Articles Tagged with Business Litigation California

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In general, American consumers are willing to pay extra for a premium product that has to be imported. That’s because they realize that getting that product to the shelf costs more than an item that is produced in the contiguous U.S. However, what happens when a product merely gives the impression of being imported? Are those consumers then entitled to a cash settlement to compensate them for being misled?

https://www.californiabusinesslitigation.com/wp-content/uploads/sites/283/2017/03/Happy-St.-Patricks-Day-135056274-001.jpgThat question is at the heart of a California lawsuit that was recently filed against Craft Brew Alliance Inc. Craft Brew produces Kona Brewing Co. beers, which feature labels crammed with images that look like they are straight out of Hawaii. The problem, as consumers Sara Cilloni and Simone Zimmer point out in their complaint, is that Kona Brewing Co. beers aren’t brewed anywhere near the islands. Instead, they are created in facilities in Washington, Oregon, Tennessee and New Hampshire. The plaintiffs are seeking class action status on behalf of consumers.

Plaintiffs allege that people “are willing to pay more for items, because they are from Hawaii,” when in reality, they are produced in the contiguous 48 states. Portland, Oregon-based Craft Brew has yet to comment on the pending litigation. The company does have a brewing facility and brew pub in Hawaii, but it only produces a scant 12,000 barrels a year, none of which make it to the mainland.

This type of litigation is nothing new in the beverage industry. Anheuser-Busch InBev has been the target of more than one similar lawsuit. As the largest brewer in the world, it stands to reason that Anheuser-Busch would attract some litigation. In fact, a judge ordered them to pay a $20 million settlement in 2015 for purportedly allowing consumers to believe that its Beck’s label beer was made in Germany. Beck’s was initially a German product, but Anheuser-Busch has been producing it in St. Louis since 2012.

The current lawsuit is only in its earliest stages. Nonetheless, it is a helpful reminder to all companies to review their labeling and marketing practices to ensure that they are not vulnerable to similar litigation.

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Charges filed by Los Angeles City Attorney Mike Feuer have put an abrupt end to operations for numerous acting workshops. Feuer leveled accusations against five workshop companies, claiming that they operated in violation of a 2009 law known as the Krekorian Talent Scam Prevention Act.

Stage-Door-123374603-001At any given time, Hollywood is home to thousands of aspiring actors who are desperate to break into show business. It’s hard for these young artists to gain the attention of casting directors who offer parts in movies and television shows, especially when the actors don’t have a top agent working for them. Workshops run by defendants like the Actor’s Key, the Actor’s Link and Studio Productions purport to offer educational classes that allow actors to essentially audition for casting directors. The trouble, as Feuer sees it, is that the workshops charge the actors for their participation. Under the definitions of the Krekorian law, this essentially is a pay-to-play scam in which the actors must submit a fee in order to audition.

Feuer filed charges against a total of five workshop companies, including nearly two dozen individuals, on February 9. Just five days later, one of the most popular and prolific of these workshops, the Actor’s Key, ceased operations and filed for Chapter 7 bankruptcy.

Owners Kristen Caldwell and Katherine Shaw, along with workshop manager Jessica Gardner, are all named in Feuer’s charges. In a statement given to the Hollywood Reporter, the principals of the Acting Key said, “… we have found that there is no realistic alternative to closing the business, and commencing bankruptcy proceedings … .” Additionally, they claim that they have been listing upcoming workshops as “full” for the last several weeks in anticipation of the closure and the charges filed by the city.

Caldwell, Shaw, Gardner and the other defendants are scheduled for arraignment on numerous charges in March. Penalties may include one year in jail and fines of $10,000. Given the high stakes involved, it is clear that understanding all relevant facets of the law is crucial for business owners. Working with a reputable business attorney is the best way to ensure compliance.

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U.S. District Judge Susan Illston has ruled that Walmart truck drivers are not entitled to an additional $80 million in a class action lawsuit settlement. The complaint was filed in 2008 with hundreds of California truck drivers claiming that they did not receive at least minimum wage for performing certain tasks. Although the judge denied the plaintiffs’ claim to the $80 million, Walmart will still have to abide by the initial $54 million settlement that was awarded in an earlier jury decision.

walmart-truckclose-up-side-view_129821854433586541-001Walmart asserts that its truck drivers are among the best paid in the industry, with many of them earning between $80,000 and $100,000 per year. Moreover, their attrition rate is low, and the judge commended them for taking rapid action to comply with evolving compensation laws. The drivers argued in their lawsuit that their employer compensated them only based upon miles driven and specific activities rather than hours worked, which constituted a violation of state law. Accordingly, the drivers claimed that they did not receive adequate compensation for tasks like washing and inspecting trucks. They further argued that they were not appropriately paid for mandatory 10-minute breaks and 10-hour layovers.

In November 2016, a jury of seven agreed with the drivers, awarding them approximately $54 million in back pay. This latest decision came in response to the plaintiffs’ request for an additional $5.8 million for restitution, $54.6 million in liquidated damages and $25.6 million in penalties. The judge went along with the request for $5.8 million in restitution, but denied the other claims, saying that there is not sufficient evidence that Walmart acted in bad faith or with “dishonest and wrongful motive.”

It’s possible that Walmart may still appeal the decisions by the judge and the jury. However, they scrapped their former driver-compensation package in 2015 in favor of a new one that is in compliance with California law. Because compensation laws change periodically, it is only sensible for all business owners to have their compensation practices reviewed by an employment attorney on a regular basis. This may prevent a company from finding itself involved in a similar class action lawsuit.

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The question of whether or not a franchisor is a joint employer of the workers at a franchisee’s location was at the heart of a class action lawsuit in California. In the federal case, the judge ruled that a franchisor could be held accountable for the misdeeds of its franchisee.

Dollar and paragraph sign on a brass scale , 3d illustration

The complaint was filed in a federal court in San Francisco in 2014. Plaintiffs were a group of current and former employees at McDonald’s restaurants in the Bay Area. All of the restaurants were owned by a franchisee, which is known as The Edward J. Smith and Valerie S. Smith Family Limited Partnership. Workers leveled charges at the franchisee for violating California wage and hour laws. These allegations included consistent errors in payroll calculations, failure to pay overtime, not providing rest breaks and meal periods and neglecting to reimburse workers for the time they spent keeping their uniforms clean and ready to wear.

Along with the wage and hours issues, the lawsuit also questioned whether or not the McDonald’s corporation was a joint employer with the Smith partnership. The corporation ultimately agreed to a $3.75 million settlement, but maintains that it is not a joint employer with its franchisees. Instead, they agreed to the settlement in order to avoid the ongoing costs and disruptions of lengthy litigation.

Workers hail the settlement as a major victory that may allow other parent corporations to be held responsible for the actions of a franchisee. However, business owners take a grim view of the development. They are concerned that a trend toward holding parent corporations responsible for the actions or misdeeds of franchisees may be detrimental to entrepreneurism.

At this time, the National Labor Relations Board is making similar arguments that McDonald’s should be considered a joint employer in a worker retaliation case in New York. If this case receives similar treatment, then it may establish a precedent for holding parent corporations responsible as joint employers.

Whether you are a franchisor or a franchisee, it’s vital that you seek legal counsel so that you are aware of your rights and responsibilities as an employer.

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We celebrate Veterans Day on November 11. Americans honor the brave men and women of the armed forces who risk their lives to protect our freedom. They include past and present members of the US Army, Navy, Marine Corps, National Guard, Air Force, and the Coast Guard.

A Veterans Day design of a heart and American Flag with a red, white and blue background

Originally called Armistice Day, major hostilities of World War I were formally ended at the 11th hour of the 11th day of the 11th month of 1918, when the Armistice with Germany went into effect.

Here are a few quotes to mark this occasion:

“On this Veterans Day, let us remember the service of our veterans, and let us renew our national promise to fulfill our sacred obligations to our veterans and their families who have sacrificed so much so that we can live free.” 
Congressman Dan Lipinski

“This nation will remain the land of the free only so long as it is the home of the brave.” Elmer Davis

“Courage is contagious. When a brave man takes a stand, the spines of others are often stiffened.”  Billy Graham

“How important it is for us to recognize and celebrate our heroes and she-roes!” Maya Angelou

“True heroism is remarkably sober, very undramatic. It is not the urge to surpass all others at whatever cost, but the urge to serve others at whatever cost.” Arthur Ashe

“Duty, Honor, Country. Those three hallowed words reverently dictate what you ought to be, what you can be, what you will be.” Douglas MacArthur

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The Consumer Product Safety Act, or CPSA, and legislation like it, makes it a crime to sell products that are the subject of a safety recall. Nonetheless, that is precisely what the U.S. Consumer Product Safety Commission, or CPSC, says that retail giant Best Buy did between 2010 and 2015. The retailer recently agreed to pay a $3.8 million penalty to the CPSC for breaking the law.

Compliance and Violation words on green road or street signs to illustrate the important choice between following or ignoring vital legal rules, guidelines, laws and regulations

The CPSC accused Best Buy of continuing to sell 16 products even after those items had been recalled. Ranging from cameras and laptops to dishwashers and electric ranges, each product posed a safety hazard. A recalled dehumidifier sparked a fire after being sold by a Best Buy store years after it should have been quarantined from sale. Given the more stringent clauses of the CPSA, which was amended in 2008, it was only a matter of time before the CPSC took notice.

Best Buy stated that they had a recall system in place during the 2010 to 2015 period. However, the CPSC found that Best Buy’s system for finding and getting rid of recalled products was ineffective. Among the findings, the CPSC says that the Best Buy system failed to permanently block product codes for recalled items. Additionally, some of those product codes were reactivated or the system functions that should have prevented a sale were overridden.

In addition to paying the $3.8 million penalty, Best Buy must also set up a much more robust system for identifying recalled products and preventing them from being sold. This system will include an internal component of controls and procedures as well as an element that requires reporting information to the CPSC.

Best Buy’s experience serves as a cautionary tale for all retailers. The CPSC is growing increasingly vigilant about enforcing the CPSA, and that means that more companies are going to see large penalties being levied against them. It is more important than ever for retailers to understand the CPSA and to stay informed regarding current government and manufacturer recalls. Working with an experienced business attorney is one of the best ways to ensure compliance.

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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” attitude 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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With approximately 60,000 employees participating in its 401(k) program, Morgan Stanley should be positioned to offer an outstanding retirement investment package. However, a group of employees is now seeking class action status as they sue the investment firm for mismanagement of the company’s 401(k) plan.

Balance in digital background / A concept of technology law or tIn the complaint, plaintiff Robert Patterson alleges that Morgan Stanley only made poorly performing investments available in its 401(k) program. The suit argues that instead of abiding by the Employee Retirement Income Security Act, which states that employers have a fiduciary responsibility to act in the best interests of plan members, Morgan Stanley routinely chose to include some of its least successful funds in the company 401(k).For instance, the available mid-cap fund was Morgan Stanley’s own Institutional Mid-Cap Growth Fund. Investment advisory firm Morningstar, Inc., gave this fund the worst rating for investors who held an interest in the fund over a period of several years. The small-cap fund that Morgan Stanley offered to its employees fared even worse. It underperformed 99 percent of all similar funds in 2014, and its performance didn’t improve much in the subsequent year.

Moreover, the lawsuit claims that Morgan Stanley was charging outrageous fees. Patterson and his co-plaintiffs allege that Morgan Stanley was charging their employees considerably more than outside clients were being charged. In some cases, employees were charged twice the going rate for outside clients.

In the complaint, lawyers for the plaintiffs argue that the company “selected their proprietary funds not based on their merits as investments, or because doing so was in the interest of plan participants, but because these products provided significant revenues and profits to Morgan Stanley.”

Other financial management firms like Edward Jones and Franklin Templeton have been hit with similar lawsuits in recent months. Several high-profile educational institutions like Yale University, the Massachusetts Institute of Technology and Johns Hopkins University have also been accused of similar mismanagement. With lawsuits like these on the rise, it is more important than ever before for employers to ensure that their 401(k) plans comply with ERISA and other applicable legislation.

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From outward appearances, the 56 campuses of the Marinello Schools of Beauty were profitable and successful. However, the Department of Education believed that school administrators had engaged in an ongoing and systematic program of misrepresentation that enabled the school to collect millions of dollars in federal financial aid. The schools have now been shuttered and a portion of the $11 million settlement is poised to be distributed among six whistleblowing employees while the remainder is being returned to the government.

WhistleblowerMarinello School of Beauty was founded in 1905. The school eventually boasted 39 locations in California with others found in Nevada, Utah, Connecticut and elsewhere. Programs offered included cosmetology, barbering and hair design. However, recent students knew that trouble was brewing. A Connecticut graduate received multiple notices from the school telling her that she owed several thousand dollars. She told the school that her tuition was supposed to be covered by federal aid, but to no avail. The school refused to release her transcripts so she cannot get a cosmetology license.

Her story is like many others, but it was a group of six former employees who brought the allegations of misdeeds to the federal government. They alleged that the schools did not provide adequate training. Moreover, they claimed that the school knowingly requested federal student aid for enrollees who did not have a diploma. Some of these students were maneuvered into a high school diploma completion program that was not accredited. Other students did not receive all of the federal funds that they were entitled to. Marinello was further accused of inflating its enrollment numbers, graduation rates and the earning potential of graduates.

The Department of Education withdrew federal financial support of the schools at the end of 2015, and the schools shuttered for good in February of the following year. The government will only be able to recoup a small portion of the many millions of dollars that had been distributed to the schools in the last year or two alone, but this case remains a cautionary tale for other institutions that receive aid from the federal government.

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Most people think Snapchat is just a fun messaging app. They use it to send photos and videos that self-destruct seconds after being viewed. Snapchat also features an app that makes it possible to creatively alter photographs. Known as “Lenses,” this app is what makes it possible for the photo’s subject to sport floppy dog ears, hearts instead of eyes or a floral headband. Now, this capability is at the center of a potential class action lawsuit.

Magnified illustration with the word Social Media on white background.

Illinois residents Jose Martinez and Malcolm Neal filed a complaint in Los Angeles in May of 2016, arguing that Snapchat violated their state’s Biometric Information Privacy Act. The law is aimed at preventing biometric identifiers from falling into questionable hands and sprang from concerns about how the necessary technology used to collect biometric identifiers might be used without the user’s knowledge or permission.

The lawsuit contends that Snapchat is collecting and maintaining detailed biometric information on their customers. This is being done without the knowledge and consent of the users, which is contrary to Illinois’ law.

Snapchat categorically denies the allegations, arguing that their service is not capable of collecting complex biometric information that would allow them to identify the face of one user as opposed to another. Instead, they say that the technology involved is merely for object recognition, which makes it possible for the program to determine which objects in a photo are faces and where the eyes, nose and mouth are located. Moreover, Snapchat denies that they are in any way storing the data that is used in the Lenses app.

Snapchat is not the first social media platform to be sued over similar technology. Both Facebook and Google are facing legal battles relating to face-recognition software that automatically identifies particular people in photographs.

This lawsuit is only in its beginning stages. It was moved to the federal courts in July 2016, and Snapchat may be facing stiff fines if their software is determined to be guilty of violating Illinois’ law. This incident demonstrates the powerful need for businesses to understand the laws of states where they will be operating.