http://www.bulletproofblog.com The blog on crisis communications Fri, 30 Jul 2010 17:06:27 +0000 http://wordpress.org/?v=2.8.4 en hourly 1 http://www.bulletproofblog.com/2010/07/28/whats-next-the-plaintiffs-perspective-asbestos-case-redefines-summary-judgment-in-pennsylvania/ http://www.bulletproofblog.com/2010/07/28/whats-next-the-plaintiffs-perspective-asbestos-case-redefines-summary-judgment-in-pennsylvania/#comments Wed, 28 Jul 2010 19:22:53 +0000 Larry Smith http://www.bulletproofblog.com/?p=3467 In this regular feature, Bulletproof interviews top plaintiffs’ counsel for their perspective on the crises likely to affect businesses in the near future. Today, we speak to Richard Myers of Philadelphia’s Paul, Reich & Myers, P.C., who for the past nine years has litigated Summers v. Certainteed Corp. and Nybeck v. Union Carbide Corp., an asbestos case that will likely have major repercussions for most other business sectors as well, especially in Pennsylvania.

In July, the Pennsylvania Supreme Court overturned summary judgment orders issued by the trial court in 2003. The order granting summary judgment in the case of plaintiff Richard Nybeck was reversed by a panel of three Pennsylvania Superior Court judges in 2005. The defendants petitioned for en banc argument before the Superior Court, and the petition was granted.

The case by plaintiff Frederick Summers case was transferred from the Superior Court panel where it was pending and consolidated with the Nybeck case for argument. The trial court's summary judgment rulings in both cases were that non-asbestos-related medical conditions precluded a causal link to asbestos exposure. The Superior Court en banc split 4-4 with one judge recusing himself. The Pennsylvania Supreme Court accepted both the defendants’ and plaintiffs' petitions for allowance of appeal.

The Supreme Court has now said that determinations as to causation should survive summary judgment and go to juries for determination. The two plaintiffs had long histories of smoking tobacco. Beyond this “mixed causation” question, the validity of summary judgment itself is an issue.

How would you summarize the importance of this ruling?

Rich Myers: It redefines summary judgment in Pennsylvania and, as a result, you will see significantly fewer summary judgments granted in this state.

Historically, summary judgment became an accepted process in Pennsylvania in the 1960s, much later than with the federal courts. The emphasis by our Supreme Court on abuse of discretion as the defining purview of the appeal process came even later than that. Before that, the Supreme Court had done de novo reviews in which they were not bound by the fact-finding of the lower courts.

Now, Summers decisively reaffirms a new review of the facts of the case as the proper appellate standard regarding summary judgments. That means more cases will go to trial because more summary judgments will be thrown out. As significantly fewer summary judgments are upheld, there will likely be fewer motions for summary judgment, except in cases where the plaintiffs really have no basis for going forward.

The message from the Supreme Court is that juries are the proper arbiters of the facts.

How would you answer the argument that the essence of the appellate system is all about abuse of discretion – about the actual performance of the lower court judge rather than the finding of specific facts?

Rich Myers: That traditional and proper understanding of the appellate process still applies, of course, where juries have been the fact finders. In the summary judgment process, however, the “performance” of the judge, as you term it, dovetails with the fact-finding since the judge is the sole fact-finder. It is therefore a proper duty of the appellate court to review the facts from scratch and determine if, as [Pennsylvania Supreme Court Justice Max] Baer wrote, there is substantial expert opinion to warrant a jury deliberation.

In Summers, Justice Baer also wrote that “where it is clear that reasonable minds could differ on the issue of causation, precluding asbestos litigants from pursuing causes of action, supported by competent medical evidence, merely because of the existence of competing health conditions, is unsustainable.”

So the importance of your case has less to do with “mixed causation” than with summary judgment itself?

Rich Myers: Correct. There aren’t all that many cases involving mixed causation in the way this asbestos case does with respect to tobacco. Actually, in cases where the fact patterns are similar to Summers, asbestos defendants may have some advantage at trial, since these days the public has so much antipathy to tobacco and jurors may put the burden of responsibility on plaintiffs who have a history of smoking. In some cases, the worst thing for business about the Supreme Court ruling is that trials cost more than summary judgment.

A reduced summary judgment system is bad for businesses in cases where, say, consumers bring suit against them in product cases. But businesses are plaintiffs too, and the number of business-to-business lawsuits continues to increase. From that angle, the Supreme Court’s decision should be a welcome one for companies that initiate lawsuits.

What happens next with your case?

Rich Myers: Sadly, Mr. Summers passed away and his case will be dropped at the request of his family because he died of causes unrelated to asbestos exposure. Mr. Nybeck has become totally dependent on an oxygen support system, so I will be moving for an expedited trial listing.

Do the implications of the Supreme Court ruling go beyond Pennsylvania?

Rich Myers: I have no evidence that it necessarily does, but I do hope it starts a trend – and not only because of my self-interest as a plaintiffs’ trial lawyer. In general, I’d say that, except in cases where both sides agree to a bench trial, judges should never be fact-finders.

I was always taught that trial by jury is the basis of our justice system. “Trial” is not, to be sure, a four-letter word.

Click here to receive the Plaintiff's Perspective in your inbox each week.

Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.]]> http://www.bulletproofblog.com/2010/07/28/whats-next-the-plaintiffs-perspective-asbestos-case-redefines-summary-judgment-in-pennsylvania/feed/ 0 http://www.bulletproofblog.com/2010/07/14/whats-next-the-plaintiffs-perspective-ford-case-underscores-worker-recall-issues/ http://www.bulletproofblog.com/2010/07/14/whats-next-the-plaintiffs-perspective-ford-case-underscores-worker-recall-issues/#comments Wed, 14 Jul 2010 13:30:19 +0000 Larry Smith http://www.bulletproofblog.com/?p=3382 In this regular feature, Bulletproof interviews top plaintiffs’ counsel for their perspective on the crises likely to affect businesses in the near future. Today, we speak to Geoffrey Damon of Butkovich & Crosthwaite Co. LPA in Cincinnati, who is seeking to file a class action against Ford Motor Co. and the United Auto Workers on behalf of 80 union workers. The workers lost their seniority rights after they were recalled to work at a Ford transmission plant in Batavia, Ohio in 2007. The plaintiffs had taken $100,000 buyouts but were recalled a few months later when Ford reversed its decision to close the plant.

The two plaintiffs filing this case, Spicer at al. v. Ford Motor Co. et al., claim the defendants violated the Labor Management Relations Act by denying them full-time status, including seniority rights, after their return. Meanwhile, other Ford union employees in Flat Rock, Mich. had also been recalled to work but were able to obtain full-time status after going through a grievance process. In the Batavia case, the UAW rescinded a grievance filed by the plaintiffs’ local union, allegedly saying it had no merit.

The current plaintiffs are seeking at least $100,000 in back pay, front pay, liquidated damages, and loss of benefits. They're also seeking punitive damages and attorney fees and costs.

In what way do you allege Ford’s actions violated the Labor Management Relations Act?

Geoffrey Damon: Simply enough, failure by an employer to abide by the provisions of a collective bargaining agreement violates the Labor Management Relations Act. In this case, that agreement stipulates that seniority and full-time status be accorded employees who work ninety consecutive days, which my clients did. That time stipulation is irrespective of how long they worked before they accepted the original buyouts. It’s a matter of how long they were kept on the job them after they returned to work.

Throughout the period, Ford repeatedly endeavored to get the recalled employees to sign waivers of their seniority rights. Some did. My clients did not.

Does the inclusion of the union as a named defendant add an important wrinkle to the case?

Geoffrey Damon: There’s actually a type of lawsuit in which management and unions find themselves together on the defense side of labor complaints. Sometimes, as in this case, the reasons why they are co-defendants can be important in terms of understanding the dynamics at play. My clients are younger people, and I believe there was some resentment of them among the older union rank and file for accepting the buy-outs in the first place.

How might the situation at Flat Rock affect this case?

Geoffrey Damon: It could be critical.   I suspect that a simple comparison will underscore that there was no good excuse for the grievance process not to go forward in Batavia. We’ll want to know if there was something unique about the circumstances in Flat Rock but I am not aware of any distinguishing feature.

What do you imagine will be Ford’s defense here?

Geoffrey Damon: Based on my prior experience, employers can always find ways to wrangle over the terms of a collective bargaining agreement. They are characteristically vague and convoluted, so much so that exact opposite conclusions can be are argued from the same contractual language.

If you were advising Ford, what takeaways from this case would you underscore, irrespective of whether or not you finally prevail?

Geoffrey Damon: Certainly, I’d stress that the entire employee recall process has to be handled with greater clarity and with coherent guidelines in place. I don’t think Ford thought through this situation much at all before it began to unravel on them.

Just as important, there must be uniform procedures in place for presenting and soliciting waivers.

Click here to receive the Plaintiff's Perspective in your inbox each week.

Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.

]]> http://www.bulletproofblog.com/2010/07/14/whats-next-the-plaintiffs-perspective-ford-case-underscores-worker-recall-issues/feed/ 1 http://www.bulletproofblog.com/2010/06/30/whats-next-the-plaintiffs-perspective-advocacy-group-targets-mcdonald%e2%80%99s-%e2%80%98predatory%e2%80%99-marketing-to-children/ http://www.bulletproofblog.com/2010/06/30/whats-next-the-plaintiffs-perspective-advocacy-group-targets-mcdonald%e2%80%99s-%e2%80%98predatory%e2%80%99-marketing-to-children/#comments Wed, 30 Jun 2010 13:57:21 +0000 Larry Smith http://www.bulletproofblog.com/?p=3165 In this regular feature, Bulletproof interviews top plaintiffs’ counsel for their perspective on the crises likely to affect businesses in the near future. Today, we speak to Stephen Gardner, litigation director for the Center for Science in the Public Interest (CSPI), which has advised McDonald’s restaurants of its intent to file suit against the fast food giant unless it removes promotional toys from its meal packages. An advisory letter is legally required in several states before suits can be brought under consumer protection statutes.

CSPI accuses McDonald’s of “undermining parental authority” by manipulating children with, among other similar lures, promotional merchandise for the new Shrek movie – and, as a result, exacerbating the national obesity epidemic by irresponsibly marketing unhealthy food.

In April, supervisors of Santa Clara County in California voted to ban toy promotions from fast food meals sold in unincorporated parts of the county.

If this matter does go on to a lawsuit, do you feel you have a strong case? Why?

Stephen Gardner: Legally, the deception claim is very strong. Kids are per se deceived by any marketing aimed at them. No one disagrees with that developmental fact.

On unfairness, it's quite strong as well, but requires a little fact-finding to determine the substance of the unfairness. We allege that it's unfair to the kids, above and beyond tricking them into wanting McDonald’s food now, because it inculcates a life-long fast food habit, with McDonald’s the chief supplier.

And it's unfair to parents, simply because McDonald’s is intentionally trying to bypass their authority by going direct to the kids, and thus making their jobs as parents needlessly harder.

How important is the Santa Clara ban in supporting your efforts?

Stephen Gardner: Not at all important, although we certainly support it. We were developing our case around a year before we learned of the Santa Clara action.

Doesn’t all direct marketing to children undermine parental authority?

Stephen Gardner: Yes. But not all of it to this extent, or with these results.

What do you expect on this issue from the FTC later this year? How meaningful would voluntary guidelines be in this matter?

Stephen Gardner: Other folks at CSPI work more directly with the FTC on these issues than I do, so I can't speak to the question of what we can expect from the FTC on this. But voluntary guidelines are likely to be meaningless. McDonald’s is already under voluntary guidelines with the Better Business Bureau, and those guidelines permit this behavior.

Should you prevail in your effort, either in court or by influencing MacDonald’s out of court, what larger impact would it have – both on the fast food industry and other industries?

Stephen Gardner: With luck, it would send a signal to other, smaller companies, to do the same thing. Worst case, companies will [at least] know that predatory food advertising is not something that has no consequences.

]]> http://www.bulletproofblog.com/2010/06/30/whats-next-the-plaintiffs-perspective-advocacy-group-targets-mcdonald%e2%80%99s-%e2%80%98predatory%e2%80%99-marketing-to-children/feed/ 0 http://www.bulletproofblog.com/2010/06/25/do-toys-make-kids-fat/ http://www.bulletproofblog.com/2010/06/25/do-toys-make-kids-fat/#comments Fri, 25 Jun 2010 12:25:20 +0000 David Bartlett http://www.bulletproofblog.com/?p=3142
This week, the Center for Science in the Public Interest (CSPI) sent a letter to McDonald’s calling on the fast food giant to remove toys from all packaged meals or face the prospect of litigation. According to the CSPI, the toys included in McDonald’s Happy Meals encourage kids to eat fast food and, thus, are a contributing factor to what many have called a childhood obesity epidemic.

To some, the CSPI’s move might be considered a reach at best, or another persuasive argument for tort reform at worst. But before you dismiss it as just another activist fundraising stunt, consider that one California county has already voted to ban toys from McDonald’s Happy Meals and other fast food promotions aimed at children.

Depending on which scientific expert you talk to and when, childhood obesity – and adult obesity for that matter – is a real problem. But whether banishing toys from Happy Meals and Cracker Jack boxes is the most effective way to tackle the problem remains an open question.

McDonalds is indeed a fat target for food activists – and the company’s considerable efforts in recent years to add healthy choices to its menus obviously have done little to change that. This is just another reason that it would be safe to assume that the campaign against fast food won’t stop with McDonalds or with calls for a ban on promotional campaigns built around toys.

As issues of obesity and general health continue to get more and more media attention, any company in the food or restaurant business is a potential target. As such, they need to be wary of what may be coming next. Take the threat seriously. Get ahead of the story. Position yourself as part of the solution rather than part of the problem. And don’t do anything to inadvertently make yourself an easy target for media-savvy activists.

Most important, remember that victory for corporations in matters like these seldom comes from proving the adversary wrong. Responding in kind to attacks is an essentially defensive strategy that may lead to occasional partial victories, but partial victories only.

Long term victory is achieved by making an adversary’s legitimate issue your own, taking  the leadership role away from your critics, and doing so at the earliest possible opportunity.

David Bartlett is a Senior Vice President at Levick Strategic Communications, an expert communications strategist and crisis manager, and a contributing author to Bulletproof Blog.]]> http://www.bulletproofblog.com/2010/06/25/do-toys-make-kids-fat/feed/ 0 http://www.bulletproofblog.com/2010/06/23/what%e2%80%99s-next-the-plaintiff%e2%80%99s-perspective-%e2%80%93-supreme-court-to-weigh-in-on-credit-card-interest-rate-case/ http://www.bulletproofblog.com/2010/06/23/what%e2%80%99s-next-the-plaintiff%e2%80%99s-perspective-%e2%80%93-supreme-court-to-weigh-in-on-credit-card-interest-rate-case/#comments Wed, 23 Jun 2010 16:38:18 +0000 Larry Smith http://www.bulletproofblog.com/?p=3105 In this regular feature, Bulletproof interviews top plaintiffs’ counsel for their perspective on the crises likely to affect businesses in the near future. Today, we speak to Greg Beck, a staff lawyer with Public Citizen Litigation Group. That non-profit advocacy organization is co-counsel for the respondent, James McCoy, in Chase Bank USA v. McCoy.

The U.S. Supreme Court has agreed to hear JPMorgan Chase & Co's appeal in this lawsuit, which claims that the bank violated federal law by failing to notify credit card holders before raising interest rates due to late payments or defaults. The lead plaintiff alleges that Chase Manhattan Bank violated the Truth in Lending Act (TILA) by increasing interest rates retroactively to the beginning of his payment cycle after his account was closed after a late payment.

The bank wants the High Court to overturn a lower appellate court ruling in California that had reinstated a 2006 class-action lawsuit after the plaintiff lost in a district court. Chase has argued that federal law at the time of the lawsuit did not require banks to give notice of rate changes to cardholders who were late on payments.

The bank said the initial contracts given to cardholders already contained explicit provisions that allowed the raising of interest rates for borrowers in default. In 2009, the Federal Reserve Board amended existing law with a requirement that banks give cardholders advance notice of rate increases due to default even if the default rate was already specified in the original contract.

Why does this case interest Public Citizen?

Greg Beck: We think this is an important case because retroactive rate increases subvert a central purpose of the Truth in Lending Act: ensuring that people know what interest rates they are paying before they incur debt.

A provision in the fine print of the contract providing that a bank might increase the rate under certain conditions is not a substitute for disclosure.

That a bank has discretion to increase the rate does not tell the consumer whether the bank has chosen to use that discretion or, if so, what the new interest rate actually is. As a result, consumers inevitably incur debt without knowing the applicable rate, which is exactly what TILA is supposed to prevent.

Is it a fair summation of your position that the bank should be held accountable for not complying with provisions to the Truth in Lending Act that were not imposed until 2009?

Greg Beck: We aren’t arguing that banks should be subjected to 2009 rules for agreements made before the regulations had been enacted. Our argument is that TILA has always required disclosure of interest rates. That is the purpose of TILA and, as the court of appeals held, the most “natural reading” of the statute and its pre-2009 implementing regulations.

If the plaintiff prevails in the Supreme Court, what impact do you think it will have on the banking industry?

Greg Beck: However this case is decided, it will not require any major change in the banking industry. Everyone appears to agree that disclosure is required under the 2009 amendments, and banks are therefore already required to provide notice.

Click here to receive the Plaintiff's Perspective in your inbox each week.

Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.

]]> http://www.bulletproofblog.com/2010/06/23/what%e2%80%99s-next-the-plaintiff%e2%80%99s-perspective-%e2%80%93-supreme-court-to-weigh-in-on-credit-card-interest-rate-case/feed/ 2 http://www.bulletproofblog.com/2010/06/16/whats-next-the-plaintiffs-perspective-johnson-johnson%e2%80%99s-product-recall-protocol-spawns-potentially-massive-class-action/ http://www.bulletproofblog.com/2010/06/16/whats-next-the-plaintiffs-perspective-johnson-johnson%e2%80%99s-product-recall-protocol-spawns-potentially-massive-class-action/#comments Wed, 16 Jun 2010 13:05:40 +0000 Larry Smith http://www.bulletproofblog.com/?p=3060 In this regular feature, Bulletproof interviews top plaintiffs’ counsel for their perspective on the crises likely to affect businesses in the near future. Today, we speak to Donald Haviland of Haviland Hughes, LLC in Philadelphia. Mr. Haviland has filed a lawsuit in a Philadelphia federal court on behalf of three claimants, and is seeking class status, to force Johnson & Johnson’s McNeil Consumer Healthcare unit to increase the scope of cash refunds for consumers who purchased approximately 130 million recalled bottles of children's Tylenol, Motrin, Benadryl and Zyrtec.

The recall, affecting purchases from December 2008 to the present, occurred on April 30. J&J’s handling of the recall, and the product issues leading to it, have resulted in an FDA investigation and Congressional hearings.

Importantly, plaintiffs say that McNeil should be making cash refunds only, and that coupons also offered in lieu of cash are totally inadequate. Plaintiffs likewise want current restrictions on refund eligibility significantly loosened so that people who discarded bottles before the recall qualify for refunds.   

How big could your action get if it is granted class status?

Donald Haviland: Since we’re talking about some 130 million bottles, it’s fairly difficult to get our hands around the potential size of the class. But taking into account the number of consumers who bought multiple bottles of the J&J McNeil products, we’re still talking about tens of millions of people who could qualify to join a class action.

What is the rationale for your demanding cash-only refunds?

Donald Haviland: People paid cash and they didn’t get what they paid for, so they ought to get their money back. In a sense, it’s just that simple – but let’s also talk about those coupons, which Johnson & Johnson characterizes as “highly valuable.” In fact, they are absolutely worthless.

First of all, McNeil has stopped manufacturing children's drugs, so the coupons are at best promissory notes redeemable – maybe – at some point in the future. [The plant where the products were manufactured was temporarily shuttered.] Second, even if there were new drugs being manufactured right now, why should consumers be asked to trust their quality? Having unwittingly administered defective medicine to children who were already sick, are they now supposed to jump at the opportunity to possibly do so again?

It’s not just a matter of fairness and common sense. It’s a matter of law and a powerful one at that. In 1995, the Third Circuit expressly rejected a settlement that would have provided consumers with $1000 coupons in settlement of cases involving GM pickup trucks that posed fire hazards. Again, why should I let you satisfy your legal and moral obligations by marketing the very products to me for which you are now liable?
Rule 23 (and explanatory comments) of the Federal Rules also require that coupons offered in such cases have transferability and/or cash value. The McNeil coupons have neither.

Clearly, Johnson & Johnson is doing everything it can to avoid real economic responsibility. If we assume 130 million products at $5 to $7 per bottle, we’re talking about a liability of $650 to $910 million. J&J should put that money into escrow right now, which is not only the right thing to do but, from a business standpoint, the smart thing to do. 

Remember, too, we’re not asking for damages. We just want our money back. But if J&J wants to go to court, we’ll certainly look for punitives at that point.

How can you determine the legitimacy of claims by people who had already disposed of the bottles at the time of the recall?

Donald Haviland: It’s simple. Some sort of qualifier will be in order, perhaps a receipt or a sworn affidavit. The chances are slim to none that consumers would perjure themselves for the small dollar amounts to which each of them would be entitled. What we are contesting is that, under the current recall protocol, consumers should be obliged to provide miniscule details that are only found on the original bottle, and which J&J McNeil now expects claimants to provide. It’s just another dodge to lower claim volume.

As a product recall model, how would you describe J&J’s approach? What are its presumed deficiencies?

Donald Haviland: Effective models provide for full recalls and full restitution. J&J’s recall template does neither. It is the opposite of the proven effective model. It’s all about shortcuts and short-changing. Not only has J&J McNeil failed in its recall protocol to offer full and credible restitution but, as of late May, the company had only issued about 600,000 consumer refunds, according to J&J’s own testimony before Congress.

Were it not for our lawsuit, that number would likely dwindle in the next months, which means the company gets off with only a slap on the wrist. That would send yet another awful message to corporate America about litigation, not as a fair way to assess responsibility, but merely as a cost of doing business.

As it stands, though, the J&J’s product recall model was actually so deficient as to provide plaintiffs’ lawyers with an open invitation to further seek justice and redress consumer grievances.

We’ve set up a website, www.childrenstylenollawsuit.com, to counter the disinformation that the defendant provides on its own site.

How do possible criminal charges by the FDA affect your case?

Donald Haviland: No doubt, such charges, or any serious discussion of such charges, can only support the merits of significant civil claims. 

Do you have any concerns about providing optimal counsel in light of the fact that your wife is one of the three plaintiffs?

Donald Haviland: My wife was the trigger for me to pursue this litigation. I remember it was Mother’s Day, not long after the recall, when she suddenly announced that there were seven bottles of recalled product in our own medicine cabinet. So she became one of the named plaintiffs in our suit. As this class action grows, we’ll probably take her off the case to avoid any appearance of possible conflict or impropriety, though there is none.

Johnson & Johnson owes my wife around 50 bucks for those seven bottles, but I’m not going to jeopardize this case in order to collect it. We intend to redress the wrong done to the millions of parents throughout the country.

How will this case affect future pharmaceutical litigation?

Donald Haviland: Hopefully it will send a message to all companies that, when you get caught doing something wrong, intentionally or not, you then need to do the right thing by reimbursing fully the consumers who’ve supported you for so many years.

Click here to receive the Plaintiff's Perspective in your inbox each week.

Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.

]]> http://www.bulletproofblog.com/2010/06/16/whats-next-the-plaintiffs-perspective-johnson-johnson%e2%80%99s-product-recall-protocol-spawns-potentially-massive-class-action/feed/ 0 http://www.bulletproofblog.com/2010/06/11/bulletproof-interview-special-%e2%80%93-diversity-in-2010-and-beyond-charles-volkert-esq-on-the-value-of-a-strong-diversity-brand/ http://www.bulletproofblog.com/2010/06/11/bulletproof-interview-special-%e2%80%93-diversity-in-2010-and-beyond-charles-volkert-esq-on-the-value-of-a-strong-diversity-brand/#comments Fri, 11 Jun 2010 18:22:42 +0000 Derede McAlpin http://www.bulletproofblog.com/?p=3005 series of video interviews with leading legal and reputational strategists on the topic of diversity in 2010 and beyond.

In today’s installment, Charles Volkert, Esq., Executive Director of Robert Half Legal, a leading staffing firm specializing in the placement of attorneys, paralegals, legal administrators and other legal professionals with law firms and corporate legal departments, discusses the recent lack of growth in diversity in the legal profession and how firms can build stronger diversity brands.

As an expert on recruitment in the legal industry, Mr. Volkert addresses how law firms can leverage diversity efforts into tangible gains in recruitment, retention, and winning new business,

Click the video to view Mr. Volkert’s interview and much more in its entirety with Bulletproof.

Derede McAlpin, Esq. is a Vice President at Levick Strategic Communications, the nation's top crisis firm. She is also a contributing author to Bulletproof Blog.

]]> http://www.bulletproofblog.com/2010/06/11/bulletproof-interview-special-%e2%80%93-diversity-in-2010-and-beyond-charles-volkert-esq-on-the-value-of-a-strong-diversity-brand/feed/ 0 http://www.bulletproofblog.com/2010/06/09/what%e2%80%99s-next-the-plaintiff%e2%80%99s-perspective-%e2%80%93-second-life-employment-reclassification-case-targets-labor-abuses-by-%e2%80%98franchisers%e2%80%99/ http://www.bulletproofblog.com/2010/06/09/what%e2%80%99s-next-the-plaintiff%e2%80%99s-perspective-%e2%80%93-second-life-employment-reclassification-case-targets-labor-abuses-by-%e2%80%98franchisers%e2%80%99/#comments Wed, 09 Jun 2010 21:29:36 +0000 Larry Smith http://www.bulletproofblog.com/?p=2988
In March, Massachusetts District Judge William Young ruled that the plaintiffs, classified by Coverall Health Based Cleaning System (a cleaning business) as franchisees, are in fact employees and not independent business entities. As such, they are entitled to overtime pay, minimum wage, and compensation protection benefits. Coverall has 250-plus franchisees in Massachusetts.

Franchisers and their trade association have declared that this ruling threatens the viability of franchise businesses in the state. Damages in the case have not yet been determined nor has the situation of workers who assist the franchisees yet been adjudicated.

Does this case represent a new trend in worker misclassification actions? How so?

Shannon Liss-Riordan: There has been an increased awareness in recent years of employers misusing the independent contractor label in order to save on labor costs. This case is a continuation of that trend but highlights an even more extreme example of this type of worker abuse. Here, a company charged janitorial workers for low-paying cleaning jobs and tried to justify it on the ground that the workers were in business for themselves. What the workers were actually buying was a poorly paid job and the right to hand over more of their money to the company.

Do you agree with David French, vice president of government relations for the International Franchise Association, that the judge's determination – that “franchisers are in the same business as their franchisees” – could affect any franchise company?"

Shannon Liss-Riordan: This case is different from most franchise relationships because here the franchisees really were just performing the services sold by the company, and thus they were in the same business as the company. In this case, Coverall entered into commercial cleaning contracts with building owners and managers and delegated the cleaning work to its “franchisees,” no differently from how an employer would enter into such contracts and delegate the work to its employees.

The company also retained overriding control over the relationship with customers. By contrast, McDonalds, for example, does not itself sell burgers to customers; it sets up a system allowing its franchisees to sell the burgers. And if a customer doesn’t like a burger, McDonalds doesn’t take that customer away from the franchisee.

Do the Obama Administration's efforts to have the Internal Revenue Service target companies that misclassify workers give plaintiffs extra leverage in these kinds of cases?

Shannon Liss-Riordan: There has been a lot of talk in the federal government, as well as among various state agencies, about cracking down on independent contractor misclassification. Our experience has been that government agencies have very limited resources, and they are only able to pursue a small percentage of companies violating the law.

But, while I wouldn’t say that these government initiatives have much direct effect on most of our cases, the government has at least raised awareness of the issue.

What for you would represent a clear enough differentiation between employees and franchisees? Would companies achieve such differentiation by clearly stating that they don't directly sell any of the products or services they license franchisees to sell? Would they achieve such differentiation by no longer prohibiting former franchisees from competing?

Shannon Liss-Riordan: We have seen companies try to escape their legal liability by stating that they do something different from what they actually do. But the courts look at actions, not words, and so just stating that the company does not sell the products or services that the franchisees provide is not enough to get them off the hook.

For instance, we had a strip club claim that it sold alcoholic beverages, not exotic dancing, but the court saw it for what it was – a strip club. We’ve had package delivery companies argue that they provide “marketing logistical support” to customers who want their packages transported, but the courts have recognized that they are in fact package delivery companies. Likewise, Coverall denied that it was in the business of selling commercial cleaning services, but that is exactly what it does.

In order to differentiate itself from its franchisees, a company needs to be structured such that it really is only providing a franchise opportunity to its franchisees. Eliminating non-compete provisions is also an important step to establishing that the franchisee is not wholly dependent on the franchiser for its business.

You’re well known for tips cases. Are there any recent or upcoming developments on that front that merit attention?

Shannon Liss-Riordan: There are a handful of states that have strong, explicit tips laws protecting gratuity income for service workers. We are seeing cases being brought in more of these states where businesses (particularly restaurants, hotels, and other hospitality establishments) have flouted these laws (largely due no doubt to under-enforcement). We are also pursuing common law claims against establishments that skim or divert tips from service employees in states that do not have explicit tips statutes.

In the wake of the federal court’s decision earlier this year in Overka v. American Airlines (which certified a national class of skycaps claiming tip diversion under state common law theories), we expect courts in more states to allow tips cases to go forward under claims such as tortious interference and unjust enrichment. We also expect to see more cases brought on behalf of tipped employees outside the food and beverage industry.

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Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.]]> http://www.bulletproofblog.com/2010/06/09/what%e2%80%99s-next-the-plaintiff%e2%80%99s-perspective-%e2%80%93-second-life-employment-reclassification-case-targets-labor-abuses-by-%e2%80%98franchisers%e2%80%99/feed/ 0 http://www.bulletproofblog.com/2010/06/02/what%e2%80%99s-next-the-plaintiff%e2%80%99s-perspective-%e2%80%93-second-life-the-alleged-damages-are-virtual-the-potential-judgment-is-real/ http://www.bulletproofblog.com/2010/06/02/what%e2%80%99s-next-the-plaintiff%e2%80%99s-perspective-%e2%80%93-second-life-the-alleged-damages-are-virtual-the-potential-judgment-is-real/#comments Wed, 02 Jun 2010 18:17:59 +0000 Larry Smith http://www.bulletproofblog.com/?p=2869 In this regular feature, Bulletproof interviews top plaintiffs’ counsel for their perspective on the crises likely to affect businesses in the near future. Today, we speak to Robert A. Bracken in the Pittsburgh office of Pribanic Pribanic + Archinaco. Mr. Bracken is representing four online gamers in a case against Linden Research, creator of Second Life, and its founder Philip Rosedale. They claim the company redacted the plaintiffs' ownership rights to virtual "land" without reasonable compensation, which, they say, constitutes fraud and violation of California consumer protection law.

According to the complaint, Linden distinguished the then-struggling Second Life from other multi-player role-playing game sites by promoting the idea of ownership. Members paid monthly fees for their holdings that the company likened to property taxes. "Linden made a calculated business decision to depart from the industry standard of denying that participants had any rights to virtual items, land and/or goods," says the suit, which was filed in Pittsburgh.

The plaintiffs allege that Linden then quietly changed its contract terms and the language on its website, deleting the ownership concept.

Just to be clear, what are the actual damages in this case?

Robert Bracken: We are seeking damages in excess of $5 million. While the damages we seek certainly appear to exceed this amount, until we have all the facts about the amount of the virtual land sales, we are going to refrain from going into more detail. Further, we are seeking declaratory relief to, among other things, declare that Second Life users own the virtual property and items they purchased.  

Why are virtual property rights important?

Robert Bracken: As evidenced by Second Life’s substantial revenues, consumers are spending many millions of dollars on virtual property. As such, consumers are entitled to receive the property rights that they purchased. As time goes on, virtual worlds and communities continue to grow in terms of importance. More and more people are spending their time communicating through virtual worlds and
networks.
 
What do you think were Second Life’s motives in revoking the idea of users’ ownership rights?

Robert Bracken: We have alleged that after reaping the monetary benefits of promoting Second Life as a world created and owned by its users, Linden simply stripped consumers of the ownership rights that they had been sold. Right now, it looks like it may be as simple as wanting back what they sold after the fact. 

We have also alleged in the Complaint that there was much discussion about the "liquidity event," which may be one of the driving forces in the decision to strip consumers of their ownership interests. Philip Rosedale also made a number of statements suggesting that Linden made the ownership representations because the company was on the brink of shutdown, i.e. underfunded. What will be very interesting to see in discovery is what the shareholders knew and when. Once we see that, we will be in a better position to discuss whether there were other issues at play.
 
What might the impact of this case be if you prevail?

Robert Bracken: This case should establish that consumers are protected in virtual worlds and online, just as they are in everyday life, from deceptive business practices.   
 
What other Internet-related issues do you think are gaining in importance for plaintiffs?

Robert Bracken: One issue that all plaintiffs need to be cognizant of, particularly in personal injury cases, is a defendant’s ability to access their Facebook, MySpace and other social networking sites. Plaintiffs should be leery of whose “friend requests” they confirm. Once they gain access, defendants can take undated photographs or snapshots of the pages themselves and use them to attack the severity of a plaintiff’s injuries, for example, or prejudice them before a jury by taking and presenting quotes, comments, and postings out of context.
 
The Internet has also led to more plaintiffs pursuing invasion of privacy claims. Often personal, private information gets posted on websites without the plaintiff’s consent and the plaintiff’s only recourse is to pursue litigation.

Click here to receive the Plaintiff's Perspective in your inbox each week.

Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.

]]> http://www.bulletproofblog.com/2010/06/02/what%e2%80%99s-next-the-plaintiff%e2%80%99s-perspective-%e2%80%93-second-life-the-alleged-damages-are-virtual-the-potential-judgment-is-real/feed/ 2 http://www.bulletproofblog.com/2010/05/26/whats-next-the-plaintiffs-perspective-well-strategized-punitive-damages-strategy-sends-novartis-a-pointed-message/ http://www.bulletproofblog.com/2010/05/26/whats-next-the-plaintiffs-perspective-well-strategized-punitive-damages-strategy-sends-novartis-a-pointed-message/#comments Wed, 26 May 2010 14:30:37 +0000 Larry Smith http://www.bulletproofblog.com/?p=2807 In this regular feature, Bulletproof interviews top plaintiffs' attorneys for their perspective on the crises likely to affect businesses in the near future. Today, we speak to David Sanford of Sanford Wittels & Heisler LLP, a class action litigation boutique with offices in New York, Washington, D.C., and San Francisco.

On May 19, Novartis Pharmaceuticals, a U.S. unit of Novartis Pharmaceutical Corp, was ordered to pay Sanford’s clients – a group of 5,600 female employees – punitive damages of $250 million, the largest ever employment discrimination verdict, according to Bloomberg.

The verdict was also the second-largest verdict of any sort in 2010.

Mr. Sanford had asked the jury to award $285 million in punitive damages. Earlier, 12 plaintiffs who testified against Novartis were awarded $3.36 million in compensatory damages on issues of pay, promotion, and pregnancy discrimination.

The case is Velez et al. v. Novartis Pharmaceutical Corp. et al. It was tried in the U.S. District Court for the Southern District of New York.

What was the reasoning behind the decision to ask for the specific amount of $285 million in punitives?
 
David Sanford: That number represents between 2% and 3% of Novartis' stipulated 2009 sales of $9.5 billion. It is a significant percentage, as our goal was to send a very strong message to Novartis as well as to any other company that engages in discriminatory employment practices.
 
At the same time, we calculated the request at an amount that, while painful for the defendant, would not impede its ability to fully conduct its business. We are certainly aware that Novartis provides a critical product in the marketplace and we are by no means interested in preventing the company from continuing to do so.
 
As a litigation strategy, I think it was important to convey the message to the jury that justice needs to be done, and that justice can be done, without causing suffering among the millions of people who depend on the pharmaceuticals manufactured by the defendant. We explicitly made the point to the jury that we were striving for just such a balance and, apparently, they heard and appreciated that message.   

You scored devastating points against Novartis’ expert witness, Finis Welch. Was his testimony uniquely or anomalously flawed – or are there lessons here for other corporations?

David Sanford: Mr. Welch testifies often on related issues. In this case, his analysis was flawed. For example, he used hourly rates as a basis for generating average employee compensation, which resulted in his basing an argument for Novartis on wholly insupportable numbers. By calculating hourly rates for women on leave, he artificially inflated the compensation for women. 
 
The jury understood that Dr. Welch's analysis was flawed. The lesson for corporate defendants is a simple one: be straight with the numbers.

These disparate pay and promotion issues seem old. Haven’t they been resolved at large multinational companies by improved and prophylactic company policies? Is this case sending a new message or repeating an old one that should have been learned years ago?

David Sanford: You may have actually hit upon the issue when you mention “improved and prophylactic company policies.” Big companies have such policies, to be sure – but so what? It’s still just paper. Where they’re failing is in the implementation, oversight, and supervision of their own practices. They need to actively monitor to ensure compliance with their own employee compensation and employee policies.
 
Juries care about deeds, not words

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Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.

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