Category Archives: Litigation

Litigation

Motions to Dismiss Still A Possibility

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Mark Kingseed by Mark Kingseed

In spite of the recent Second District Appellate Court decision in Sacksteder v. Senny, 2012 Ohio 4452 (2012), which declined to adopt the more stringent pleading standards set out by the U.S. Supreme Court in Bell Atlantic v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), it is still possible to get inadequately pled complaints dismissed via a motion to dismiss or for judgment on the pleadings.  Coolidge Wall recently succeeded in having an intentional infliction of emotional distress count dismissed in a discrimination suit because the plaintiff had not pled facts sufficient to demonstrate the requisite “extreme and outrageous” conduct exceeding “all possible bounds of decency.”  The court ruled that terminating an at-will employee, even if there were allegations of discrimination involved, did not automatically rise to the level of a viable intentional infliction of emotional distress case.  Rather, the court held that since the harm identified by the plaintiff “is limited to that produced by her discharge,” the plaintiff had alleged nothing that could provoke the level of outrage necessary to sustain a claim for intentional infliction of emotional distress.

There is no doubt that successful motions for judgment on the pleadings or motions to dismiss are more difficult given the Sacksteder decision.  However, as the recent decision demonstrates an aggressive and carefully thought out Motion to Dismiss can still be successful.  A defendant’s counsel should carefully analyze the facts alleged to determine whether the allegations, if proven, meet the prima facie elements of the cause of action.  If not, a Motion to Dismiss is still a tool which can be used.

How to Increase the Odds That the Loser “Really Pays”

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Richard A. Talda  by Richard A. Talda

Often, a client seeking our advice asks if they can recover their attorney’s fees in a lawsuit.  We explain that an award of attorney’s fees to a prevailing party only occurs in a few situations:  when a Federal or State law mandates an attorney fee award to the lawsuit’s winner, or when a court, in its discretion, determines that the behavior of the losing party is so egregious that punitive damages and attorney’s fees should be awarded.  We explain that the necessary “egregious behavior” needs to almost rise to the level of criminal activity before a court will even consider a request for attorney’s fees.  While most clients believe that the wrongs done to them by adverse parties are always “criminal” in the sense of being intentional and outrageous, it is rare when a court will award attorney’s fees purely based on bad business behavior.

However, clients can dramatically improve their chances to recover their attorney’s fees by providing a loser pays requirement in their contracts, agreements, purchase orders, proposals, and even in their standard terms and conditions.  These clauses are generally enforceable in court and provide a means for a wronged person to recover attorney’s fees when pursuing the adverse party for damages and compensation.

Critical to enforcement of a loser pays provision is the need to make it part of your contract or agreement.  Therefore, care must be taken in the specific language of such clauses as well as how they are disclosed and agreed to by all of the parties in a business relationship to ensure enforceability.  This is particularly true, if a loser pays clause is found in your terms and conditions.  You should consult your legal advisor as to how best to impose and ensure enforceability of such provisions against other parties with whom you do business.

Do You Deserve a Break Today? Not at this McDonald’s

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  by Merle F. Wilberding

In McDonald’s Corp v. Union County Board of Revision, 2012 Ohio 3751 (Court of Appeals – 3rd District), McDonald’s Corporation made it clear that Connolly Construction Co. (“Connolly”) did not deserve a break today. In fact, McDonald’s Corporation wanted Connolly thrown out of court.

On March 31, 2011, Connolly filed a Complaint with the Union County Board of Revision challenging the valuation of McDonald’s property in Marysville. McDonald’s Corporation intervened in the proceeding and moved to dismiss Connolly’s Complaint because the Complaint was signed by “John R. Connolly,” with no indication of his status.  It was acknowledged that he was a salaried employee of Connolly, but there was no evidence as to whether or not he was an officer of Connolly.

On August 20, 2012, the Third District Court of Appeals affirmed the dismissal of the case for want of jurisdiction, ruling that, as a salaried employee of Connolly, John R. Connolly, did not come within the protection of the Ohio Supreme Court’s ruling in Dayton Supply & Tool Company v. Montgomery County Board of Revision, 111 Ohio St.3d 367, 2006-Ohio-5852, 856 N.E.2d 926 (2006).

In Dayton Supply, the Supreme Court had ruled that a corporate officer had not engaged in the unauthorized practice of law by signing a complaint for the valuation of property before the Montgomery County Board of Revision. In McDonald’s, the Court of Appeals ruled that a salaried employee did engage in the unauthorized practice of law by signing a complaint for the valuation of property before the Union County Board of Revision.

In making that ruling, I believe the Court of Appeals identified a distinction in employee labels without a difference in whether that act constitutes the unauthorized practice of law.  I had the opportunity to argue Dayton Supply before the Ohio Supreme Court and I am confident that neither the oral argument nor the written decision supports a conclusion that a salaried corporate employee engages in the unauthorized practice of law by signing a Complaint, but a salaried corporate officer does not engage in the unauthorized practice of law by signing the exact same type of complaint.

The real thrust of the Dayton Supply decision was that a non-attorney employed by a corporation could sign a complaint before a board of revision without engaging in the unauthorized practice of law, as long as that employee does not actively participate in the case by making legal arguments, examining witnesses, or undertaking any other tasks that can be performed only by an attorney.

If that holding were applied properly in Connolly, the case could have proceeded on the merits.  Instead, the public interest factors advanced by the Supreme Court went unheeded by the Court of Appeals in its ruling that I believe unfairly restricts the public’s access to the judicial system without any corresponding benefit to the public.  I hope the Ohio Supreme Court reviews the Connolly case.

Stay away from my friends: When is a business’s social media friend list a trade secret?

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Sasha VanDeGrift  by Sasha VanDeGrift

The general rule in Ohio is that for a customer list to be a trade secret, it has to be… a secret. Usually this means that the customer list is stored in a locked drawer or a password-protected server that only a few trusted people can access.

But with the emergence of social media, a friend list may be as or more important than a traditional customer list. But can a business’s friend list be a trade secret just like a customer list?

Christou v. Beatport, L.L.C., No. 10-cv-02912-RBJ-KMT, 2012 U.S. Dist. LEXIS 34307 (D. Colo. 2012) has raised this very issue. Christou owned several nightclubs in Denver that featured electronic house music. Christou employed Bradley Roulier as his talent scout and performance coordinator. Roulier had access to the friend lists.

The relationship between Christou and Roulier soured and Roulier left Christou’s nightclub empire to form a competing music business called Beatport. As former employees sometimes do, Roulier left with information that Christou believed to be trade secrets, including the friend lists.

Christou sued Roulier and Beatport, claiming the friend lists were trade secrets. Beatport moved to dismiss, arguing that the friend lists could not be trade secrets as anyone who accessed Christou’s social media pages could see who Christou’s friend are.

But the court found that the names themselves, readily available to the public, were not the important factor. Rather, by friending a business, the business gained access to the friend’s interests and preferences, contact information, and a built-in means of contact. This information cannot be obtained from outside sources. The court found that Christou could continue the lawsuit against Beatport because the friend lists could plausibly be trade secrets.

The court did not address whether the individual user’s profile is private or public. Facebook in particular has made headlines when privacy settings changed automatically and made formerly private content public. If a user made his/her content public, including the interests and preferences that could be valuable to a business, would that negate the court’s conclusion that the information requires protection because it cannot be obtained elsewhere? Can something be a trade secret when the business cannot control whether the very thing it desires to protect is actually a secret.

On the other hand, a friend list is greater than the sum of its parts. Having lists of thousands of people who have self-identified themselves as potential customers is immensely valuable. In Christou, the friend lists contained thousands of people, some of whom identified favorite DJs, songs, artists, etc., which would help Christou or Beatport learn what music was trending with their primary audience. Even if the customers all made their profiles public, which would make their contact and preference information just as available to Beatport as to Christou, Beatport would have to use its resources to find the profiles. Having a list of those people would save time and money, a fact that might persuade a judge that regardless of whether the profiles are public or private, the information is a trade secret.

Few, if any, courts have resolved these questions. As the court in Christou stated, whether a friend list is a protectable trade secret is an issue of first impression in federal court. Likewise, Ohio courts have not decided this issue. But we are likely to see more litigation on this issue, including the final decision in Christou.

The implication from the court’s decision is that under the right circumstances, a friend list might be a trade secret. Friend lists have business value and have to be treated that way. Make it clear that you do not want anyone other than your people talking to your friends. If your actions do not tell your competition to stay away from your friends, the competition will try to replace you as your friends’ BFF in the industry

Rockin Robin, Tweet Tweet Tweet

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Merle Wilberding  by Merle Wilberding

“Rockin’ Robin, Tweet, Tweet, Tweet” were some of the great lyrics from early Rock & Roll. Bobby Day brought this song to # 2 on the Billboard Top 100 in 1958. Although Bobby Day was a one-hit wonder, his “Rockin’ Robin, Tweet Tweet Tweet” lives on even today on You Tube ( http://www.youtube.com/watch?v=ocT1wFcYspE ).

Bobby Day could never have foreseen that “Tweet Tweet Tweet” would become the sounds of the times today, as everyone either tweets or knows someone who tweets, and as everyone either is on Facebook or knows someone on Facebook – - so much so that the tweets or other social media communications may be caught in the netting of the legal system. Just ask Jacob Jock who spent three days in the slammer because, while sitting on a jury, “friended” the defendant in the case.

There are other illustrations of jurors tweeting during the trial about their thoughts on the evidence, or posting their thoughts on Facebook. In fact, the corruption trial of Baltimore Mayor Sheila Dixon became known as the “Facebook Five” case because five jurors had “friended” each other during the trial. These practices have put at risk a number of cases on appeal.

It is clear that we must do something to keep these Rockin’ Robins and chatty jurors from “hoppin’ and a-boppin’ and singing [to] all the little birdies on Jaybird Street.” Think about the lyrics from that song and the potential for juror social media misconduct and then give me a response to these questions:

What should lawyers do to safeguard their client from social media misconduct?

What should judges do to safeguard their proceedings from social media misconduct?

Food Fights: How Tasty Treats Can Fuel Nasty Litigation

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Sasha VanDeGrift  by Sasha VanDeGrift

Never get between a man and his money… or his snacks.

For one Livonia, Michigan man, Joshua Thompson, a local movie theatre’s prices for concessions were an attack on both. So Thompson decided to put his money where his mouth is – by filing a class action lawsuit against the theatre in the Wayne County, Michigan Circuit Court.

According to Thompson, super-sized snack prices violate the Michigan Consumer Protection Act. While many hungry movie-goers may find his efforts very satisfying, it remains to be seen whether the court will chew on his claims for a while or spit them out.

Those who have not been to the movies in a while might find the prices hard to swallow: Thompson paid $8.00 for a Coke and a package of Goobers the day after Christmas. Bah humbug. Thompson apparently did his own research and learned that comparable goodies would cost roughly one-third the price if purchased elsewhere.

Thompson told the Detroit Free Press that he used to BYOC (“bring your own candy”) to that theatre, but that the theatre recently posted a sign banning outside food and beverages. Perhaps the most surprising part of this story is that he decided to file suit rather than sneak in contraband concessions.

There do not appear to be any similar cases in Ohio. That said, like the Burger King trans fat and the McDonald’s coffee spill cases were in their day, this is probably just the first helping of movie-snack litigation.

Filmgoer takes stand on costly snacks, sues AMC Livonia theater freep.com

Joshua Thompson loves the movies. But he hates the prices theaters charge for concessions like pop and candy. This week, the 20-something security technician from Livonia decided to do something about it: He filed a class…

Ohio’s Most Litigated Private Pool?

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Daniel Gentry by Daniel Gentry

An Ohio family in Mahoning County is demonstrating their commitment to property rights, swimming, or both.

In 1949, Ohio Edison obtained an easement for building and maintaining an electric transmission line, and currently maintains a 69,000 high voltage line within the easement area. More than 25 years later, in 1977, the Wilkes family purchased a home on a lot partially covered by Ohio Edison’s easement. In 1993, they installed an above-ground swimming pool and storage shed within the minimum safe distances from the transmission lines pursuant to the National Electrical Safety Code.

In November of 2008, Ohio Edison notified them to relocate or remove the structures within 14 days. The Wilkes retained counsel who was unable to resolve the dispute despite threatening to “have each and every employee of Ohio Edison who trespass or attempt to trespass on Mr. and Mrs. Wilkes’ property arrested and charged with all felony criminal statutes presently enacted in the State of Ohio.”

Ohio Edison filed suit on April 8, 2009 in the Mahoning County Common Pleas Court seeking to enforce the easement and obtain relief ordering the family to remove the structures. The Wilkes family also initiated a separate proceeding with the Public Utilities Commission of Ohio on August 5, 2009, and asked the PUCO to order Ohio Edison to move the transmission lines. After the PUCO dismissed the complaint, the Wilkes family appealed to the Ohio Supreme Court on May 3, 2011.

Meanwhile, the Mahoning County litigation that Ohio Edison started continued. In August of 2010, a court magistrate ordered the family to relocate the pool and the shed. After challenging that decision with the sitting judge who agreed with the magistrate, the Wilkes appealed. The trial judge declined to suspend his order while they appealed. On May 5, 2011 (while both appeals were pending), the trial court judge found the Wilkes to be in contempt of court and fined them. Soon thereafter, however, the court of appeals stayed Ohio Edison’s case on May 25, 2011 in order to allow the Supreme Court to determine the Wilkes’ appeal from the PUCO.

The Ohio Supreme Court decided on February 22, 2012, that the dispute belonged in court rather than before the PUCO. According to news accounts the next day, the family intends to battle on, and presumably will resume their appeal from the Mahoning County Common Pleas Court decision in the Ohio Edison matter.

While the Wilkes’ fight with Ohio Edison has been working its way through the courts and the PUCO, the Wilkes family has managed to avoid moving their pool and shed and otherwise could have continued to use them for three summer seasons. But the battle is not over yet and, in the final analysis, the Wilkes family will have to decide whether it was worth it to spend that amount of time and presumably a lot of money to try to protect their right to a private dip in the backyard pool. Perhaps the answer is already clear since the trial court issued an order on June 19, 2009 precluding the family from using the pool.

In re Complaint of Wilkes v. Ohio Edison Co., Ohio Slip Op. No. 2012-Ohio-609.

The full opinion may be found at the following link:
http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2012/2012-Ohio-609.pdf

Supreme Court’s GPS Constitutional Privacy Ruling Could Impact Private Employers

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Allison Michael  by Allison Michael

Recently, in U.S. v. Jones, the U.S. Supreme Court ruled that the Fourth Amendment (protecting a person’s reasonable expectation of privacy and against unreasonable search and seizure) was violated when law enforcement inserted a Global Positioning System (or GPS) device in a vehicle, without a valid warrant, and tracked the vehicle’s every move on public streets for a month. Although Jones is a criminal case involving the U.S. Constitution which prohibits unreasonable searches by government actors, the decision may have a ripple effect on private employers who use GPS and other tracking devices to monitor employees’ whereabouts.

Currently, only two states, California and Texas, have laws prohibiting use of GPS or similar devices in vehicles without the owner’s consent. There are also two recent federal bills pending which, if enacted, would likewise prohibit nonconsensual use of the devices in the private employment and other contexts. It can be expected that more states will follow lead and introduce similar legislation. In the meantime, the majority of states recognize a common law tort claim (a civil claim for damages) against an employer for breach of an employee’s right to privacy. Given the general lack of case law on tracking devices and privacy concerns, coupled with the strong, privacy protective message from the Supreme Court, it is likely that private sector employees will rely heavily on the Jones decision in making such tort claims and arguing that their employers violated privacy expectations in “unreasonable” tracking and monitoring scenarios.

In light of these considerations, private employers are cautioned to limit the use of tracking devices (whether in vehicles, smart phones, laptops, or other portable devices) to that which is reasonably necessary to satisfy the employer’s legitimate business needs. Legitimate business needs may include things such as investigation of misconduct, locating a stolen vehicle or lost driver, or verifying that a service call was made when a customer is denying it. Still, even where legitimate business needs reasons for tracking exist, certain precautions should be taken to reduce liability exposure for invasion of privacy claims.

First, employers should notify employees of the “who, what, when, where and why” of use of the tracking device through a written policy, and obtain the employee’s signature acknowledging receipt and review of the policy. Second, GPS and other tracking devices should only be used in company-owned vehicles or equipment. If the employee uses his/her own vehicle or equipment for business purposes during work hours, tracking should only be done with the employee’s consent and knowledge (and preferably only after the employee has refused to use the company vehicle or equipment that was offered to him/her). Third, with rare exception, employers should never track an employee’s whereabouts during non-work hours. A “rare” exception could be limited tracking to determine whether an employee is driving a company vehicle for personal reasons after work against known company policy, or to find out whether an employee is actually working after hours as he/she is claiming on his time card. Even these limited exceptions should only be used when the employer has received other reliable information that the employee is engaging in the alleged wrongdoing.

Following these guidelines may help reduce liability exposure for invasion of privacy claims, and, in any event, are simply “best practices” from an employee relations standpoint.

Employer Collective Arbitration Prohibited

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In a victory for employees, the NLRB recently held in D.R. Horton, Inc., 357 N.L.R.B. No. 184 (Jan. 2012), that an arbitration agreement that prohibits employees from filing class action lawsuits violates the National Labor Relations Act.

In D.R. Horton, the company required employees to sign an agreement that required them to arbitrate their disputes. However, the agreement provided that the arbitrator would not have the power to consolidate claims or award relief on a class basis.

The Claimant’s attorney notified the company that he had been retained to represent a class of employees in a Fair Labor Standards Act case contending that the employees had been improperly classified as exempt and that he wished to arbitrate the dispute. In response, the company cited the class prohibition in the arbitration clause and claimed the notice to arbitrate was ineffective.

The NLRB in a 2-0 decision found that filing a collective or class action claim constituted protective concerted activity which is protected by Sections 7 and 8(a)(1) of the National Labor Relations Act.  Moreover, the Board determined that such an arbitration clause would cause employees to believe they were prohibited from filing an Unfair Labor Practice charge.  Therefore, the Board determined that such arbitration clauses are prohibited. 

The Board’s decision is significant.  It applies to both union and non-union employers. Furthermore, it casts renewed doubt on the utility of employment arbitration clauses as a means of eliminating class action disputes. Such clauses had become more popular in light of a recent U.S. Supreme Court case enforcing an arbitration provision that prohibited class action lawsuits by members of the public. AT&T Mobility v. Conception, 131 S. Ct. 1740 (2011).

Employers are cautioned to have their arbitration clauses reviewed by counsel before asking their employees to sign them.  In addition to problems with clauses that prohibit class actions, courts have found other restrictions in employer/employee arbitration clauses to be unconscionable or unenforceable.   Similarly, companies should carefully consider whether they want to include arbitration clauses as a means of alternative dispute resolution in other business agreements.  This is especially true because the traditional benefits of arbitration (i.e., faster and cheaper resolution) may not be present depending upon how the arbitration provision is drafted.

Social Media Posts as Evidence? The Verdict is YES!

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Sasha VanDeGrift by Sasha VanDeGrift

My mother used to always say that once your opinions hit the air, you are responsible for them. Like mothers usually are, she was right. But her advice is even more significant in the age of social media. A moment shared on Facebook or MySpace with 587 of your closest “friends” can truly come back to haunt you, not just in social settings, but also in court.

That’s right: the seemingly innocuous post today could be an opponent’s key piece of evidence tomorrow. I recently experienced this representing a client in an administrative hearing. Prior to the hearing, my client, a skilled internet sleuth, found some really good dirt on our opponent that our opponent had been kind enough to announce on his Facebook wall. Even better, our opponent had never elected to change his Facebook settings to make his wall content private. Without even being his “friends,” my client and I were able to see everything ever posted on our opponent’s page.

Before using this evidence, I did some legal research to see if any courts in Ohio had relied on social media pages as evidence. In fact, several local courts have admitted social media evidence:

  • State v. Hause, 2009-Ohio-548, Warren App. No. CA2008-05-063:
    • The Twelfth District Court of Appeals affirmed the conviction and sentence of a part-time school district employee stemming from pictures she posted on Facebook showing her providing alcohol to minors.
  • Gillum v. Gillum, 2011-Ohio-2558, Montgomery App. No. 24401:
    • The Second District Court of Appeals affirmed a decision by the Domestic Relations Court decision not to remove children from their mother’s custody based on content posted on the mother and daughters’ MySpace pages the father felt were “inappropriate.” The 13 and 15 year old daughters had posted pictures of themselves in swimsuits with captions like “sexii” and “one sexii cowgirl.” The mother had posted that the father was “fat,” “ugly,” and that he and his new wife were “sinners.” The Second District found that the posts were “problematic,” but that the danger posed by the posts was not significant enough to warrant a change in child custody.
  • State of Ohio v. McCraney, 2010-Ohio-6128, Summit App. Nos. 24750 and 25285.
    • The Ninth District Court of Appeals affirmed the convictions for two defendants of engaging in a pattern of gang activity based, in part, on pictures from the Defendants’ MySpace pages showing the Defendants wearing gang colors, displaying gang hand signs, standing with known gang members, and paying tribute to a fallen gang member.

The take-away for attorneys and social media users: even in cases given the highest level of constitutional protections (i.e. criminal and child custody cases), social media evidence has been admitted and considered by courts in rendering judgment. Now, it is worth noting that none of the parties in these cases challenged the authentication of the social media pages or raised any other objections to their admission into evidence. How courts have addressed such objections is a topic for another day (stay tuned).