California Business Litigation Blog

In 2000 Elizabeth Raymond was hired as an executive assistant by Larry Flynt Publications Inc. (L.F.P.). Raymond signed an agreement to the terms of her employment as outlined in the L.F.P. employee handbook. That handbook contained a provision in which Raymond agreed that any dispute for sexual discrimination or harassment would be submitted for arbitration.

When Raymond was fired in 2002, she filed suit alleging sexual harassment in violation of the Fair Employment and Housing Act. L.F.P. filed a motion to compel arbitration, which was granted.

The arbitrator found L.F.P. liable for creating/maintaining a hostile work environment and awarded Raymond $175,000 in compensatory damages and punitive damages of $500,000 against Larry Flynt and $250,000 against L.F.P.

The arbitration agreement signed by Raymond also contained the following judicial review clause: “Any party may apply to a court of competent jurisdiction for entry of judgment on the arbitration award. The court shall review the arbitration award, including the ruling and findings of fact, and shall determine whether they are supported by competent evidence and by a proper application of law to the facts. If the court finds that the award is properly supported by the facts and law, then it shall enter judgment on the award; if the court finds that the award is not supported by the facts or the law, then the court may enter a different judgment (if such is compelled by the uncontradicted evidence) or may direct the parties to return to arbitration for further proceedings consistent with the order of the court.”

Los Angeles Superior Court Judge Kenneth R. Freeman’s found the “Judicial Review” clause unenforceable and upheld the $925,000 award in favor of Elizabeth Raymond. Larry Flynt and L.F.P appealed.

The Court of Appeal ruled yesterday in favor of Judicial Review, reversed Judge Freeman’s ruling and remanded the case for consideration of the Flynt defendants’ legal challenges to the award.

The Court of Appeal’s opinion may be found HERE.

Continue reading "Court of Appeal Reverses Discrimination Award Against Larry Flynt Publications" »

Posted by Richard Oppenheim | Permalink | Email This Post

Posted In: Business Litigation   Employment Law

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Redbox Automated Retail, LLC (Redbox) has built a growing business renting DVDs for only $1 per day from their bright red kiosks. In the lawsuit filed in Federal Court on October 10, Redbox claims that Universal Studios Home Entertainment (USHE) and 3 subsidiaries are trying to force changes that will constrain Redbox and its business model.

In a meeting on August 26, USHE gave Redbox until close of business on August 27, 2008 to agree to the following:

Redbox is immediatedly prohibited from renting any DVDs for 45 days after the public release date

Redbox is prohibited from selling any USHE DVDs and must destroy all previously rented copies

Under the currently successful Redbox business model, Redbox stocks new release DVDs in kiosks on the date of public release, in large quantities and sells previously viewed DVDs for $7 as early as 12 days after release.

This model is in large part responsible for the growth of Redbox from 125 kiosks in 2004 to over 6500 at the end of 2007. The projections for 2008 call for 12,000 kiosks.

Putting teeth in their “my way or the hi-way” proposal, USHE stated it will terminate relationship with both Redbox DVD distributors; VPD and Ingram.

Instead of agreeing to the new terms, Redbox filed suit in Federal Court. In the suit, Redbox is claiming that UHSE and subsidiaries have violated the Sherman Antitrust Act and are misusing copyright laws.

Redbox is asking for the court to award the following relief:

a. A declaration that Defendants' conduct constitutes copyright misuse, and
thereby renders copyrights for Universal DVDs - however marketed, sold
or distributed - unenforceable during the period of misconduct;
b. Injunctive relief prohibiting USHE from engaging in any efforts to limit
the supply of Universal DVDs to Redbox;
c. A declaration that the Revenue Sharing Agreement and USHE's
threatened action against VPD and Ingram violate the Sherman Antitrust
Act;
d. Damages to the full extent permitted by law;
e. Attorneys' fees and costs; and
f. Such further relief as this Court deems just and appropriate.

Posted by Richard Oppenheim | Permalink | Email This Post

Posted In: Business Litigation   Contract Litigation   Intellectual Property

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In Varisco v.Gateway Science and Engineering, the California Court of Appeals upheld a Los Angeles Superior Court ruling which determined that Al Varisco was in fact an "Independent Contractor", not an employee of Gateway. Plaintiff Varisco alleged that the “at will” clause in his contract with Gateway established employee status.

From the opinion, which can be found HERE:

"Appellant Al Varisco sued respondent Gateway Science and Engineering for wrongful termination of employment and similar causes of action, all of which depended on the allegation that he had been Gateway's employee. Gateway moved for summary judgment on the ground that Varisco was not an employee, but an independent contractor. The trial court found for Gateway, and we affirm. All the undisputed facts add up to an independent contractor relationship. A single clause in the parties' letter
agreement which allowed either party to terminate at will did not transform that relationship into an employment relationship."

The Court of Appeals reviewed the following to before affirming Varisco’s status as an “Independent Contractor”.

Control is the principal factor in determining whether an individual worker is an employee or an independent contractor. "An independent contractor is 'one who renders service in the course of an independent employment or occupation, following his employer's desires only in the results of the work, and not the means whereby it is to be accomplished.' Thus, the most significant question in the independent contractor/employee determination is "'whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.

Case law has identified secondary indicia of the nature of the relationship. These are:

(a) whether the one performing services is engaged in a distinct occupation or
business;

(b) the kind of occupation, with reference to whether, in the locality, the work is
usually done under the direction of the principal or by a specialist without supervision;

(c) the skill required in the particular occupation;

(d) whether the principal or the worker
supplies the instrumentalities, tools, and the place of work for the person doing the work;

(e) the length of time for which the services are to be performed;

(f) the method of payment, whether by the time or by the job;

(g) whether or not the work is a part of the regular business of the principal;

(h) whether or not the parties believe they are creating the relationship of employer-employee."

Related Citations may be found in the opinion document. If you have questions related to employment law problems, feel free to contact Sylvester, Oppenheim & Linde.

Please Note: While the above information can be beneficial for the purpose of employment law, the IRS definition of Independent Contractor status remains to be a question best answered by a Certified Public Account (CPA) or Tax Law professional.

Posted by Richard Oppenheim | Permalink | Email This Post

Posted In: Business Litigation   Employment Law

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