Articles Posted in California Business Litigation

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A former Amazon employee is suing his erstwhile employer over not being paid overtime. In the lawsuit, he asserts that Amazon misclassified him as a salaried manager that was not entitled to overtime. However, the worker says that the duties he performed were those of a manual laborer who should have been eligible for overtime. This case is a useful reminder for all employers to review their classification and compensation packages to ensure that they don’t encounter a similar issue.

clock-overtime-110616811-001Michael Ortiz was hired as a shift supervisor at Amazon warehouses in California. His official title was “Level-4 Manager,” a position that was supposed to cover mainly supervisory duties. Amazon’s policy defines this type of job as a salaried position that is not eligible for overtime. Entry-level “associates” whose main responsibility is moving packages, are hourly workers who can be paid overtime, and that is the work that Ortiz contends he was doing.

In the complaint filed in Contra Costa County Superior Court, Ortiz says that he spent his days loading and sorting boxes or clearing up jams on conveyor belts. Similarly, he asserts that he frequently worked days that were longer than eight hours and in excess of 40 hours per week. Only a minimum of his time was spent in supervisory or managerial duties, Ortiz contends.

According to the complaint, there may be thousands of other people who are current or former Amazon employees who may have experienced a similar situation. At the heart of the story is a central question: Did Amazon knowingly misclassify workers in an attempt to avoid paying overtime? If so, then they may find themselves on the hook for multiple thousands, if not millions, of dollars in back wages.

This lawsuit is still in its early stages, and Amazon has said that they will not comment on pending legal matters. It’s fairly safe to assume that both sides of this issue are going to dig in their heels, so a long fight is all but assured. Reviewing company classification and compensation plans with an employment lawyer is advisable for avoiding a similar situation.

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Patent trolls may find it harder to do business thanks to a decision by the U.S. Supreme Court. That is good news for any business or entrepreneur who has ever been the subject of a frivolous patent infringement lawsuit. However, the decision also may make it more difficult to pursue legitimate infringement complaints.

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Companies that function as patent trolls make a practice of buying up patents merely for the purpose of suing large companies for infringement. They don’t make a product, nor do they provide a service. They earn a “profit” by collecting settlements from businesses that want to avoid the time and expense of a lengthy lawsuit.

Formerly, patent trolls could file complaints in any court district that they felt would be most advantageous to them. The Eastern District of Texas, in particular, is considered friendly toward such lawsuits. Most of the cases were decided quickly in favor of the patent owner, resulting in large settlements. In fact, the favorable climate for filing infringement lawsuits in the area became something of a cottage industry. One hotel in Marshall, Texas even purchased an account with the U.S. District Court’s online database to improve their appeal to visiting lawyers.

Under this model, the company being sued didn’t have to be located or associated with Texas in any way, forcing representatives to travel to defend themselves. This new decision by the Supreme Court changes that as it requires that patent infringement lawsuits be filed in the state in which the defendant is incorporated.

The decision was rendered on a case involving TC Heartland, an Indiana company that was being sued for patent infringement by Kraft Heinz in Delaware. Counsel for TC Heartland argued that they shouldn’t have to be sued in Delaware, and the Supreme Court ultimately agreed. While this decision is likely to slow down patent trolls, it also may make things more difficult for entrepreneurs who want to assert their patent rights against an organization in another state.

Anyone who is being sued for patent infringement or believes that their rights are being infringed, needs to retain intellectual property counsel.

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The one-time owner of a successful car dealership group in California has been awarded more than $256 million by a jury. Mike Kahn, who ran the Superior Automotive Group with dealerships in LA and San Francisco, fought Nissan Motor Acceptance Corp. for eight years before achieving this judgment. NMAC is the financing arm of the Nissan company, and its representatives say that they plan to appeal this verdict.

1504001-Gavel-Money-2During the financial crash of 2008-2010, many new-car dealerships were struggling. Superior’s were among these, but this wasn’t always the case. Nissan had recognized Superior as one of the top three dealership groups in the world prior to 2008. The company had sold more than $1 billion of inventory in the period between 2001 and 2008. That all changed with the economic downturn. Suddenly, consumers weren’t buying cars.

Typically, car dealerships finance the purchase of new cars through an organization like NMAC. The loan on the car is frequently paid back when the car is sold to a consumer. However, with cars not moving, dealerships everywhere were defaulting on these loans. Mike Kahn’s dealerships were among these. He reached out to NMAC, asking for them to not default him on his outstanding loans. The company agreed, and then proceeded with a default anyway.

Kahn sold one of his dealerships to cover some of what he owed to NMAC, but it wasn’t enough. More than 800 employees were put out of work when all seven dealerships had to close, and NMAC sued Kahn for an additional $40 million while also seizing all of his personal and business assets. A relationship that once thrived was now deeply contentious.

Kahn countersued and eventually prevailed after nearly a decade of litigation. A jury awarded him compensatory and punitive damages in what appears to be an indictment of large corporations deliberately putting local companies on the chopping block. NMAC plans to appeal the decision, so this saga is not over yet. Nonetheless, this is an apt demonstration of how an excellent partnership can quickly go wrong, making the requirement for careful planning and good contracts a necessity.

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Getting a high-profile celebrity to endorse a product or service can be a major coup. After all, in a society that emulates famous personalities, what could be more desirable than an A-list star saying that they use a company’s wares?

Reputation-Management-105888720-001While celebrities are public personalities, this does not necessarily mean that their images can be used for a marketing campaign without their permission. Traditionally, lawsuits have sprung up around campaigns that utilized the voice or image of a famous person without their consent. These campaigns were problematic because they caused the public to believe that the celebrity was endorsing the product.

While those kinds of lawsuits still occur, a recent lawsuit that Sofia Vergara settled against Venus Concept highlights a new wrinkle in this area of law. The trouble began in 2014 when Vergara posted a photo to her WhoSay account. Vergara was undergoing a massage using a Venus machine. Venus Concept learned of the image and subsequently used it on their social media accounts, claiming that Vergara “loved” the treatments.

Unfortunately, Vergara contends that she found the treatments a waste of time and money, and that she had no intention of starring in a campaign for the company. Arguing that she had been paid $15 million for other endorsements, Vergara sued Venus Concept for that amount, which would approximate the money she would have received if she had agreed to endorse the product.

The early settlement of the suit suggests that Venus Concept backed off fairly quickly. However, their legal troubles were probably completely unexpected. It’s easy to imagine that executives at the company were eager to promote their brand and an apparent association with an A-list television star. They made the mistake of not even asking for permission to re-use Vergara’s image, let alone negotiating a deal that might have been mutually beneficial.

While it is exceptionally easy to re-post the social media commentary of others, it is not always a good idea to do so without seeking their permission. This is particularly true with high-profile personalities. When in doubt, it is always best to seek legal counsel.

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A screenwriter/producer is suing The Walt Disney Company over its award-winning animated film “Zootopia.” The writer claims that the entertainment giant stole his idea after he pitched it to studio executives in 2000 and 2009.

Copyright-Law-135827413-001Gary Goldman, whose many credits include writing the script for “Total Recall” and acting as an executive producer for “Minority Report,” filed the lawsuit in March 2017. Goldman asserts that he produced a treatment in 2000 that dealt with “an animated cartoon world that metaphorically explores life in America through … anthropomorphic animals.” His treatment included a human cartoonist who creates the world of the anthropomorphic animals, which would be called Zootopia. The title of the project was “Looney.”

Goldman says he pitched his idea to a Disney executive in 2000, but that the studio passed on the project. The subject came up again in 2009, this time with Goldman providing executives with a more developed treatment that included illustrations and descriptions of characters. Disney said the project would be considered, but Goldman alleges that they never contacted him. Shortly afterward, Disney appeared to be developing a Zootopia project of their own.

The plaintiff in this case appears to have done almost everything right. He registered the original treatment with the Writer’s Guild to protect ownership of the source material. However, current media reports do not disclose whether or not he took further steps to protect his rights, like asking Disney executives to sign a legally-binding agreement before showing them any intellectual property.

The question of whether Disney “stole” or was at least “inspired by” Goldman’s ideas remains unanswered at this time. Comparing the character illustrations commissioned by Goldman with the final look of the characters in the completed film does show some similarities. However, this is not necessarily enough to convince a judge that Disney borrowed someone else’s ideas. After all, anthropomorphic animals confronting human issues in a cartoon world is hardly a concept that hasn’t been explored in detail before Zootopia.

Companies and individuals that want to protect valuable intellectual property are encouraged to consult with legal counsel before sharing their ideas.

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A Workers’ Compensation claim made by a woman who lost part of her leg at work has been upheld by the Commonwealth Court of Pennsylvania. The decision comes after her employer, Starr Aviation, disagreed with the decision of the Workers’ Compensation Appeal Board, which ruled that the worker was entitled to compensation.

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Modesty Colquitt was driving a luggage transporter at the Pittsburgh Airport in September 2014 when the accident occurred. The transporter overturned, pinning Colquitt’s left leg beneath it. She was taken to the hospital, where her left leg was amputated below the knee.

The case seems cut-and-dried. However, there are additional facts that are worthy of consideration. Starr Aviation argued that Colquitt was not performing her job duties when the she was driving the transport. Colquitt had forgotten her wallet and feminine hygiene products on that day. Knowing that she would need lunch and the feminine hygiene products during her shift, she called her mother to bring them to her. Colquitt obtained permission from her supervisor to take the transport to meet her mother, which is when the accident occurred.

Both the Workers’ Compensation Appeal Board and the court relied on the “personal comfort doctrine,” a rule of law which stipulates that a worker is still “on-the-job” if they temporarily leave to take medication, use the restroom or complete other small tasks that make it possible for them to perform their job. In essence, the judges felt that Colquitt would have been adversely affected by not having her wallet and the required feminine hygiene products. She simply would not have been able to perform as effectively if she did not have lunch or access to appropriate feminine hygiene products.

This decision comes despite the testimony of co-workers who offered her crackers and pointed out that feminine products were available in the restroom. However, the judge found that this testimony related to “collateral issues” rather than whether or not compensation could be claimed.

Work Injury claims are almost always complicated. This is why it is imperative for California employers to work with experienced attorneys who can offer valuable guidance and advice.  If you have any questions about business litigation or work injuries feel free to contact me, Rich Oppenheim at 818-461-8500 or use the “Contact” option in the right column.