• Look-Alike Computer Tablets; Apple Sues Samsung for Patent Infringement

       

     

    Until very recently, Samsong was selling a touchscreen computer tablet that competed with Apple’s.  In a recent lawsuit, Apple accused Samsung of infringing Apple’s design patent for the iPad.  A patent is a temporary government-granted monopoly on an invention.  There are two types of patents – utility and design.  A utility patent protects the invention.  Design patents protect original and ornamental designs of manufactured articles. Apple claims the Samsun tablet looks very similar to the iPad.  The judge called the tablets “virtually indistinguishable.”

     

    A lawsuit can take several years.  A plaintiff in a patent, trademark or copyright case can suffer lost revenue throughout that lengthy period while the alleged infringer is able to benefit from exploiting the infringed invention.  To avoid this, the plaintiff not infrequently asks the court for a preliminary injunction which is a court order that requires a defendant to do or refrain from doing something while the case is pending.  In this case, Apple sought a preliminary injunction to stop Samsong from selling the allegedly offending tablet. 

     

    Courts are rightly hesitant to stop an alleged infringer prior to a verdict in an infringement case unless the court is convinced that the plaintiff has a good chance of winning.  Thus, for a plaintiff to be successful in obtaining a preliminary injunction, it must prove the following: 1)  a “substantial likelihood” of success on the merits when the case finally is decided; 2) failure to grant the injunction will likely result in irreparable injury to plaintiff; 3) the threatened injury to plaintiff outweighs damage the injunction will likely cause the defendant; and 4) the injunction will not disserve the public’s interests.

     

    Just as courts are concerned about a plaintiff’s irreparable injury, they also do not overlook the possible damage to defendant if, in the end, defendant wins. Therefore, courts often require a plaintiff, who has proven a right to a preliminary injunction, to post a bond.  A bond represents a sum of money that is posted by the plaintiff and is used to compensate defendant for losses caused by the injunction in the event plaintiff looses.

     

    In the case by Apple against Samsung, the court required Apple to post a bond in the amount of $2.6 million, which Apple has done. In response, Samsung has appealed the decision that granted the preliminary injunction.  The remedy Samsung seeks is a stay, which is a temporary cessation of a court order.  And the battles continue.

     

    A trial on the underlying infringement case is expected in very late July. For more information, click here.

    DISCUSSION QUESTIONS:

    1) Given that our economic system is based on competition, what prompts our government to give, even temporarily,  exclusive rights to use an invention?

    2) Why must plaintiff prove the four necessary facts to get a preliminary injunction?

  • The Long and Winding Obscenity Case Against Fox for Cher and Nicole Richie Profanity and ABC for NYPD Nudity

    In a case that has been around almost as long as Cher, the U.S. Supreme court, once again, issued a decision related to three FCC charges against Fox and ABC television. First, in the 2002 Billboard Music Awards, broadcast by Fox Televsion, the singer Cher exclaimed during an unscripted acceptance speech: “I've also had my critics for the last 40 years saying that I was on my way out every year. Right. So f * * * ‘em.” At the 2003 Billboard Music Awards,Nicole Richie made the following unscripted remark while presenting an award: “Have you ever tried to get cow s* * * out of a Prada purse? It's not so f * * *ing simple.” The third incident involved an episode of NYPD Blue, a regular television show broadcast by respondent ABC Television Network. The episode broadcast on February 25, 2003, showed the nude buttocks of an adult female character for approximately seven seconds and for a moment the side of her breast. During the scene, in which the character was preparing to take a shower, a child portraying her boyfriend's son entered the bathroom. A moment of awkwardness followed. The FCC received indecency complaints about all three broadcasts.

    After these incidents, but before the FCC issued Notices of Apparent Liability to Fox and ABC, it issued a decision sanctioning NBC for a comment made by the singer Bono during the 2003 Golden Globe Awards. Upon winning the award for Best Original Song, Bono exclaimed: “ ‘This is really, really, f * * *ing brilliant. Really, really great.’” The FCC found the use of the F-word was “one of the most vulgar, graphic and explicit descriptions of sexual activity in the English language,” and found “any use of that word or a variation, in any context, inherently” indecent. The FCC then found that both Fox and ABC had violated commission standards for decency. You can read full background on the case as well as the history of obsenity regulation here.

     The networks appealed the findings of indecency and their fines ($1.4 million each).  The U.S. Supreme court (FCC v. Fox Television Stations, Inc. (Fox 1), 556 U.S. 502 (2009) held that the FCC’s findings were not arbitrary nor capricious and remanded the case for findings related to the network’s First Amendment challenges to the fines. On remand, the Court of Appeals found the FCC indecency policy failed to give broadcasters sufficient notice of what would be considered indecent. The court found the Commission was inconsistent as to which words it deemed patently offensive. On appeal once again to the U.S. Supreme Court, F.C.C. v. Fox Television Stations, Inc., --- S.Ct. ----, 2012 WL 2344462 (decided June 21, 2012), the court held that the FCC failed to give Fox or ABC fair notice prior to the broadcasts in question that fleeting expletives and momentary nudity could be found indecent. The Court determined that the FCC’s presumptive prohibition on the F-word was plagued by vagueness because the FCC had, in the past, found the fleeting use of those words not indecent provided they occurred during a bona fide news interview or were “demonstrably essential to the nature of an artistic or educational work.” Read more http://www.newyorker.com/online/blogs/closeread/2012/06/supreme-court-ruling-television-swearing.html#ixzz1ymWsimOp. The court held that because of the inconsistencies and lack of clarity that the FCC standard was void for vagueness. Therefore, the FCC’s standards as applied to these broadcasts were vague, and void under the First Amendment.  The court set aside the FCC’s findings as well as its orders and fines against the networks.

    The FCC is free to create standards of decency for broadcasting programs.  However, the standards must be established in advance of any charges of violations and those standards must be clear and applied consistently.  Because the broadcasters would not have understood the standard at the time the violations occurred, the U.S. Supreme Court struck down the standards are void for vagueness.

     

    Discussion Starters

    1.    What must the FCC now do to make the standards constitutional?

    2.   Why were the cases taken up on appeal so many times?

     

  • Supremes: Public Unions Must Provide Proper Notice of Political Contributions

    California allows, as do many states, government employees to create union bargaining units as agency shops. All employees in such units are represented by a union. Employees who choose not to join the union must pay fees for representation expenses of the union. Those fees are not to include political expenditures by the union.

    For the Service Employees International Union (SEIU) in California, that meant that employees represented by the union who did not join paid agency fees equal to 56% of regular union dues. Such employees are sent annual “Hudson notices” that were imposed by the Supreme Court in an earlier decision which stated that non-union members could not be billed for union political activity without notice and opportunity to withdraw from contribution. To force political contributions would violate First Amendment rights.

    In 2005, the SEIU spent $12 million successfully opposing a ballot initiative that would have reduced public union political strength. To fund the campaign, the union imposed an “Emergency Temporary Assessment to Build a Political Fight-Back Fund” that imposed a temporary 25% increase in dues. Non-union members were required to contribute to the election fund and were not sent a Hudson notice that would give them the chance to opt out of contributing. On behalf of non-union employees who paid into the political fund, suit was brought against SEIU claiming violation of First Amendment rights for being force to make political contributions.

    The district court held for petitioners, but the Ninth Circuit Court of Appeals reversed, contending that Hudson notices were not required in such instances. Petitioners appealed and the Supreme Court reversed.

    The Court held that a Hudson notice was required. The union could not evade the responsibility to provide the opportunity to opt out of making political contributions just because a special election was involved. When dues and contributions are changed, notice is required. There is no justification for failing to provide the notice.

    Discussion: Why would the union prefer not to provide notice?

  • Grades Allegedly Altered to Keep Tuition Flowing at Famous MBA School

            

    The Manhattan District Attorney’s office is investigating alleged grade forgery at Baruch College’s graduate business school.  The claim is that a school administrator altered grades of about 15 students without the professors’ knowledge or authorization. The alleged motive was to prevent those students from getting low grades that would have required them to withdraw from school.  That circumstance would have resulted in loss to the school of significant tuition money.  The program’s cost  ranged from $45,000 to $75,000 depending on the student’s concentration. 

     Baruch College is part of the City University of New York (CUNY) system. Its MBA program is housed in the Zicklin School of Business, named for its benefactor, investment managerLarry Zicklin. Until now the school has enjoyed a reputation as a respected school at which to earn an MBA.

     Baruch College, like most universities, has a procedure for changing a student’s grade.  It is typically used when a student completes most but not all of the requirements of a course within a semester.  The professor assigns the student an “I” for incomplete until    the student finalizes the work.  At that time the faculty member grades it, calculates the student’s final grade, and submits to the department chairperson a Change of Grade form.  Customarily the form requires the professor to state the original grade, the revised grade, and the reason for the change.  Additionally the faculty member is required to sign the document indicating the accuracy of the information contained within it. The department chair and/or the dean usually must sign the form as well.  It was this document that was modified by the administrator without approval. For more information click here.

    The alleged action of the administrator constitutes forgery, the crime of making or altering a written document without authority.   Additionally the action constitutes fraud by misrepresenting to the students’ employers that their school work was satisfactory, and justified the company continuing to pay tuition.  Other victims of the fraud include companies that hired the students, believing from the transcripts that their grades were satisfactory and their abilities up to par. Additionally, most states have a crime applicable to businesses called unfair trade practices.  These regulations outlaw a variety of misleading and unfair business conduct including various frauds.

    The Zicklin School of Business has initiated a number of checks and balances to help prevent repeat occurrences in the future.  Once of those is a grade confirmation form.  The school sends to the faculty a copy of the final grades recorded for each student.  Faculty then will compare the recorded grade with the grade actually assigned.  Any discrepancies should be discovered through this process.

    The school is also addressing the status of students whose grades were, err, upgraded. A faculty committee will review each student’s record and provide an opportunity to complete the work required to finally earn their diplomas.

    Discussion Question:

    1) If the administrator is found guilty of adjusting the grades to ensure lucrative tuition payments, what would be an appropriate sentence?

    2)  In addition to criminal prosecution the district attorney’s office may initiate, what action might students take whose grade were changed and who now will likely need to complete work to justify their degrees?  Do they have legitimate grounds to complain?

    3) If you were the dean of the business school (and thus its primary administrator), what actions would you take to control the negative publicity and restore the school’s reputation?

      

  • Pom Is Wonderful -- But, Its Ads Are Misleading

    An FTC administrative law judge has ruled that Pom Wonderful must cease and desist making certain claims about the benefits of its juice made from pomegranates. Pom Wonderful ads claimed that its juices treat, prevent or reduce the risk of erectile dysfunction or that they are clinically proven to do so. Pom Wonderful ads also claimed that the juices reduced the risk of heart disease and prostate cancer. The judge concluded that there was insufficient scientific evidence to support the claims and has prohibited the company from making such claims for 20 years. In addition, the company must submit all of its ads and marketing materials (as well as supporting materials for any claims) to the FTC for approval for the next five years. You can read the judge’s 345-page order here. http://www.ftc.gov/os/adjpro/d9344/120521pomdecision.pdf

    Not all of the company’s ads (as evidence by the one appearing above) made the claims.  The company’s general counsel noted that there were just “a small number” of the company’s ads that involved the claims.  Stephanie Strom, “Judge Says Pom Wonderful’s Advertising Misleading,” New York Times, May 22, 2012, p. B3. The company released a statement indicating that it was still working through the requirements of the judge’s order.

    The FTC has the authority to issue a cease and desist order for false or misleading ads, but also has the authority to require corrective ads. The judge stopped short of requiring the company to issue corrective ads, but, as noted, its ads going forward will be supervised very closely by the agency. The company argued that when its ads claimed that Pom Wonderful reduced health risks or prevent health problems, the ads were similar to claims such as, “Broccoli is good for you.”  Their lawyers argued that there is a difference between a good company making claims about a food product and a drug company making claims about the benefits of an over-the-counter or prescription drug and that Pom Wonderful ads should be judged by food standards. However, the judge ruled that even the use of words such as “may” or “can” are heard differently by consumers as “will.”  The judge concluded that tying the health benefits to the product without scientific support for the claims was inherently deceptive.

    Discussion Starters

    1.      What does a company need to have in order to make health benefits claims about its products?

    2.     What will Pom need to do going forward with its ads?

     

  • A Salesman Is ... A Salesman

    The Fair Labor Standards Act (FLSA) requires employers to pay overtime to employees who work more than 40 hours a week. However, the statute exempts “outside salesmen” from this requirement. The Department of Labor has written regulations expanding upon that brief statement in the statute.

    Labor says that salesmen are those “making sales” and notes that salesmen often have to do “incidental work” other than pure selling, such as record keeping, as part of their activities.

    Pharmaceutical salesmen are relied upon by the drug companies to visit physicians to sell their goods. Most salesmen work more than 40 hours a week. Christopher and other drug sales reps sued their employers for violation of the FLSA.

    They spend about 40 hours a week doing sales work (without much supervision) and spend another 10-20 hours a week doing incidental work—primarily record keeping. They contended they should receive overtime. (Their annual income averaged about $70,000.)

    The district court and court of appeals disagreed, but the Department of Labor interpreted its regulations as saying that the exemption to overtime applied only to salesmen who actually transferred title to goods. Drug company representatives did not actually do that; they just encouraged physicians to use the products produced by their companies. The plaintiffs appealed to the Supreme Court, arguing that the Department of Labor interpretation should be accepted and they should be paid overtime.

    The Court agreed with the lower courts in rejecting the claims of the plaintiffs. They are salesmen not covered by the FLSA for purposes of overtime. The Court noted that the views of the Department of Labor should be considered, but found its new view of what is a salesman to be “unpersuasive” and went with the traditional view of such positions.

    Discussion: Why would the Department of Labor change a long-standing view on such a matter and try to force many sales positions into jobs that would be paid overtime?

  • Publisher Defendants File Answers in E-Book Price-Fixing Case

    Two months ago a post in this blog told about an antitrust suit brought by the United States Department of Justice (hereafter DOJ) against Apple and five other large US publishers alleging a conspiracy to stabilize  prices for ebooks by price -fixing. (See April 12, 2012 post.)  The alleged goal of the conspiracy was to combat giant book seller Amazon’s low prices. The theory of the DOJ’s case was that, without such an agreement, the six defendants would likely try to compete with Amazon, resulting in low ebook prices.   

     A conspiracy is an agreement among two or more parties to violate the law.   The Justice Department alleged that the CEOS of the defendant publishers and Apple met regularly to discuss pricing, and agreed to limit price competition among them, resulting in consumers paying more for e-books than they otherwise would have.  Such an agreement is called price-fixing and is a per se violation of the antitrust laws.  The purpose of price fixing is to coordinate among competitors the price of a product seeking thereby to push the price as high as possible.  Such an agreement results in higher profits for sellers and higher prices for buyers.  A per se antitrust violation involves action that is considered so harmful to competition that it is virtually always illegal.  

     The initial stage of a lawsuit is the pleading stage.  Pleadings are written documents that identify the positions of the parties.  The first pleading is a complaint issued by the plaintiff.  It states the reason(s) why plaintiff is suing.  In response, and within a specified time period, the defendant must respond with a pleading called an Answer.  This document states whether the defendant admits or denies the allegations in the complaint.  The time permitted for defendant to serve an Answer is set by statute and can be extended by agreement of the parties.  Failure by the defendant to file a timely Answer can result in a default judgment, meaning the defendant loses automatically, without the opportunity to contest the charges. Sometimes a defendant will negotiate an early settlement with the plaintiff and thereby avoid the need to file an Answer.   Numerous reasons could prompt a defendant to do so – concern that plaintiff has enough evidence to convict; desire to avoid negative publicity; desire to avoid the time, and expense necessary to defend a case; and desire to avoid the angst often associated with a lawsuit.  

    All  six defendants denied violating antitrust laws.  The three that settled are Simon & Schuster, HarperCollins and the Hachette Book Group. For an example as to why, HarperCollins explained it this way – “HarperCollins made a business decision to settle the DOJ investigation in order to end a potentially protracted legal battle.”  For more information on why the parties settled, click here.  The three that filed an Answer are Apple, Penguin and Macmillan. They all denied the allegations in the Complaint of price-fixing, and denied conspiring over dinners, or otherwise in phone conversations and emails.  Included in Macmillan’s 26-page pleading is the following feisty response, “Absent any direct evidence of conspiracy, the government’s complaint is necessarily based entirely on the little circumstantial evidence it was able to locate during its extensive investigation, on which it piles innuendo on top of innuendo, stretches facts and implies actions that did not occur and Macmillan denies unequivocally.”.  For additional information on the Answers filed, click here.

     Penguin and Apple both denied involvement in a conspiracy and accused Amazon of predatory actions.  Penguin referenced Amazon’s “below-cost pricing strategy . . . detrimental to the long term health of the book industry.”  Apple asserted Amazon was the monopolist, not the defendants. 

    The director of Consumer Federation of America, a consumer advocacy group, commented, “[Amazon} may be a threat to the publishers, but that’s only because [Amazon] is more efficient and they’ll deliver books at a lower cost.  They’re not a threat to the consumer, and that’s what’s the important point.”

    The case will now proceed to the discovery phase in which each party to a lawsuit can obtain evidence from the opposing party, with the goal of avoiding surprises at trial.

     

     

  • Costner, Baldwin, and a Soured Oil Clean-Up Business Deal

    Stephen Baldwin and his friend, Spyridon Contogouris, and Kevin Costner were investors in Ocean Therapy Solutions, LLC, a company that had developed oil-separating centrifuges.  These devices “eat up” the oil from spills and do so quickly enough to halt damage. 

    Following the April 2010 explosion at the BP Deepwater Horizon rig, BP officials met with Mr. Costner and other Ocean Therapy representatives to determine whether the centrifuges would work on the Gulf spill.  As a result of the meeting, BP contracted with Ocean Therapy to spend $52 million on the devices.  BP made a deposit of $18 million upon signing the contract.

    At about the same time that Ocean Therapy and Mr. Costner were negotiating with BP, Mr. Baldwin and Mr. Contogouris were negotiating to sell their interests in Ocean Therapy Solutions. The two sold their interests for about $2 million ($1.4 million for Mr. Baldwin and $500,000 for Mr. Contogouris).  However, they were unaware of the negotiations with BP.  After they learned of the BP contract, Mr. Baldwin and Mr. Contogouris filed suit against Mr. Costner seeking an additional $21 million for the value of their interests.

    The case went to trial in New Orleans this month.  Costner testified that he never saw Baldwin contribute anything to their company's efforts to persuade BP to use the centrifuges. Baldwin testified that no one asked him to invest any capital or lobby BP but said he used his celebrity to market and promote the centrifuges while he also worked on a documentary about the nation's worst offshore oil spill.

    Read more: http://www.foxnews.com/entertainment/2012/06/15/stephen-baldwin-loses-lawsuit-against-kevin-costner-gets-zilch/#ixzz1xvg2WAp9

    Following the trial the jury deliberated for two hours before returning a verdict in favor of Mr. Costner.  The jury concluded that Mr. Costner was not aware that Mr. Baldwin and Mr. Contogouris were seeking a buy-out.  Mr. Costner did use funds from the BP deposit to buy out the two.  However, Mr. Baldwin and Mr. Contogouris had put very little cash into the company and the $2 million represented a substantial return on their investment.

    Limited liability companies can place management responsibilities in the hands of one owner, as Ocean Therapy Solutions did with Mr. Costner. There is a fiduciary duty between the owners of the LLC and also between the managing owner and the “silent” owners, but daily disclosure of ongoing negotiations and contracts is not required. The jury concluded that Mr. Costner was not aware of the knowledge of Mr. Baldwin and Mr. Contogouris and could have assumed that they sought the buy-out was fair, given their initial investment, even with the BP contract.

    The lessons learned from the Costner experience are the importance of regular reporting of financials and transactions to owners as well as careful disclosures at the time of any buy-outs of owners.

    Discussion Starters

    1. What are the rights of LLC owners?  What is their liability?

    2.  What disclosure responsibilities does the managing owner have to other owners?

     

  • State Tax Systems Must Be Rational, Not Fair

    The City of Indianapolis followed an 1889 Indiana law that allowed local governments to pay for public improvements by assessing landowners that benefitted from the improvements. The land owners would each pay an equal share of the project or the amount paid could be adjusted based on property size or some other criteria.

    The city had a program to replace septic tanks by hooking up homes to the city sewer system. When it completed a neighborhood, it would assess every homeowner the same amount, which could be paid lump sum, or paid over time.

    When the neighborhood in question had septic tanks replaced by the city sewer system, the 180 homeowners were billed $9,278 each, which some paid in a lump; other residents chose the 10 year payment plan of $77 a month, or some other time payment scheme.

    The city then decided to switch to a new financing method for the septic tank replacement program. It spread the cost out in the general tax program rather than bill individual homeowners. This meant that those who were on the monthly payment plan could quit making payments. The homeowners who paid the lump sum requested a refund. The city refused. Those homeowners then sued the city for violation of the Equal Protection Clause, contending that similarly affected persons were subjected to discriminatory tax treatment.

    The lower courts agreed with the homeowners, but the Indiana high court held that there was a rational basis for the change in the tax plan, so there was no constitutional issue. The matter was appealed to the U.S. Supreme Court.

    The Court agreed that the homeowners had no case. The city’s tax scheme does not involve a fundamental protected right. The tax plan is based on economic, social, local and commercial concerns. There is a rational basis for the new tax scheme as it reduces administrative costs for the city to pay for the program via general local taxes rather than bill individual homeowners for improvements. No out-of-state commerce or residents are discriminated against by the tax scheme. All the city is required to do is provide a “rational basis” for its tax scheme, which it has done by noting the ease of administration of the scheme that does not involve billing individual property owners by each project and because the city believes the new scheme will result in fewer complaints about the cost of switching from septic to sewer. Giving a refund to those who already paid would be an administrative chore, so the city need not do so if it chooses not.

    Discussion: The administrative cost of billing homeowners for the cost of their individual sewer hookup is not large, so that appears to largely be an excuse. Does this give state and local governments the ability to engage in widely discriminatory tax schemes that favor some businesses or residents at the expense of others?

  • A “Black Box” for Truckers: Monitoring Hours Driven

    A bill that would require commercial truckers to install electronic recorders, often called “black boxes” on all of their trucks is winding its way through Congress.  Currently, commercial truckers keep track of their hours on the road through paper logs.  The logs were mandated in order to keep track of the federal maximums for commercial truck drivers.  The law places a limit of 70 hours of driving in any 8-day period, following by a mandated 34-hour rest period. The American Trucking Association, which supports the legislation, indicates that the paper logs allow truckers to drive illegally, something that creates a safety hazard. 

    The European Union is also considering a similar form of electronic monitoring to replace its current system that has the hours recorded in the truck on a CD.  However, truckers there indicate that drivers often change out the CD in order to avoid detection of maximum-hours violations. Watch a video on the history of the EU monitoring and its new proposal.

    The technology for the trucking black box was developed through large commercial fleets.  Schneider International installed black boxes on its trucks (it has a fleet of 13,000) in 2010 and saw a significant reduction in crashes.  The company’s vice president for safety indicated that fatigue was the number one cause of crashes involving their trucks.  Since 2010 the company’s injury and fatality crashes have decreased and the number of crashes caused by fatigue has also decreased. Larry Copeland, “’Black Box’ Proposal Divides Truckers,” USA Today, June 12, 2012, p. 3B. The American Trucking Association, the largest trade association for commercial trucking companies, has reached similar conclusions on safety and supports the requirement.

    The above picture shows a traffic jam near Jefferson, Oregon on March 29, 2012 following an accident involving a truck and multiple vehicles.

    Small-business owners who drive trucks that are not part of a fleet believe that the black boxes are an invasion of privacy and will also allow micromanagement of drivers.  Some drivers feel that the ability to monitor when the truck is moving will result in increased fatigue because the drivers will not take as many breaks as they do because they know someone is watching their productivity. You can read about drivers' views and the technology in a forum on the black boxes. In addition, the Owner-Operator Independent Driver Association (OOIDA) notes that all the black boxes can do is tell you whether the truck is moving.  It cannot tell you who is driving the truck.  However, there are in-cab cameras that can be mounted to show who is driving the truck, a feature that would not be required under the black-box bill.

     

    Discussion Questions

    1.     Describe the positions of the trade organizations and explain why the two groups have taken the positions they have on black boxes.

    2.     How could the black-box information be used if there is an accident involving a truck?  

  • Donald Trump Threatens Defamation Lawsuit; Miss USA Pageant Rigged?

         

    Donald Trump, real estate magnate and co-owner of the Miss Universe and related pageants, is readying a defamation  lawsuit against Miss Pennsylvania. Her transgression?  She referred to the Miss USA pageant (the winner of which competes in the Universe contest) as “fraudulent” and “trashy”.  The comments were made as she resigned her crown in protest over what she perceived as a rigged crown contest.  According to her, a fellow contest saw the list of the Top Five before the pageant started.  The allegation is vigorously denied by the Miss Universe Organization.

    Defamation is the tort of publishing untruthful, negative comments about another person.  A related tort is disparagement of product which is making false, unflattering comments about another’s business or product. These torts provide a remedy to people and companies for injury to reputation. To constitute either tort, the statement must be one of fact.  A statement of opinion is protected by the right of free speech and is privileged, meaning it cannot be the basis for a defamation or disparagement lawsuit.

    In this situation, Ms. Pennsylvania’s use of the term “trashy” is clearly opinion.  Her statement that the top five contenders were selected ahead of time, suggesting the competition was fixed, is a statement of fact.  We can all agree that, if true, it is not flattering for a business to represent itself as giving every state representative a fair chance at the crown when in fact the finalists have been pre-selected. 

    The statement that the event was “fraudulent” is somewhat unclear but arguably a characterization of an alleged fact (a term to describe the claimed fixing of the outcome).  As such, it would not likely be considered an opinion and thus would be actionable.

    In response to the beauty queen’s comments, Donald Trump was interviewed by NBC news and could not resist a dig.  He stated, “I did see her for about a second.  I never felt that she had a chance [to win], . . . ”.    While this statement meets one requirement for defamation – that the statement be demeaning, it is clearly The Donald’s opinion and thus not defamation.

    For more information, click here.

    DISCUSSION QUESTION:

    1)    How does an untruthful, belittling statement damage reputation?  Does a statement of opinion damage reputation in the same way?

     2)    An element of defamation is a statement that is false.  Truth is a complete defense.  Yet a true, unflattering statement likewise damages a person or business’ reputation.  Why are truthful negative comments not actionable?

     

  • Your Car Being Googled and Googling in Your Car

    Google just received the right in Nevada to operate its driverless cars on the highways there.  Google has turned a Toyota Prius into a car that drives itself through cameras mounted on the roof.  The Google car currently out and about in Nevada has cameras mounted on its roof to steer the car and a warning system for those seated in the car about issues such as “approaching a crosswalk.” The technology is intended to be a supplement to driver presence because 90% of all accidents are caused by human error.  The car’s purpose is to eliminate driver error, but not the driver.  The car must still have a qualified driver at the wheel, but the car steers itself and adjust to posted speed limits.  The car is being touted as one that will allow drivers to look away to phone, taxt, or Google without risking an accident.

     

    Coincidentally, as the Google car is taking to the roads, Audi, Nissan, General Motors, and Ford are making Wi-Fi, Facebook, the Internet, and, Google (of course) as well as all other things cyber available for use in their new vehicles. Government guidelines from the National Highway Traffic Safety Administration (NHTSA) are that car manufacturers should not place anything in their vehicles that would distract drivers for more than two seconds.  However, the guidelines are just that –guidelines, so the government has no enforcement powers.  NHTSA is concerned because 3,092  people who were killed in traffic accidents in 2010 (about 10% of the total traffic accident death toll) were killed as a result of driver technology distraction (cell phones, texting, and use of car screens for GPS devices). (See an example of this in a "Glee" recap). Nearly 50% of teens admit that they text while driving.

     

    The industry response is, “They are just going to do it anyway, so we might as well bring it into the car and make it safer.” The industry believes that devices designed for car use will be safer than any hand-held devices. You can see the AT&T concerns about use of cell phones and technology while driving here.

     

    The presence of technology presents some interesting tort liability issues.  The Google car specifically provides that the self-driving ability is a driver supplement and not a substitution for a driver.  However, if the technology fails and the driver is in an accident, such a scenario does bring up the issue of product liability.  Google can disclaim liability for the failure of the driver to monitor the car, but it would be difficult to disclaim liability if the product were defective and there was nothing the driver could do to prevent an accident. 

     

    The presence of technology in hand-held form also presents some driver liability issues.  Even when texting-while-driving is not a violation of the law, there is a negligence standard that holds drivers liable for such conduct, which is what a reasonable person would do while driving.  The clear conclusion of decisions to date is that texting while driving is not reasonable behavior. The new issues are whether it would be negligent to text while driving a car that comes with the capability to text while driving and whether it would be negligent to do so when you have a self-driving car. Car manufacturers do warn:  Be sure to be in park before you Twitter or updated you Facebook.

     

    Discussion Starters

    1.      How does the presence of internet technology in a car affect liability issues?

    2.     What would the effect of the government guidelines be in an accident case in which the driver at fault was using the auto manufacturer’s technology?

     

  • OSHA Sinks SeaWorld’s Featured Act; Ruling Requires Safety for Whale Trainers

       

    Wild animals are dangerous creatures.  This fact is not lost on OSHA, the Occupational Safety and Health Administration, the federal agency responsible to assure safe and healthful working conditions for employees.  One way OSHA works to achieve this objective is by inspecting work sites to monitor compliance with laws that mandate safety precautions. These  assessments are done by OSHA inspectors who are specially trained to identify illegal and/or unsafe circumstances.  Inspections are done periodically but in addition can be triggered by employee complaints about dangerous conditions or by accidents on the job caused by hazardous circumstances.

     The odds are good that you have visited a SeaWorld on a family vacation.  One of the prime attractions is the killer whales  who perform in the water with trainers who sometimes ride on them and sometimes ride on a platform along side them.  The stunt is quite impressive and the whales are generally well trained.  However, they remain wild animals subject to unpredictable behavior. A tragic accident involving one of the trainers prompted a recent OSHA investigation.  Sadly, the trainer was violently killed by a six-ton killer whale in 2010 at Sea World in Orlando, Florida.  At the time the trainer was lying  on a platform next to the whale, with her face touching the animal’s, while submerged about a foot into the pool where the whale swam.  For details on the circumstances of the trainer’s death, click here. 

    The incident prompted a six month investigation by OSHA of the park.  The investigators determined that trainers should be protected from the whales during shows by a physical barrier or some other device that SeaWorld might devise that would provide the same level of safety.  Additionally, OSHA fined SeaWorld  $75,000 for safety violations associated with the death.  In response, SeaWorld issued a statement calling OSHA’s findings “unfounded” and appealed.  The first level of appeal from a governmental agency is usually a proceeding within the agency.  Before a party to an agency case, such as SeaWorld, can pursue the matter in court, the party must exhaust its administrative remedies.  This means the party must utilize all appeal options within the agency before a court will hear the matter. The process for appeal of an OSHA finding is a hearing before a body titled the Occupational Safety and Health Review Commission.  A two week hearing was held at which both SeaWorld and OSHA presented evidence. The administrative law judge who presided has now issued his  decision. It upholds OSHA’s findings that trainers should ot be permitted in the water with whales during public performances.   

    The judge also rejected SeaWorld’s concern that it would lose patronage and therefore income without its heavily advertised act of trainers in the water and in close proximity to the whales.  The judge noted that, since the trainer’s death in 2010  and pending the outcome of the OSHA proceedings, trainers at SeaWorld have not been permitted to swim close to the whales during public performances and yet the Orlando park reported record earnings in 2011. 

    For more information on this matter, click here.

    Discussion Question:

    1) What evidence do you think SeaWorld presented at the hearing before the administrative appeals judge?

    2) How important to the OSHA judge was SeaWorld's concern for preserving its heavily promoted featured act?