August 3, 2010

Ninth Circuit Rules in Favor of Defendants' Use of Lexus Name

Last month, the Ninth Circuit Court of Appeals ruled that an automobile broker’s use of the following five letters “Lexus” was not trademark infringement. It stated that it was actually a “lawful nominative fair use”.

lexus.jpgFarzad and Lisa Tabari are independent, online auto brokers in Southern California who formerly used the domain names “buy-a-lexus.com” and “buyorleaselexus.com”. Toyota Motor Sales USA filed a trademark infringement lawsuit against the Tabaris. Toyota also sought an injunction to prevent use of the Lexus mark.

The District Court concluded that the brokers had infringed Toyota's mark. That court enjoined use of the Lexus mark in any domain name or metatag. The Tabaris appealed these decisions.
On appeal, the Ninth Circuit reversed the lower court’s decisions. The appellate court stated that consumers looking for a Lexus online are sophisticated enough to know an official Lexus website from the Tabaris sites. The court also affirmed that internet searchers are used to trial and error searches, and as such would not be confused.

Lacking any affirmative suggestion of affiliation or sponsorship, the Ninth Circuit reasoned, simple use of the mark in the domain name would not cause Internet users to believe there is sponsorship or affiliation with Toyota/Lexus.

Quoted from the Ninth Circuit decision, which may be viewed HERE : “The Tabaris are using the term Lexus to describe their business of brokering Lexus automobiles; when they say Lexus, they mean Lexus. We’ve long held that such use of the trademark is a fair use, namely nominative fair use. And fair use is, by definition, not infringement.”

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June 25, 2010

CA Supreme Court Rules in Favor of Vonage in Spam Lawsuit

When Craig Kleffman received 11 email messages offering broadband phone services from Vonage and noticed that they came from a variety of domain names, he found a lawyer and filed a lawsuit. Kleffman felt that these emails were spam (also known as junk emails) and as such a violation of a California spam law that prohibits marketers from sending messages with misleading headers.

spam%202.jpgWhile the emails might be annoying, the California Supreme Court ruled this week that they were not spam, and did not violate California law.

Justice Ming W. Chin wrote on behalf of a unanimous court: "We find that a single e-mail with an accurate and traceable domain name neither contains nor is accompanied by 'misrepresented … header information' ... merely because its domain name ... is 'random,' 'varied,' 'garbled' and 'nonsensical' when viewed in conjunction with domain names used in other e-mails.”

He continued: "An e-mail with an accurate and traceable domain name, makes no affirmative representation or statement of fact that is false."

And concluded: “…we hold that, on the undisputed facts of this case, sending commercial e-mail advertisements from multiple domain names for the purpose of bypassing spam filters is not unlawful under section 17529.5(a)(2).”

The ruling (which may be viewed HERE) will likely make it more difficult for internet users to sue email marketers in California, which has an anti-spam law that is broader than the federal Can-Spam law. Generally, the federal law (which bars individuals from suing for spam violations) overrules most state spam laws. There's an exception for state laws to be used when dealing with fraud.

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March 24, 2010

City Employee Settles for $100,000 in Scented Lawsuit

In a lawsuit filed in Federal Court in 2008, City of Detroit employee Susan McBride complained she was "chemically sensitive" and suffered migraines, nausea and coughing caused by a co-worker’s perfume and room deodorizer. McBride also stated that it became difficult for her to breathe and do her job.

roses.jpgThe city settled for $100,000. Detroit city employees in the three buildings where McBride works are being cautioned not to wear fragrant products, including colognes, aftershave, perfumes, and deodorants. Additionally, employees are no longer allowed to use candles and air fresheners.

The employee handbook and Americans with Disabilities Act training given to all city employees also will bear warnings.

Because this case did not go to trial, it sets no legal precedent. That is unlikely to deter others from filing similar lawsuits in the near future.

The lawsuit filed claims that McBride’s supervisor didn’t respond to her complaints. Had the supervisor taken action to resolve her complaints, such as communicating with the “scented” employee in search of a solution, all of this may have been avoided.

Let this be a warning to all employers. If/when an employee complains about any condition causing substantial interference with that employee’s ability to perform in the workplace, action must be taken promptly to resolve the complaint.

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March 2, 2010

Lawsuit Alleges Yelp Extorting Money from Business Owners

The website Yelp has been accused of trying to extort money from companies. The company is a customer review website and the class action lawsuit filed in court states that Yelp is extorting companies through high pressure sales tactics. The lawsuit, filed in Los Angeles federal court, alleges unfair business practices.

yelp%20logo.jpgThe lawsuit states that employees from Yelp contact the businesses that are listed on the website and request or demand that the company makes monthly payments to Yelp in order to have the negative reviews removed or modified. Yelp allows users to post favorable or negative customer reviews on the website about local businesses.

The law firms filing suit state that many of the businesses that have reviews from customers and are contacted by Yelp are small companies. The companies feel they have no choice to pay in order to protect further harm on their businesses.

However, the question that the lawsuit needs to answer is whether or not Yelp is offering to run a positive advertisement for the company above the negative reviews or if the company is offering to remove those reviews for a payment. If it is the second, this could be considered extortion since the payoffs to Yelp prevent the website from doing harm to the business.

The lawsuit is based on the California Unfair Competition Law, which dates to 1933 and is a broad law covering a large number of unfair business practices including any type of untrue or misleading advertising.

Cats and Dogs Animal Hospital is the plaintiff in the case. The veterinary hospital asked Yelp to remove false and defamatory review from the listings at the website. The website reviewed to remove the review, but the company’s sale representative called the veterinary hospital numerous times demanding that the hospital pay a hefty $300 payment in order to have the negative reviews hidden or removed from the website.

According to the lawsuit filed, a sales person contacted the hospital and stated that if a one year advertising subscription was purchased that the website would “Hide negative reviews on the Cats and Dogs Yelp.com listing page, or place them lower on the listing page.”

Further, it promised the animal hospital that if it purchased this type of subscription, no negative ads would appear in Google or other search engines. The hospital would also be able to choose a tagline and choose the order in which customer reviews appeared on Yelp.com.

Although the hospital is named the plaintiff in the case, the law firm handling the lawsuit has heard from numerous other small business owners who claim to have experienced the same type of extortion.

Vince Sollitto, vice president of Yelp states that the allegations are false and that many businesses advertise on Yelp when they have negative and positive reviews on the site.
Yelp is one of the largest customer review websites in the world. Each month more than 26 million people read and use the user generated content. The website contains more than eight million reviews.

On a related note, a recent article on TechCrunch.com states that Yelp owners walked away from a Google buyout offer worth over half a Billion dollars in December 2009.

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January 21, 2010

Dan Rather Loses Chance to Appeal $70 Million Lawsuit

The New York State's highest court declined to hear the motion of television anchor Dan Rather, who has tried to unsuccessfully sue his former employer, CBS for $70 million. He alleges that the company was in breach of his contract and made accusations of fraud against the company. The state appellate court dismissed the case in September, but the Court of Appeals denied the motion without comment.

cbs-logo.jpgThe ruling from the appellate court states that the pay or play clause in his contract allowed the network to take the actions they did. Further, the ruling stated that Rather failed to show support for his claims that CBS has hurt his future earning potential in the case.

Rather was with the company for 44 years. This motion was the final move the newsman could make in the case, which proved to be an expensive and ugly battle. Rather sued CBS first in 2007, when he stated that his treatment from the company in the aftermath of a controversial report issued about George W Bush's service in the Texas Air National Guard was released.

The lawsuit stems from a 60 Minutes II piece in which Rather reported that Bush received preferential treatment during his Vietnam era service in the National Guard. Rather states that there were documents obtained by CBS written by Bush's commanding officer at the time. However, the validity of the documents came under scrutiny and the network conceded that the documents could not be authenticated.

After he filed suit, some of his colleagues publically denounced him saying that he trying to deflect some of the blame for allowing the story, which had not been properly vetted, onto the news program. However, the lawsuit, claims Rather, is meant to take on political interests and business interests that he believes are affecting the news organizations.

Rather was quoted as saying the following in regards to the lawsuit and his claims, "I believed then and I believe now that its' important the public understand how much influence in collusion big government and big business can have in affecting how the news is handled." The remarks were made on Tuesday after his motion was declined.

CBS declined to comment on the ruling, stating that they will let Rather have the final word.
After the airing of the controversial piece, Rather says that he was pushed out of the anchor chair and then placed in the news division until he was prematurely released. He believes that the actions of the network damaged his reputation and made it difficult for the anchor to find work after that point.

January 15, 2010

Deloitte Wins Lawsuit...Former Partner Loses

In a ruling on Dec 29, former Deloitte partner, Thomas Flanagan, from Chicago, was found liable for violating the accounting firm's conflict of interest policies. These policies extend for stock and options trading of the firm's clients. Clients of the company include Motorola Corp, Allstate Corp and Walgreen Co. Flanagan who was a 30 year employee of the company, was also found to have concealed these trades from Deloitte.

deloitte%20logo.jpgA further hearing has been set to determine the extent of the penalty held against Flanagan, but reports indicate that the company is seeking monetary damages which may include Flanagan's retirement benefits. Flanagan has not made a statement regarding the case. He has said that some of his investments were allowed by the SEC, such as those in which he did not have specific interactions with client's or those clients that were not from the Chicago office where he was employed.

Flanagan, a senior partner and Vice Chairman for the company embarrassed the company and left the company vulnerable to a variety of liability exposures from clients. In addition, the company is now shaken because of the additional regulatory scrutiny about the independence of the auditor. Within the accounting industry, there are strict rules about trading simply because employees have so much access to the private information of their clients that they could affect the pricing of the client's securities. Numerous times during the trial, Flanagan invoked his Fifth Amendment rights.

Many of the company's clients have had to do their own investigation to determine the involvement of Flanagan with their individual accounts. Walgreens, USG Corp and Allstate have conducted investigation that have found that Flanagan did not have involvement with their specific audits.

The company, Deloitte, says that Flanagan made investments into the company's audit clients and others more than 300 times between the period of 2001 to 2008. In some of those transactions, evidence showed that Deloitte was trading on non public information which is illegal. As of yet, the US Securities and Exchange Commission has not brought charges in the case.

Flanagan's involvement in such transactions was detailed numerous times in the case. One instance poses Flanagan attending a meeting of Allstate's audit committee in which a draft of the company's second quarter earnings statement was circulated. The company planned to announce significant increases in full year earnings at that time. This occurred on July 17, 2006. The following day, Flanagan purchased call options in Allstate stock. He later sold them on July 20th, the day after Allstate's earnings went public and the price of the stock purchased rose considerably. The stock saw an 85 percent gain in those days.

Flanagan is also charged with concealing his holdings from the company. The company requires individuals to report investments they or their immediate families own. In numerous instances, Flanagan would record unauthorized holdings into the company's computer tracking but would go back later the same day to correct such entries indicating that he had disposed of holdings when in fact he had not.

According to reports, Deloitte did not know of Flanagan’s wrongdoing until August of 2008. At that time, the SEC contacted Deloitte in regards to an audit for Walgreens in 2007. Flanagan purchased stock in Option Care Inc a week before Walgreens announced that it would buy the company in July of 2007. Flanagan did serve as an advisory partner on that audit. Flanagan resigned from his position with Deloitte as soon as the company contacted him regarding the SEC inquiry.

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December 26, 2009

Legally Blind Woman Sues National Conference of Bar Examiners

Here in Los Angeles, a woman who is legally blind is suing the National Conference of Bar Examiners because she believes they are unfairly restricting her from using necessary equipment to take the licensing test. The woman, Stephanie Enyart says that the agency needs to catch up with better, currently available options for its standardized testing.

Pasing%20the%20bar.jpgWhen she entered law school, the Law School Admissions Test was required. UCLA, the school she was testing into, hired a human reader to read the test questions for her. The problems happened on test day. She says that the man hired was so sick that he continued to leave to get tea and blew his nose. She had a hard time understanding him through his nasally congestion, too. However, she passed the test and entered law school. She believes her score suffered because she was denied the use of a computer software program that would magnify the text of the test and convert it to speech heard through an ear bud.

The National Conference of Bar Examiners has denied her request to use a computer program to take a portion of the California bar exam that it controls. Rather, it says she must use a human reader instead.

Due to this, she has sued the national conference. She claims that the conference violated the Americans with Disabilities Act and the California Unruh Civil Rights Act that prohibit discrimination.

Enyart says, as reported by the LA Times, "To use a human reader or the visual accommodations they have offered just simply doesn't meet my disability needs. It would be like trying to run a race in someone else's shoes."

Mr. Enyart is not the only person who wants the national conference to catch up. A man named Michael Witwer, who will graduate from Catholic University of American's law school this year took another required test, the Multistate Professionals Responsibility Exam recently and passed though with a score he believes was reduced because he was unable to use computer programs during the test. Rather, a human reader was imposed by the administrator of the test.

He says that the reader commented on big words in the questions and struggled with pronunciation including struggling with the word constitutional.

However, there is some improvement seen within the industry. The National Conference of Bar Examiners has allowed three blind test takers to take the test in July using a pilot program that allows software to read the text aloud to the user. This was reported through Larry Paradis, an attorney who is part of the firm representing Enyart in her lawsuit. The pilot's internal report says that the pilot program has been successful. However, the program is unable to be used at this point, and will not be available in February when Enyart will take her test.

There are about 500 blind or vision impaired lawyers in practice in the United States. Most use equipment similar to what Enyart wants to use within their day-to-day practices.

November 23, 2009

Lawyers Earn Big Fees from Law They Authored

A recent Associated Press article reveals that every lawsuit filed or threatened under a specific California law can trace back to two lawyers who worked together in the writing of that statute. The statute is in regards to electing more minorities to office. So far, there have been about $4.3 million in settlements made under this law.

1504001%20Gavel%20%26%20Money%203.jpgUnder this law, lawyers are able to sue and win judgments easier in cases from claims that minorities were shut out of local elections. In addition, the lawsuit shields attorneys from any type of liability if the claims are tossed out of court.

Seattle law professor Joaquin Avila drafted the law. Robert Rubin, a legal director for the Lawyers Committee for Civil Rights offered advice for the drafting. Both, along with other attorneys working alongside these two, have been able to bill local governments more than $4.3 million in three cases that have settled. There are two additional lawsuits pending. More so, dozens of additional cities and school boards received warning that they too could be sued under the California Voting Rights Act of 2002. Each of these cases has been initiated by Rubin's committee or by Avila.

Although it may seem unjust, there is nothing illegal occurring when an attorney profits from a law they helped to author and state lawmakers approved. What is unique in this situation is that after seven years, related legal efforts continue to be extremely narrow in focus. Avila testified in 2002 that he expected other attorneys would take on cases due to these favorable incentives placed into the law.

According to Avila and Rubin, their roles should not overshadow the importance of these cases, as they work to end injustice at the polls. The number of minority officeholders was on the rise prior to the law being in place, and these two claim the lawyers are using the statute to shake down local governments.

Under the law, state courts may create smaller election districts that favor minority candidates. This was necessary, they claim, because the more commonly used "at large" elections allowed candidates to run across the entire district. Avila says this method leads to discrimination since the majority group will win out.

According to several communities in California, there are no complaints about voter discrimination until these attorneys stepped forward. Critics say the law is flawed. They believe that even when there is no discrimination, cash strapped communities are nearly forced to settle the lawsuit.

Many believe that the law and the settlements do nothing to improve the discrimination. Avila, who charges $725 an hour for services, would not disclose his earnings from the lawsuit. Rubin earns $700 an hour. In some school districts, the cost of such settlements is resulting in the inability of schools to provide textbooks to students.

November 5, 2009

Amgen Sued Over Alleged Medical Kickback Scheme

New York and 14 other states are filing suit against the company Amgen Inc, the largest biotechnology company in the world. The claim is that the company devised and used a nationwide kickback scheme to boost the sale of drugs. The company, along with AmerisourceBergen Corp, is charged with providing medical providers with a kickback for increasing sales of the company's product Aranesp, an anemia medication.

bribery4.jpgIn order to accomplish this, the companies encouraged medical providers to invoice third party payers for Aranesp, including Medicaid, says New York Attorney General Andrew Cuomo. The rewards included retreats and other services.

Aranesp is the third largest drug in sales for the company, producing some $3.1 billion in sales. The company lost sales since 2006 (at which time the product was the company's top sales maker) due to the discovery of a link to increased rates of heart attack and death in kidney patients. Aranesp has sold more than $11 billion since its first sales in 2001. The FDA has approved the product to treat anemia associated with renal failure and chemotherapy induced anemia.

David Polk, who is the spokesman for Amgen, states that the allegations are without merit. The U.S. Department of Justice issued a subpoena of AmerisourceBergen, who claims they are cooperating fully with the demands.

Other jurisdictions that are joining in the law suit include the District of Columbia, Florida, Hawaii, Illinois, Indiana, Louisiana, Massachusetts, Michigan, Nevada, New Hampshire, Tennessee and Virginia. The case was filed in a Massachusetts court.

November 3, 2009

Facebook Unlikely to Collect $711 Million Spam Award

Facebook, the social networking website has won an award of $711 million in damages. The damages awarded from Sanford Wallace who is a prolific spammer and social network scammer, reports state. The man was banned from accessing Facebook as well, as punishment for bombarding Facebook users with spam. The lawsuit, filed by Facebook in early 2009, names Wallace, Adam Arzoomanian and Scott Shaw, all accused of accessing accounts of users without permission to do so and sending spam emails and making posts to public message walls of users.

facebook2.jpgFacebook has a long list of victories over spammers, including one in 2008 for some $873 million against Adam Guerbuez and Atlantis Blue Capital. In this ruling, the three men violated the Computer Fraud and Abuse Act, the California Anti Phishing Act and the Controlling the Assault of Non Solicited Pornography and Marketing Act.

However, experts believe that Facebook will not see the judgement awarded. In fact, Wallace and his partner, Walter Rines, were fined some $230 million in May of 2008 in a case involving MySpace. In that case, the accused tricked users into providing login information through phishing scams. Then, as they accessed the accounts of users, they sent more than 730,000 messages with links to gambling, porn and ringtone websites. The two made more than half a million though their MySpace violations only.

It is unlikely that Facebook will receive much of the judgment, but that is not what Facebook is hoping for. They are using the case as a ploy to show other pro spammers what can happen to them for violating the rules. However, experts state that pro spammers already know what to expect and they do not see it as a deterrent. In fact, whenever these pros lose, they simply disappear for some time and emerge as a different entity somewhere else, rarely paying any of the fees they owe.

Ninety-Five percent of all email is spam, says Jamie De Guerre, who is chief technology officer at Cloudmark. De Guerre also stated that while the industry is doing well to fight spam, the spammers are doing well to find new ways to continue the process. The problem, and perhaps the solution, lies in the hands of consumers and legitimate organizations, who may wish to take more conservative communication efforts, such as avoiding any type of URLs in email communications. The problem is worldwide, and is even more common in other countries. In Russia, for example, even legitimate, respectable companies use spam.

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October 28, 2009

Radiation Overdoses Prompt Class Action Lawsuit Against Cedars-Sinai Medical Center

According to hospital officials, a computer resetting error could be responsible for a large number of patients receiving overdoses of radiation treatment. Allegedly, 206 patients received overdoses during CT brain scans at Cedars-Sinai Medical Center.

CT%20scan.jpgSeveral experts say a class-action lawsuit filed this week on behalf of the victims has little chance of succeeding. Tom Baker, professor at the University of Pennsylvania Law School commented “This is the kind of case that the medical liability system doesn't help us with."

The hospital released the following statement, "A misunderstanding about an embedded default setting applied by the machine" lead to the higher than required amount of radiation administered to patients. The patients affected received doses that were eight times the normal dose of radiation.

The error was not a one-day event, either. Rather, the patients received these treatments over an 18-month period. The direct result of the extra radiation, the hospital says, was that about 40 percent of patients lost patches of hair or experienced reddening of the skin.

Victims’ attorneys are likely to focus on the anxiety caused by the overdoses more than on the risk of cancer. Historically U.S. Courts are unsympathetic in “fear of cancer” cases because it is challenging to prove that the probability of future harm is high.

Attention has included the scanner's manufacturer, General Electric. The company says that the machine was not defective. The direct result of the event was an issuance by the FDA to all hospitals in the United States to review their safety protocols for CT scans.

October 20, 2009

Lawsuits Pending Even After Microsoft Recovers Sidekick Data

Microsoft has returned virtually all Sidekick user data, including contact information and other personal data to users. Nevertheless, there are likely to be pending lawsuits filed against the company.

On Saturday, Microsoft informed users that it had lost all data and backup systems in a system wide crash. The company now says that it has restored that data, but it appeared to be weary of issuing such a message early on.

sidekick_t-mobile.jpgMicrosoft vice president Roz Ho provided an open letter to customers of the Sidekick stating that only a small number of users are still without their personal data. However, such a warning may not be enough to keep customers. In recent conversations at T-Mobile's website, talk was about leaving the company. Users seemed to be interested in filing a class action lawsuit against Sidekick and owner Microsoft.

More so, there was evidence that some of the messages posted on the website from Sidekick users unhappy with the company were deleted or moved in some fashion after mention of the lawsuit.

The social media outlets are teaming with information. On Twitter, the micro blogging website, mention of Sidekick lawsuits was the talk of the day, including mention of several pending lawsuits in California and in Washington. One such case filed in California, was filed by a mother whose teen daughter lost photos and song lyrics in the loss of data.

Another lawsuit was filed in Atlanta, by a woman, Maureen Thompson, says that the companies she named (including T-Mobile, Microsoft and Danger the manufacturer of the device) were negligent and failed to meet advertised promises to customers. Attorney John Jablonski, speaking about the case, said that it was likely that such cases would lose merit, since the data was restored.

T-Mobile employees are not speaking of the case and claim they have no comment in regards to the online complaints from customers. The company does seem to have kept customers informed and on Monday, temporarily halted all sales of the Sidekick smartphones. In addition, the company offered affected customers one month free service from the company, plus a $100 T Mobile gift card.

It is not clear how many Sidekick users have filed or plan to file lawsuits against the company, nor how many people may still be affected by a loss of data. You may view the California lawsuit HERE, compliments of SeattlePI.com.

October 9, 2009

Amazon Settles Kindle Lawsuit On Book Deletions

The Kindle is an eBook reader heavily marketed by the company. While it is a new device and one that is selling well, the company promoting it, Amazon.com, has faced a lawsuit on behalf of the product already. The company has settled a lawsuit brought on by the deletion of two eBooks, George Orwell's Animal Farm and 1984.

kindle21.jpgThe company deleted the material for the eBook reader's accounts, who had paid for them, and refunded the customer's cost. Amazon cited that there were problems regarding the copyright use of the material. In September, Amazon announced that it would replace the deleted eBooks for anyone who purchased them, and that they would offer $30 gift certificates for those who did not wish to receive the eBooks again. The Kindle also allows for users to place notations within the eBooks for their personal use. Amazon also stated these would be restored.

Just this month, Amazon also has announced that it will settle a lawsuit brought on by two Kindle users who saw deletions of these materials. The company is paying $150,000 to a Michigan high school student named Justin Gawronski and a man named Tony Bruguier. Their attorney has stated that the two will not see any of the funds, but will instead donate the money to charity.

The settlement was filed in the U.S. District Court in Seattle on September 25th. It was a closed settlement and no further details were made available. The attorney for Gawronski and Bruguier was quoted as saying that he believes Amazon has learned an important lesson from this lawsuit.

October 7, 2009

University of Phoenix Case Settlement May Be Near

Two University of Phoenix enrollment counselors filed a lawsuit in 2003 alleging that their raises and prizes awarded to them where done based on the number of students they enrolled in the school. They filed a lawsuit against the school. The corporate executives in charge during this period of time are now at different schools, but the case is left unsettled, as of yet.

Univ%20of%20Phoenix.jpgIt is possible that the University of Phoenix parent, Apollo Group Inc, will seek a settlement in the case, before the case is set to be heard in a court of law in March of 2010. The company has not disclosed any terms of a settlement, but some experts believe it could be as high as $250 million, which equates to 25 times the record fine the school had to pay the U.S. Department of Education in 2004, on similar charges.

The school will likely seek out a settlement in the hope of avoiding a very public trial and to dismiss any allegations that similar practices are still occurring. The school is known for its aggressive recruiting tactics. In a time where the American consumer is unwilling to forgive big business corruption, the school would be foolish, some say, to go to trial.

The University of Phoenix is an incredibly sized school. Since it became a for profit school in 1976, it has been an ideal share to own on the stock market. In addition, it has over 420,000 students and its annual revenue is now near $4 billion. It is the largest recipient for federal financial aid to the tune of $3.2 billion in one school year alone.

The case came to head in 2003, when two enrollment counselors filed a lawsuit, on behalf of the federal government, charging that the school defrauded the government by paying recruiters salaries based on the number of students enrolled. Federal law bans schools from offering this type of incentive.

The school itself fought the charges and claimed that the two employees were disgruntled former employees trying to make something small into something big. A judge ruled in 2004 to dismiss the case, but it was restated two years later on appeal. The case is similar to one filed by the U.S. Department of Education in 2004. At that time, the school was fined $9.8 million based on their recruitment practices. In that case, the University of Phoenix did not admit any wrong doing.

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October 5, 2009

DIRECTV: Stop Taking Cancellation Fees From Bank Accounts

In Santa Monica, California, consumers have filed a complaint with the Los Angeles Superior Court requesting that the courts stop DIRECTV from pulling early cancellation penalty fees out of bank accounts or charging them to credit cards without the consumer's knowledge.

direct-tv.jpgFees up of to $480 are being withdrawn from customer accounts without their permission, the injunction claims. Consumer accounts have been overdrawn by the action, while others have experienced bounced checks and over the limit fees. As a result, credit reports may have been harmed. The injunction hopes to stop the withdrawal of funds from current and previous DIRECTV customers until a court can determine if the action is lawful.

The company charges an early cancellation penalty for customers who terminate their agreements before the term commitment period has been met. This period is typically 18 to 24 months. The charge applies to anyone who cancels service during this period of time, no matter what the cancellation reason is. Harvey Rosenfield who is the founder of nonprofit Consumer Watchdog and Litigation Director Pamela Pressley are heading the case on behalf of consumers. They claim that customers have no notice of the early cancellation penalty prior to their accounts being charged. Jennifer Steinberg, another attorney working the case calls the actions of the company "unauthorized seizure of people's money" and claims the company has refused to stop collecting fees like this.

Numerous people across the country have filed similar cases in regards to the cancellation charges applied to customer accounts without prior warning and without the ability to dispute the charge. In most cases, the customers did not know of the charge until the funds were already taken from their accounts.

DIRECTV has sought to block the state case, since another federal case is currently heard. Last July, Los Angeles Superior Court Judge Emilie H. Elias permitted the federal case to proceed. That case has been delayed at DIRECTV's behest.

October 2, 2009

Yogurt Maker Dannon Settles Activia Lawsuit

Dannon Co was sued for claiming that its yogurt had added health benefits over the competition. The class action lawsuit was filed in Los Angeles federal court last year. It claimed that the company falsely represented Activia, Activia Lite and DanActive products. The class action lawsuit claims that the company tried to convince people of the added health benefits of its probiotics bacteria in an effort to encourage people to purchase the more costly product.

dannon.jpgThe LA Times reports that Dannon has settled the lawsuit. It also agreed to a $35 million fund to be set up to reimburse consumers who purchase these products. The company does not admit to any wrongdoing in the case. It settled the case to, "avoid the distraction and expense of litigation" says the company's spokesman Michael Neuwirth.

The probiotics products are designed to add "good bacteria" to the human intestinal tract. In healthy, young adults, these good bacteria help to keep the body healthy by destroying microorganisms and helping with digestion. The probiotics often need to be supplemented in older people. In the U.S.to claim on a label that a food contains probiotics, it must have proven health benefits through research.

The company has agreed to amendments to its labeling practices. It will make the scientific names of the probiotics more visible on the label and will remove the term "immunity" from the labels of DanActive products. The current label claims that the DanActive product offers a positive benefit to the digestive tracts immune system.

Those who purchased the DanActive products will be able to receive up to $100 per customer, according to the LA Times. Consumers will need to submit a claim form, which must be approved.

The company launched the Activia and DanActive lines in 2006 and 2007 in an effort to boost the yogurt industry. They account for 40 percent of the company's business.

September 30, 2009

Hurricane Katrina Fraud Case: Head of Palos Verdes Company Turns Self In

Two men accused of money laundering and stealing thousands of dollars from hurricane Katrina victims have turned themselves in to authorities. Steve Slepcevic and Matthew Todd, former business partners, are accused of stealing funds from these victims. A third man is likely to turn himself in.

katrina_goes12.jpgThe men are accused of stealing more than $320,000 from victims. Slepcevic is the founder of Paramount Disaster Recovery Inc. Although he eluded authorities for days, he turned himself in, in a 7Series BMW. Todd was arrested in California and is awaiting extradition to Louisiana. A third man, Michael Mekeel, has agreed to turn himself in.

The men are believed to have forged checks and steal insurance proceeds from the hurricane victims. Slepcevic is also being charged with four counts of money laundering. The men were arrested after a Times investigation showed numerous fraud complaints.

The third man, Mekeel, claims he worked as a subcontractor for Paramount and never received payment. He also claims he reported the company to the FBI and warned clients about the company.

In one claim against Slepcevic, an affidavit states that he stole insurance proceeds, threw a lavish party and then purchased a $1.6 million home in Redondo Beach, all within just six months of Hurricane Katrina. Two homeowners filed the case in Louisiana and two hotel owners who claim to have hired the Paramount Company after the hurricane. The company claimed to be a disaster recovery company that would work to negotiate settlements with the insurance companies on behalf of the claimants, for a 20 percent fee. The company employees are accused of taking the checks issued by insurance companies, forging client names and then depositing the funds in the company's accounts in California.

The California attorney general's office is also seeing $170,000 on top of all of the fraudulent charges for a 2007 settlement between the company and the California Department of Insurance. In that situation, Paramount, including Todd and Slepcevic represented themselves as public adjusters for the victims of the Angora fires in South Lake Tahoe. Five additional complaints are pending in that investigation.

September 9, 2009

Toyota Accused of Concealing Evidence in Rollover Lawsuits

On August 31, 2009 in New York, New York, it was reported that a former attorney for Toyota was suing the company for their involvement and for their supposed hiding and destruction of implicating documents. The primary item that is being discussed are the results that one fond from roll over tests and the damage that could truly be incurred.

rollover-1.jpg The suit has been filed by a Mr. Biller who worked for Toyota from 2003-2007. He claims that not only did he see the items that he is claiming that the company withheld, but in some cases went so far as to destroy the items and to go and have them not included in findings that would negatively impact the company.

The problem with a lawsuit such as his is the fact that it creates a sense of doubt no matter what may have really occurred. If this is the case, then there is the possibility of old cases that had been dismissed or found to not have any merit, to possibly be reopened. This is because there were so many people who were injured in rollover accidents involving Toyota vehicles.

If any of the accusations that have been made by Mr. Biller are true, you will see a large influx of items and cases pertaining to the roll over accidents. There are accusations that the company was even withholding information in regards to results as well as how quickly corrective action could be taken from the auto manufacturer.

One thing that some may take into consideration is the fact that Mr. Biller ended up quitting his job at Toyota claiming he was suffering from psychiatric problems while he was at the job. In 2008 he went to work for the District Attorney in San Francisco where he was let go after several months. He received a negative mark upon his release from the office.

No matter which group has the bigger issues in all respects, someone is going to end up not looking good at all, and a shadow of doubt has been cast on the Toyota Company no matter how the court finds in the case.

Continue reading "Toyota Accused of Concealing Evidence in Rollover Lawsuits" »

September 2, 2009

Oracle's Motion Demands Information From Rimini Street

Oracle has filed a motion to compel against Rimini Street last month in a strategic move directly related to a 2007 lawsuit against Oracle rivals SAP and TomorrowNow. The motion accuses its owner of using TomorrowNow to illegally acquire Oracle software and support materials.

Rimini Street was founded by former TomorrowNow executive Seth Ravin, who left the company after SAP purchased it in 2005. The Las Vegas company provides support for both Oracle and SAP applications at discounts of up to 50%.

oracle%20bldg.jpgOracle subpoenaed Rimini Street earlier this year, seeking data about the company's business model and practices. But Rimini objected to the request on a number of grounds, including confidentiality concerns and the possibility Oracle was seeking discovery related to Rimini Street "for a purpose other than the present lawsuit," according to court documents.

Ravin was deposed in May, according to Oracle's motion. In the session, Ravin confirmed that Rimini Street was serving a number of former TomorrowNow customers, but "would not provide a single detail about how those customers are being supported".

SAP has said that its TomorrowNow workers were authorized to download materials from Oracle's site on behalf of TomorrowNow customers. SAP also admits that some "inappropriate downloads" had occurred. SAP has also said that Oracle's software remained in TomorrowNow's systems and has denied Oracle's allegations of a wider pattern of wrongdoing.

Oracle's Aug. 21 motion demands that Ravin be ordered to sit for two more hours of deposition; and provide" documents sufficient to show Rimini's business model," including whether it has ever "relied on copies of customers' licensed software to provide software support"; information about any automated tools the company has used to download material from Oracle's support site; and documents tied to Rimini's preparation of tax updates for customers.

While acknowledging that third-party support is legal, Oracle claims that SAP and TomorrowNow provided discounted support through illegal acts, such as making thousands of unauthorized copies of Oracle's software, and conducting "routine, massive and indiscriminate downloading" of support-related materials on behalf of customers who weren't entitled to them, according to the motion to compel.
In a related note, the U.S. Department of Justice has approved the proposed acquisition of Sun Microsystems and terminated the waiting period under the Hart-Scott-Rodino Act. Sun’s stockholders approved the transaction on July 16, 2009.

Continue reading "Oracle's Motion Demands Information From Rimini Street" »

August 31, 2009

Mother Says Teacher Slapped Autistic Boy

A cell phone video depicts the scene of an eleven-year-old autistic boy being struck by a teacher. The child’s mother has filed a lawsuit against the Pittsburgh Public Schools because of the slap, and other allegations of assault on the boy.

autism-ribbon2.jpgThe teacher, Lori Davis, was fired from her job by the school district because of the incident at Conroy School, located in Manchester. The video, posted on YouTube.com, is mentioned in the lawsuit. The lawsuit states that the teacher hit the child on the side of the head and then said, “Stop moving your chair back. Move it! And you stay back there! I’ve had it with you!”

One of the claims in the lawsuit is the school’s alleged poor background checking that allowed the teacher to be placed in the school.

The incident was not the first time that the boy was assaulted, according to a teacher’s aide named Andre Burrell. Burrell personally witnessed the teacher both verbally and physically abuse the child on multiple occasions before the March 14th video release in 2008. In addition, the child was also assaulted by a bus aide, who the school district also fired.

The teacher was fired in June of 2008, a full three months after the incident. The state also revoked the teacher’s teaching certificate after the incident was reported to them.

Experts in special education state that this is really the exception to the rule and that most special education teachers are in fact very good with students. Still, this incident could cause parents to step back and wonder what is happening with their own children both in the classroom and on the bus.

August 28, 2009

Special Monitor Appointed For Milwaukee Public School Special Education Lawsuit

A federal judge appointed the monitor who will oversee the Milwaukee Public Schools process of locating and compensating students who were denied special education services between 2000 and 2005. The process requires locating thousands of students, potentially. Elise T. Baach was appointed as independent monitor of the class action lawsuit.

Special%20Education-1.jpgIn addition to the appointment, the judge, U.S. Magistrate Judge Aaron Goodstein, also provided documents on when the search for these individuals would be conducted. The schools must track down any student who missed being identified as eligible to receive special education services between that timeframe. Both current and former students would be sought.

The search and compensation is required after a court found that the Individuals with Disabilities in Education Act, a federal law, was violated. That lawsuit, Jamie S. Vs. Milwaukee Public Schools was ruled on in the same court district.

Not only do the schools need to locate these students but they must also determine what is fair compensatory services to provide to those whose rights were violated. Notices must be posted starting September 1st, 2009 in all public schools in the district and must remain there until Jan 4th, 2010. Anyone who could have had their rights violated is encouraged to sign the class action lawsuit to receive the required compensatory requirements. Students who were suspended during for more than ten days in that period must also be identified, and the schools must determine which students could have qualified.

The original lawsuit claims that the school did not make required payments to allow the special education students to attend private schools for the services that the public schools could not provide. The school district has appealed the ruling.

Continue reading "Special Monitor Appointed For Milwaukee Public School Special Education Lawsuit" »

August 26, 2009

New Standard for Whistleblower Claims Determined by Ninth Circuit Court of Appeals

The Ninth Circuit Court of Appeals rendered an opinion clarifying what a plaintiff must show to establish a whistleblower claim under the Sarbanes Oxley Act (SOX). In the opinion (HERE) by Judge Jay S. Bybee the Court found that plaintiffs did not have to "prove the existence of fraud before suggesting the need for an investigation." They only had to demonstrate they believed fraud had occurred to prompt the employer’s obligation to investigate.

753037_slot_machine.jpgThis complicated story involves married intellectual property attorneys Shawn and Lena Van Asdale working for International Game Technology (IGT) as associate general counsel. One or both of them discovered documents which lead them to believe that an investigation into a patent held by Anchor Gaming should be started. Anchor was a former competitor of IGT before the 2 companies merged.

The slot machine patent in question was a major asset of Anchor and if not valid, could have fraudulently overvalued Anchor before the merger.

Shawn expressed concern to his bosses that an older Bally machine may have a valid patent which had not been disclosed before the merger. His belief was that IGT had been intentionally misled about Anchor's value. The Van Asdales both raised the issue again with IGT's general counsel (Anchor's former top lawyer), stating they believed the nondisclosure of the Bally machine was suspicious and there was a potential of fraud.

The Van Asdales were terminated within a short time following those meetings.

The couple sued, asserting a whistleblower claim under the SOX, contending they were terminated for reporting potential shareholder fraud in connection with the IGT / Anchor merger. The Nevada-based federal trial court sided with the employer and granted its summary judgment motion, finding the Van Asdales had not shown they had discussed the suspected fraud specifically enough with IGT before they were terminated.

The Ninth Circuit Court of Appeals disagreed and reversed, vacated and remanded the trial court’s decision. While this decision may clarify what a plaintiff must do to establish a whistleblower claim, it may expand the use of privileged information by in house counsel, which was previously constrained under “attorney/client privilege”.

Continue reading "New Standard for Whistleblower Claims Determined by Ninth Circuit Court of Appeals" »

August 21, 2009

Banning of Autistic Child’s Service Aid Dog Leads to Lawsuit Against School District

A lawsuit has been filed by the parents of a 5 year old autistic boy against the Columbia (Illinois) School District for forbidding their son’s service dog from accompanying the boy to classes. A Monroe County judge is expected to rule this week on whether the dog is allowed to attend class with the autistic child. The Monroe County Circuit Court Judge, Dennis Doyle, promised he would make a decision before the first day of class, August 24, 2009.

corbin-service-dog-pics.jpgFive year old Carter Kalbfleisch was only 18 months old when diagnosed with Autism. Carter experiences acute outbursts, often eats inappropriate things like grass and rocks, and runs away from his parents and teachers.

Doctors at Cardinal Glennon Children's Medical Center recommended a specially trained service dog for Carter. The dog and training have cost the family about $10,000.

(Photo of Carter & Corbin courtesy of STLTODAY.COM)

Carter's parents have noticed many positive changes since working with Corbin, a one year old Bouvier. Carter bonded instantly with the dog and now has minimal outbursts while in public. The boy’s parents have even noticed Carter is interacting with people.

School officials did not provide a reason for banning Corbin, but rumors indicated there were concerns of other students with allergies and that there may be students who fear dogs. Carter’s parents acknowledged they would have argued the decision within the school, but a decision would have taken nine months.

Children and adults with disabilities often use service dogs like Corbin and such dogs are becoming increasingly popular with people with Autism. Studies show children and adults who suffer from autism relax and open up more easily when a service dog is near. People with autism are known to have severe emotional and sensory overload, which makes it harder for them to deal with everyday surroundings and social interactions.

United States federal law protects the rights of the disabled to use service dogs. Illinois law permits the use and presence of a service dog in school, which is the law the Kalbfeisches’ are depending on. The disability laws have plenty of gray area. For example, small companies can forbid service animals if they are too disruptive, and school environments are also subject to such interpretation.

Continue reading "Banning of Autistic Child’s Service Aid Dog Leads to Lawsuit Against School District " »

July 30, 2009

Odoriferous Hog Farm Lawsuit Yields $1.1 Million Settlement

A Cedar County Missouri couple has reached a $1.1 Million settlement against the operators of a hog farm, the hog supplier (Missouri Farmers Assn.) and the Missouri Farm Bureau which insured the operation.

Pig%20Farm.jpgEd and Ruth McEowen filed the nuisance lawsuit against the hog operators after barns were erected less than 1,000 feet from their home several years ago. One of the barns was constructed without a permit within 1000 feet of the McEowen home; a violation of the Missouri Department of Natural Resources regulations. The farm operated six years without an operating permit from DNR.

The settlement involves only odors up to the date of the settlement. But the McEowens said they were ready to file another nuisance action if the hog operation continued to harm their quality of life.

“Night was always the worst,” Ed McEowen said. “It’s like the monsters come out at night. The sickening stench just lays down here in the valley once the sun goes down. You could never invite anybody over because you never knew how bad the stench was going to be.”

At capacity the farm raises 7500 hogs. Hog waste has fouled a creek that runs through the McEowens’ property, the lawsuit said. The McEowens have lived on their 40-acre farm for 30 years and built the house and a workshop by hand.

Attorney Charlie Speer said he has about 350 cases involving large factory farms and odors around the state. This lawsuit “Sets the Bar for Future Settlements” and sends a clear message.

July 24, 2009

Denny's Restaurants Sued Over High Sodium Levels

The Center for Science in the Public Interest (CSPI) sued the Denny's Restaurant chain yesterday, saying the restaurant chain's menus should disclose the "dangerously high" levels of sodium in its meals.

dennys.jpgAccording to MayoClinic.com “Various organizations, including the National Academy of Sciences' Institute of Medicine, have published recommendations on daily sodium limits. Most recommend not exceeding the range of 1,500 and 2,400 milligrams (mg) a day for healthy adults.”

The sodium content in many of Denny’s meals far exceeds that range including the Meat Lover's Scramble which comes with a two strips of bacon, two sausage links, hash browns and pancakes, topping the chart at a whopping 5,690 milligrams! Even the Super Bird turkey sandwich has 2,610 milligrams of sodium.

CSPI executive director Michael F. Jacobson believes that Denny’s is slowly sickening its customers. “For those Americans who should be most careful about limiting their sodium, such as people middle-aged and older, African-Americans, or people with existing high blood pressure, it's dangerous to eat at Denny's. Denny's customers deserve to be warned about the considerable health risk posed by many of these meals.”

Denny's and CSPI were in negotiations earlier this year in an attempt to lower the sodium content on many menu items. Small changes occurred with a slight sodium reduction in their cheese sauce, shrimp skewers and kids' meals. CSPI wanted to see more changes over the whole menu, and when that didn't happen, the lawsuit was filed.

The lawsuit is calling for Denny’s to make the broad sodium reductions or menu disclosures.

Generally restaurants (including fast food) and frozen prepared foods have higher sodium content than freshly prepared meals. It is always advisable to check the food providers’ websites to determine sugar, fat and sodium content. You will find Denny’s nutritional information by clicking HERE.

July 16, 2009

Toxic Nerve Agent Potentially Poisoned Woman On Flight

In a disturbing case, Terry Williams, a 17 year veteran flight attendant for American Airlines, is alleging that the plane's flaws lead to her exposure to toxic exposure to chemicals that lead to her ailments. Since December of 2008, she has had a constant migraine. In addition, she is facing balance and vision problems, the inability to remember childhood memories, tremors in her arm, and a prickly sensation in her feet.

American%20Airlines%202.jpgThe event in question happened on April 11. 2007 when she says she was on Flight 843. As the plane taxied into place in Dallas, Texas, she claims she saw a misty type of haze come into the cabin. The "fume event" as it is being termed, is what she blames for her illnesses. She states that as she was leaving the plane she felt as if she had a cold coming on and experienced a neon green discharge from her nose.

Williams has filed a product liability lawsuit against Boeing and McDonnell Douglas, the aircraft manufacturers. The claim she has is that there was a lack of filters and sensors to protect her from such an incident.

In particular, the concern is the chemical tricresyl phosphate. This is a chemical that is used in nerve agents and pesticides. There is a lot of dispute over how often these types of events occur, though they are said to happen. The National Research Council reported in 2002 that four out of 1000 flights have such a fume event. This data was collected from three Canadian airlines. The FAA does not dismiss the potential of fume events happening and has promised to look into the events. At the same time, the FAA reports that the symptoms are also found in other neurological conditions. They are working to determine the amount of exposure to chemicals in aircraft.

New technologies in plane design, such as those found in the Boeing 787 Dreamliner no longer use the same methods to cooling the engine, which is being blamed for the event. The FAA Reauthorization Act of 2009 which has passed the House and is now in the Senate calls for research and the development of filters and sensors for removing oil based containments from the bleed air, the problem that could have lead to Williams' condition.

May 28, 2009

Lawsuit Claims Costco Employee Repeatedly Held Against Her Will

A lawsuit which seeks class action status was filed against Costco Wholesale Inc. claiming violations of California wage and hour laws. Mary Pytelewski, a full time employee at a San Diego area Costco store for over 10 years filed the suit.

costco.jpgPytelewski alleges that Costco company policy requires employees to clock out and then remain locked in the store for 15 minutes while managers close the store each night. In addition to wage and hour violations, her attorneys state that Costco’s practice of locking the employees inside the store after they clock out is the equivalent of false imprisonment. The lawsuit seeks $50 million in damages.

When Pytelewski complained about the practice she was "rebuffed and ridiculed at every turn." Then she was given a negative evaluation, and a supervisor was assigned to her cash register at closing time to watch her.

Her attorney David Sanford stated "Costco makes the false claim that locking these employees inside its warehouses until store managers and supervisors complete their closing routines is necessary for store security."

By my calculations, IF Ms. Pytelewski was a full time employee who was prevented from leaving 15 minutes a day, 5 days per week, 50 weeks per year for 10 years that would equal 37,500 minutes. That is 625 hours, or the equivalent of over 78 eight hour workdays without hourly or overtime pay.

If the allegations are true, I wonder how many other Costco employees will join the lawsuit, in California as well as other states.

May 24, 2009

Lawsuit Filed Between Sex Toy Party Business Rivals

Brown Bag Party of Costa Mesa, California filed a lawsuit in California Federal Court against competitor Pure Romance of Loveland, Ohio. The lawsuit accuses Pure Romance of false advertising, unfair competition, libel and interference with business. Brown Bag Party is seeking at least $75,000 in damages.

Brown%20Bag.jpgBoth companies are national competitors in the sex toy, home party business.

According to the lawsuit, at a Las Vegas convention for independent contractors earlier this year, Pure Romance representatives and owners disseminated information that Brown Bag Party was in bankruptcy, going out of business and being acquired by Pure Romance.

Attorneys for Brown Bag say those statements are untrue.

The lawsuit alleges that the statements were made in an attempt to convince independent contractors to sell Pure Romance products and not those of Brown Bag Party. It also alleges that those making the statements knew they were untrue when they made them.

Pure Romance has also filed a lawsuit against women in Hamilton County Ohio who dropped their Pure Romance affiliation and switched to hosting parties for Brown Bag. That suit has been transferred to federal court.

Continue reading "Lawsuit Filed Between Sex Toy Party Business Rivals" »

May 17, 2009

Lawsuit Filed Against New York Law Firm Chadbourne & Parke Over Legal Research Fees

California attorney Patricia Meyer has filed a lawsuit on behalf of a former Chadbourne & Parke client alleging overcharging of fees related to legal research. The complaint alleges unfair business practices, unjust enrichment, fraud and deceit.

legal_research.jpgFormer client J. Virgil Waggoner retained the Chadbourne law firm in 2002. His bill totaled $108,000.00, of which $20,000 was for legal research related to his matter. Ms. Meyer claims the research should have been only about $5000. The lawsuit alleges that Chadbourne billed Waggoner for research on an hourly basis, while paying the research on a flat fee basis.

Ms Meyer states that the practice of profiting from costs, without disclosing the practice in the client retainer agreement violates rules of professional conduct set forth by the California and American bar associations. There was no such disclosure made to Mr. Waggoner.

In a statement, Chadbourne partner Thomas Hall paints a different picture: "We adamantly deny this claim of Mr. Waggoner, with whom we ended our relationship over four years ago. It is telling that Mr. Waggoner -- a Texan who had retained our New York, not California, office -- filed suit in California only after his New York malpractice lawsuit against Chadbourne was dismissed and only after we sued him in New York for unpaid fees."

Ms. Meyer said the reason the lawsuit was filed on March 2, but not served on Chadbourne & Parke until May 1 is because she did not want to compromise other investigations alleging similar claims. She went on to say that similar lawsuits are in the pipeline, and she has evidence that shows at least a dozen other law firms are overcharging clients for legal research.

Continue reading "Lawsuit Filed Against New York Law Firm Chadbourne & Parke Over Legal Research Fees" »

May 16, 2009

Class Action Lawsuit Filed Against KB Home Alleges Inflated Appraisals

While this lawsuit is newsworthy, the allegations against residential developer KB Homes are echoes of previous lawsuits.

Most recently, this lawsuit filed in Federal Court in Phoenix claims the builder conspired with Countrywide Financial to inflate appraisals for home sales in Arizona and Nevada. The lawsuit estimates the average appraisal was inflated by $20,000 for over 14,000 homes built by KB in Nevada and Arizona.

money_house.jpgMore homeowners are expected to join the lawsuit filed on behalf of all who purchased KB homes in Arizona and Nevada since 2006 and used Countrywide as the lender.

Historically, KB (formerly known as Kaufman Broad) owned its own mortgage company, KB Home Mortgage Company. In 2005 the US Department of Housing and Urban Development (HUD) fined KB $3.2 million for poor mortgage underwriting practices. By that time, KB had sold its mortgage company to Countrywide Financial.

About a month later (August 2005) the US Federal Trade Commission (FTC) fined KB $2 million for violation of a 1979 FTC agreement related to arbitration clauses in its contracts.

In 2008 this blog posted “KB Home and Countrywide Sued Over “Inflated” Appraisals” related to similar and identical issues involving California homeowners.

California Attorney General Edmund G. Brown Jr. filed a lawsuit against Countrywide in June of 2008 (amended in July 2008) alleging shocking loan practices. Brown stated "In one case the company approved an adjustable rate mortgage to an 85-year-old disabled veteran with such a low credit score and high debt that he defaulted in less than six months."

R.I.P. Countrywide: In January, 2008 Bank of America bought Countrywide for $4 billion in stock. In April, 2009 Bank of America announced the end of the Countrywide name. It will now simply be called Bank of America Home Loans.

May 15, 2009

California Attorney General Jerry Brown Files Suit in Property Tax Reassessment Scam

Earlier this week, the following lawsuit was filed in San Diego Superior Court “PEOPLE OF THE STATE OF CALIFORNIA VS. SEAN MCCONVILLE” by the California Attorney General’s office.

The lawsuit alleges that brothers Sean and Michael McConville and their companies Property Tax Reassessment and Property Tax Adjustment Services targeted tens of thousands of California property owners in an effort to fraudulently obtain $179.00 from each while promising to lower their property taxes through reassessment.

Click on images below to view actual letter:

AssessmentLetter1.jpgAssessmentTH2%2Cjpg.jpg

The problems were numerous. According to the lawsuit the McConville brothers’ companies mailed out letters that implied a connection to a government agency, looked like bills, offered services for $179.00 that are available at little or no cost directly from all county assessors, and allegedly failed to deliver services when paid.

According to Attorney General Jerry Brown “These scam-artists ripped off thousands of homeowners for property reassessment services readily available free of charge.” He continued “This lawsuit seeks to end the deception and blocks these companies from continuing to scam homeowners.”

Brown’s suit seeks an end to the scam and at least $2.5 million in civil penalties.
The Ventura County District Attorney’s Office charged one of the brothers last week, Sean McConville, with 20 felony counts for criminal conduct stemming from his property tax reassessment operations.

And this was not the McConville brothers first brush with the law. On April 16, 2008 the California Department of Corporations filed enforcement actions against the brothers and ALG capital. Those documents are available HERE.

Homeowners who believe they have been victimized by this or any other property tax scam should contact the California Attorney General’s Office at: 1-800-952-5225 or their local County District Attorney.

May 1, 2009

Wolfgang Puck’s Spago Sued over Bathroom Injuries

Spago patron Marjorie Linden claims that in 2007 she had to use the ladies room during lunch at the famous Beverly Hills restaurant. Linden claims that the condition of the restroom was deplorable with the floor covered in urine and feces.

Spago.jpgHer lawsuit states that while using the only usable toilet, which had no lock on the door, an unfortunate and preventable series of events left her with significant injuries.

As TMZ.com tells the story: “…Linden claims she had to use one of her hands to hold the door closed while she took care of business on the throne. But mid-squat, with her hand stuck firmly on the handle, another woman allegedly yanked the door open causing Linden to fall "face-first onto the tile floor."

The lawsuit claims that Linden messed up her knee, broke her back and caused serious mental damage.

Spago reps state that cleanliness of their bathrooms has never been an issue. "In our 27 years of business we've never had an issue close to this ... that portion of the claim is totally without merit."

December 19, 2008

EEOC Issues Q&A Guide to Performance and Conduct Under the ADA

Recently the U.S. Equal Employment Opportunity Commission released a comprehensive document designed to reduce confusion related to the performance and conduct of employees protected by the Americans with Disabilities Act.

cooltext402161481.jpgEmployers will be pleased to see that this document clearly answers many ADA related performance and conduct questions. The document includes 30 questions with answers using 48 examples of actual cases, documented by 90 footnotes.

For your convenience, you will find the Table of Contents below, including direct links to each section. You will find the entire document HERE. As always, if you have questions related to employment lawsuits, feel free to contact me.

TABLE OF CONTENTS

I. Introduction

II. Basic Legal Requirements

III. Application of ADA Legal Requirements to Performance and Conduct Standards

A. Performance standards

B. Conduct standards

C. Questions pertaining to both performance and conduct issues

D. Seeking medical information when there are performance or conduct problems

E. Attendance issues

F. Dress codes

G. Alcoholism and illegal use of drugs

H. Confidentiality issues arising from granting reasonable accommodation....

I. Legal enforcement

In case you missed the latest EEOC religious discrimination guidelines, you can read about them HERE.

October 24, 2008

Court of Appeal Reverses Discrimination Award Against Larry Flynt Publications

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.

Flyntpublications.jpgWhen 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" »

October 13, 2008

David v. Goliath: Redbox Sues Universal Studios Home Entertainment

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.

redbox.jpgIn 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 must limit the number of copies of USHE DVDs in any particular kiosk

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.

October 3, 2008

Court of Appeals Answers Age Old Question....Employee or Independent Contractor?

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.

990816_team.jpgFrom 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.

September 5, 2008

US Court of Appeals Upholds Employment Contract Despite Language Barrier

After being terminated by Sun Constructors (Sun) in 2006, Juan Morales filed a wrongful termination lawsuit. Sun claimed that Morales was bound by an arbitration clause in the employment agreement signed upon his employment. Morales claimed that since the agreement was in English, he did not understand its terms when he signed it, thus he could not be bound by it since he does not speak or understand English. The District Court agreed with Morales. Sun appealed.

1068786_major_const.jpgAccording to the opinion written by Judge Michael A. Chagares of the US Court of Appeals Third Circuit, when Morales was hired in 2004 he passed a written exam in English and attended a 2 ½ hour orientation which explained the employment agreement. Sun provided a bilingual employee to translate for Morales during the orientation. The bilingual employee testified that he did not specifically explain the arbitration clause to Morales.

Judge Chagares ruled in favor of Sun, and remanded the case back to District Court with instructions to enter a stay pending arbitration. In his opinion, Judge Chagares cited an 1875 US Supreme Court decision, Upton v. Tribilcock that said: "It will not do for a man to enter into a contract, and, when called upon to respond to its obligations, to say that he did not read it when he signed it, or did not know what it contained."

Judge Chagares continued “Morales, in essence, requests that this Court create an exception to the objective theory of contract formation where a party is ignorant of the language in which a contract is written. We decline to do so. In the absence of fraud, the fact that an offeree cannot read, write, speak, or understand the English language is immaterial to whether an English-language agreement the offeree executes is enforceable.”

August 15, 2008

California Supreme Court Rejects Validity of Most Non-Competition Agreements

On August 7, 2008, the California Supreme Court unanimously ruled in Edwards v. Arthur Andersen that the state legislature effectively restricted the ability of employers to prevent employees from working for competitors.

483868_leather_chair.jpgThe Opinion States: “We conclude that Andersen’s noncompetition agreement was invalid. As the Court of Appeal observed, “The first challenged clause prohibited Edwards, for an 18-month period, from performing professional services of the type he had provided while at Andersen, for any client on whose account he had worked during 18 months prior to his termination. The second challenged clause prohibited Edwards, for a year after termination, from ‘soliciting,’ defined by the agreement as providing professional services to any client of Andersen’s Los Angeles office.” The agreement restricted Edwards from performing work for Andersen’s Los Angeles clients and therefore restricted his ability to practice his accounting profession.”

With a few exemptions primarily related to the sale of a business, the court essentially voided all California non-competition agreements.

California Business and Professions Code Section 16600 states:

Except as provided in this chapter, every contract by which
anyone is restrained from engaging in a lawful profession, trade, or
business of any kind is to that extent void.

Still in effect are the protections for the employer in the Uniform Trade Secrets Act which prevent employees from “stealing” the employer’s client list.

This case also takes on issues related to “employee release” agreements often signed upon termination of employment.

The Supreme Court held that employee release agreements in which the employee releases the employer from “any and all” claims do not waive statutory protections provided to the employee in Labor Code Section 2802.

Continue reading "California Supreme Court Rejects Validity of Most Non-Competition Agreements" »

August 6, 2008

US Court of Appeals Upholds Termination of Employee Found “Sleeping” on Job

David McNary suffers from Diabetes and Graves’ Disease. He worked for Schreiber Foods as a sanitation employee on its dairy equipment. His co-workers knew of these conditions and would occasionally pitch in to help when he needed it. He was free from any work restrictions related to his health.

Nap-IMG_5344.jpgIn September 2005, while cleaning trash compactors, McNary felt dizzy and light headed. He left the compactor area, put his feet up on a table and closed his eyes.

Two supervisors found him with his head back, his mouth open, and his eyes shut. McNary explained his medical conditions and denied he was sleeping. The Company subsequently terminated him for sleeping on the job.

In January, 2006 McNary filed a complaint against Schreiber alleging a violation of the Americans with Disabilities Act (ADA). McNary claimed discrimination based on his physical condition. He also claimed to have informed management and co-workers about his conditions and need to take brief breaks to relieve eye pain and dizziness.

Following discovery, The District Court found that Schreiber provided a legitimate nondiscriminatory reason for McNary’s termination; sleeping on the job in violation of company policy and granted Schreiber’s motion for Summary Judgment.

McNary appealed.

The United States Court of Appeals for the Eighth Circuit stated “We review de novo the district court's grant of summary judgment to [Schreiber]. Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.”

Notably, the Court of Appeals added,

"[F]ederal courts do not sit as a super-personnel department that reexamines an entity's business decisions." One reason we emphasize this point is that a number of plaintiffs present a sympathetic situation in which the employer's judgment in imposing discipline may appear poor or erroneous to outsiders. It is tempting to think that the role of the federal courts is to offer a remedy in that sort of case. Whether we might believe that [Schreiber] was unduly harsh in its treatment of [McNary], however, is not a matter to be considered in deciding this appeal. Our authority is to determine only whether there is a genuine issue for trial on the question whether [Schreiber] discharged [McNary] because of his [disability].

It could be inferred from that statement that McNary might have seen a better result if he had claimed that Schreiber failed to provide reasonable accommodation for his disability. But, he sued for wrongful termination and lost in District Court and on appeal.

McNary v. Schreiber Foods, Inc. (8th Cir. 8/1/08)

May 2, 2008

Ebay Sues Craigslist for Diluting Equity

Internet Auction Giant eBay filed a lawsuit last month against Craigslist, the online classified site which draws over 20 million unique visitors per month. When news of the lawsuit surfaced, details were unavailable as the lawsuit was not made public. A redacted version has just been released and is available HERE.

449px-Craigslist01.jpgAccording to eBay, the reason behind filing the lawsuit is that Craigslist directors Craig Newmark and Jim Buckmaster (also CEO), have unfairly entered into transactions that diluted eBay’s economic interest in the company by more than 10 percent. EBay alleged that both the directors have breached their fiduciary duties.

EBay claims that its equity in Craigslist has been diluted from 28.4 % to 24.85 %. With less than 25% of the company, eBay can no longer place a director on the Craigslist board.

Five days after the lawsuit was filed, Craigslist (headquarters shown above) fired back at eBay, calling the lawsuit unethical and “smelling of a hostile takeover”. Even in the lawsuit, eBay makes it clear that it would welcome the opportunity to purchase all of Craiglist.

Through its acquisitions, eBay has illustrated that it wants to be in the online classified business in a big way. Last year Kijiji (created and launched by eBay in 2005) was made available in select US cities.

Will David triumph over Goliath or will Goliath end up owning David?

Continue reading "Ebay Sues Craigslist for Diluting Equity" »

April 16, 2008

Google Sued by the Borings for Invasion of Privacy

Internet giant Google has been sued by Aaron and Christine Boring for taking photographs of their property for Google Maps Street View feature. The problem is that the photos were taken from a private road.

Google%20StreetView%20Flikr.jpgFor those who have not yet experienced Google Street View it is a feature of Google maps that allows users to actually “visit” the street via the internet through photographs providing a 360 degree view.

Not all cities have this Google feature available yet, but the Boring’s property was included last year. The images are captured by a car similar to the one seen above with an array of cameras mounted to its roof.

Google spokesperson Larry Yu said that the company has a policy of only taking photos from public streets. He also said that concerned citizens can contact the company if they want a photo taken down. Yu added “"We absolutely respect that people may not be comfortable with some of the imagery on the site. We actually make it pretty easy for people to submit a request to us to remove the imagery."

In this case, damages may be difficult to prove since Google is not the only place on the web showing an image of the Boring’s home. The Allegheny County real estate Web site has a photo, a description of the home and the couple's name. The site contains similar information, including pictures, of nearly every property in the county.

The Smoking Gun has a copy of the photos (which are no longer on Google Streetview), a copy of the lawsuit (including the Boring’s home address) and a photo from the Allegheny County website.

Continue reading "Google Sued by the Borings for Invasion of Privacy" »

April 9, 2008

Woody Allen Sues American Apparel Over Billboards

Academy Award winning director Woody Allen filed a lawsuit in U.S. District Court in Manhattan seeking $10 Million from American Apparel for use of his image without permission. The lawsuit states that the actor and director does not endorse commercial products or services in the United States.

WOODY-ALLEN-RABBI-large-1.jpgAllen’s image (shown at right courtesy of Frillr.com), appeared on two billboards in New York and Los Angeles for one week in May 2007. Allen appears as a Hasidic Jew, a character from his movie “Annie Hall”. The lawsuit calls the billboards "especially egregious and damaging."

In a statement, American Apparel defended their use of Allen’s image as “Social Parody” protected by the First Amendment. They also stated “We had no intention of selling garments through the use of Mr. Allen’s image … We will make every effort to resolve this with Mr. Allen in an amicable way.”

In addition to its clothing line, American Apparel, based in Los Angeles is known for its colorful CEO Dov Charney and its political efforts in favor of immigration reform.

Was this “Social Parody”, infringement or just an effort to generate publicity? While we may never know for sure, I predict it will go away quietly with a monetary settlement.

April 1, 2008

How Will Magic Castle/AMA Lawsuit Affect Its Future?

For over 45 years the Magic Castle has been the clubhouse of the Academy of Magical Arts (AMA). On February 21, 2008 the AMA flied a lawsuit against Magic Food & Beverage Inc., a company with an affiliation to Magic Castle Park LLC, the owner of the property, which has been for sale since last year. Although not a subsidiary of Magic Castle Park LLC, Magic Food and Beverage Inc. is affiliated through corporate officers and/or executives common to both entities. This information is based solely on the complaint filed, Case No: BC 385828, in Los Angeles Superior Court.

800px-MagicCastle01.jpgThe lawsuit includes 4 “Causes of Action” as follows:

• Trespass

• Trespass to personal property

• Assault

• Injunctive relief

The following sentence is heresay: AMA members have been told that the AMA wants to stay in the building known as the “Magic Castle”. NOTE: If the AMA governing board would like to make a formal statement to the contrary, I will post a retraction here.

Here is the question. If you were a tenant (AMA) in a 100 year old building (known as the Magic Castle) which was a small part of a parcel of land (10 plus acres) currently for sale and positioned for total redevelopment, would it be smart to sue those affiliated with your landlord if you wanted to stay?

This lawsuit appears to indicate the contrary. Personally, it would be unlikely that I would sue anyone affiliated with my landlord if I wanted to stay.

Following the filing of this lawsuit, the plaintiff (AMA) filed an ExParte application for temporary restraining order and an order to show cause RE: preliminary Injunction.

From the Court Document: “The Court has read and considered the above stated Ex Parte Application.

After argument of Counsel, the Application is denied.”

Continue reading "How Will Magic Castle/AMA Lawsuit Affect Its Future? " »

March 25, 2008

EBay Settles “Buy It Now” Lawsuit With MercExchange

MercExchange filed a lawsuit against online auction giant eBay in 2001 claiming eBay’s “Buy It Now” infringed on MercExchange patents and technology. In 2003 a jury awarded MercExchange $35 million in damages. The judge reduced the jury award to… $25 million. A federal judge certified the penalty and eBay threatened appeal.

inflatable-ebay-logo.jpgDuring the above proceedings MercExchange tried to block eBay’s use of “Buy It Now”. In 2006 the Supreme Court made a landmark decision to allow eBay to continue use of “Buy It Now”. Before this ruling patent owners were virtually always granted court orders to block infringements. These actions to block use typically lead to faster more lucrative settlements for the patent owners.

Since the Supreme Court ruling in eBay’s favor, judges throughout the US have denied requests for court orders to block use where the infringer was not a competitor of the patent owner.

Financial terms of the settlement were not disclosed by either party. EBay said it would buy three patents from MercExchange related to “Buy It Now”/fixed priced sales as well as related technology. EBay General Counsel Mike Jacobson stated “The agreement gives us access to additional intellectual property that will help improve and further secure our marketplaces.''

This Supreme Court decision adds a new aspect to the trend written about previously on this blog whereby infringers are strategically using the court system to buy intellectual properties and/or licenses to use intellectual properties.

March 11, 2008

LifeLock Sued by Experian for Deceptive Business Practices

Most of us have seen the LifeLock advertisement in which company CEO Todd Davis reveals his Social Security number and then speaks about the effectiveness of the company’s protections. Experian’s lawsuit claims that LifeLock’s ads are fraudulent and misleading. Experian also claims that LifeLock’s primary means of protecting its 600,000 clients is filing a fraud alert every 90 days for each LifeLock client.

49277_data_protection_cd-rom.jpgA fraud alert is a notice/flag put on your credit report through the consumer reporting agencies. This flag establishes that as part of any credit approval process, you need to be notified.

Experian claims LifeLock’s practice of filing fraud alerts on behalf of clients is illegal because, under the Fair Credit Reporting Act, “fraud alerts can only be requested by the individual consumer or an individual acting on behalf of the consumer."

Further the lawsuit claims, adding four alerts per year for 600,000 LifeLock members to Experian’s database will degrade the effectiveness of legitimate fraud alerts over time. Credit grantors could lose the ability to distinguish between fraud alerts added by consumers who legitimately believe that identity theft is imminent and those added by LifeLock. The complaint alleges that credit grantors will have reason to doubt the credibility of all fraud alerts and their effectiveness for consumers legitimately impacted by fraud and identity theft will be severely compromised.

The complaint against LifeLock was filed by Experian in the U.S. District Court for the Central District of California.

March 4, 2008

Allianz Agrees to $10 Million Settlement With CA Insurance Commissioner

Allianz Life Insurance Co. is reportedly the largest seller of annuities in California. According to the Department of Insurance, Allianz allegedly used deceptive sales tactics to mislead thousands of elderly people into purchasing unstable and/or unsuitable annuities. Many of those mislead were over 80 years old!

949759_dollar_sign.jpgAn annuity is a contract between a person and a financial institution (insurer) in which the person makes at least one payment and in turn receives "tax-deferred growth of earnings" back from the insurer.

California Department of Insurance officials conducted an examination into Alliance which revealed that in 2004/2005 Allianz replaced 126 existing annuities with financially unsuitable annuities for elderly clients.

In addition to the $10 Million penalty, Allianz agreed to implement a “suitability review” for customers over 65 to insure they are “fully aware of the products they are purchasing."

California Insurance Commissioner Steve Poizner stated “This landmark settlement ends years of aggressive and misleading marketing schemes targeted to our most elderly and vulnerable. The fact that Allianz used deceptive practices and high-pressure sales tactics to lure and cajole seniors into buying unsuitable policies is appalling. However, today's settlement represents a real change for the industry and is a tremendous victory for all California seniors."

Anyone with questions regarding insurance matters can contact the California Department of Insurance consumer hot line at (800) 927-HELP or visit http://www.insurance.ca.gov.

February 26, 2008

CA Court of Appeal Affirms EMT’s Protection Under MICRA

In a lawsuit filed by a Los Angeles Police Officer injured while accompanying an arrestee being transported by ambulance, the Court of Appeal upheld the trial court’s decision that the ambulance driver was protected by the Medical Injury Compensation Reform Act (MICRA).

Officer Randy Canister was injured during the ambulance ride when the ambulance hit a curb, alledgely to avoid a car while enroute to a hospital. Canister was not wearing a seatbelt. Immediately following the accident, Canister provided a written statement which stated that he had not worn a seat belt as a “tactical” decision. He later recanted that statement and claimed that he did not know the ambulance had seatbelts and no one told him.

530378_ambulances.jpgCanister claimed that Emergency Ambulance Service (EAS) was operating the ambulance negligently, and that driving the ambulance was not within the scope of protection provided to emergency health care providers under MICRA.

EAS presented evidence that all ambulance drivers in California, including the one driving at the time of this accident, must have special licenses issued by DMV to operate an ambulance. EAS also presented relevant case law and precedent illustrating that driving an ambulance was within the definition of “professional services” protected by MICRA.

In the opinion by Justice Madeleine Flier, the Court of Appeal rejected Canister’s argument, concluding that EMTs are healthcare providers, and that any negligence by EMTs in driving an ambulance constitutes professional negligence.

Some cases simply should not be appealed and this was one of them.

Every good trial attorney knows which of his/her cases should go to trial,

Continue reading "CA Court of Appeal Affirms EMT’s Protection Under MICRA" »

February 18, 2008

Lawsuit Can Proceed Over Color of Grocery Store Salmon

The California Supreme Court reversed a decision by the Court of Appeals allowing a class action lawsuit to proceed over disclosure of chemically color enhanced salmon sold in many California grocery stores. Named in the lawsuit are Albertson’s Inc., Safeway Inc., The Kroger Co., Trader Joe’s, Costco Wholesale Corp., Whole Foods Market Inc., Bristol Farms Inc., Ocean Beauty Seafoods Inc., and various subsidiaries.

930548_salmon_filets.jpgPlaintiffs in Los Angeles, Alameda and Monterey counties consolidated lawsuits in 2004 claiming that the named stores sold fish with chemical additives canthaxanthin and astaxanthin. The additives allegedly changed the grayish color of farm raised salmon to resemble the color of wild salmon. The lawsuit claims that the stores’ failure to disclose the use of chemical additives to consumers was misleading. The lawsuit also claims possible concerns exist over farm raised salmon and consuming artificial coloring agents.

Specifically the lawsuit contains causes of action for unfair or deceptive trade practices under the Consumer Legal Remedies Act; false and misleading advertising; negligent misrepresentation and unfair and unlawful business acts and practices in violation of the state’s Unfair Competition Law, which includes the Sherman Law.

In the unanimous opinion the justices held that the Federal Food, Drug, and Cosmetic Act does not preempt deceptive marketing claims under California’s Sherman Food, Drug, and Cosmetic Law because Congress explicitly intended to allow states to establish their own disclosure requirements and remedies for violations, and because the plaintiffs’ claims were based on state, rather than federal, law.

What is the true color of your salmon? Only your grocery store knows for sure, and until this lawsuit is resolved, they aren’t telling!

February 11, 2008

CA Court of Appeal Rules Yahoo Message Boards Will Remain Anonymous

Lisa Krinsky was formerly president and CEO of SFBC International in Florida. On a financial message board hosted by Yahoo, Krinsky was the target of some very negative, crude and vulgar comments. Krinsky filed suit against 10 pseudonymous posters for libel and interference with contractual/business relationships.

yahoo-logo.jpgThe problem was that she had to identify the people she was suing. Krinsky attempted to discover the defendants’ identities by serving a subpoena on Yahoo. Yahoo notified Doe 6 that it would comply with the subpoena in 15 days unless a motion to quash or other legal objection was filed.

Doe 6 then moved in superior court to quash the subpoena on the grounds that (1) plaintiff had failed to state a claim sufficient to overcome his First Amendment rights for either defamation or interference with a contractual or business relationship, and (2) plaintiff's request for injunctive relief was an invalid prior restraint.

Santa Clara Superior Court Judge Socrates P. Manoukian concluded that the totality of circumstances justified the relief Krinsky was seeking, and denied Doe 6’s motion to quash.

Doe 6 appealed.

On appeal, Justice Franklin D. Elia wrote for the court that posters to Internet message boards had a First Amendment right to shield their identity, and that this right could only be overcome if Krinsky could make a prima facie showing that a case for defamation existed.

Directly from the opinion, which can be found HERE “We thus conclude that Doe 6's online messages, while unquestionably offensive and demeaning to plaintiff, did not constitute assertions of actual fact and therefore were not actionable under Florida's defamation law. Because plaintiff stated no viable cause of action that overcame Doe 6's First Amendment right to speak anonymously, the subpoena to discover his identity should have been quashed.”

While we in no way condone the vulgarity and crudeness used by Doe 6 (as quoted in the opinion), we commend the California Court of Appeals for protecting our free speech rights related to the Internet.

February 8, 2008

KB Home and Countrywide Sued Over “Inflated” Appraisals

Deborah and Lonnie Bolden, and David and Dolores Contreras filed a lawsuit this week claiming that KB Home and a unit of Countrywide inflated appraisals, defrauding them out of tens of thousands of dollars.

904328_plastic_houses.jpgThe Boldens say they paid $70,000 more for their home than neighbors who used different appraisers. The lawsuit alleges that Countrywide and KB "conspired with affiliated appraisers to generate fraudulent" appraisal reports.

The Boldens' attorney, tells of a neighbor who had used their own appraiser and got KB to reduce the price of their home by $61,000. He also said that to keep houses at their contracted price, KB exaggerated appraisals during a falling market in 2005 and 2006.

The lawsuit seeks restitution, compensatory and punitive damages and class-action status for all California KB Home customers who bought homes from August 2005 to July 2006 and used Countrywide financing.

KB Home issued a statement saying "we believe that our full and complete investigation will show these allegations to be without merit."

This comes on the heels of a Whistleblower lawsuit filed against Countrywide KB Home Loans (joint venture) by former Regional VP Mark Zachary. In the lawsuit Zachary claims to have been fired after reporting that employees were using false income amounts and inflated appraisals to facilitate the closing of home loans.

Continue reading "KB Home and Countrywide Sued Over “Inflated” Appraisals" »

January 16, 2008

Cardiac Patient Rasheed Hunter Files Class Action Lawsuit Over Medtronic Recall

On behalf of Californians implanted with Sprint Fidelis leads, counsel for Rasheed Hunter announced the filing of a class action lawsuit. The leads are the wiring connecting an implanted defibrillator to the heart. Medtronic suspended use of the product on October 15, 2007 after 5 patient deaths were associated with the failure of the leads.

457881_usb_cable_4.jpgIn the lawsuit, Mr. Hunter seeks to hold Medtronic responsible for all diagnostic and medical charges as well as possible (corrective) surgical expenses caused by the faulty devices.

Medtronic believes that the risk is small. From their letter to patients: “Patients with a Sprint Fidelis lead are more likely to experience complications from removal than from a problem with a Sprint Fidelis lead.” They go on to suggest that reprogramming might serve to further mitigate the problem in their letter to physicians.

According to the Medtronics website, there have been over 268,000 Sprint Fidelis leads implanted to connect the life saving defibrillators to patients’ hearts.

Sadly this is truly a no win situation for everyone involved. Medtronic acknowledges the small failure rate and the deaths linked to it. They further acknowledge that they concur with the opinion of the Independent Physician Quality Panel which believes it is inappropriate to prophylactically remove Sprint Fidelis leads except in unusual individual patient circumstances.

January 9, 2008

EZ Lube Settlement Allows Customers to Watch Car Repairs

Orange County Superior Court Judge David T. McEachern Monday approved a $5 million settlement, stemming from a 2004 investigation by the state's consumer agency that investigates complaints against automobile repair shops. The settlement also includes 5 years probation, and closed circuit cameras allowing waiting customers to watch service being performed on their vehicles.

259976_car_repair.jpgIn 2003 KNBC/TV in Los Angeles conducted undercover investigations at numerous EZ Lube locations in Southern California. Some of its undercover video has even turned up on You Tube. In 2004 the California Bureau of Automotive Repair started its own investigation.

There is currently a statement on the EZ Lube website (click on Main Menu, Company Info then select Press & News) dated 9/27/2006: “You may have seen recent news reports that the Bureau of Automotive Repair (BAR has charged EZ Lube with violations of the Automotive Repair Act). We are writing to assure you that the BAR’s accusations are wrong and that our commitment to our customers is unwavering.”

According to EZ Lube’s press release dated 12/31/07 (courtesy of KNBC) EZ Lube is implementing a $6 Million Plan for Customer Assurance.

It was over 4 years between the KNBC investigation and the resolution which calls for a $5 Million settlement. Additionally there is the $6 million customer assurance plan, 5 years probation and more than 4 years of bad press on TV, in newspapers and on the internet. This is an illustration of how NOT to handle legal problems in a business.

Most business legal problems do not improve with age. EZ Lube should have started on resolving this problem in 2003. Their statement of 9/27/2006 could indicate that they were still trying to fight the government agencies at that time when they should have been well on the way to resolution.

Continue reading "EZ Lube Settlement Allows Customers to Watch Car Repairs" »

December 21, 2007

Apple Settles Patent Lawsuit with Burst

Could this be the licensing trend for the new millennium? In settlement of all patent infringing lawsuits between them, Apple and Burst announced a cash settlement of $10 Million to be paid to Burst upon signing of the “settlement”. Apple then gets non exclusive rights to all of Bursts patents except 4 (one issued and 3 pending) related to new DVR technology.

314241_i-pod_mini_blue_1.jpgBurst had claimed that Apple infringed patents related to transmission of compressed files in iTunes, QuickTime and the iPod. Apple claimed it possessed the technology before Burst applied for patents.

Turning back the clock, in 2005 Burst announced a $60 Million settlement with Microsoft, providing an end to patent infringement lawsuits between them and giving Microsoft nonexclusive use of Burst’s patent portfolio.

In this 2005 press release, Richard Lang, Burst CEO stated his intention to use the Microsoft proceeds in 3 areas of the business. Number 2 was “To Reserve a sufficient amount of operating capital to launch a vigorous ongoing enforcement of its patent rights against all infringing parties, as well as pursuing software licensing and other avenues available to the Company to maximize the return to Burst shareholders.

He would appear to be a man of his word. The question remains, are patent infringement lawsuits the new licensing vehicle for high tech companies? Ultimately time will tell but in my perception, the trend is clear.

December 14, 2007

California Supreme Court: “You Must File a Claim Before Suing the Government!”

The California Supreme Court took steps to clarify the process of suing a governmental entity that Courts of Appeal have disagreed on for years. The Supreme Court has clarified the requirement of the “Tort Claims Act,” requiring the filing of a demand prior to the institution of tort and contract litigation against a governmental entity.

678901_contract_2.jpgPrior to this ruling, Courts of Appeal in California presented contradictory rulings on the issue. Some ruled that the “Tort Claims Act” excluded contract disputes and others ruled that it included contract disputes with governmental entities.

To further clarify, the Supreme Court went as far as changing the name of the act. The new name is the “Government Claims Act”.

In a unanimous opinion, Justice Carol Corrigan wrote “Government Code section 905 requires that ‘all claims for money or damages against local public entities’ be presented to the responsible public entity before a lawsuit is filed. Failure to present a timely claim bars suit against the entity. (§ 945.4.) Here we hold that these requirements apply to breach of contract claims.”

The decision is available for review here on the California Supreme Court website.

To sum up, if you have a dispute with any public entity within the State of California, you are required to file a claim with that entity before filing a lawsuit. With this decision in place, failure to file a claim will provide the public entity the legal clout to have your lawsuit dismissed.

Continue reading "California Supreme Court: “You Must File a Claim Before Suing the Government!”" »

December 7, 2007

California Lawsuit Seeks Fair Emergency Room Billing Practices

Pamela Hope Cincotta and Joyce Kraus are plaintiffs in a class action lawsuit alleging price gouging at 2 different hospital emergency rooms. The class action lawsuit was filed December 3rd by attorney Ron Bochner against the California Emergency Physicians Medical Group (known today as CEP America).

803500_emergency_entrance.jpgFrom the lawsuit “…CEP provides emergency room professional services for many hospitals in California. It separately bills patients for such services. Plaintiffs are informed and believe and theron allege that in so billing patients, CEP has engaged, and continues to engage, in a pattern and practice of charging unfair, unreasonable and inflated prices for medical care to its uninsured patients who are generally the least able to pay these inflated and unreasonable charges. CEP also pursues aggressive collection techniques in charging these unfair, unreasonable, irregular and inflated prices. In doing so, they have attempted to collect, by various means, the unfair, unreasonable and inflated prices for medical care to CEP’s uninsured patients as debts in California.

CEP provides ER services to approximately 55 hospitals in California. The results of this lawsuit would likely affect prices and billing practices at all of those hospitals.

Dr. Wes Curry, president of CEP America, said "We're confident that our billing practices are proper."

Technically the lawsuit is a class action complaint for violation of California Unfair Business Practices Act; Consumers Legal Remedies Act; Breach of Contract and Breach of Implied Covenant of Good Faith and Fair Dealing; Unjust Enrichment.

California has approximately 7 million uninsured residents.

November 29, 2007

Will Brad Pitt be Sued by Universal?

What does the writers strike, the success or failure of the movie “State of Play” and contract law all have in common? They will all factor in to Universal’s decision about suing Brad Pitt in the future.

678902_contract_3.jpgPitt pulled out of the movie last month. It is believed that Pitt was unhappy with script rewrites and due to the writers strike and shooting schedule, further changes could not be made.

Universal issued this statement: "Brad Pitt has left the Universal Pictures production of State of Play. We remain committed to this project and to the filmmakers, cast members, crew and others who are also involved in making the movie. We reserve all rights in this matter."

There are an almost infinite number of factors involved in assessing any breach of contract lawsuit.

A few of the common ones in business contracts include: Which party drafted the contract? Are the terms clear and concise or subject to interpretation? Was there a “meeting of the minds”? Was there an exchange of value? Was there full disclosure or possible fraud?

Not being a mind reader (and not having seen the contract), I won’t try to predict whether Universal will file suit. But the last sentence in their statement “We reserve all rights in this matter." literally shouts that they are giving it serious consideration.

And the latest news? Russell Crowe has stepped in to take the lead in “State of Play”.

Continue reading "Will Brad Pitt be Sued by Universal?" »

November 21, 2007

Disney Sued by Disabled Guests Over Segway Ban

The Walt Disney Co., the world's largest theme-park operator, has been sued by three people who allege that the company's ban on Segway personal transporters at its theme parks is in violation of federal disability laws.

segway_tour_small.jpgNo one seems to be claiming that they were denied access to Walt Disney World or any other Disney Theme Park. The allegations seem to be that they (disabled guests who can stand but not walk long distances) could not use their Segways.

While not commenting on the lawsuit, Disney Spokesperson Jacquee Polak stated "Our primary concern is the safety of all our guests and our cast members. We have a long history of being a leader in creating accessible experiences for our guests with disabilities."

Depending on model and equipment, most Segways weigh between 110 and 120 pounds. Add the weight of a small rider at 140 pounds and you have a total weight of 250 pounds and above.

Imagine the injuries to Disney guests if a Segway traveling at a speed 10 to 12 mph accidently hit one or more guests.

Disney welcomes the use of manual and electric wheelchairs and 4 wheel power chairs by disabled guests. Disney even has them available for rental.

With the utmost respect for all people with disabilities, I agree with Disney on this issue. The safety of Disney guests is more important than the wishes of a few who want to see Disneyland on a Segway. Wheelchairs and powerchairs are far more safe in crowded venues.

November 14, 2007

California Attorney General Settles With AT&T Mobility

AT&T Mobility (formerly Cingular) will no longer charge their customers for any calls made after their phones are lost or stolen. In the complaint, Attorney General Jerry Brown alleged that the company violated California law, including Public Utilities Code section 2890, which bars phone companies from charging customers for unauthorized services.

260343_mobile_phone_thief.jpg“No cell phone company should profit from calls made by thieves or unauthorized users,” Brown said.

The agreement, a stipulated judgment, requires AT&T Mobility to inform each of their customers of their legal rights regarding lost or stolen phones. Under the agreement, AT&T must either credit the disputed charges or inform customers of their legal rights.

AT&T must notify customers--in writing--of these new requirements and assist customers to obtain credit for amounts already paid on lost or stolen phones, back to year 2003. AT&T will also pay the Attorney General's Office $500,000 for costs of the investigation and for the Unfair Competition Law Fund, administered by the California District Attorneys Association.

“This groundbreaking settlement makes AT&T the first cell phone company that has agreed to protect its customers from cell phone rip-offs and other unauthorized uses,” Brown said. “It is now time for the rest of the cell phone industry to step forward and follow AT&T’s example,” Brown added.

What will happen if the rest of the cell phone industry doesn’t follow AT&T's "example"? Well, the California Attorney General has never been known for his “wait & see” attitude.

November 6, 2007

Court of Appeals to Bank of America: When is a Vice President not a Vice President?

If you have ever wondered why so many employees at your bank carry the title of Vice President, the decision in Ramanathan v. Bank of America could shed some light. The California Court of Appeals reversed a trial court decision, which will allow Padmanabhan Ramanathan to move forward with his wrongful termination suit against Bank of America.

648752%20BofA%20Seattle.jpg The banks position was that the National Banking Act Sec. 24(Fifth) of the bank act bestows the power “[t]o elect or appoint directors, and by its board of directors to appoint a president, vice president, cashier, and other officers, define their duties, require bonds of them and fix the penalty thereof, dismiss such officers or any of them at pleasure, and appoint others to fill their places.”

The most entertaining part of the decision was found in the footnotes…… At oral argument, the Bank’s counsel argued that if the Bank chose to designate all of its employees, “including janitors, maintenance workers, everyone” as “vice presidents,” then they too would all be covered by the provisions of the NBA. The judge labeled this a “startling assertion”.

In spite of such a sound “legal” argument, Superior Court Judge Jeffrey W. Horner, writing on assignment for the Court of Appeal gave more weight to Ramanathan’s declaration that he had no employees working under his supervision, had no control over anyone else’s employment, was primarily involved in the design and development of software applications, and had nothing to do with banking operations or customer service.

Continue reading "Court of Appeals to Bank of America: When is a Vice President not a Vice President?" »

October 31, 2007

If a Judge Adds a Poem to His Ruling, Should the Commission on Judicial Performance Open an Inquiry?

Because it’s Halloween here is a short entry about a creeping vine. Apparently this case arose after a woman brought suit against her neighbor for allowing a vine to grow on her property which damaged her roof. According to his attorney James A. Murphy, In December 2006 Superior Court Judge Loren E. McMaster tentatively ruled that one count of intentional infliction of emotional distress be dismissed. He outlined his reasoning in an order, and merely summarized the reasoning in a poem, which appeared at the end of his ruling.

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In a letter sent to the judge by Commission on Judicial Performance Staff Counsel Charlene M. Drummer dated Aug. 15, 2007, the commission notified McMaster of its decision to authorize an inquiry into whether action is warranted for his recital of a poem in a tentative ruling.

Judge McMaster complied with the commission’s Sept. 4, 2007 deadline to respond and a determination by the commission remains pending. Murphy, contends that the commission’s letter was not an accurate description of what had taken place and does not think further action by the commission is warranted.

Here is the poem:

Defendant planted a creeping vine
That crept and crawled and soon entwined
Itself in plaintiff’s roof, and made a mess
Causing plaintiff to suffer great distress
This lawsuit follows but leaves unsaid
Why plaintiff didn’t whack the vine instead

I believe, with very few exceptions (and this is NOT one of them) judges handle their difficult jobs extremely well and fairly. It has been my observation that most complaints about judges are made by lawyers who had not fully prepared for motions, hearings and/or trials.


October 25, 2007

Intel and Transmeta End Patent Lawsuits With Intriguing Settlement

In a David v. Goliath story with a surprise ending, Transmeta and Intel have settled their mutually opposing patent infringement lawsuits. Intel will pay Transmeta a total of $250 Million; $150 Million now plus $20 Million a year for the next 5 years.

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In addition to all pending lawsuits being settled, Intel will receive non exclusive rights to Transmeta’s entire patent portfolio (press release here). Transmeta gets an influx of cash and a guaranteed income for 5 years which will allow further research & development. Additionally, Transmeta can proceed without the threat of any additional patent lawsuits from Intel.

So who won? While it may be a little early to speculate, Transmeta is clearly better off than it was before the lawsuits were filed. Prior to this settlement, Transmeta’s market value was slightly over $40 Million. They have pretty much guaranteed their future for at least 5 years. In all likelihood, Intel will parlay their “investment” in Transmeta’s patent portfolio into profits which will exceed their cash outlay.

This is a textbook example of a settlement in a business lawsuit which not only stands to benefit both parties, but consumers as well.

One final note. Transmeta has 2 attorneys on it’s in house legal team while Intel’s in house legal team has over 200. I have long believed that in law, smaller is better because it allows much greater flexibility in litigation.

It’s nice to see that David won even if Goliath didn’t lose!

Continue reading "Intel and Transmeta End Patent Lawsuits With Intriguing Settlement" »

October 16, 2007

No Love for Apple and AT&T in Class Action iPhone Lawsuits

By the time you read this, there will likely be at least one more lawsuit filed against Apple and AT&T over the iPhone. While I believe that all lawyers are good and some are better, it is times like these that make me question some in the legal profession.

When lawyers take on a lawsuit where the plaintiffs are suing because the iPhone will do everything it was promised to do, but won’t allow use on other networks or with third party application software....it just ticks me off!

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Good lawyers DO NOT accept meritless lawsuits!

In case you don’t know, the Apple iPhone has been sold to only work on the AT&T network. There were never any other promises in any advertising or on the website. If you visit the Apple iPhone questions and answers web page you will find the following:


Can I “unlock” iPhone and use it with another wireless carrier?
AT&T is the exclusive wireless carrier for iPhone in the United States. If you currently use another wireless carrier, you can choose to transfer your number when you activate your AT&T account.

One of the toughest aspects of my practice is meeting with people who think they have a case and telling them they don’t. Countless times during an initial consultation with a prospective client, I have to tell them honestly that they have little or no chance of coming out ahead in a lawsuit. Most people appreciate our integrity.

Knowing where you stand before signing a retainer agreement or writing a check means that both you and your lawyer have a better chance of reaching a favorable result in your legal matter. This is one of the reasons for success on our clients’ behalf.

If your iPhone won’t fly a kite or will not do anything else it was not intended to do…call someone else. But if you want an honest appraisal of your current legal issue (always at no charge), call me today at 818-461-8500.

Richard Oppenheim

PS Additional helpful information may be found in questions 5 and 6 in our resource document “Eleven Questions to Ask BEFORE Hiring a Business Attorney”. You will find it on our website Home page.

October 9, 2007

Court of Appeal Affirms: Plaintiff Cannot Purchase Products Solely as Reason to Sue

California Women’s Law Center Executive Director Katherine Lee Buckland admitted to purchasing certain skin care products in the belief that they were being deceptively sold and with the intent of suing. Originally Los Angeles Superior Court Judge Robert Hess, sustained a demurrer joined by many of the more than 30 defendants (members of the American Herbal Products Association), and whom Buckland sued for negligent misrepresentation, fraudulent concealment and violations of unfair competition and false advertising laws as well as the Consumer Legal Remedies Act. Judge Hess also denied Buckland’s motion for a injunctive relief.

skin%20care%2064254_size1.jpg Buckland appealed, contending the trial court erred. She argued that her claims were legally tenable. The Court of Appeals disagreed.

Katherine Lee Buckland cannot sue for fraud, or under consumer statutes, because she did not rely on the alleged misrepresentations in choosing to purchase the products and did not suffer any “injury-in-fact,” Justice Nora Manella wrote for the Court of Appeal.

Simply stated, Buckland had no “standing”. Standing is a direct connection to a legal cause of action and was changed in California in 2004 by the passage of Proposition 64. Prior to that, the law allowed a private person not injured by an allegedly unfair or illegal business practice or by false advertising to seek equitable relief on behalf of the general public, which is essentially what Buckland stated she was trying to accomplish in her lawsuit.

Notably strange is that the.....

Continue reading "Court of Appeal Affirms: Plaintiff Cannot Purchase Products Solely as Reason to Sue" »

September 20, 2007

AOL & KaZaa Could be Added to RIAA v. Santangelo Lawsuit

The RIAA (Record Industry Association of America) has filed an estimated 20,000 lawsuits in the last 3 years against people (many of them unnamed “John Does”) for downloading music on P2P networks. One such lawsuit was filed against siblings Michelle and Robert Santangelo who have filed a motion to add AOL and Sharman Networks/KaZaa as third party defendants.

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In this legal strategy, the Santangelos are demanding approximately $3.9 million each from AOL & Sharman. Their claim is that AOL did not take any actions to block file sharing and did not warn Michelle and Robert about consequences. The revised Complaint also blames KaZaa for designing software which automatically shares downloaded files. It also alleges that both AOL and Sharman failed to pass on RIAA warnings related to the legality and consequences of file sharing.

If the Santangelos are successful other P2P defendants in RIAA suits would likely sue their internet service and file sharing network providers for damages. Further, it could lead to file sharing software providers and ISP’s changing how they handle file downloading and uploading on the internet.

The strategy of adding other parties (especially larger companies with deeper pockets) to business lawsuits has been around a long time. It requires a special set of conditions...

Continue reading "AOL & KaZaa Could be Added to RIAA v. Santangelo Lawsuit" »

September 5, 2007

SunRocket Files Lawsuit Against Vonage: Is Customer List Confidential?

SunRocket (or what is left of it) is suing Vonage over the acquisition and use of its customer list. The complaint alleges that SunRocket had discussions with Vonage regarding the purchase of certain SunRocket assets including its subscriber base and/or customer list. Prior to those discussions, which ultimately broke down, Vonage signed a confidentiality agreement. SunRocket claims Vonage violated the confidentiality agreement by obtaining and using its customer list without permission.

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Vonage, the number one VoIP provider in the US claims it obtained the list legally by purchasing the list from a third-party broker, Paradysz Matera. Charlie Sahner, a spokesman for Vonage stated “We obtained the subscriber list through an established broker, and we were assured the data was legally obtained and could be used without violating anyone's proprietary rights. There is no connection to the [confidentiality] agreement."

SunRocket said that its customer list is "one of its single most valuable remaining assets," and that Vonage's use of the list has caused "immediate and irreparable harm and injury" to the company. SunRocket has asked a judge to compel Vonage to return the list and award unspecified monetary damages.

Continue reading "SunRocket Files Lawsuit Against Vonage: Is Customer List Confidential?" »

August 31, 2007

Lawsuit 101: Understanding the Process of Business Litigation

We regularly receive requests to explain the process of litigation, which we always communicate (using dialog NOT monologue) to prospective clients during our initial consultation. We hope you will find our lawsuit synopsis helpful. Feel free to forward it to others and remember to contact us with any questions about any business or employment lawsuit.

The litigation process generally involves four (4) phases. The length of each phase varies with the legal and factual complexities of each case.

The initial phase takes place before anything is filed in court. The attorney meets with the client to determine the facts of the claim being advanced by the client or the client's defense to a claim brought by another. In either case, it is essential that the client meet with the attorney at the earliest opportunity as valuable rights may be lost by delay. Once the attorney meets with the client, the attorney will review any documents relevant to the matter, research the applicable law and possibly speak to witnesses in order to chart a course which is in the best interest of the client.

1504001%20Gavel%20%26%20Money%202.jpgThe next phase involves the filing of an initial pleading in court. Typically, this is the filing of a Complaint or an Answer to a Complaint. The discovery process begins, which may include serving the other side with written questions, called Interrogatories, obtaining evidence which may be in the possession of the adversary or some other party and taking depositions, the oral questioning of parties and witnesses.

Once this phase has been completed, the case is ready to be tried. A trial may be in front of a Jury or a Judge and can vary in length depending upon the number of witnesses and quantity of exhibits offered. Under our system of jurisprudence, the plaintiff has the burden of proof. The plaintiff's case goes first. The defendant then has an opportunity to respond to the plaintiff's case with witnesses and evidence to support the defense. If the defendant has brought a Cross-Complaint, it is tried in the same manner. Otherwise, the plaintiff has an opportunity to put on a rebuttal case to counter the evidence offered by the defendant and, on occasion, a defendant may offer a sur-rebuttal to reply to the evidence offered by plaintiff in the rebuttal case.

The final phase of litigation involves the post-trial matters including motions to vacate or correct the judgment, appeals and efforts to collect on the judgment.

August 23, 2007

Court of Appeal to Santa Monica: Your Litigation Waived Your Right to Arbitration in Lawsuit

The case of City of Santa Monica v. Baron & Budd, B187425, simply stated, is a case about legal fees and retainer agreements. The City of Santa Monica hired attorneys, discharged attorneys and hired more attorneys. The retainer agreement in dispute included contingent fee provisions. It also had a clause stating that the attorneys were entitled to a reasonable fee if the contingent fee provisions could not be enforced. Further it stated that the amount of the fee was subject to arbitration before JAMS (Judicial Arbitration and Mediation Services).

The next 5 to 10 paragraphs could be spent describing the legal wrangling of a city government and 3 law firms. Instead I will just give the highlights.

425184_grant%20%2450.jpg Around the time the City of Santa Monica was resolving/settling the legal matter which caused it to hire outside counsel, the attorneys and the city realized there were disagreements about calculations and fees to be paid to outside counsel.

With no resolution at hand the city sued for declaratory relief in May 2004. It later amended the complaint to allege breach of fiduciary duties. Coming as no surprise, the lawyers cross-complained for their fees.

In May 2005, Los Angeles Superior Court Judge David Minning denied the city’s motion for summary adjudication. Five months later, the city moved to compel arbitration. Judge Minning denied the motion.

Court of Appeal Justice Robert Mallano said the trial judge was correct.

He cited the 17-month delay between the filing of the suit and the demand for arbitration, that the parties had extensively litigated the issues that would be the subject of the arbitration, and the prejudice the law firms would have suffered as a result of having to provide the city with more discovery than would have been required had the case been assigned to arbitration at the outset.

Los Angeles Superior Court Judge Frank Jackson, sitting on assignment, concurred in the opinion, while Justice Frances Rothschild concurred separately.

Continue reading "Court of Appeal to Santa Monica: Your Litigation Waived Your Right to Arbitration in Lawsuit" »

August 9, 2007

Corinthian Schools Denies Wrongdoing and Settles Lawsuit with Attorney General Jerry Brown for $6.5 Million

Corinthian Schools Inc. and Titan Schools Inc., subsidiaries of Santa Ana-based Corinthian Colleges Inc have reached a settlement with California Attorney General Jerry Brown to refund $4.3 million to former students, and pay $1.5 million for student debt cancellation. Additionally, Corinthian will pay $700,000 in civil penalties.

821422%20california_flag.jpg According to Hoovers.com (a D&B company), Corinthian had sales of $966.7 Million with net income of $41.5 Million in 2006. Their website states that they have 94 schools in 24 states with 65,000 students.

Corinthian is also required to cease offering 11 courses for 18 months, including the Pharmacy Technician program in Anaheim.

Here is Corinthian’s statement: "We disagree with the Attorney General's conclusions, but we are pleased to have this matter behind us. The agreement is not evidence of wrongdoing, and the company specifically denied any wrongdoing as part of the settlement. We are fully committed to providing quality education and job placement services for students and to being in compliance with state law and regulation."

Sometimes, it can be better to create a settlement which will allow your company to just get back to business. Would prolonged litigation have brought about a better result for Corinthian? We’ll never know. And considering that $6.5 Million is equal to about 2 months of Corinthian’s 2006 profit, this settlement was likely to be the best scenario in that it allows the school to focus on its business which can easily accommodate this “bump in the road.”

Trying to operate a business embroiled in litigation is like trying to play tennis in handcuffs. You may win a few points but you’re likely to lose the match.

Read more about the Value of Time and the true cost of business litigation.

August 2, 2007

VidiLife.com (LiveUniverse) Loses Antitrust Case Against MySpace.com

Can a social networking site like MySpace.com prevent its users from posting links to other competing social networking websites? According to U.S. District Court Judge A. Howard Matz, it can. In his ruling Judge Matz threw out the antitrust claim against MySpace.com declaring that the social networking site isn't required to display competitors' Web page links.

According to court documents, LiveUniverse alleges that MySpace prevents users from watching vidiLife videos that they or other users previously loaded onto their MySpace webpage, deletes references to vidiLife.com on MySpace and prevents MySpace users from mentioning “vidiLife.com.”

609312_dotcom%20FF.jpgThis may be the first antitrust case to address whether a social networking site can prevent its users from posting certain links. Representing MySpace, attorney Richard Stone stated ”MySpace doesn't prevent anyone from going to their competitors' sites, but, we have no responsibility to build a moving walkway to a competitor's store." Stone continued “And by including those links, MySpace would be risking exposure if sites such as vidiLife had any inappropriate content. “

LiveUniverse, owner of vidiLife.com was founded by Brad Greenspan. Mr. Greenspan was the founder eUniverse the company that created MySpace.com which was sold to Rupert Murdoch’s News Corp for $580 Million. According to Business Week, in that transaction Greenspan pocketed more than $47 Million.

Another VERY important aspect of this lawsuit is the lawsuit timeline.

The suit was filed on November 2, 2006. On November 22 MySpace filed a motion to dismiss LiveUniverse’s complaint. The court held a hearing on December 18 in which it granted that motion, but gave LiveUniverse an opportunity to clarify one premise of the complaint.

On January 16, 2007 LiveUniverse filed a First Amended Complaint (FAC). On February 5, MySpace filed the motion to dismiss the FAC.

The court held a hearing on March 5 and presented its decision on June 4, 2007.
In only seven months, this lawsuit went from initial complaint to resolution. Lawsuits do not have to drag on for years while depleting the assets of both parties. As was done here, good lawyers look for, create and act on opportunities to move toward resolution.

Continue reading "VidiLife.com (LiveUniverse) Loses Antitrust Case Against MySpace.com" »

July 13, 2007

Porsche Lessee Settles Lawsuit Against Auto Dealer... California Court of Appeals Remands Case Back to Trial Court RE: Attorney’s Fees

In a recent court of appeal decision (Kim v. Euro Motors, et al.), the Court held that notwithstanding the fact that a defendant settled prior to trial, it could be liable for attorney’s fees. Kim brought an action against a car dealer pursuant to the Consumer Legal Remedies Act (CLRA, Civil Code § 1750, et seq.) in connection with a Porsche Turbo that he leased from a dealer. During the first year of the lease, the vehicle was out of service for over 78 days, due to various problems. When the dealer was unable to fix the car to Kim’s satisfaction, he demanded that the dealer take the car back and refund to him all monies that he had spent. When his demand was refused, he brought an action against the dealer for damages and for recission of the lease. Kim ultimately settled with the dealer, short of trial and entered into a mutual general release and settlement agreement wherein, among other things, the dealer agreed to take back the vehicle, terminate the lease and pay a$10,000 lump sum settlement to Kim. Kim acknowledged that the payment was in full and final settlement of all claims with the exception of attorney’s fees and costs. The agreement contained the usual language that neither party admitted liability or that the other was the prevailing party.

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Kim filed an application for attorney’s fees, which was opposed by the dealer on the grounds that Kim was not the prevailing party. The trial court denied the application finding in light of the settlement, there was no prevailing party. Kim appealed.

Continue reading "Porsche Lessee Settles Lawsuit Against Auto Dealer... California Court of Appeals Remands Case Back to Trial Court RE: Attorney’s Fees " »

June 19, 2007

Principals of Litigation from Mike Dillon, General Counsel, Sun Microsystems Inc.

Today on his corporate blog “The Legal Thing, notes from a General Counsel”, I was pleased to see a view of litigation and its true costs which so closely mirrors the foundation on which we built Sylvester, Oppenheim & Linde. While our clients have heard our (very similar) version of Mike’s litigation principles, it is refreshing to see them communicated by such a highly respected General Counsel.

While I have never met Mike, I can tell that he is a truly outstanding General Counsel, not just from this blog post " On Litigation...(Azul Systems)" but also because he takes time to post items which could ultimately improve the public’s perception of the legal profession. And remember, Mike has nothing to sell. As a corporate officer of Sun Microsystems, his opinion is clean & clear, as is his writing.

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Here are Mike’s litigation principles:

No. 1 - You only litigate when you have an important interest to protect. Litigation is costly. Incredibly costly. But it is not the expense that is the real issue, it's the diversion of resources. Time employees spend reviewing e-mails and documents, educating lawyers and preparing for depositions is time away from the business. That's the real cost of litigation.

No. 2 - A non-judicial resolution is almost always preferable. When you file a complaint, you are turning over resolution of an issue to a third party - be it a judge, arbitrator or jury. To a great degree you lose control of the outcome.

No. 3 - You litigate when you have a high degree of confidence that you will prevail. Bluffing is for weekend games of Texas Hold'em . When you file suit, you need to have fully evaluated all aspects of the case to ensure that the outcome will be favorable.

No. 4 - You litigate to win. This means that your employees, board and management team fully understand and support the commitment (both financial and time) required to prevail. It also means having seasoned litigation counsel who understand your business and objectives.

Illustrating that Mike lives true to his word (another attribute of an outstanding attorney), he tells the story of Sun’s conflict with Azul Systems; how he tried to resolve it without litigation and how it progressed when that failed.

Continue reading "Principals of Litigation from Mike Dillon, General Counsel, Sun Microsystems Inc." »

April 25, 2007

Fraud Case Settled Against California Health Plan Vendor

PrudentChoice, an Irvine, Cal.-based seller of discount health plans, was charged with violating Vermont's Consumer Fraud Act. Attorney General William Sorrell said charges were based on the sale of plans to at least 89 Vermont residents at a cost of over $25,000. The problem was that PrudentChoice couldn't make good on its promises of discounts on services by physicians, hospitals, dentists and other health care providers.

Sorrell's office surveyed 24 customers, 21 of whom said they could not find a participating provider.

In the settlement, filed last week in Washington County Superior Court, PrudentChoice must pay the state $33,000 in civil penalties and $5,000 in costs.

The Associated Press quoted PrudentChoice attorney Craig Zimmerman as saying, "PrudentChoice has never had any unsatisfied members in the state of Vermont. PrudentChoice adamantly believes there's a place for discount health care in Vermont and in the United States."

This is another “Business 101” rule. Make sure that you can deliver anything your company sells. And if you discover you can’t, seek legal counsel and implement appropriate changes immediately.

For the record, although the charge was fraud, this could have been an example of the cart before the horse. The provider enlistment group may have missed a deadline for signing up health care providers (physicians, hospitals, dentists, etc.) and left the sales/marketing department uninformed. Although this scenario could look like fraud, it would have no fraudulent intent. This whole case could have been nothing more than poor internal communications and/or lack of clearly defined accountability.

In most well run companies, the executive team would know there was trouble long before any attorney general filed charges. Further, it is more cost effective to fix legal problems like the one above as soon as they are discovered.

The effect on a company’s bottom line can be tremendous.

April 10, 2007

California Judge Rules in Favor of Kaleidescape and Consumers

A California Superior Court judge ruled March 29th that a startup's media server does not violate the security technology used to protect DVD disks because the standard licensing contract and specifications for the technology are so poorly worded.

Rather than spend a lot of time analyzing the specifics of this case between Kaleidescape and the DVD Copy Control Association (DVD CCA), let’s just look at this from a contract law/litigation perspective.

Judge Leslie C. Nichols stated that the DVD CCA provided a license for its Content Scramble System (CSS) to Kaleidescape without including tech specs in the license agreement. Judge Nichols also stated "This [CSS spec] is a product of a committee of lawyers."

What can we learn from this? Sadly, this is very basic contract law.

Importantly, a contract is whatever the court says it is. Further, any ambiguities in a contract are held against the writer/creator/author of the contract.

Using the above case as an example, the judge held the DVD CCA responsible for its poorly worded licensing agreement (contract) and ruled in favor of Kaleidescape.

Lastly, contract lawyers usually fall into two categories.

Continue reading "California Judge Rules in Favor of Kaleidescape and Consumers" »

April 5, 2007

California Judge Gives Final OK to Yahoo Click Fraud Settlement

Last month final approval was given for a class action settlement involving “click fraud” that has Yahoo paying nearly $5 million in attorney fees and giving full credits to advertisers dating back to 2004.

The judge's action on Monday settles claims by Checkmate Strategic Group that Yahoo charged advertisers for clicks on online ads that were done in bad faith or fraudulent.

Although preliminary approval was given last summer, final approval for this settlement was held up by attorneys representing parties in a similar (Google) lawsuit in Arkansas. The California settlement releases Yahoo from all similar click fraud claims against it in other actions in all other states. That’s an offer Yahoo couldn’t refuse.

Reggie Davis, Yahoo's new vice president of marketplace quality stated “Final approval of the settlement validates the strength of Yahoo's click-through protection systems, and our commitment to delivering a quality experience to both our advertisers and our consumers. Our commitment does not stop here. Quality is a top priority for Yahoo, and we have a clear road map for how we're going to create the highest-quality search-advertising network in the industry."

Additionally, in my opinion final approval of this settlement allows Yahoo to put this resource draining litigation behind them, allowing Yahoo to focus on the future of the internet search business.

Putting litigation behind you is often a wise strategy in business.

Continue reading "California Judge Gives Final OK to Yahoo Click Fraud Settlement" »

March 30, 2007

Taco Bell Sued for Libel by California Farm

Boskovich Farms, Inc. filed a lawsuit in Orange County (California) Superior Court. In that lawsuit, Boskovich alleges that Taco Bell knew the green onions from its farm were NOT the cause of the E.coli outbreak that sickened 70 people, but continued to link the green onions to the outbreak. Thomas Girardi, a lawyer representing Oxnard based Boskovich Farms told the Los Angeles Times “Taco Bell engaged in an irresponsible and intentional crusade to save its own brand at the expense of an innocent supplier.”

Attorney Girardi went on to say, “The false connection between the farm and the fast food chain's E. coli problem has cost Boskovich millions of dollars of business."

Taco Bell stated, “We believed green onions may have been the source based on the presumptive positive testing, so we immediately removed them from our products to put public safety first. We later learned they were not the source of the E. coli outbreak."

The bottom line seems to be that that Boskovich green onions were clean, and Taco Bell is no longer using green onions in any of their food items.

It is highly likely that this lawsuit will come down to “Who said what and when?”

Meanwhile Boskovich announced that due to declining sales, green onions will no longer be grown on the 55 acre plot previously dedicated to the crop.

Continue reading "Taco Bell Sued for Libel by California Farm" »

March 19, 2007

Los Angeles: Motion for Summary Judgement Filed in Antitrust Lawsuit Against World Poker Tour Entertainment (WPTE)

A Motion for Summary Judgment was filed today in Los Angeles by attorneys for the 7 professional poker players (Howard Lederer, Annie Duke, Andy Bloch, Phil Gordon, and past World Series of Poker champions Chris Ferguson, Greg Raymer, and Joe Hachem),who are suing World Poker Tour Enterprises, Inc. (WPTE). Antitrust litigation is always an interesting area of law, and this lawsuit is no exception.

If you are not familiar with this lawsuit, the 7 top rated poker players contend that the WPTE agreements are illegal and are violations of Federal Antitrust laws.

Troublesome to the 7 (and their lawyers) is the release in the agreement. The release contains the following:

Player...hereby irrevocably grants to WPT the right to film, record, edit, reproduce and otherwise use Player's name, photograph, likeness, signature, biographical information, appearance, actions (including without limitation, revealing Player's hole cards), conversations ... and/or voice ... in, and in connection with, the Programs and/or the "World Poker Tour" ... and any and all derivative, allied, subsidiary and/or ancillary uses related thereto (including, without limitation, merchandising, commercial tie-ins, publications, home entertainment, video games, commodities, etc.), in whole or in part, by any and all means, media, devices, processes and technology now or hereafter known or devised in perpetuity throughout the universe.

Since each player must buy in to the tour (pay to play), the release signs over the players’ rights to the WPTE for FREE!


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No one can argue that the above release is “heavily restrictive”. The question for the court is whether it violates antitrust laws. Only time will tell how this ends, which is very much like every hand of poker ever played in history, and those to be played in perpetuity ….throughout the universe!

Continue reading "Los Angeles: Motion for Summary Judgement Filed in Antitrust Lawsuit Against World Poker Tour Entertainment (WPTE) " »

March 10, 2007

Business Lawsuits Heard in Their Own Court...Will California be next?

The State of Florida has just opened its third court devoted exclusively to business lawsuits. Do specialized courts provide better service and/or results to parties?

The cases to be tried in this new Tampa Court involve litigation where the amount in controversy is greater than $75,000 between business persons or entities. They typically relate to the internal affairs or governance of the business, non compete agreements, intellectual property and trade secrets.

The goals of this Florida state court are to increase affiance and access, decrease litigants costs and improve the understanding of business litigation issues.

While this is one way to try to unclog the court system, Nevada is taking a different path. A few years ago, they implemented a short trial program designed to resolve cases with less than $40,000 at stake, quickly with virtually no cost to the taxpayer. The short trials are only one day long and presided over by local attorneys whose fees are paid directly by the litigants. There are only 4 jurors and the trials take place in courtrooms on “dark” days. The appeals are very limited which translates to most results being final almost immediately. Best of all, trials are calendared within 120 days from when the parties choose the Judge Pro Temp.

The program has been a huge success in Nevada and is about to become mandatory for all cases which fall below the $40K threshold.

In conclusion, I believe the litigants will win in the Florida program. A judge who hears only Business Litigation cases is very likely to be better than one who hears a wide variety of cases.

In Nevada, everybody wins; the litigants, the judges whose calendars are relieved from the volume of small cases, the lawyers and of course the jurors and the taxpayers.

We live in a wonderful country and it is truly refreshing to see our court systems changing with the times.

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March 5, 2007

Lawsuit finally settled…..after only 31 years of Litigation!

Lawsuits are time consuming. I know that some attorneys in Los Angeles, many throughout California and all the trial lawyers in our firm are focused on resolving lawsuits for our clients rather than stretching them out needlessly.

But whose fault is it if a lawsuit takes 31 years to resolve?

According to information from the Arizona Daily Star, tribal leaders from Arizona’s Tohono O’odham nation joined Governor Napolitano and Tuscon officials for a long overdue signing ceremony.

In the settlement, the tribe will be guaranteed 50-thousand acre feet of water each year at no cost, mostly from the Central Arizona Water project.

My opinion? This lawsuit just had too many players. Involved were City of Tuscon officials, State of Arizona officials, federal officials including the Department of the Interior and of course the Tohono O’odham tribal nation.

The moral of this story is simple. If and when considering litigation, remember to evaluate all the parties involved, as they will play a significant part in the outcome of your lawsuit. If time is of the essence, bureaucracies should be avoided.

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