. Science supports a conclusion that

the food we eat every day is, indeed, safe. So

why don’t Americans feel that way?

The answer lies in the fact that statistics can’t

compete with emotion when it comes to as-

suaging anxiety. Numbers don’t move people

the way that human drama does—and there

are no more dramatic events in the food

industry than when a person dies after eating

something she believed was safe.

This facet of human nature explains a large

part of the equation; but not all of it. There is

another factor at play, and it manifests itself in

the efforts of those with skin in the food-fear

game. Food industry adversaries—the plain-

tiffs’ bar chief among them—understand how

emotion impacts the marketplace. Even more

troubling for the food industry, they under-

stand how to manipulate digital and social

media strategies to ensure their emotional ap-

peals ring out in the marketplace.

By way of example, when we look at the

circumstances surrounding the recent salmo-

nella outbreak that killed two people, sickened

150, and originated at an Indiana cantaloupe

farm, we see just how effective their efforts

are at controlling the flow of information on

food safety issues. In other words, we see just

how good they’ve gotten at controlling search

results on Google, the venue more people turn

to for information than any other (digital

or otherwise).

Plaintiffs control the keywords. As of this writing, a Google search for

the term “cantaloupe outbreak” lists a law firm

as the top sponsored link. A search for “canta-

loupe lawsuit” returns six plaintiffs’ firm sites

on the first page. Industry messaging on safety

issues is nowhere to be found on the first page

of either of these searches. Bottom line—on

virtually every food outbreak issue, the plain-

tiff’s bar is masterfully controlling the dialogue

on Google.

Plaintiffs dominate the blogo-sphere. When users click those links

mentioned above, they are most often directed

to blog posts that outline how the industry

failed to keep cantaloupe consumers safe.

While the posts provide plaintiffs with an im-

portant messaging venue, the blogs themselves

ensure high search rank for the posts because

they are sources of the frequently-updated

content that attracts the Google spiders.

Plaintiffs use online video. A Google

Video search for “cantaloupe listeria

lawsuit” features two plaintiff-produced videos

in the top three results. Just like the blog posts

mentioned above, these videos don’t paint the

industry as a responsible steward of public

health. And as Google increasingly emphasizes

the spoken word over the written one, these

videos further optimize plaintiffs’ messaging.

Plaintiffs geo-target. As mentioned

above, a Google search for “cantaloupe

lawsuit” returns one plaintiff-maintained link.

At the same time, a Google search for “canta-

loupe lawsuit Kentucky” (one of the hardest hit

states during the outbreak) returns two spon-

sored links. That tells us that at least one firm

is targeting its efforts to the geographic areas

where its messages will resonate most.

What all of this means is that the plaintiffs’ bar

is operating in a virtual information vacuum

when contamination strikes the food and bev-

erage industry. “Within the legal community,

they are simply outworking and outsmarting

the other side when it comes to online com-

munication,” says Bob Hibbert, a partner at

Morgan Lewis & Bockius who has worked on

number of high-profile food safety issues. “It’s

clearly in the best interest of the food industry,

and of the people who represent it, to mount a

more effective response to this challenge.”

Fortunately, leveling the playing field doesn’t

require any great strategic leap. Food manu-

facturers need to understand that the same

tactics driving high levels of consumer anxiety

can be employed to diminish it as well. Specifi-

cally, food companies should:

own their risk terms and keywords. Plaintiffs’ keyword dominance exists

because food manufacturers don’t own the risk

terms that their consumers use to find infor-

mation on the latest safety crises. While they

likely optimize their Web properties for terms

related to their products (“tomato,” “spinach,”

”cantaloupe,” etc.), they don’t do the same for

terms such as “foodborne illness,” “recall,”

“lawsuit,” or “outbreak”—and that enables the

plaintiffs’ bar and other adversarial voices to

dominate the conversation. At the moment an

instance of contamination is discovered, food

companies need to engage in Search Engine

Optimization (SEO) and Marketing (SEM)

campaigns that rank their response messages

at the top of the list when their risk terms are

queried. Even better, food manufacturers that

do the same in peacetime not only eliminate

the need to scramble when trouble arises; they

create a compelling safety narrative that plain-

tiffs will have to overcome.

address the blogosphere. Plaintiffs’

attorneys maintain blogs as a means to

provide a steady stream of optimized content

that keeps their messages front and center on

search engines. They know that if they are ac-

tive all the time, the Google spiders will elevate

their sites when a food recall hits and it comes

time to troll for class action clients. By blogging

about all the ways they work to diminish the

possibility of contamination, food manufac-

turers can also create the salient, frequently-

updated content that ranks on Google when

consumers seek information on food safety.

Engage via video. Food manufacturers

that reach out to consumers with engag-

ing video content not only provide themselves

a leg up on the SEO front; they establish the

emotional connections needed to bridge the

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safety perception gap. Articulating food safety

statistics such as those cited above merely tells

people their food is safe. Video shows them why

they should consume with confidence. With

video content that highlights safety procedures

and the men and women charged with carrying

them out, food manufacturers can powerfully

articulate a commitment to safety that sticks

with their audience. By going a step further

with how-to videos that outline healthy food

preparation steps, they can themselves take on

the identity of true consumer advocates.

Be where the fear is. When an

outbreak does occur, the companies at

the center the problem—as well as those whose

brands may be tarnished by mere association—

need to target their messages to affected popu-

lations. Not only does geo-targeting streamline

their optimization efforts by focusing resources

where they are need most; it enables compa-

nies to directly reach the very consumers most

likely to change their buying and eating habits

as a result of a contamination incident.

Google is the portal by which consumers gain

or lose confidence in products and services.

As such, it is too important a venue for food

manufacturers to cede to their adversaries.

At a time when more than half of Americans

are concerned about the foodborne illness,

the industry has a compelling safety story to

share. With strategies that enhance Web opti-

mization, they can help ensure that a captive

audience is there to hear it.

Richard S. Levick, Esq., President and CEO of LEVICK,

represents countries and companies in the highest-stakes

global communications matters—from the Wall Street

crisis and the Gulf oil spill to Guantanamo Bay and the

Catholic Church.

L3.

Weekly

Michael Volkov, a shareholder in LeClairRyan, discusses the tough whistleblower laws that were

passed as part of the Dodd-Frank financial reform package. Whistleblowers that meet certain cri-

teria are now entitled to as much as 30 percent of all recoveries that result from their cooperation

with the government. That’s a powerful incentiveand it dictates an urgent need for companies to

ensure that employees report problems internally, before turning to regulators.

Michael volkov & Julie grohovsky:two views on Whistleblowers, dodd-Frank, & the False claims act

Julie Grohovsky, partner at Wu, Grohovsky & Whipple, discusses the importance of the False

Claims Act for combating fraud and protecting American tax dollars. Ms. Grohovsky particularly

stresses the significant impact of whistleblowers and the rewards that motivate them on exposing

fraud against the national treasury.

Weekly

Qatar Plays historic role in glencore’s Bid For Xstrata

gaMe- changer:richard S. Levick, Esq.Originally Published on Forbes.com

It is no doubt a matter of historical inter-

est when two companies like Glencore and

Xstrata engage in a high-profile yearlong

back-and-forth negotiation to create the

world’s largest mining concern. If the deal

gets done, the marketplace and shareholder

impact will be significant as it would

create a global commodities giant that

can compete with the likes of Rio Tinto

and Vale. The merger, worth around

$36 billion, would be the year’s biggest

corporate transaction.

Not just the wrangling over sale price, the

story is further vivified by the power struggle

over who will run the reconstituted entity. The

fact that Glencore was originally founded by

Marc Rich in 1974 and that its IPO set records

last year in London certainly adds more spice

to the stew.

All that said, the real historical significance of

this saga may have less to do with mining, or

even with corporate takeovers in general, than

with a portentous next chapter in the history

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of sovereign wealth funds, and how these

massive investment entities must now position

themselves in the global community.

Of course there’s been no dearth of blow-by-

blow media coverage of Glencore’s bid for

Xstrata, the world’s fourth-largest diversified

miner. Glencore, which already owns 34% of

Xstrata, was rebuffed in June and a revised

offer, including a reported 27% premium, was

formally made on Monday, September 10. Ivan

Glasenberg, Glencore’s chief executive, had

previously insisted that he would not budge

from his original terms. Glencore now similarly

avers that it will not increase this current offer.

Glencore’s options may still include a hostile

position that would only require a majority

rather than 75% shareholder approval, al-

though the company seems to have backed off

from that strategy. The revised offer calls for

Xstrata Chief Executive Mick Davis to stay at

the helm for only six months, then be replaced

by Glasenberg while Xstrata Chairman John

Bond would remain chairman. The market

seems confident the deal will now go forward

as shares increased by 2.4% on Monday. Yet

the leadership issue remains a question mark.

As of this writing, Davis is reportedly ready to

quit and so is CFO Trevor Reid along with 20

other senior executives.

The institutional investors were fairly split in

their response to the revised deal. Standard

Life supports it, but Knight Vinke, an activ-

ist shareholder, now wants Xstrata’s board to

look for a third party. Knight Vinke is one of

Xstrata’s 20 largest holders.

But let’s back up for a minute. The spark that

really set this fire was struck by Qatar Holding

LLC (QH), established in 2006 by Qatar Invest-

ment Authority (QIA), the sovereign wealth

fund (SWF) that owns about 12 percent of

Xstrata. After QH rejected Glencore’s initial

offer in June, no less a personage than former

UK Prime Minister Tony Blair, a good friend

of Qatari prime minister Sheikh Hamad bin

Jassim, was recruited to keep both Glasenberg

and Ahmad Mohamed Al-Sayed, the managing

director and chief executive of Qatar Holdings,

at the bargaining table.

More than any other Xstrata shareholder, Qa-

tar Holding seems to be the linchpin. Not sur-

prisingly, there was no small interest in how it

would respond to Glencore’s revised offer. In

fact, not just the content, but the style of that

response, reported on Tuesday, is significant.

First of all, it is the first statement of any sort

that QH has made in response to Glencore’s

proposals. Heretofore, SWFs have typically

been cautious passive investors, a judicious

strategy in the past considering the potential

in both the U.S. and Europe for intensified

regulatory interest in how the investment

arms of foreign governments buy up

domestic properties.

It is therefore something of a watershed

moment when an SWF acts like an activist

shareholder, which is precisely what Qatar did

when it rejected Glencore’s offer. “The trans-

formation was likely inevitable once the sov-

ereign wealth funds began to invest directly

in companies,” says Leonard Schneidman,

Managing Director of WTAS, a tax, valuation

and financial advisory firm. “They can no lon-

ger work solely behind the scenes or pursue

their objectives via intermediary entities,”

adds Schneidman, editor of Sovereign Wealth

Funds: A Legal, Tax and Economic Perspective

(Practising Law Institute).

Further heightening its profile in this deal, QH

is holding back approval, saying that it will

make its decision “in due course.” The SWF is

thus openly playing the role of what the me-

dia describes as “kingmaker” and it certainly

seems content to play hard-to-get. Reportedly,

QH may not even weigh in until after the

Xstrata board issues a statement expected on

September 24.

The kingmaker role underscores another po-

tentially decisive point: that, as an SWF, QH is

rich enough, and expansive enough, to take it

or leave it. In late August, Glasenberg assumed

the same position when he said that Xstrata

was “not a must-do deal.” But Glasenberg

blinked on September 10. QH is not likely to.

For companies and their boards, QH is thus

a new kind of activist investor, one that has

seemingly endless options and immeasurable

leverage. It’s a dazzling prospect of what the

future may hold when we consider another

essential point: that no one in the investment

arena takes a longer-term view of things than

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Fred Krebs, Senior Advisor at Clearspire LLC and the Association of Corporate Counsel discusses

the current “golden age” for general counsel—an era in which their influence and impact on the

business community has never been more significant. With this higher profile comes intensified

scrutiny, even as new resource challenges demand that general counsel identify new ways to get

the most out of their outside law firm relationships.

crisis

litigationFinancial coMMunications

corPorate & rePutationPuBlic aFFairs

sign uP today

Fred kreBson the role of general counsel

SWFs. If Qatar’s holdings in Xstrata suffer be-

cause this deal falls through, Qatar can and will

ride it out.

Yet Qatar’s precedent-setting role in the Glen-

core bid suggests new challenges ahead for the

SWFs as well. The 12th largest SWF in the world

has just taken a step beyond quiet power, to the

noisier public role of activist investor. No one

in the U.S. or Europe is raising national security

concerns as a result. It is fair to say, however,

that Qatar’s conspicuously aggressive role in

this deal presages additionally more aggressive

SWF positions in the future.

At the very least, SWFs can revisit how they will

represent themselves in the years ahead if and

when such positions do indeed become increas-

ingly aggressive and public. Power and promi-

nence increase incrementally but inexorably

and, in an uncertain political climate, it is wise to

make the world as comfortable in your presence

as possible. To that end, these emergent power

brokers should remind everyone that they have

the same rights as any other investor. If Carl

Icahn can make or break a deal, so can they.

At the same time, the SWFs have already been

shrewd enough to characterize their invest-

ment strategies as “opportunistic,” which is

precisely how the QIA describes its philosophy.

An opportunistic strategy is an unpredictable

one, happily so in the sense that there’s no

carefully devised plan, no multifaceted conspir-

acy to influence anyone’s foreign policy or buy

up the Eiffel Tower and ship it off to Doha.

Conversely, the SWFs can reinforce that assur-

ance by carefully communicating how and why

they do pick their investment targets, focusing

too on the diverse benefits for everyone; when,

for instance, their money supports needed

infrastructure projects. Xenophobic tensions

won’t go away in our lifetimes but it is always

prudent to turn as many enemies as possible

into stakeholders, no matter how untold the

wealth you currently enjoy.

Richard S. Levick, Esq., President and CEO of LEVICK,

represents countries and companies in the highest-stakes

global communications matters—from the Wall Street

crisis and the Gulf oil spill to Guantanamo Bay and the

Catholic Church.

“ Power and prominence increase incrementally but inexorably and, in an uncertain political climate, it is wise to make the world as comfortable in your presence as possible.”

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the urgencyoF noW.