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NYC Litigation Blog

Tuesday, April 7, 2015

Successful Defense of Growing Startup that Provides Meals to Schoolchildren

Here is the appellate decision in recent case we successfully defended on behalf of a startup and its principal. The growing company, Red Rabbit, provides healthy meals for schoolchildren. The Appellate Division unanimously affirmed the lower court decision, dismissing all remaining claims for fraud and breach of fiduciary duty because the non-disclosed information was not material to, or relied upon in, the transaction.

Brummer v Red Rabbit, LLC
2015 NY Slip Op 02912
Decided on April 7, 2015
Appellate Division, First Department
 

Friedman, J.P., Acosta, Moskowitz, Richter, Kapnick, JJ.

14731 652565/12

[*1] John Brummer, Plaintiff-Appellant-Respondent,

v

Red Rabbit, LLC, et al., Defendants-Respondents-Appellants.

Order, Supreme Court, New York County (O. Peter Sherwood, J.), entered on or about July 28, 2014, which granted defendants' motion for summary judgment dismissing the complaint and plaintiff's cross motion for summary judgment dismissing the counterclaim, unanimously affirmed, without costs.

The complaint alleges that defendant Rhys Powell was a patient of plaintiff John Brummer, a podiatrist. In 2005, Powell formed defendant Red Rabbit, LLC to provide healthy lunches to New York City preschools. Powell used his own funds and those of other investors, including a total of $25,000 from Brummer at the inception of the business, giving Brummer a 7% interest.

In the summer of 2010, Powell approached Brummer and offered him $40,000 for 6% of the company (leaving Brummer with 1%), but without disclosing that he had been in negotiations for a large investment in Red Rabbit by two investors. Powell allegedly based his valuation of Brummer's interest on a percentage of Red Rabbit's average income for the past year and the next year as projected, and, in September 2010, Brummer accepted the $40,000.

The evidence of plaintiff's long-held desire to sell back his interest in defendant Red Rabbit, LLC demonstrates that the alleged false representations regarding the company's value and alleged concealment of impending investments from additional investors were neither relied upon nor material to plaintiff's decision to sell. Accordingly, dismissal of both the fraud and breach of fiduciary duty claims was warranted (see generally Lama Holding Co. v Smith Barney Inc., 88 NY2d 413, 421 [1996]).

Absent an allegation of actual loss by plaintiff, his unjust enrichment claim is also deficient (see Edelman v Starwood Capital Group, LLC, 70 AD3d 246, 250-251 [1st Dept 2009], lv denied 14 NY3d 706 [2010]).

The counterclaim failed to allege the breach of any duty found in defendant Red Rabbit's operating agreement.

Accordingly, it was properly dismissed.

THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: APRIL 7, 2015

CLERK


Wednesday, February 18, 2015

Pawn Shops Settle EEOC Harassment Lawsuit

What are my rights at work when my boss harasses me?

Seapod Pawnbrokers will pay $300,000 as part of a settlement with the United States Equal Employment Opportunity Commission (EEOC). Operating stores in Brooklyn and Queens, the company was charged with harassing and retaliating against its Hispanic female employees.

Seapod's former owner and manager was accused of harassing workers based on their sex, race and ethnicity and firing them if they complained. These violations of federal law were the subject of an EEOC lawsuit. The pawn shop owner allegedly referred to his mostly Hispanic female employees as his "Seapod bitches" and his "whipping slaves." He also allegedly sexually harassed the women and fired some of them when they resisted or complained.

The EEOC filed suit after trying unsuccessfully to settle the case. A four-year consent decree resolved the case on various terms, including the EEOC monitoring Seapod's employment practices throughout the four years.

Monetary damages in the amount of $300,000 will be paid to the victims. The owner is forbidden from having any association with the company and cannot enter its stores or contact its employees. Going forward, Seapod must revise its policies for complaints and investigation and inform its employees about the changes. Seapod is also required to provide all employees annual anti-harassment and anti-retaliation training.

The EEOC has a Strategic Enforcement Plan identifying six national priorities that include preventing harassment in the workplace and protecting vulnerable workers. The agency is responsible for enforcing federal laws against employment discrimination.

If you have experienced employment discrimination or wrongful termination, Thomas M. Lancia PLLC can help. He has been zealously advocating for clients in New York, New York, for more than 20 years. Call him today at (212)964-3157 for a consultation.


Tuesday, February 17, 2015

F.R.C.P. 68 - Offers of Judgment and Attorneys' Fees

While acting as Plaintiff’s counsel, our firm has recently received a flurry of offers of judgment from competent defense counsel in federal cases.  Why?  I thought I would answer this question and provide a handy chart for employment, copyright and a few other types of cases we handle as plaintiff’s counsel.

A party defending a claim may make an Offer of Judgment under Rule 68 of the Federal Rules of Civil Procedure (the “Offer”), specifying the terms and amount of the Offer.  Rule 68’s language means Defendant is typically the party making the offer and the Plaintiff is usually the party that accepts or rejects it. When the Defendant makes the Offer, the trial court has no discretion to decide whether or not to enter it if it is accepted by Plaintiff.  But if the Offer is rejected, and Plaintiff ultimately prevails but receives a damages award lower than the Offer, Plaintiff’s counsel may not receive statutory attorneys’ fees.  That may ultimately make the Offer more attractive, precisely the effect desired by defense counsel when making the Offer.

            The relevant portion of Rule 68 reads “If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.”  Fed. R. Civ. P. 68(d).   Clever defense counsel try to craft the Offer to be just high enough to entice an acceptance but still low enough to be a good result for their client.  Counsel must be sure to indicate that costs are included in the total amount of the Offer, or else defendant may be responsible for the plaintiff’s costs after the date of the Offer, even if the plaintiff’s recovery is less than the amount in the Offer, .

In recent cases our firm has handled, many practitioners have argued that a Rule 68 Offer of Judgment unequivocally cuts off attorneys’ fees in all cases.  That’s often true, but not always true.  As a general rule, attorneys’ fees are cut off as of the date of an Offer ONLY IF the statute governing the underlying claim defines attorneys'  fees as part of costs.  If the statute does not include attorneys’ fees as a part of costs, the party making the Offer may still be liable for paying the Plaintiff’s attorneys’ fees even if the amount recovered is less than the amount offered. 

As always, start with the statute.

Statute

Are fees defined as part of costs?

Copyright Act

Yes

Lanham Act

Unclear; Attorney fees may only be awarded in “exceptional cases”

§ 1983

Yes

Americans with Disabilities Act

Yes

Fair Labor Standards Act

No

Title VII

Yes

§ 1988

Yes

ERISA

No

FMLA

No


Wednesday, January 21, 2015

“Goodfellas” Actor Sues “The Simpsons” for Using His Image and Likeness Without Consent

Can a TV show base a character on an actor’s role in a movie without violating the law?

One might argue that all mafia types in TV and film are interchangeable and based on a stereotype. Frank Sivero would likely disagree. The actor filed a $250 million lawsuit against Fox Television Studios, Inc., and 21st Century Fox America, Inc., claiming that his character Frank Carbone from the 1990 movie "Goodfellas" served as the basis for the cartoon character Louie in the television show "The Simpsons."

According to Sivero, he created and developed the Carbone character without a script and based on his own personality. During that time, he was living next door to writers from "The Simpsons," and Sivero alleges that the show appropriated his confidential idea in creating Louie. Sivero seeks damages for the use of his name and likeness, claiming that he is entitled to a portion of the profits from all things "Simpsons" related, including the television show, movie and video games.

Sivero allegedly spoke with producer James Brooks in 1995 or 1996 about being part of the future success of "The Simpsons" and possibly even doing a movie together. In his lawsuit, Sivero asserts that there was never any intention of making a film; rather, individuals associated with "The Simpsons" were studying him further in connection with the Louie character.

It is unclear why Sivero waited so many years to file this lawsuit, although Louie is a recurring character in "The Simpsons" and appeared most recently in an April 2014 episode. Sivero asserts that he has been typecast due to the show's use of his likeness and idea, further damaging him financially.

Thomas M. Lancia has more than 20 years of experience representing clients in the New York City area in matters involving copyright litigation. Call him at (212)964-3157 for a consultation today.


Wednesday, January 7, 2015

Sandwich Shop Causing Stir With Non-Compete Agreement

How do courts determine the validity of a non-compete agreement?

Most businesses need employees to operate efficiently.  But, most employees do not stay with the same employer for their entire careers. Therefore, some employers worry that these former insiders will use the information they obtained to create unfair competition when they begin working for someone else.

In order to avoid this for a specified period of time, some employers utilize non-compete agreements also known as restrictive covenants, in order to limit a former employees work opportunities after separating from the business.  While these agreements are legal in most states, in order to be considered valid they must not be overly restrictive.  One company is currently being scrutinized for its use of these agreements.

Jimmy John’s is a sandwich franchise with locations all over the United States.  The company employs all types of workers and apparently requests that even low-level workers sign a non-compete agreement.  The terms of the agreement include that if the worker leaves that they cannot be employed by a competitor for two years.  A competitor is defined as any entity that makes 10% or more from the sale of sandwiches and operates within a two mile radius of any Jimmy John’s.  These terms essentially prevent workers from finding employment with any other business that sells sandwiches and some think that these terms are too limiting.

The New York Attorney General has become involved and has initiated an investigation into Jimmy John’s business practices in relation to this matter.  It seems that the Attorney General thinks that these agreements might violate the law.  Usually, non-compete agreements are used to stop higher level employees who might have access to sensitive, valuable or confidential information, from using it to unfairly compete.  As low level workers at Jimmy John’s do not have access to this type of information, it seems that the use of these agreements might be stifling the free market unnecessarily.  Therefore, the terms of the non-compete agreements used by the sandwich shop might be overly restrictive making the agreements invalid.

Thomas M. Lancia works with employers and employees relating to non-compete agreements, trade secrets and employment discrimination in the New York City area.  Contact him by calling (212)964-3157 today for a consultation.

Friday, December 12, 2014

Grooveshark Loses Copyright Infringement Suit

Can online music services use copyrighted works without permission of the copyright holder?


The online music industry is always ripe with disputes.  Internet music downloading and streaming services have been involved in copyright infringement litigation going back to the days of Napster.  Not surprisingly, another online music streaming service has been involved in a copyright issue and found to have violated Federal laws.

Grooveshark, based in Gainesville, Florida, allows users to stream music from it’s website.  The company had a huge following entering 2011 and was signing advertising deals with major businesses.  In some instances, Grooveshark was streaming music without the permission of the works copyright holder and claiming that they were protected under the Digital Millennium Copyright Act.  This act allows websites to use material owned by others as long as they take down the material once notified by the copyright holder.   Unfortunately, the three major record companies were not persuaded by this argument and filed suit against the company in a United States District Court in Manhattan in 2011.

The District Court recently found against Grooveshark on a motion for summary judgment.    They held that the Digital Millennium Copyright Act did not protect the company because its own employees (including corporate officers) uploaded music to the site themselves without the authorization of copyright holders.  The company not only knew they were committing copyright infringement and uploaded the music anyway, but, also requested that employees upload infringing material or face consequences.  The court also found that the company destroyed evidence that would have been relevant to the case.

The amount of damages has yet to be decided, but a large verdict could bankrupt the company. While it claims to be exploring its options to appeal this case, Grooveshark is also facing copyright lawsuits by various other parties.  

Copyright laws are complicated and therefore copyright litigation can be complex.  It is important to contact an experienced copyright litigation attorney should you be accused of infringement or looking to assert your rights under a copyright you hold.  Thomas M. Lancia handles all types of copyright litigation in the New York City area.  Contact him by calling (212)964-3157 today.

Friday, November 21, 2014

Two Circuit Courts Disagree Regarding Copyright, Fair Use and Transformative Use Law

In a significant rebuff, the U.S. Court of Appeals for the Seventh Circuit recently questioned and disregarded the U.S. Court of Appeals for the Second Circuit’s analysis regarding the fair use and transformative use legal defenses to copyright infringement. 

In 2013, the Second Circuit had determined that, in Cariou v. Prince, an artist who transforms another’s work generally does not legally infringe on the original author's work or intellectual property rights. In September of this year, the Seventh Circuit, in Kienitz v. Sconnie Nation reached different conclusions, while drawing attention to errors in the Second Circuit’s legal analysis. The Seventh Circuit questioned the following points regarding the Second Circuits analysis of the fair use and transformative use defenses:

• The Second Circuit based its analysis almost solely on whether or not the original work had been “transformed”.
• The Second Circuit did not take into consideration the differing motives of the original and transforming artists regarding the creation of the works in question, i.e. how and why something was being expressed.
• The Second Circuit did not require the transforming artist to comment on, reflect on, parody, satirize or otherwise offer new insights to the original work.
• The Second Circuit disregarded the central precepts of the Copyright Act pertaining to a copyright owner’s exclusive right to reproduce, distribute, perform, display, transmit or prepare derivative works based on his or her original work.

Kienitz v. Sconnie Nation involved the defendant using a photograph copyrighted by the plaintiff on a T-shirt. Despite the fact that the Seventh Circuit rejected findings of the Second Circuit in Cariou v. Prince, it decided for the defendant. It based its opinion on several concepts of the Copyright Act as well as the marketing effect of the artwork in question. The court described the Second Circuit’s laser focus on transformative use issues as “dangerous” to the future existence of derivative works. 

If you have questions regarding copyright infringement, contact Thomas M. Lancia.  Attorney Lancia has more than 25 years of legal experience and can provide sound advice. Call (212)964-3157 for a consultation today.

Thursday, November 20, 2014

Can Text That Predates Copyright Protection Be Used Without Permission If It Has Been Recently Altered?

Copyright laws regarding old and even ancient texts are clear. The novel The Three Musketeers by Alexandre Dumas is not protected by copyright laws. Neither is Macbeth by Shakespeare or Emma by Jane Austen. So could Exemplary Tales of Love and Tales of Disillusion, written by María de Zayas y Sotomayor in approximately 1647, enjoy copyright protection?

The answer to this question is “possibly,” if the text has been significantly altered, and the altered text was copyrighted. This is the key question in a lawsuit filed by author and translator Julian Olivares against Elizabeth Rhodes, a professor at Duke University and Margaret Greer, a professor at Boston College. 

The facts of the case are as follows. In 2009, Rhodes and Greer published an English-language version of the Spanish-language Exemplary Tales of Love and Tales of Disillusion. In the book’s introduction, Rhodes and Greer state that the Spanish-language version of Exemplary Tales, on which they based their English translation, was Olivares’, that Olivares served as an editor of their book and that Olivares was one of many people who provided “assistance and support” for their work.

Olivares has sued, claiming that he published his work with a copyright  and that Rhodes and Greer did not request or receive permission to use his work in any way.  He also alleged that his edition was a “new and different version” of Exemplary Tales that contained “a large amount” of original material and is therefore eligible for protection.  As well as that he did not serve as editor for the work or provide assistance and support and that he was not in contact with Rhodes and Greer at all.

Though the outcome of the case will not be known for months or years, it already illustrates an important point: Even seemingly clear-cut cases of copyright protection can quickly become complex. It therefore makes sense to work with a qualified copyright attorney when publishing and using material, as well as when litigating in a copyright dispute case. 

New York City attorney Thomas M. Lancia has successfully tried and arbitrated copyright infringement and trademark legal cases since 1998 and can provide the answers and assistance you need regarding intellectual property law questions. Call (212)964-3157 for a consultation today.

Friday, November 14, 2014

NYPD Officer Fired For Alleged Connections to Criminals Now Suing Department

It is usually considered discriminatory for your employer to ask about your sex life or associates outside of work. But, what if the agency you work for has a policy that prohibits you from associating with certain parties.  A former New York City Police Department officer has recently brought a lawsuit that addresses this very question.

Erica Rivera, 27, of Orange County, New York, was a NYPD officer working at the 52nd Precinct in the Bronx.  In 2012, when she was a new officer, a woman came into the station house and informed other officers that there was a photograph of Rivera and a gentleman named Danny Perez posted on social media.  The woman was Perez’s new girlfriend.  Rivera and Perez dated years before and the picture was from 2007.  Unfortunately for Rivera, Perez has also been incarcerated for a stabbing since they were an item.  This raised some concern among Rivera’s superiors and she was questioned about the circumstances and even about current sexual relations with Perez, which she denied.  Afterward, the incident seemed to blow over.

But, in 2013, a detective from Rivera’s town informed the NYPD that she was currently involved with another individual with criminal ties, George Mann.  Mann had been arrested in relation to child support payments.  Rivera was again questioned about her personal relationships and even about her sex life.  When she objected, her superior threatened to fire her unless she agreed to talk.  She then admitted that she had been dating Mann sporadically and had a sexual relationship with him but maintained that she did not know about his criminal history. 

In August, she was fired from the job after a two year investigation by the NYPD Bureau of Internal Affairs.  Her termination was based on NYPD policy that officers are prohibited from being involved with criminals.  If officers break any policy while in their initial probationary period, they can face termination.  As such, Rivera was fired.  When she applied for unemployment benefits, the NYPD disclosed the circumstances of her firing to the Department of Labor. Rivera has now brought a lawsuit against the NYPD claiming that their questioning about her sex life was illegal and asking the court for $5 million in damages.  

Whether you work for a small company or large agency, New York City Thomas M. Lancia can help if you have an issue with your employer.  He is experienced in all areas of employment litigation, including discrimination and wrongful termination.  Contact his office today by calling (212)964-3157 for a consultation.


Wednesday, October 29, 2014

The Turtles Are Not Happy About Unauthorized Use of Their Music

Popular 1960’s music group The Turtles are at the center of multiple copyright disputes relating to the unauthorized use of their work by digital media companies.  While most artists must give permission for their songs to be played by sources such as Pandora and Sirius XM, these parties have been playing multiple tracks by The Turtles without this authorization.  The lawsuits brought by the band have highlighted an ambiguity that currently exists in copyright law and that will hopefully be remedied in the near future.

Last year, The Turtles filed multiple lawsuits against Sirius XM in New York, Florida and California, for allegedly playing their music without authorization.  It seems that Sirius was playing these tracks in reliance on an obscure provision of the federal copyright law.  This provision allows recordings made on or before February 5, 1972 ineligible for federal copyright protection.   This means that these recordings can be played without authorization and without paying royalties.  While some state laws do apply to these recordings, it is unclear what they protect.  The Turtle’s demanded over $100 million dollars in damages in the lawsuits brought under the applicable, but haphazard, state laws.  

Recently, a judge in the California case granted the group summary judgment and decided that it was clear that their performance rights have been infringed upon.  This decision is contrary to another recent California decision made in a similar case brought by several major record labels.  

Now, The Turtles have brought a similar suit against the increasingly popular Pandora Media on the same basis.  They are seeking $25 million dollars in the new California lawsuit.  Although Pandora claims that it pays other types of royalties in these situations, the copyright law is unclear and at times conflicting in this area.  The decisions in these cases have the potential to make a major impact on how older music is handled by digital media and other companies in the future and could entitle the owners of these works to large amounts of compensation.  

If you have a copyright issue that seems unclear, an experienced attorney can help to demystify it for you.  Call New York, New York copyright infringement attorney Thomas M. Lancia (212)964-3157 for a consultation today.

Wednesday, October 15, 2014

Top Model Sues New York City Modeling Agency for Wage Violations

According to model Eva Agerbrink, a New York modeling agency has gone too far in its attempt to wring money from its talent.  In her class action lawsuit against MSA Models, the 48-year old plaintiff claims that the agency, like many others, illegally evaded state and federal wage and hour laws by claiming that its models were "independent contractors."  The agency also penalized models when clients they modeled for failed to pay the agency.  Its practice was to deduct 20 percent from models' commissions and also to charge the clients who hired them 20 percent.  If a client didn't pay, they deducted funds from the model.

Agerbrink says that, relying on such practices, MSA deducted 35 percent of Agerbrink’s earnings for work she did modeling for the QVC shopping network.  

Her complaint against MSA Models and its owner accuses them of minimum wage and overtime violations.

She also says that when, without the agency's help, she found and accepted an in-house position as an administrative assistant and model with Cache, a nationwide specialty retailer, MSA demanded a percentage.  The agency served her with papers claiming the right to $17,946 in wages from her new job.  

Agerbrink claims she has lost tens of thousands of dollars in the course of her three-year contract with MSA and is seeking unpaid wages and other damages.  Models generally are not paid all the wages they have earned, she says, because of their weak bargaining position.  

Agerbrink has a colorful past as a model and actress.  She played the part of a stripper in a movie and was involved in a love-triangle that made gossip pages when one of her lovers allegedly threatened another with a baseball bat. Even so, her plight is no different from that of workers who rely on staffing agencies in less glamorous industries.  

If you have been classified as an independent contractor when you are actually an employee, or if you feel a staffing company is unfairly deducting too much from your earnings, you may have a claim under federal and state wage and overtime laws.  Thomas M. Lancia can help you recover the back pay and damages to which you are entitled.  Call (212)964-3157 for a consultation today.

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