Employment Law – Attorney fees not recoverable in California rest break and meal break cases

The California Supreme Court continued the winning streak for employers with its decision in the case of Kirby v. Immoos Fire Protection that attorney fees are not recoverable for prevailing parties in meal break and rest break cases.

Before the Kirby case, it was generally assumed the winning side in meal break and rest break cases was entitled to recover attorney fees.  Therefore, there was a huge incentive for employers to settle break cases, even if the case had questionable merit, because of the possibility the employer could be liable for attorney fees if the case went to trial (in that situation, the fees could easily be $25,000 to $50,000 or much more if the case was a class action).

The Kirby ruling means that for break cases to be feasible, the amount of missed breaks should be significant and there should be multiple employees who have missed breaks.  Even so, the value of these cases will be diminished unless other legal theories are alleged that do provide for the recovery of attorney fees (such as discrimination, harassment, or PAGA claims).

For more information on meal and rest breaks, see these answers to frequently asked questions on breaks.

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Copyright Law – Owner of Roscoe’s Chicken and Waffles Learns the Hard Way about Copyright Damages and Attorneys’ Fees

In another example of what can happen if one is found liable for copyright infringement, the owner of Los Angeles civic treasure Roscoe’s House of Chicken and Waffles was recently found liable for copyright infringement of 8 songs to the tune of $36,000 in damages ($4,500 per song) and $162,728 in attorneys’ fees and costs.

The copyright infringement in question was that a lounge found to be controlled by the owner of Roscoe’s played 4 songs by a live band and 4 songs by a DJ without an ASCAP license.  The $4,500 in damages per song is well within the range recoverable for copyright infringement.  Courts have the power to award attorneys’ fees to the victorious party in copyright infringement cases.  In this case, the court found an attorneys’ fee award was appropriate: the amount of the fees was largely the result of extensive argument over whether the lounge was in fact controlled by the owner of Roscoe’s.

Between the potential of significant damages, liability for the other side’s attorneys’ fees, and personal liability against anyone that exercises control over and receives a direct financial benefit from an infringing party (i.e. the lounge), the consequences of copyright infringement must be taken seriously by any business owner that uses music or other copyrighted material in their business.



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Employment Law – Rules for meal breaks and rest breaks explained by California Supreme Court in Brinker case

Here is the long-awaited, mostly pro-employer, decision on meal breaks and rest breaks by the California Supreme Court in the Brinker case.  The decision confirmed employers need only provide the opportunity for employees to take meal breaks, and employers do not need to monitor their employees to ensure the breaks are actually taken.

Providing an opportunity to take a meal break means relieving the employee of all duties.  An employer cannot pressure their employees to not take breaks, and providing incentives to avoid breaks or encouraging employees not to take breaks (i.e. promoting someone who never took a break) will be problematic.  However, an employer does not have to police meal breaks and ensure no work is performed during meal breaks.

In general, 30 minute meal breaks are supposed to be given once every 5 hours.  The Brinker court also ruled that the meal break could be given early in the 5 hour window (this is a particular concern for restaurant workers like those in the Brinker case, where it is not uncommon to have meal periods taken early in a lunch or dinner shift before restaurants get busy: Brinker operates Chili’s and Macaroni Grill restaurants, among others).

The Brinker Court also clarified when a rest break must be provided: one rest break must be provided for a shift lasting 3 1/2 to 6 hours, two rest breaks must be provided for a shift lasting 6 to 10 hours, and three rest breaks for a shift lasting 10 to 14 hours.  For an 8 hour shift, in general one rest break should be scheduled before the meal period and one rest break should be scheduled after the meal period.  Unlike meal breaks, rest breaks should still be scheduled near the middle of the applicable period when practical.

For more on this case, see this LA Times blog post, a restaurant industry trade paper’s reaction, and nolo.com’s take on this case.

For answers to frequently asked questions on rest breaks and meal breaks, see our website page on this.


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Employment Law – How did Ani Chopourian get a $168 million dollar verdict?

Sacramento physician assistant Ani Chopourian made recent headlines with her $168 million verdict against Mercy General Hospital for unlawful retaliation, harassment, and rest/meal break violations.  This may be the biggest verdict ever for a victim of workplace harassment.

The $168 million verdict consists of $42.7 million for lost wages and for emotional distress and $125 million in punitive damages.  The verdict is being appealed, and it will not be surprising if the verdict is substantially reduced or if Chopourian settles in order to receive money now instead of waiting for what could be a lengthy appeals process.

Depending on what wrongdoing an employer commits, an employee may be entitled to recover lost wages since the wrongdoing (known as “back pay”) and perhaps as long as it takes to find comparable employment if reinstatement is not feasible (known as “front pay”), emotional distress, attorney fees, prejudgment interest, and punitive damages.

The amount of punitive damages that can be awarded depends on the nature of defendant’s conduct; the amount necessary to have a deterrent effect on the defendant (so a larger award is appropriate against a more wealthy company or individual); and the amount must bear a reasonable relation to the damages suffered by the plaintiff.

The $42.7 million in lost wages and emotional distress is believed to consist of about $3.5 million in lost wages and about $39 million in emotional distress.  The lost wages would include a substantial amount for front pay, so the jury must have believed Chopourian was distressed enough to be unable to find comparable employment for a while.

There are no standards for calculating emotional distress.  Given the severity of Chopourian’s claims against Mercy General Hospital as noted in the above Los Angeles Times article, a 7 figure emotional distress award is not out of the question but $39 million does appear excessive.

Often times the ratio of punitive damages to damage awards is considered in determining whether a punitive damage award is proper, and a 3 to 1 ratio ($125 million to $42.7 million) is usually thought of as reasonable.  However, if the damage award is reduced, that would justify a punitive damage reduction.  In addition, it is our understanding $125 million is nearly as high as Mercy General Hospital’s total profit, so an appeals court is likely to reduce the punitive damage award as a lower award would probably be considered enough to be a proper deterrent against this type of conduct happening again.

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Patent Law – The Patent Troll Update: News and Strategy

Patent lawyers have known about patent trolls for a while, but it’s only been lately that the mainstream media and public at large have paid real attention to the existence of and effect of patent trolls.  Therefore, as an ongoing service, this blog will keep periodic tabs on developments in the patent troll world and strategies to respond to patent trolls.

First, some basics.  There’s no clear definition of a patent troll, but in general patent trolls to us are persons/entities who are trying to enforce patents, often vaguely-worded patents, against alleged infringers with products in the marketplace (we generally exempt universities from this definition, although arguably they act like patent trolls at times too).  These persons/entities have for the most part not manufactured or marketed any products using the patented invention, and patent troll entities have often been formed for the purpose of being a holding company for filing lawsuits or seeking licensing fees.  An alternative name for patent trolls, non-practicing entities (NPEs), has been gaining in popularity in legal circles but the mainstream media still prefers the catchier “patent troll” term.

Why should we care about patent trolls?  Because patent trolls reduce companies’ incentives to innovate, as described in this Boston University School of Law working paper.  For a less academic perspective, see this Slate.com article.

With that in mind, here’s some recent developments in patent troll news and strategy:

Slate.com reported on Article One Partners, a company that provides research to look for  prior art (public information that is relevant to the validity of a patent): the interesting thing about Article One Partners is that it uses “crowdsourcing” via its worldwide network of researchers to find prior art.

Felix Salmon of Reuters noted that even with better prior art research, the procedure to invalidate patents that have already been issued is so cumbersome that patent infringement defendants often don’t get an adequate opportunity to properly challenge the validity of the patents.

Facebook game fanatics, Ars Technica reports Facebook and Zynga (of Farmville fame) have been sued by what appears to be a “shell company” for patent infringement.  The Techdirt.com blog observed this is just another example of the problem with issuing software patents (a variation of what we reported in our blog post on the Therasense case on business method software patents).

The Wall Street Journal profiles prominent patent defense lawyers who decide life is better representing NPEs.


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Trademark Law – Can Jeremy Lin trademark Linsanity?

You knew there had to be a business angle to the feel-good sports story that is Jeremy Lin of the New York Knicks, so over the past week we have seen dueling trademark applications for the catch-phrase, Linsanity, by two California dreamers and the man himself, Jeremy Lin (Lin’s trademark application can be seen here).

Lin’s trademark opponents are Andrew Slayton (who coached at Jeremy Lin’s high school, but did not, as has been widely reported, actually coach Jeremy Lin) and Yenchin Chang (who lives in Los Angeles County and appears to work in import/export).  Their applications to trademark Linsanity can be seen here and here.

Trademark law prohibits the registration of marks containing not only full names, but also surnames, shortened names, and nicknames if the name in question “identifies” a particular living individual without getting their written consent.  Protection is given to those famous enough that the public would reasonably assume the connection with the requested mark and the celebrity, or if the person is publicly connected with the business in which the mark is being used.  This means that even if the celebrity is not in the business of selling his stuff, others can be barred from cashing in on the celebrity’s fame.

Given that, it’s hard to see how Slayton and Chang will be able to get their registrations approved.  This is very similar to the Charlie Sheen trademark gold rush we blogged about last year (most if not all of those trademarks have since been rejected or abandoned, including those filed by Sheen himself).  We are not aware of any business actually conducted by Chang.

Jeremy Lin’s offensive seems to be working, as of the afternoon of February 19, Slayton’s linsanity.com website was no longer selling goods and now appears to be a Linsanity portal site that accepts advertising.

As for Jeremy Lin, it is our understanding the NBA and the Knicks have the contractual right to sell Jeremy Lin-related goods (the Knicks are selling their own Linsanity merchandise) with a share of the revenue going back to the players, but Lin should be in the best position to claim trademark rights in Linsanity.

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Copyright Law – The One Satisfaction Rule’s Use in Copyright Cases May Get a Test

Karaoke hardware and software distributor, KTS Karaoke, is in a legal rumble with Sony/ATV Music Publishing about whether KTS’ distribution of karaoke recordings constitutes copyright infringement and the extent of such infringement, as described in this Hollywood Reporter article (click here and here for copies of the lawsuits KTS and Sony/ATV have filed against each other).

Sony claims KTS sold unlicensed karaoke recordings.  KTS apparently did not manufacturing any of these recordings.  One issue that may be determined in these lawsuits is KTS’ contention that Sony should not be entitled to damages from KTS if Sony has already received damages for the distribution of the same unlicensed recordings from someone else, such as KTS’ suppliers (to be more precise, if Sony is entitled to damages from KTS, KTS contends the damages it owes should be reduced by the amount of damages paid by other companies that have paid damages for the same infringement).

The “one satisfaction rule” is a general legal principle wherein an injured party is entitled to one payment for a single injury.  The one satisfaction rule has been applied in at least one copyright case (detailed here in a blogpost from renown copyright commentator, William Patry).

Sony contends the one satisfaction rule does not apply as they consider the upstream manufacturer (KTS’ suppliers) to be unrelated to and not jointly and severally liable with distributors such as KTS.  To the extent both parties infringe, Sony considers this to be separate infringements and therefore Sony should be able to recover damages from both parties.  It will be interesting to see if the court rules on whether the one satisfaction rule applies to this case.


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Patent Law, Trademark Law – Updates on Christian Louboutin, inequitable conduct, and Chris Bosh

With 2011 coming to an end, this is a good time to check in on updates on some of our favorite blogposts of the past: Christian Louboutin’s quest to trademark the color of his shoe soles, pleading inequitable conduct in patent cases post-Therasense, and Chris Bosh’s efforts to stop his former girlfriend from appearing on Basketball Wives.

Christian Louboutin: Louboutin’s appeal of the denial of his request for an injunction to stop YSL from selling shoes with red soles is still pending.  Louboutin’s case is being aided by Tiffany, which filed a brief supporting Louboutin’s position that he can trademark a color.

Inequitable conduct in patent cases: The Therasense court ruled that proving intent to deceive now requires evidence that the applicant knew of material prior art and made a “deliberate decision” to deceive the PTO by withholding a reference to such prior art and that the materiality of the undisclosed prior art must be so important that “but-for” the deception, the PTO would not have allowed the patent claim(s) covered by the undisclosed prior art.  As noted in the Docket Report blog, two recent cases have held that in pleading an inequitable conduct claim, it is only necessary to show that an intent to deceive the PTO was plausible, not that it was the most likely inference.

Chris Bosh: Bosh’s lawsuit likely contributed to discouraging Basketball Wives from using his ex-girlfriend Allison Mathis, on the latest season of the show.  However, Bosh’s lawsuit, which was filed in Los Angeles, was thrown out because of the procedural problem of the California court not having jurisdiction over Mathis, a Florida resident.  Mathis has since sued Bosh in Florida for interfering with her chance to be on Basketball Wives.  It is not clear what the status of Mathis’ lawsuit is.


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Real Estate Law – What was that rule against perpetuities in the film The Descendants?

If you were paying close attention while watching the excellent new film, The Descendants, with George Clooney, you may have wondered what the rule against perpetuities was and why it was important to a certain piece of real property in the movie.

The rule against perpetuities is a long-standing rule in US common law which discourages a person from controlling real estate long after that person dies.  The rule basically prohibits interests in land that vests more than 21 years after the death of an identifiable individual living at the time the interest was created.  For those who really want to know how the rule works (god help you), see the Wikipedia entry on the rule against perpetuities for examples on when the rule applies or doesn’t apply.

As this article describes, The Descendants’ situation is based on some real-life Hawaiian family trusts.  Spoiler alert: for what might happen in the story after the movie ends, see this article.

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Insurance Law – Accident victims can’t recover more than the amount of their medical bills paid by their health insurer

Insurance companies scored a big victory with the California Supreme Court’s recent decision in the case of Howell v. Hamilton Meats & Provisions (click here for the Google Scholar version of the decision).  In personal injury/accident cases the accident victims are allowed to recover, among other things, the reasonable cost of medical expenses for treatment related to the accident.  For those with health insurance, as you probably know, the health insurers negotiate reduced rates with hospitals and doctors so that the hospitals and doctors accept discounts, often times substantial discounts, from their normal billed rate.

In the Howell case, Howell was seriously injured in an auto accident and received substantial medical treatment. The billed amount of her treatment was about $190,000.  However, since Howell had health insurance, the hospital and doctors ended up accepting only about $60,000 for Howell’s treatment.

Therefore, the California Supreme Court held that regarding the amount of medical expenses recoverable by Howell, she could only recover the amount actually paid for her treatment, $60,000, even though the reasonable value or market value of her treatment arguably exceeds $60,000.

There are 2 big side-effects of this ruling.  The first side effect is that it causes a situation where an uninsured person has a better case than an insured person because the uninsured person with Howell’s injuries can claim $190,000 in medical expenses while Howell can only claim $60,000.  A general legal principle called the “collateral source rule” says that if an injured person is compensated for his injuries from someone besides the tortfeasor, that payment shouldn’t be taken into account in figuring out the amount of the injured person’s damages.  The California Supreme Court decided the collateral source rule did not apply to health insurance and limited the recoverable amount to the actual amount paid, even though the majority of other states allow the injured person to recover the reasonable value of the medical treatment, even if that exceeds the actual amount paid.

The second side effect is that as a practical matter, the amount of money awarded for pain and suffering is often based on the amount of medical bills (in general, in personal injury cases you can recover the amount of medical bills, property damage, lost earnings and earning capacity, and pain and suffering: it is common for pain and suffering to have the most value out of these damage categories).  Therefore, the value of many personal injury cases will be substantially reduced because, as seen in Howell, if there is health insurance the amount of medical bills will probably be less than 50% what they would have been if there was no insurance: for Howell, the pain and suffering is based on $60,000 in medical bills instead of $190,000.  Also, the Howell case was silent on how the difference in the billed rate and the amount paid makes a difference in figuring out the amount to award for pain and suffering: arguably plaintiffs will now not be able to even refer to the billed medical expenses to explain the extent of their injuries (meaning, if the jury is barred from hearing that the billed medical expenses were $190,000 and only hears the medical expenses were $60,000, a pain and suffering award is likely.to be smaller).

For more on this case, see this Sacramento Bee blogpost on the case, an interview with the appellate lawyer representing Howell, and a pro-insurer view of this case.

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