Articles Posted in Internet

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One of the questions I hear frequently is about whether we are accepting new clients.

While the short answer is “Yes”, here is some additional information which many people find interesting.

Great%20Fit%20Gears%2039896521-001.jpgOur law firm, Sylvester Oppenheim & Linde is committed to client service and quality legal representation for each and every client. That means that we only accept clients who we feel are a good match for our expertise, experience and areas of practice.

I learned a long time ago that we can’t be all things to all clients, but we can be all things to some clients: and those are the ones we welcome and serve in an exemplary manner.

The purpose of this blog is to provide helpful information to anyone who reads it. On our website, you will find another example of our “Be of Service” mind-set by reading our Home Page Article “Eleven Questions to ask BEFORE Hiring a Business Attorney“. You will also find a list of our practice areas on that page.

Our clients tell us that they appreciate our honesty, accessibility and guidance. And we appreciate our clients.

Back to the question. The answer is: “Yes, we are always looking for one or two new good clients.” If you have a legal issue, I invite you to call and let’s find out whether we are a great fit for each other. I can be reached at 818-461-8500 or via the Contact form on this page.

Richard Oppenheim

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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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Facebook is dealing with a massive class action lawsuit that may see them refunding millions of dollars to parents who were the victims of so-called “friendly fraud.” The complaint alleges that since around 2011, Facebook has permitted minors to unwittingly make multiple transactions on their parent’s credit card through playing online games at the social media platform’s website.

Social-Media-37877338-001Kids love to play games like Angry Birds, Barn Buddy, Ninja Saga and others on Facebook. Frequently, they log in to the website using their parent’s Facebook account, though they also may have an account of their own. If the parent lets the child use their credit card to make an in-game purchase just once in one of Facebook’s games, the system stores the card number. Subsequently, the child makes multiple charges as they play, sometimes adding up to hundreds or thousands of dollars that parents may not be aware of until weeks later.

Evidence suggests that Facebook was aware of the loophole and that employees took a fairly hard line against allowing refunds for a practice that they referred to as “friendly fraud” or “FF.”

A paper trail from within Facebook shows conflicting viewpoints on the practice. One email from a Facebook employee mentions that game developers should be counseled to block friendly fraud transactions. Other internal documents reveal that Facebook actually educated developers about friendly fraud and encouraged them to enable such practices in their games.

When parents were stonewalled in their attempts to get refunds from Facebook, they contacted their credit card companies in attempts to invalidate the charges made by their children. Once again, internal Facebook documents show that the company was aware of an inordinate number of chargebacks associated with games like Angry Birds. However, there was concern that taking steps to minimize or eliminate friendly fraud transactions might also interfere with legitimate transactions.

The California lawsuit is still ongoing, but the recently published documents concerning it are illuminating. Business owners and executives may want to consider the transparency of their transactions and how well they communicate pricing strategies to customers in order to avoid similar confusion.

If you a California business owner with a legal challenge or issue, I invite you to call and let’s find out whether we are a great fit for each other. I can be reached at 818-461-8500 or via the Contact form on this page.

Richard Oppenheim

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Shareholders Sue Mindbody Over Acquisition Deal

Shareholders in software company Mindbody are suing the company for breach of fiduciary duty. Plaintiffs claim that the company’s proposed acquisition by Vista Equity Partners provides plenty of compensation for Mindbody executives and the board of directors but leaves stockholders out in the cold.

Vista Equity Partners is a private equity company that focuses on acquiring promising software and tech companies like Mindbody. In December 2018, Vista and Mindbody reached an acquisition agreement that is valued at $1.9 billion.

Lawsuit-64354059-001The next month, public shareholder in Mindbody Joseph Schmit filed a lawsuit against the companies in San Luis Obispo Superior Court. Among the claims, Schmit alleges that Mindbody and its board “breached their fiduciary duties of loyalty, good faith, due care and disclosure” with their acceptance of the acquisition deal.

Schmit believes that the deal was engineered to benefit Mindbody executives and board members without giving appropriate consideration to the financial interests of shareholders. The company went public in 2015, and stocks traded at an all-time high of $43.85 in May 2018. However, the acquisition deal will make the company private again. Vista will pay just $36.50 per share.

Schmit argues that Mindbody is a company on the rise. While the stocks may be trading today at approximately $36.50 per share, he believes that profits will skyrocket. The acquisition locks out shareholders from financially benefitting from that profit.

In the lawsuit, Schmit details that Mindbody executives and board members will receive huge payouts because of the deal. One executive stands to take home $61 million while another may receive just over $11 million. Several other executives and board members stand to earn a few million dollars each.

Qatalyst Partners LP, an investment bank, advised Mindbody on the terms of the agreement and whether or not it was fair to all involved. The bank also acted as an adviser to Apptio Inc. which was acquired by Vista in November 2018.

Several other law firms are looking for plaintiffs who feel they may have been injured by this deal, which may mean that Mindbody and Vista could be facing a class action lawsuit.

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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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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.

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Facebook is facing legal woes as a group of plaintiffs charges the tech giant with making it possible for companies to post employment advertisements in a discriminatory manner. The plaintiffs include the American Civil Liberties Union, a coalition for workers and three women who were seeking employment.

Smart-Phone-with-Apps-48915227-001In addition to Facebook, 10 employers are named as defendants in the complaint. Plaintiffs say that Facebook’s ad-targeting technology made it possible for these employers to direct their help-wanted ads exclusively to men. The jobs on offer included truck drivers, law enforcement officers and sales clerks at sporting goods retailers.

The Equal Employment Opportunity Commission received the complaint, which argues that since an increasing number of job and housing applicants are conducting their searches online, it has been increasingly easy for employers and landlords to engage in discriminatory practices. Under federal law, it is illegal for employers and landlords to discriminate against people based on their race, religion, gender, national origin, disability status or other protected categories.

However, in the online world, it is routine for tech companies to use algorithms that fast-track certain ads to specific users. Facebook excels at “microtargeting” users for certain advertisements. Additionally, the social media platform allows users to click on a link that says “Why am I seeing this?” This feature is actually what prompted lawyers with the ACLU to file the complaint.

Outten & Golden, a Washington, D.C. law firm, performed an experiment in which people used Facebook to search for a job or otherwise indicate that they were engaged in a job hunt. Employment ads for the 10 employers named in the suit were displayed for the male job candidates but not for the female ones. The Facebook users then clicked on the “Why am I seeing this?” link, where it was stated that their gender played a role in the targeting of that particular ad to that user.

This is not the first such complaint that has been lodged against Facebook. An earlier EEOC complaint alleged that Facebook employment ads were targeted to unfairly exclude older employees. Both of these cases are pending.

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A group of current and former Tinder employees are suing their parent company over an alleged scheme to cheat them out of stock options. Match Group, and its parent company IAC/InterActiveCorp, are the defendants.

Legal-Fees-PaidSean Rad, Justin Mateen and Jonathan Badeen, who are the co-founders of Tinder, are among the plaintiffs in the two billion dollar lawsuit. The plaintiffs accuse IAC and Match Group of manipulating financial data to make it appear that Tinder’s value was drastically lower than it actually was. After formulating the lowball valuation, the plaintiffs say that the parent company stripped many of Tinder’s employees of their stock options. IAC/Match removed Rad as Tinder’s CEO, putting in his place Greg Blatt, a Match CEO.

Blatt is accused of harassing Tinder employee and plaintiff Rosette Pambakian at a company holiday party in 2016. However, plaintiffs allege that IAC/Match kept Blatt in place long enough to complete the unreliable value of the company and to orchestrate a merger with Match Group, essentially transforming the successful company into a stagnant holding company.

IAC/Match claimed that Tinder was worth about three billion dollars at the time, which was the same value that the parent companies had assigned to Tinder two years before. This valuation remained the same even though Tinder’s user base had increased by 50 percent in that period with revenue expanding by 600 percent.

In the lawsuit, plaintiffs allege that the parent companies systematically lied to Tinder’s employees with the aim of cheating them out of the stock-option money to which they were entitled according to a contract. A recent SEC filing by IAC/Match shows a projected $800 million in earnings for 2018, which totals 75 percent more than the projections the company published last year.

The complaint states that the more Tinder earned, the more the parent companies were required to pay to Tinder employees. This seems like a fairly solid motive for IAC/Match’s alleged actions. However, copious discovery and a possible jury trial will be required. Protect the interests of your company by working with a qualified business attorney.

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James Damore, a former Google employee who made headlines last year after his written diatribe regarding why women are barred biologically from being successful at engineering, is making headlines again for suing the company.

Gender-Discrimination-105366239-001In his long and considerably detailed complaint, Damore alleges that the tech giant discriminates in its hiring policies against white, conservative men. He accuses the company of having hiring quotas for workers who are female or belong to an ethnic minority. Citing meetings in which department managers are singled out and chastised for not having reached their quota of female or minority workers, Damore says that it is difficult for a white man who does not hold liberal views to get ahead at Google.

Among the charges, Damore says that Google actively discriminates against white male employees who have “perceived conservative views by Google.” The complaint goes on to state that Google has a practice of disciplinary action against employees who “expressed views deviating from the majority view at Google on political subjects raised in the workplace ….”

Google’s own diversity reporting makes Damore’s claims seem at least partially spurious. The company’s latest reports say that their workforce is 69 percent male and 56 percent white. What is more, their technical employees are 80 percent male and 53 percent of these workers are white. This may make it difficult for Damore to support his claims in court.

At the same time, Google is being sued by four female former employees who say that the company openly discriminates against women, paying them less than male counterparts and making it more difficult for them to advance to more responsible positions. In fact, the government is already investigating Google for suspected discriminatory practices against females and minorities.

Google seems to be embattled on all sides thanks to these lawsuits. Their position is a stark reminder of how important it is to develop hiring, promotional, disciplinary and firing practices that are in strict accordance with the law. Working closely with a business and employment attorney is an excellent way to ensure that your company does not run afoul of the law.

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The line that divides free speech from school speech is one that often gets blurred. In an age where multitudes of information is available at the touch of a finger, the situation becomes even more complex. When a student creates an Instagram account that is rife with racist statements and images of classmates, are his efforts protected by the First Amendment?

zero-tolerance-at-schoolOne student at Albany High school in Albany, California created such an Instagram account in November 2016. He invited a handful of friends to access the derogatory pictures that he had taken of other students, most of whom were African-American girls. Along with his friends, he made racist comments. Some of his friends “liked” the images.

The Instagram feed was discovered in March 2017. The students who had been targeted by the account were threatened with violence in many of the posts. When school officials reviewed the account, punishments were swift. The account’s creator was expelled in June. Other students received suspensions. An anti-racism rally was held on the day that the suspended students returned. Concurrently, another faction of students decided it was time for a session of “restorative justice.” The suspended students were essentially forced to walk a gauntlet of screaming, angry students, some of whom became violent. One of the students who was returning to school after being suspended had his nose broken in the incident.

The students who were punished for their involvement filed a lawsuit that named the school district, several officials, employees at the school and board members as defendants. Recently, Judge James Donato issued a ruling on part of that lawsuit. He agreed with the defendants’ assertions that the punishments had been reasonable as they were levied by the district in the case of most of the students. However, he ruled that other students who had not targeted specific students with their posts were too harshly punished.

Other claims must be decided in this complex case. When it comes to questions of free speech, it is always best to stay on the side of caution, especially when schools or the workplace are involved.