Articles Posted in Business Litigation

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A “Charge of Discrimination” filed by the Department of Housing and Urban Development against Facebook is making waves. In the Charge, HUD accuses that Facebook “unlawfully discriminates based on race, color, national origin, religion, familial status, sex, and disability” when it comes to advertisements for housing.  The document can be viewed HERE.

https://www.californiabusinesslitigation.com/wp-content/uploads/sites/283/2016/05/http.www-51883498-001.jpgThrough Facebook’s ad platform, advertisers are able to target users of the social media service who are most likely to be interested in their goods and services. HUD says that these practices may violate the 1968 Fair Housing Act.

HUD Secretary Ben Carson argues: “Facebook is discriminating against people based upon who they are and where they live.” Calling the practice “as discriminatory as slamming a door in someone’s face,” Carson objects to features on the advertising platform such as toggle buttons that make it possible to include or exclude men or women. There’s also a search box that can be used to exclude individuals who are not fluent in a certain language.

Attributes that advertisers can choose or exclude include accessibility, Hispanic culture, hijab fashion and foreigners. Additionally, Facebook’s advertising platform features a map tool that advertisers use to exclude people living in certain areas from seeing specific ads.

A U.S. Administration Law Judge will be responsible for hearing the case unless one of the parties demands a federal court venue instead. The Administrative Law Judge has the power to award damages in the event that discrimination is proved.

The Charge comes just after Facebook announced that they had reached settlements in nearly half-a-dozen housing discrimination lawsuits. Altogether, the social media company will pay $1.95 million to the plaintiffs in these cases. Settlements in the cases also require that Facebook make massive changes to its ad platform as it relates to advertising for credit, employment and housing.

A Facebook spokesperson is surprised by HUD’s new Charge in light of these recent settlements and the changes that are underway with the ad platform. Legal experts are closely watching the situation to see if HUD is using the Charge to warn others to avoid similar advertising practices that could be used in a discriminatory manner.

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Agrochemical giant Monsanto, which is now owned by Bayer, is facing a slew of lawsuits based on its popular Roundup weed killer. Roundup contains an herbicide called glyphosate. Critics argue that this herbicide is carcinogenic and responsible for causing numerous cases of cancer.

949759_dollar_signCalifornia plaintiff Edward Hardeman sued Bayer-Monsanto on the grounds that use of Roundup contributed to his diagnosis with non-Hodgkin lymphoma. Hardeman owns property consisting of more than 50 acres. For 25 years, he sprayed the property with Roundup to control poison ivy and other invasive plants. Attorneys estimate that he used 6,000 gallons of the product throughout those years.

When Hardeman was diagnosed with cancer, it didn’t take long for him and his doctors to start taking a closer look at his habitual use of Roundup. Bayer-Monsanto currently is dealing with in excess of 11,000 lawsuits in the U.S., all of which argue that the glyphosate used in the product causes cancer in people.

Recently, a jury agreed with Hardeman’s conclusion that Roundup caused his illness. Their decision is said to be based on scientific evidence, which is in line with another jury decision from last year. In that case, the plaintiff was a landscaping employee with a public school district. The jury concluded that Roundup was responsible for the plaintiff’s terminal illness, awarding him almost $290 million. Eventually, the verdict was reduced to $78.5 million, a decision that is currently on appeal.

In the second phase of the current trial, plaintiffs will have to demonstrate that Monsanto had knowledge of the possibility that glyphosate could cause cancer and they did not provide adequate warnings. Presiding judge Vincent Chhabria unsealed documents that allegedly demonstrate that Monsanto worked to discredit independent scientific research that showed their product was unsafe. Moreover, the documents may indicate that Monsanto executives persuaded officials at the EPA to approve glyphosate contrary to the scientific evidence.

The outcome of this case remains in the balance, as does the outcome of the thousands of similar lawsuits. It seems Monsanto did a poor job of protecting their customers and in doing so failed to protect themselves.

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A decision in a California lawsuit may have implications for retail employers who require workers to be available for on-call shifts. Under the decision, it may be wise for such employers to consider whether or not their employees are entitled by law to compensation for their time when they are requested to “report to work” by telephone.

clock-overtime-110616811-001Ward v. Tilly’s, Inc. is a class action lawsuit filed by Skylar Ward, an employee of retail chain Tilly’s. The plaintiff alleges that her employer institutes a policy of on-call shifts in which employees are required to call in two hours in advance to ask the employer if they are needed. In the complaint, attorneys argue that such an obligation triggers an employer responsibility to compensate the employee for their time under the California Industrial Welfare Commission’s Wage Orders.

The Wage Orders state that when an employee complies with a requirement to report for work, they are entitled to half of their usual pay or no less than two-hours’ pay. Tilly’s policy stated that employees should assume that they were scheduled to work up until the moment they were told that they weren’t needed. This meant that employees would have to schedule their time as if they were going to be working, leading to arrangements for childcare, giving up social engagements and being unable to schedule academic courses.

Under Tilly’s policy, employees could be disciplined for failing to call in or for refusing to work an on-call shift. Such actions received the same discipline as missing a regularly scheduled shift.

Ward’s complaint was refused by the trial court. An appeal brought the case before the Court of Appeal, which reversed the trial court’s findings two to one. Appeal judges determined that reporting for work under the definition in the Wage Orders means “presenting oneself as ordered.”

The dissenting opinion argued that the Wage Order’s intent applied to the employee’s physical presence at the store. Nonetheless, the outcome of this matter demonstrates the need for employers to review their pre-shift call-in policy to bring it in line with the findings in Ward v. Tilly’s.

If you are an California employer or business owner with questions about any legal issue feel free to contact me, attorney Richard Oppenheim at 818-461-8500 or via the Contact form on this page.

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When a worker suffers an on-the-job injury, what sort of accommodation is her employer legally required to make to ensure her ability to return to work? The law is deliberately vague on this subject, generally stating that employers must make “reasonable” accommodations. Failing to do so can lead to legal headaches.

Wrongful-TerminationThat’s the case for Dignity Health in California. Dignity manages St. John’s Pleasant Valley Hospital. Virginia Hoover had been working at the hospital for approximately 24 years as a radiologic technologist. In 2014, she suffered an injury to her shoulder while moving some equipment. The hospital granted her a leave of absence for recovery.

By August 2014, Hoover was cleared to return, but she was given limitations. She wasn’t supposed to lift anything heavier than 15 pounds with her non-dominant left arm and she was not permitted to raise that arm above her head. However, Hoover claims that Dignity made no effort to accommodate these restrictions. She was fired in December 2014 after her employer concluded that she couldn’t perform her duties.

Hoover filed a lawsuit against Dignity in 2016. Recently, a jury awarded her just over one million dollars for lost wages and emotional distress. The plaintiff claimed that Dignity had wrongfully terminated her and discriminated against her based on her age. Among the claims, Hoover says that another employee with similar restrictions had been accommodated by the hospital to remain in their position.

Dignity argued that they accommodated Hoover by granting her a leave of absence and then working with her to return to her duties. However, supervisors ultimately concluded that she wasn’t capable of performing the essential functions of her job.

In such cases, the law states that employers must find alternative work for an employee, but no documents from the lawsuit indicate whether or not this was attempted.

If you are an employer and one of your workers gets injured on the job, do you know how to comply with the relevant laws? Failing to do so can result in a costly lawsuit and negative publicity. If you are an California employer or business owner with questions about on the job injuries or any legal issue feel free to contact me, attorney Richard Oppenheim at 818-461-8500 or via the Contact form on this page.

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Multi-level marketing company LuLaRoe is going through rocky times. Not only is the company’s number of consultants down to fewer than 35,000 after reaching a high of 77,000 in February 2017, but also the organization is facing a massive lawsuit from its chief supplier, Providence Industries.

1504001-Gavel-Money-2The lawsuit was filed in November 2017, with the plaintiff stating that LuLaRoe had failed to pay its bills since May. Initially, plaintiffs sought damages of $49 million based on $34 million in products that Providence sent to LuLaRoe for which they were never paid. The rest of the amount was for storage of other products at LuLaRoe’s request.

Now, Providence has increased their demand to $63 million as the lawsuit drags on. In new filings, they allege that LuLaRoe is quietly liquidating goods. Providence is asking for a writ of attachment to prevent this. Their initial request for such a writ was denied months ago, but this one is supported by the testimony of nine former LuLaRoe consultants, each of whom alleges that they’ve been waiting for months to receive refunds on returned products after giving up their positions as consultants.

To further support their argument, Providence says that the defendant has a history of not paying their bills and that the organization is likely insolvent. LuLaRoe has not commented on these allegations, but Providence asserts that the company’s founders are hiding financial assets in a series of shell companies. Based on comments made by the founders, Providence believes that they may try to leave the country with the funds.

While LuLaRoe makes no comment on the pending litigation, they do appear to acknowledge that things haven’t gone well in the past. Recent social media videos posted by the founders show them talking about a history of flawed products and how they are entering an era of “LuLaRoe 2.0.” They insist that if consultants stay with them, they will see tremendous financial gains.

A business attorney may be able to provide the needed guidance for most new companies. Many potential business problems can be avoided by using an experienced business attorney during early planning and strategizing.

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Sidecar, a former competitor in app-based ride-sharing services, recently launched a lawsuit against Uber. The complaint alleges that Uber used illegal anticompetitive strategies to drive its rivals out of business so that it could monopolize the industry.

Sunil Paul, who was the CEO of Sidecar, writes on his blog that “It was never a fair fight.” He goes on to argue that customers are now stuck paying higher rates and being forced to choose Uber because of that company’s illegal practices.

scales-and-gavel-90061933-001Uber was established in 2009. At the time, they specialized in providing black-car rides that were summoned via an app. Sidecar began offering paid shared rides in 2012. In their complaint, plaintiffs state that their company fostered many innovations including estimations for trip duration and fares. Uber then launched UberX in 2013, which offered a similar paid ride-sharing service. This soon made up the bulk of Uber’s business.

In the complaint, lawyers note that Uber began engaging in predatory pricing practices in an effort to stifle competition. It’s alleged that the company was subsidizing passenger fares as well as driver payments.

Additionally, Sidecar alleges that Uber engaged in a campaign of fake ride requests, with these requests either being subsequently canceled or being taken by a representative of Uber who would try to convince the driver to switch allegiances. Back in 2014, Lyft made similar accusations against the ride-sharing giant. Those charges were substantiated at the time.

Sidecar shuttered operations in 2015 with its assets and technology being sold to GM. Reports suggest that GM is now using those items to develop a robot-driven taxi service. Meanwhile Uber is looking to go public in the first quarter of 2019. It’s one of the most highly anticipated IPOs to come along in recent years, and Uber executives feel that the timing of the lawsuit is suspicious at best.

After all, it’s been three years since Sidecar ceased operations, so why sue now? It may be that Sidecar’s former executives are hoping to undermine the public offering. Time will tell, but it may be difficult for Sidecar to substantiate its claims.

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A class action lawsuit has concluded with Motel 6 agreeing to an $8.9 million settlement. Central to the litigation was the assertion that motel employees conveyed private information regarding Latino guests to officials working for Immigration and Customs.

on-brass-scale-32746330-001The claims in the lawsuit centered around two Motel 6 locations in Phoenix. Eight hotel guests claimed that their private data was given to ICE officials even though the officials didn’t have a warrant. Among the complaints were that hotel employees invaded the privacy of its guests and that the employees discriminated against the guests based on their national origin and race.

Motel 6 admitted in September that employees at its Arizona locations shared guest information with government officials. This transfer of information led to guests being detained or even deported on numerous occasions.

It was the Phoenix New Times that initially brought the practice to light. In the aftermath, public cries to boycott the Motel 6 brand became difficult to ignore. G6 Hospitality, which owns the Motel 6 brand, states that the actions of the employees in Phoenix do not represent company policy. In fact, the corporate office was unaware of the practice.

Subsequently, Motel 6’s corporate offices instituted a company-wide policy forbidding the sharing of information with law enforcement unless employees are compelled to do so. A warrant or subpoena must be presented before any information can be exchanged.

The Mexican American Legal Defense and Educational Fund represented the eight plaintiffs in the lawsuit. A spokesman for the organization says that upwards of $7.6 million of the settlement will go directly to the plaintiffs. An estimated $1.3 million will be used to pay for the costs of administering the settlement and for attorney fees. Those plaintiffs who were placed in removal proceedings stand to get the largest share of the settlement money.

With planning and some luck, most businesses never have occasion to deal with law enforcement. However, this case is a helpful reminder that it is wise to have policies in place so that employees will know how to react in the event of an encounter with law enforcement.

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Although California recently passed net neutrality laws, the state is putting its plan to implement these laws on hold. This is in response to the challenge that the Federal Communications Commission, or FCC, is facing at the federal level. If federal courts decide that current FCC regulations concerning net neutrality are illegal or unenforceable, then they will be undone. This would render California’s new laws moot.

Scales-of-Justice-Digital-94824052-001At the end of 2017, the FCC repealed Obama-era regulations regarding net neutrality. This means that no government authority is policing broadband providers to ensure that they are not unfairly throttling or discriminating against certain Internet content. California and other states decided to implement net neutrality laws at the state level in response to ensure a level playing field.

As soon as California passed their laws, the FCC sued the state, claiming that the state had no power to regulate what is essentially an interstate system. However, the FCC also is facing several lawsuits from companies like Public Knowledge, Vimeo and Mozilla. These lawsuits argue that the FCC’s new rules are plagued by factual and procedural issues.

If these lawsuits succeed, then the FCC’s most recent regulations will be voided in whole or in part. Such a decision would eliminate the need for California’s new net neutrality laws. California Attorney General Xavier Becerra decided against litigating the suit that the FCC filed. Instead, an agreement was reached between the U.S. Justice Department and the state to hold off on enforcing the state law.

In a statement, Becerra said, “… every action we launch is intended to put us in the best position to preserve net neutrality for the 40 million people of our state.” State Senator Scott Wiener similarly notes, “After the DC Circuit appeal is resolved, the litigation relating to California’s net neutrality law will then move forward.”

FCC official Ajit Pai has a different perspective. “This substantial concession reflects the strength of the case made by the United States earlier this month,” Pai said in a statement.

For now, the battle for net neutrality will continue to be fought in federal court.

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A decision in the California Court of Appeals serves as a reminder that compliance with wage and hour laws should be a primary concern for all employers.

The case is Atempa v. Pedrazzani. Arguing that their former employer did not pay them in accordance with the law, two former co-workers from a restaurant filed a suit against the company. They sued not only their former employer Pama, Inc. but also the owner of the company, Paolo Pedrazzani.

clock-overtime-110616811-001The plaintiffs alleged that Pama and Pedrazzani violated several wage and hour laws. Among these were California Labor Code Section 558 regarding unpaid overtime and California Labor Code Section 1197.1 regarding unpaid minimum wages. The plaintiffs used the Private Attorney General Act of 2004, or PAGA, as the basis for their suit. In a bench trial, the plaintiffs prevailed. According to the court’s decision, Pedrazzani and Pama were jointly and severally responsible for any civil penalties that were based on wage and hour violations. Using PAGA, the court also declared that Pedrazzani was liable for the plaintiffs’ attorney fees.

Pedrazzani and Pama appealed the decision, and when Pama filed for bankruptcy, Pedrazzani became the only party to be held responsible for paying the attorneys’ fees and civil penalties.

In his appeal, Pedrazzani argued that an individual could not be held legally responsible for the wage and hour violations of an employer unless plaintiffs showed that the employer was an alter ego of the individual. However, the appeals court denied this argument and decided that Pedrazzani was personally liable for all civil penalties.

The court stated that an employer and an “other person” could be held liable for failing to follow wage and hour laws and that the employer’s business structure is irrelevant. Pedrazzani, so the court argued, was the “other person” under the definition of Labor Code Sections 558 and 1197.1.

With this decision, the court says that an employer and its owners and officers may be held personally liable for civil penalties arising from wage and hour violations. Clearly, vigilance with regard to wage and hour compliance is more critical than ever.

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California’s legislature recently passed a bill that would give the state the toughest Internet neutrality laws in the country. However, a lawsuit filed by the federal Department of Justice may prevent the law from going into effect on January 1, 2019.

System-Failure-51347065-001Back in 2015, the Federal Communications Commission instituted a set of net neutrality regulations that were aimed at preventing businesses, namely Internet service providers, from showing favoritism for their websites or the sites of their affiliates. Those regulations were rolled back in 2017 under President Trump’s administration.

In response, lawmakers in California’s legislature began agitating for statewide net neutrality laws. The legislation passed in both houses by a wide margin, and Governor Jerry Brown subsequently signed the bill into law. Among the elements of the new law are prohibitions against Internet service providers blocking data or narrowing bandwidth when users try to look at certain content or websites. Internet service providers, or ISPs, have a practice of speeding up access to the video streams and websites of companies that pay them extra fees or are in some way affiliated with them.

The new law also includes a prohibition against using a so-called “zero-rating” system in which ISPs don’t count visits to certain websites against monthly data caps for users. Typically, the data from these websites doesn’t “count” because the website is in some way affiliated with the ISP.

After Governor Brown signed the bill, the U.S. Department of Justice filed a lawsuit against it. Arguing that only the federal government has the power to regulate the Internet, the DOJ claims that having different net neutrality laws on a state-by-state basis is inviting chaos.

Law professor at Stanford University Barbara van Schewick argues that the California law is simply adopting the same regulations at the state level that the FCC put in place just a few years ago. Van Schewick went on to say that there’s a case in federal appeals court that may have significant bearing on California’s law.

That case was brought by 22 state attorneys general in protest against the repealing of the federal net neutrality laws.