Articles Posted in California Business Lawsuit

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Retail giant Walmart is facing a two billion dollar lawsuit. The plaintiff, a Silicon Valley company called Zest Labs, says that Walmart employees stole their trade secrets, later implementing the technology for Walmart’s benefit without crediting or compensating Zest Labs.

Spoiled-fruit-73671769-e1533921700439Estimates suggest that in excess of $85 billion worth of fresh food goes to waste every year in America. The reasons for this waste are complex and various, but Zest Labs felt that they had devised innovative methods for minimizing “fresh food shrink.” The company began developing the system in 2010, and by 2015, Walmart had expressed an interest in the technology. Under an agreement, Zest Labs began sharing its discoveries and innovations with representatives from Walmart. The disclosures included demonstrations and presentations that highlighted proprietary information that Zest Labs had developed over the course of their work in the previous five years.

Zest Labs alleges that Walmart participated in numerous trials over a two-year period. Then, the company abruptly pulled out of the arrangement in November 2017. In the complaint, Zest Labs executives describe being “stunned” by the sudden about-face, and their consternation only grew four months later when Walmart announced its new Eden project.

Zest Labs employees felt that the similarities between their technology and Walmart’s new Eden system were too significant to ignore. They argue that “Walmart used its years of unfettered access to plaintiffs’ trade secrets, proprietary information, and know how to steal the Zest Fresh technology and misappropriate it for Walmart’s own benefit.” The complaint goes on to say that “Walmart integrated the Zest Labs technology into Eden without authorization and without compensating Zest Labs.”

While this particular case represents something of a David vs. Goliath situation, no organization of any size can afford to neglect the protection of its intellectual property. This includes valuable trade secrets that help one company differentiate itself from the competition. Whenever confidential information or trade secrets are shared, it is advisable to have an enforceable non-disclosure agreement signed first. This not only protects the company that is sharing its proprietary information but also provides them with additional leverage should court action become necessary.

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Is it acceptable for a third-party app developer to have access to private email inboxes? That’s the central question in a new class-action lawsuit that was filed in Sacramento. The lead plaintiff is James Coyne, an Ohio resident with a Gmail account, and he alleges that Google allows others to look at the emails in Gmail user’s inboxes for purposes of marketing and data mining.

Big-Brother-Spy-4Google has already pledged to stop scanning emails in user inboxes for advertising purposes. However, Coyne says that the company didn’t go far enough to protect user privacy. Google’s pledge came in the wake of another class-action suit in which the plaintiffs charged that their privacy rights were violated by the company’s practice of scanning incoming emails to generate targeted advertisements.

Nonetheless, the plaintiffs in this new case allege that the company continues to allow third parties to sift through the inboxes of users who sign up for certain email newsletters such as those that contain price comparison tools. The Wall Street Journal and other media outlets say that the purpose of this sifting is to mine data, produce new marketing efforts and other unspecified tasks.

Coyne argues that “Gmail users never provided consent to Google to provide privileged access to third-party developers.” He goes on to assert that this practice is in contrast with the company’s recent vow to make every effort to protect user privacy. The problem as Coyne sees it is that users might opt out of using Gmail if they knew that their emails would be scanned by strangers.

Google says that every third party that has access to Gmail inboxes is thoroughly vetted. This means that Google is satisfied that the third parties won’t use any data that they collect for nefarious purposes. Additionally, the company argues that third-party apps aren’t allowed to access inboxes until Gmail users are shown a permissions screen.

Coyne argues that the permissions screens don’t go far enough. Protecting data and customer privacy is increasingly important in this technology-driven era. Consult with a business attorney to ensure that you and your clients are sufficiently protected.

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Disney and Redbox are continuing their legal battle over the codes that customers use to download digital copies of movies. Typically, these codes are included in movie “combo packs” that include DVD and Blu-ray versions of films plus a code that customers can use to download a digital version of the film. Redbox has been purchasing these combo packs, placing the DVDs and Blu-rays in their machines and also enabling customers to purchase the digital download code. Disney says that Redbox’s practice is a breach of their copyrights to the media.

redbox-1Redbox argues that Disney engages in practices that include false advertising, misuse of copyrights and unfair competition. Additionally, they say that Disney’s behavior is anti-consumer, and they go on to assert that the restrictions that Disney puts on its media is tantamount to copyright misuse.

However, Disney attorney Glenn Pomerantz argues that Redbox is not Disney’s direct competitor. This means that Redbox wouldn’t be able to claim that Disney is using unfair tactics to gain dominance in the marketplace.

Attorney for Redbox Michael Geibelson responded by accusing Disney of “aggressive” behavior in their efforts to prevent Redbox from purchasing movie combo packs, but Pomerantz refutes this claim. He says that Disney and Redbox entered into a contractual agreement, and that Disney is simply trying to enforce that agreement.

Geibelson countered by asserting that Disney does not appropriately outline the terms and conditions of the purchase of movie combo packs. Once again, Pomerantz disputed this argument, saying that customers who purchase a download code have no way of knowing that it came from a combo pack, and therefore they could not be aware of the terms and conditions nor could Redbox claim false advertising.

Both parties acknowledge that talks between them are ongoing. As they continue to battle it out in the courtroom and conference room, it seems clear that the outcome of this case may have a far-reaching effect on other media companies. Now is the perfect time for businesses to consider how well protected their intellectual property is and to explore the efficacy and comprehensiveness of their contracts.

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French cosmetics company L’Oreal is facing a lawsuit in the Southern District of New York. The complaint was filed as a class action that includes four consumers and others who feel that they have been cheated.

Class-Action-GavelAt issue is two of the company’s products. One is the makeup product Maybelline Super Stay Better Skin Skin Transforming Foundation. The other is the Age Perfect Eye Renewal Eye Cream. The average cost of both products across the country is $15. Yet, plaintiffs allege that they are only able to dispense between 43 and 81 percent of the volume of each product as it is disclosed on the label.

Plaintiffs argue that the reason they are unable to fully utilize the contents is that the bottles are defective. Typically, the products are dispensed by a pump, but the consumers involved in the lawsuit say that the pump cannot provide access to all of the contents. The plaintiffs further allege that the bottles are made of glass and sealed in such a way that consumers cannot access the contents in another manner. Accordingly, they say that anyone who attempts to use these products is losing approximately $7 based on their inability to use half the bottle’s contents.

Numbers concerning the faulty dispensation of products were determined through laboratory testing, and plaintiffs suggest that the results should be well known to L’Oreal. This is because consumer reviews posted on the L’Oreal website routinely include complaints about being unable to access much of the product that is packaged in bottles. The company’s response is a polite thank you and a note saying that the complaint will be passed on to management. Plaintiffs say that the packaging remains unchanged despite a relatively long history of such complaints.

In the lawsuit, the plaintiffs argue that “there is no equitable justification for Defendant’s products to suffer from these defects,” pointing out that the company routinely uses other, more effective dispensers for various items. L’Oreal has yet to answer the complaint, but it seems clear that they may have a costly fight in terms of legal fees and bad press.

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Troubled fitness gadget manufacturer FitBit is facing new legal woes from a former competitor. Jawbone, which used to engage in fierce competition with the other company, is seeking legal satisfaction after alleging that several current and former FitBit employees stole their trade secrets. Additionally, a federal grand jury has criminally indicted those individuals.

Top-Secret-198073496-300x199FitBit’s main product is wearable activity trackers. The trackers record data about everything from steps taken to hours of sleep. Unfortunately for the company, they have been struggling in recent years. FitBit’s initial public offering on the stock market three years ago had its shares going for $32.50 apiece. Now, those stocks are worth just $7.42 each. Between 2016 and 2017, the company lost approximately $380 million. The number of devices sold tumbled precipitously as well.

No matter how badly off FitBit appears, it seems that Jawbone has it even worse. As of July 2017, they were officially out of business. However, former company executives still seem concerned with the activities of their erstwhile competitor, namely, the poaching of employees and the stealing of trade secrets.

Unfortunately for FitBit, the U.S. Attorney’s Office seems interested too. A federal indictment names six employees, only one of which apparently still works for FitBit, who are accused of stealing trade secrets from Jawbone, and taking those secrets to their new supervisors at FitBit. Each defendant was employed at Jawbone in the period between 2011 and 2015, and all were subject to a confidentiality agreement. The indictment says that FitBit actively recruited the employees of its competitors and then used trade secrets to improve its own technologies.

Acting U.S. Attorney Alex Tse says: “The theft of trade secrets violates federal law, stifles innovation, and injures the rightful owners of that intellectual property,” making it clear that his office plans to prosecute this case with vigor.

The defendants will soon appear in court, and civil litigation between Jawbone and FitBit is still pending. This situation illustrates how critical it is for companies to not only use carefully crafted confidentiality agreements with their employees but also to protect their intellectual property with vigilance.

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Electric car company Tesla has filed a lawsuit against a former employee over what it claims are stolen secrets. Martin Tripp is named as the defendant.

System-Failure-51347065-001Tripp began working for Tesla in October 2017. His job was at the organization’s Nevada battery factory. As a process technician, Tripp was required to sign a non-disclosure agreement like other employees. Supervisors at Tesla began noticing problems with Tripp’s employment after a few months. They allege that Tripp was combative with colleagues and caused disruptions. In May 2018, he was reassigned to another department. The company also claims that this prevented Tripp from getting a promotion that he felt he deserved.

In the complaint, Tesla alleges that Tripp’s reassignment and the denied promotion are what sparked the employee to retaliate. Tripp admitted to internal investigators at Tesla that he wrote a software program that was capable of transferring gigabytes of data to computers outside the company. The data included photographs and videos, and Tesla claims that all of the data was privileged. Tripp is alleged to have placed the hacking software on the computer systems of three other employees so that he could continue to receive data even after he left the company. Additionally, this measure would implicate the other employees in the data theft.

According to the complaint, Tripp then leaked some of the stolen data to the media, combining it with falsehoods such as a claim that punctured battery cells were used in Tesla’s Model 3 car. The company further alleges that Tripp falsified data regarding the amount and value of scrap metal that is generated in the organization’s production processes.

Tesla CEO Elon Musk warned employees in an email about the hacking and the falsehoods that were leaked to the media. He noted that many other entities, like oil and gas companies, “want Tesla to die,” and that this is leading them to investigate whether or not Tripp acted alone.

It is not known if any criminal investigation has been launched, but this situation serves as a reminder of the importance of protecting intellectual property using all legal means available.

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A California law firm is being sued by three of its female associates. The plaintiffs, identified only as “Jane Does,” allege that Morrison & Foerster systematically discriminates against female employees, particularly those who are pregnant or have children.

Gender-Discrimination-105366239-001Representatives for the plaintiffs say they believe the case will become a class action lawsuit once other female associates at Morrison become aware of it. Plaintiffs are seeking approximately $100 million in damages, arguing that the firm pays them less and provides them with fewer promotions when compared with male peers.

The allegations came as a surprise to partners at Morrison & Foerster, a firm that provides several options for accommodating the needs of new parents. Some of these programs include flexible work options, reduced hours, parental transition time and 20 weeks of paid time off for primary caregivers.

However, the plaintiffs say that associates who take advantage of these programs are “set up to fail.” In January 2018, each learned that their peers who were in the same class year had been promoted ahead of them. Additionally, their salaries were no longer the same as their promoted peers. Their external billing rates had been raised, an error that management corrected when they were alerted to the issue.

One plaintiff described her performance review, which occurred during the same month. The plaintiff says that the partner conducting the review essentially informed her that she had not been promoted because she became a mother. She also revealed that her request for flexible scheduling, which would have allowed her to work full time with some of the hours being logged at home, was denied.

Another plaintiff was told that she was required to work more billable hours upon her return from maternity leave. However, when she requested additional work to meet this new standard, the partners were not forthcoming.

It’s unlikely that the management at Morrison intended to discriminate against any of their associates. However, sometimes even the appearance of gender and pregnancy bias is enough to cause legal problems. Working closely with an employment attorney is the best way to avoid these situations.

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The Ninth Circuit Court has acted to further eliminate the wage gap. In fact, it reversed a decision that the judge now views as unjust. The ruling sets precedent for female employees who allege that they are paid less than similarly qualified male counterparts for the same work.

Compensation-134182432-001The case in question is Rizo v. Yovino. Aileen Rizo is a math consultant employed with Fresno County Public Schools. When she learned that male colleagues in her department were being paid significantly more than she was, Rizo began investigating. What she learned eventually led her to sue her employer. Basically, Rizo was earning less because she had been paid less in her previous positions with other employers. Fresno County Public Schools used her wage history as justification for paying her less than male counterparts with similar experience.

The Ninth Circuit agreed with this pay history reasoning last year, aligning themselves with the defendant because the pay differential was based on “a factor other than sex.” The recent reversal of this finding means that a worker’s pay history cannot be construed as “a factor other than sex” under the auspices of the Equal Pay Act. This decision effectively wipes out 30 years of precedent, and activists say that it strikes a major blow to the wage gap situation.

In the decision, Judge Reinhardt wrote that “‘any factor other than sex’ is limited to legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance.” The judge went on to argue that using the Equal Pay Act to perpetuate the gender wage gap runs contrary to the very purpose of the Act.

The decision is an echo of several state-level decisions that are prohibiting employers from gathering data relating to the salary history of prospective employees. Accordingly, it is critical for employers to update their hiring processes to reflect these changes. It also is sensible to review current salary data for all existing employees to ensure that any pay disparities between male and female colleagues with similar qualifications are supported by the provisions of the Equal Pay Act.

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The Walt Disney Company recently suffered a setback in a California federal court. Specifically, a judge has denied Disney’s request for a preliminary injunction against Redbox that would have forced the DVD-rental company to stop reselling the download codes for digital copies of the studio’s films.

redbox-1Redbox’s movie rental kiosks have become a familiar part of the landscape in recent years. Consumers stop by these kiosks for the latest releases. For the most part, Redbox has distribution deals with the major movie studios that allow them to profit by renting out the studios’ films. However, Redbox has no such agreement with Disney.

Accordingly, Redbox purchases Disney-distributed movies from retailers, then slips them into their kiosks for customer rental. Disney and other movie studios frequently put new films in combo packs that feature DVD and Blu-ray copies of the films along with a download code for getting a digital copy. In addition to renting DVDs and Blu-rays, Redbox has been selling the download codes on slips of paper that are obtainable at their kiosks.

When Disney found out about this practice, they immediately launched a lawsuit. Among the charges in the complaint were copyright infringement, false advertising, unfair competition, tortious interference with customer contracts and breach of contract. Redbox quickly countersued, arguing that the studio was trying to stifle possible competition for its soon-to-be launched digital streaming service.

Not only has a federal judge denied Disney’s request that Redbox be stopped from re-selling download codes, but also the judge says Disney is actually misusing copyright law. On each Disney movie combo pack, consumers will find language stating that the download code cannot be sold or transferred. The studio argued that this constitutes a legally binding contract, but the judge did not agree. In fact, the judge said that there is no law that prevents what Redbox did. After the “first sale,” which was the lawful purchase of the combo pack, the owner is then free to dispose of the copies as they wish.

Copyright law can be incredibly nuanced. Work with a skilled business attorney to protect your intellectual property rights.

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When a corporation hires a coach for an executive, that executive probably expects to hone skills that enable her to take on a more advanced role. However, that was not the experience had by Denise Stilwell, a former executive at Twentieth Century Fox.

Gender-Discrimination-105366239-001Stilwell began her employment with Fox in 1999. By 2013, she had been promoted to a vice president position in enterprise rights management. The position came with a four-year contract, which included a promise of promotion to a senior vice president position within the first two years.

Her immediate supervisor accepted a voluntary retirement package in 2016, which meant that she began reporting to Fox CFO Dean Hallett. Shortly after the change, Stilwell was summoned to Hallett’s office. She expected to be given a promotion. Instead, Hallett informed her that she “smiled too much,” and that an executive coach was going to begin working with her.

That coach was Jack Zwissig from Zwissig and Associates. Zwissig allegedly told Stilwell that her “smile is fake,” that she laughed too much and that people generally didn’t like her. Most troubling of all is Stilwell’s assertion that Zwissig told her that she should “lift her skirt.”

Stilwell reported Zwissig’s comments to Hallett, calling them sexist and improper. Almost immediately, she was reassigned to another executive vice president, Joanie Wallace, who refused to meet with her for months. Abruptly in January 2017, Stilwell was fired because her department wasn’t moving in the right direction.

Recently, Stilwell filed a lawsuit naming her former employer, Zwissig and Zwissig’s firm as defendants. The complaint levels charges of gender discrimination, retaliation and hostile work environment, among others. If she prevails, the plaintiff hopes to collect unspecified damages for loss of future earnings and benefits as well as emotional distress.

This situation acts as a vital reminder that all complaints regarding possible harassment and discrimination must be followed up on swiftly and thoroughly. Failing to do so often exacerbates the situation to a point that is difficult to control. Working closely with a qualified employment attorney is the best way to prevent these circumstances from occurring.