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From outward appearances, the 56 campuses of the Marinello Schools of Beauty were profitable and successful. However, the Department of Education believed that school administrators had engaged in an ongoing and systematic program of misrepresentation that enabled the school to collect millions of dollars in federal financial aid. The schools have now been shuttered and a portion of the $11 million settlement is poised to be distributed among six whistleblowing employees while the remainder is being returned to the government.

WhistleblowerMarinello School of Beauty was founded in 1905. The school eventually boasted 39 locations in California with others found in Nevada, Utah, Connecticut and elsewhere. Programs offered included cosmetology, barbering and hair design. However, recent students knew that trouble was brewing. A Connecticut graduate received multiple notices from the school telling her that she owed several thousand dollars. She told the school that her tuition was supposed to be covered by federal aid, but to no avail. The school refused to release her transcripts so she cannot get a cosmetology license.

Her story is like many others, but it was a group of six former employees who brought the allegations of misdeeds to the federal government. They alleged that the schools did not provide adequate training. Moreover, they claimed that the school knowingly requested federal student aid for enrollees who did not have a diploma. Some of these students were maneuvered into a high school diploma completion program that was not accredited. Other students did not receive all of the federal funds that they were entitled to. Marinello was further accused of inflating its enrollment numbers, graduation rates and the earning potential of graduates.

The Department of Education withdrew federal financial support of the schools at the end of 2015, and the schools shuttered for good in February of the following year. The government will only be able to recoup a small portion of the many millions of dollars that had been distributed to the schools in the last year or two alone, but this case remains a cautionary tale for other institutions that receive aid from the federal government.

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Judge R. Gary Klausner has ruled that Led Zeppelin may not collect almost $800,000 in defense fees from the plaintiffs in a recent copyright lawsuit. Earlier, the copyright infringement case was settled in the band’s favor.

monumentThe lawsuit centered around the band’s most successful song, “Stairway to Heaven.” Songwriter and guitarist Randy Wolfe had long harbored suspicions that the better-known rockers had lifted the introduction of his 1968 instrumental composition “Taurus,” to be used in their hit. Wolfe passed away in 1997, but his trust filed the lawsuit in 2014. If the suit had been decided in the plaintiff’s favor, the trust might have received several million dollars. Estimates suggested that the song has generated more than $500 million thanks to its popularity.

The jury decided in Led Zeppelin’s favor. However, Jimmy Page and Robert Plant along with Warner/Chappell Music, the song’s publishing company, had expended considerable money in fighting the lawsuit. Once they prevailed, they decided that they were entitled to recoup those expenses from the unsuccessful plaintiff.

Ultimately, Judge Klausner found that the songwriters and publishing company were not entitled to legal fees and miscellaneous costs related to their defense because the initial lawsuit was not frivolous. The defendants contended that the lawsuit was merely an attempt to obtain easy money from famous musicians and that an award of legal fees to the defendants would discourage other potential plaintiffs from embarking on similar efforts.

The judge was not swayed by these arguments, stating that he had found sufficient validity in the lawsuit to allow it to go to trial. By definition, this meant that the suit could not be categorized as frivolous. Moreover, the judge asserted that there was no evidence suggesting that the Wolfe trustee had acted with “nefarious motives.”

The Led Zeppelin copyright infringement lawsuit contains many fascinating and instructive components. The most important of these may be how crucial it is to preserve and defend intellectual property rights. Whether you are an inventor or are being accused of profiting from someone’s else’s innovation, you need competent legal counsel to protect yourself.

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One of the questions I hear frequently is about whether we are accepting new clients.

While the short answer is “Yes”, here is some additional information which many people find interesting.

Great%20Fit%20Gears%2039896521-001.jpgOur law firm, Sylvester Oppenheim & Linde is committed to client service and quality legal representation for each and every client. That means that we only accept clients who we feel are a good match for our expertise, experience and areas of practice.

I learned a long time ago that we can’t be all things to all clients, but we can be all things to some clients: and those are the ones we welcome and serve in an exemplary manner.

The purpose of this blog is to provide helpful information to anyone who reads it. On our website, you will find another example of our “Be of Service” attitude by reading our Home Page Article “Eleven Questions to ask BEFORE Hiring a Business Attorney“. You will also find a list of our practice areas on that page.

Our clients tell us that they appreciate our honesty, accessibility and guidance. And we appreciate our clients.

Back to the question. The answer is: “Yes, we are always looking for one or two new good clients.” If you have a legal issue, I invite you to call and let’s find out whether we are a great fit for each other. I can be reached at 818-461-8500 or via the Contact form on this page.

Richard Oppenheim

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Most people think Snapchat is just a fun messaging app. They use it to send photos and videos that self-destruct seconds after being viewed. Snapchat also features an app that makes it possible to creatively alter photographs. Known as “Lenses,” this app is what makes it possible for the photo’s subject to sport floppy dog ears, hearts instead of eyes or a floral headband. Now, this capability is at the center of a potential class action lawsuit.

Magnified illustration with the word Social Media on white background.

Illinois residents Jose Martinez and Malcolm Neal filed a complaint in Los Angeles in May of 2016, arguing that Snapchat violated their state’s Biometric Information Privacy Act. The law is aimed at preventing biometric identifiers from falling into questionable hands and sprang from concerns about how the necessary technology used to collect biometric identifiers might be used without the user’s knowledge or permission.

The lawsuit contends that Snapchat is collecting and maintaining detailed biometric information on their customers. This is being done without the knowledge and consent of the users, which is contrary to Illinois’ law.

Snapchat categorically denies the allegations, arguing that their service is not capable of collecting complex biometric information that would allow them to identify the face of one user as opposed to another. Instead, they say that the technology involved is merely for object recognition, which makes it possible for the program to determine which objects in a photo are faces and where the eyes, nose and mouth are located. Moreover, Snapchat denies that they are in any way storing the data that is used in the Lenses app.

Snapchat is not the first social media platform to be sued over similar technology. Both Facebook and Google are facing legal battles relating to face-recognition software that automatically identifies particular people in photographs.

This lawsuit is only in its beginning stages. It was moved to the federal courts in July 2016, and Snapchat may be facing stiff fines if their software is determined to be guilty of violating Illinois’ law. This incident demonstrates the powerful need for businesses to understand the laws of states where they will be operating.

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Well-known clothing retailer Abercrombie & Fitch has taken plenty of media heat thanks to its restrictive “look policy.” At one time, they dictated everything from the length of employees’ fingernails to the color of their hair. In addition, employees were required to purchase clothes from the retailer.

Lawsuit word breaking through red glass to illustrate legal action brought by a plantiff against a defendant in a court of law through opposing lawers or attorneys

Abercrombie & Fitch is now being sued for this aspect of their look policy. Judge Jesus Bernal recently ruled that a lawsuit that was originally filed by two former employees could move forward as a class action. The class could potentially have thousands of members, making this case much more significant, and possibly much more costly, if the plaintiffs prevail.

At the heart of the lawsuit is the store’s policy that required its approximately 62,000 employees to exclusively buy their work attire through the brand. The complaint, which was filed in California, notes that workers were expected to purchase clothes at least five times per year to coincide with the seasonal fashions found in the stores. Allegedly, all employees were given a “style booklet” outlining what they were supposed to buy and how it should be worn.

The complaint claims that this policy caused the hourly pay rate to fall below minimum wage. At the same time, the plaintiffs say that Abercrombie benefited from the policy. Although employees received a discount on their purchases, the retailer nonetheless made a substantial profit through requiring workers to shop there. Moreover, employees working on the sales floor were considered “models” who were displaying the store’s latest fashions. This enticed customers to spend more money to attain the same look that employees were wearing.

Abercrombie has already drawn fire for refusing to hire a Muslim female who needed to wear a hajib and for firing another worker who had a prosthetic arm. Their situation provides a helpful reminder for other employers that employee dress codes need to be well thought-out and reasonable. Most importantly, they should be in line with the law and all Constitutional rights. It is a wise idea to have an experienced attorney review a dress code policy to minimize the opportunities for litigation.

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The Third Circuit Court has ruled in favor of a Pennsylvania school district in a lawsuit brought by the family of a student who was assaulted on a school campus. The assault occurred in the 2012-2013 school year at Chester High School, which is within the boundaries of the defendant in the lawsuit, Chester Upland School District.

Stop school violence road signThe victim was Alphonzo Green, a high school freshman at the time of the assault. Chester High had abolished the issuance of student identification cards, and was not requiring visitors to register at the office or wear a pass. A trespasser entered the campus on a day that is referred to as “National Fight Day” with the apparent object of assaulting several students. Green was one of these.

Green’s father, Alphonzo King, filed a lawsuit against the school district, citing their lax security policies as having caused the attack on his son. According to the complaint, Green’s civil rights had been violated and the district had fostered a dangerous condition when it did away with the ID card requirements. Thus, the complaint argued, Green’s due process was violated.

A district court decided in favor of the defendant, but King chose to appeal to a higher court. The three judge panel sided with the lower court, finding that the claim did not meet four criteria that would have proven the school district’s liability. Mainly, the judges relied upon whether or not the district’s decision not to provide student identification cards was an affirmative act that created a situation that was dangerous for the plaintiff. They concluded that the omission of ID cards did not constitute an affirmative act.

Moreover, the judges felt that the plaintiff couldn’t demonstrate how the physical assault was a “fairly direct” consequence of the school’s refusal to issue ID cards. The plaintiff could only succeed with this claim if he proved that the lack of student ID cards somehow provided the impetus for the physical assault. Arguing that the attack was the result of “random criminal conduct,” the judges decided that the district bore no liability in the incident.

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An online charter school in Ohio filed a lawsuit against the state’s Department of Education in an effort to block an attendance audit.

The Electronic Classroom of Tomorrow, known as ECOT, advertises that it enrolls more than 15,000 students. This means that the facility is larger than most of the traditional public school districts. The tremendous number of students entitles ECOT to approximately $107 million in annual funding from the state.

ECOT is unlike traditional schools in that students log on via the Internet. Officials from the Department of Education want to audit ECOT’s attendance records to determine whether or not they genuinely have 15,000 students and whether or not those learners are meeting the 920 hours threshold that is mandated by state law. This means that students would have to log in for approximately five hours each day.

ECOT consultant Neil Clark argues that students are not required to complete 920 hours of classroom time. He asserts instead that 920 hours of learning opportunities are required to be presented. Moreover, Clark says that the government never asked for “documentation of log-in durations” in prior audits to determine how much funding ECOT would receive. Clark also suggests that the government is trying to retroactively apply new standards that do not apply because of the contract between ECOT and the government.

ECOT is not the first charter school to experience political turmoil recently in Ohio. In 2015, a smaller online school was found to have misrepresented its attendance numbers, with the result being that they had to return 80 percent of the money they had received from the state.

Officials at ECOT may be trying to avoid a similar fate. However, they are wise to ask that the Department of Education live up to an existing contract. Neil Clark declares that the school “successfully passed audits in 2003, 2006, 2011 and ten other audits” that were conducted by a different accrediting body. According to his statements, ECOT is not against being audited, they simply want the government to do so within the terms of their contract.

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Sometimes, the only appropriate way to respond to a lawsuit is by filing a countersuit. At least, that seems to be the philosophy of Groupon, Inc. The story began a few months ago when International Business Machines, better known as IBM, filed a lawsuit against Groupon. IBM claimed that Groupon, which is an e-commerce marketplace that connects subscribers with merchants in their local area, infringed four of its patents.

Balance in digital background / A concept of technology law or tIBM claimed that at least two patents that are related to its late-1980s telecommunications service Prodigy are clearly infringed by the technology upon which Groupon bases its services. In their complaint, IBM asserts that they deserve compensation from Groupon for the newer company’s use of IBM’s patented technology. An IBM spokesperson notes, “Over the past three years, IBM has attempted to conclude a fair and reasonable patent license agreement with Groupon.” Frustrated in these efforts, IBM filed a lawsuit in Delaware where the company is organized.

Groupon chose to file a countersuit in Illinois, where it has its home base in Chicago. Among other charges in the complaint, Groupon skewers IBM as a “relic of once-great 20th Century technology firms.” Moreover, Groupon asserts that the technology giant “has now resorted to usurping the intellectual property of companies born this millennium.” A spokesperson from Groupon said in an emailed statement to journalists that: “Unfortunately, IBM is trying to shed its status as a dial-up-era dinosaur by infringing on the intellectual property rights of current technology companies, like Groupon.”

Groupon alleges in its countersuit that IBM actually infringes its patented technology with its WebSphere Commerce software. Merchants can use WebSphere to track customer orders and sales as well as offer special deals and pricing based on the customer’s current geographic location. Groupon insists that much of this technology has already been patented by them, which entitles them to royalties from the “billions of dollars in revenue that IBM has received” from their unfair use of Groupon’s technology.

The outcome of these cases remains pending, but the situation highlights the need to protect intellectual property and perform appropriate due diligence before developing new technology.

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Fireworks%2039914849-001.jpgThe team at Sylvester, Oppenheim & Linde and the California Business Litigation blog  wish all of our clients, friends, business associates and blog readers a very safe and extremely fun 4th of July Holiday!

In observance of Independence Day our office will be closed Monday July 4th.

Enjoy your holiday, stay cool and keep your pets indoors!

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Home improvement retail giant Lowe’s has agreed to pay an $8.6 million settlement to disabled workers that the company fired. The agreement was reached after the federal government’s Equal Employment Opportunity Commission filed a lawsuit against the company in California.

Gardne center worker in a wheelchair holding a flower pot in a greenhouse

The settlement money will be distributed to former Lowe’s employees who were fired from the company between January 1, 2004 and May 13, 2010. Eligible employees were terminated after exceeding the company’s 180-day or 240-day medical leave policy. All of the affected employees were either disabled, “regarded as” disabled or were associated with someone who was disabled.

While Lowe’s stipulated a maximum leave policy of either 180 days or 240 days, officials with the EEOC argued that the policy was not in line with the Americans with Disabilities Act, or ADA. In fact, the EEOC charged that Lowe’s “engaged in a pattern and practice of discrimination” against employees who were disabled. Moreover, the lawsuit argued that Lowe’s routinely failed to provide adequate accommodations for disabled workers.

Also as a part of the settlement agreement, Lowe’s is required to hire ADA consultants who can help to reshape the company’s leave policies and assist them to address accommodation issues. Lowe’s will be required to create a system for recording and tracking employee requests for accommodation and how those requests are dealt with. Additionally, staff and management members across the company will be asked to undergo training related to ADA issues.

Lowe’s executives argue that they revamped their leave policies and more closely examined their compliance with ADA in 2010. Nonetheless, they agreed to this settlement to further the effort to comply with all facets of the ADA.

Lowe’s situation acts as an important lesson to other employers who are not sure if they are in compliance with all applicable aspects of ADA. Hiring a consultant or seeking legal advice before a serious problem arises is the best way to avoid a costly lawsuit from the EEOC or a former employee. Proactive measures toward offering accommodations and not violating ADA medical leave policies are important for any company that is seeking long-term success.