Procedural Issues May Determine Immediate Fate of President’s Executive Order Before Diverse Panel of Ninth Circuit Judges

The near-term fate of President Trump’s Executive Order barring entry from seven Muslim-majority countries was before the Ninth Circuit Court of Appeals on February 7, 2017.  The Court must decide whether to stay a Temporary Restraining Order, or “TRO,” entered by U.S. District Judge James L. Robart, stopping enforcement of the Executive Order in response to a challenge by the States of Washington and Minnesota.  The three judges on the panel exemplify judicial diversity: Hon. William C. Canby, Jr., is an 85-year old Carter appointee based out of Phoenix; Hon. Richard Clifton is a 66-year old George W. Bush appointee from Hawaii; and Hon. Michelle Friedland is a 44-year old Obama appointee from San Francisco.

Although many controversial and politically charged issues are ultimately at play, the oral argument stands as a reminder to all that sometimes procedural issues are outcome determinative.  Washington’s Solicitor General Noah G. Purcell, representing the two plaintiff states, explained that a TRO is not normally appealable to the Circuit Court unless it is functionally a full preliminary injunction.  Thus, he urged the Court to consider the Government’s application as one seeking a writ of mandamus, under which the Court may only overturn a district court decision in the most extraordinary of circumstances.   And although the states had a heavy burden to obtain the TRO in the first place, the panel was quick to point out that it was the Government that was seeking a stay of the District Court’s TRO and the Government, therefore, bore the burden of persuading the Court that a stay was necessary.

On the merits, both sides faced tough questions. All three judges questioned Department of Justice Attorney, August E. Flentje, on whether there was any evidence supporting the Government’s assertion that there would be “irreparable harm” if the Executive Order were not allowed to go into effect. The Government, the judges observed, was hard pressed to point to a single example in the recent past of an entrant from one of the seven banned countries that had been arrested for terrorism related activities.  For his part, Mr. Purcell was peppered with questions about whether the Executive Order is different from other immigration orders, like President Reagan’s ban on entry by most Cuban immigrants.

The Ninth Circuit panel took the case under advisement, noting its understanding of the time sensitive nature of the issue and the need for a prompt decision.

For more information, please contact Kathleen Barnett Einhorn, Esq., Chair of the Firm’s Complex Commercial Litigation Group, at keinhorn@genovaburns.com or Jennifer Borek, Esq., Partner in the Complex Commercial Litigation Group, at jborek@genovaburns.com.

Share

No Right of Public Performance for Sound Recordings Under New York Common Law

Answering a question certified to it by the Second Circuit Court of Appeals, the New York Court of Appeals held in Flo & Eddie, Inc. v. Sirius XM Radio, Inc., that New York’s common law does not protect the right to publicly perform a sound recording. The plaintiff is a company formed by two former members of the “Turtles,” a band most famous for its 1967 hit, “Happy Together.” Federal Copyright law began to recognize limited protection for sound recordings in 1971: owners of sound recordings produced after February 15, 1972, were granted the exclusive right to reproduce, distribute and prepare derivative works of those recordings. In 1995, Congress passed the Digital Performance Right in Sound Recordings Act (DPRA), now codified at 17 U.S.C. § 114, which afforded a limited right of public performance with respect to copyrighted sound recordings. The DPRA was aimed at prohibiting public performance of sound recordings by digital radio services, and excluded AM/FM radio stations, bars, restaurants, and stores, which maintain the ability to play (i.e., “perform”) copyrighted sound recordings.

Because the Turtles’ music was recorded before 1972, the band members were forced to rely on state common law protection. Analyzing the history of the common law in the state, a majority of New York’s highest court held that no such protection exists under New York’s common law. Analyzing cases going as far back as 1872, the Court found that, in contrast to federal statutory protection, New York’s common law copyright protection is “very slight at best,” and is limited to the right of first sale of a work.

The Court’s ruling does not address other causes of action like unfair competition and does not overrule cases that disapprove of “piracy,” i.e., surreptitiously recording a live performance and selling it. Nonetheless, the Court’s decision is a victory for digital radio services like Sirius, Pandora, and the like, which have fought nationwide over the right to play older un-copyrighted works without paying licensing fees.

For more information on copyright law or the New York Court’s decision in Flo & Eddie, Inc. v. Sirius XM Radio, Inc., please contact Kathleen Barnett Einhorn, Esq., Chair of the Firm’s Complex Commercial Litigation Group, at keinhorn@genovaburns.com or Jennifer Borek, Esq., Partner in the Complex Commercial Litigation Group, at jborek@genovaburns.com.

Share

Supreme Court to Review Whether “Offensive” Names Can Be Trademarked

The U.S. Supreme Court agreed today to review the Federal Circuit’s decision to strike down the Lanham Act’s ban on “disparaging” trademarks.  The case, Lee v. Tam, No. 15-1293, involved an Asian American dance-rock band’s attempt to trademark their name THE SLANTS. The U.S Patent and Trademark Office (USPTO) refused, citing the Lanham Act’s prohibition on “disparaging” trademarks. The Federal Circuit held that this prohibition violated trademark applicants’ First Amendment Rights. (See Litigation Law Blog’s previous post about the Federal Circuit’s decision from December 23, 2015.)

The Supreme Court’s decision could impact the more famous battle over an attempt to cancel the trademark registration for the NFL’s Washington Redskins as disparaging to Native Americans.

In the Washington Redskins case, a federal district court had ruled that the football team’s trademark disparaged Native Americans.  The team had appealed the case to the Fourth Circuit Court of Appeals, which was scheduled to hold oral argument in December.  On October 18, 2016, the Fourth Circuit agreed to stay consideration of the appeal until the Supreme Court decides Lee v. Tam.

For more information on the Lanham Act or the Supreme Court’s grant of certiorari in Lee v. Tam, please contact Kathleen Barnett Einhorn, Esq., Chair of the Firm’s Complex Commercial Litigation Group, at keinhorn@genovaburns.com or Jennifer Borek, Esq., Partner in the Complex Commercial Litigation Group, at jborek@genovaburns.com.

Share

Third Circuit Rejects Class Certification for Widener Law Grads

A panel of the Third Circuit Court of Appeals refused to allow class certification for a group of Widener University School of Law Graduates who allege that the law school inflated postgraduate employment rate statistics in Harnish v. Widener Univ. Sch. of Law, No. 15-3888 (3d Cir. Aug. 16, 2016). The law graduates claimed that, between 2005 and 2011, Widener advertised that up to 97% of students obtained employment after graduation, when, in fact, only 50-70% of graduates obtained full-time legal employment. This misrepresentation, the plaintiffs argued, violated New Jersey and Delaware consumer fraud statutes.

The circuit court rejected the plaintiffs’ theory of damages, predicated on the report of their expert economist, Dr. Donald Martin. Dr. Martin attempted to show a statistically significant relationship between employment rates and tuition prices across 64 private law schools. The analysis, though compelling, was flawed, the Court held. Because the plaintiffs did not present a theory of class-wide damages, they failed to establish that common questions of fact with respect to damages “predominate” over individual questions or that the named plaintiffs’ claims were “typical” of the class—both requirements for class certification under Federal Rule of Civil Procedure 23.

Specifically, the plaintiff’s theory was that Widener’s misrepresentations empowered the school to charge higher tuition across the market. This type of “price inflation” theory is similar (though not identical) to the “fraud on the market” concept that has been accepted in federal securities class actions. Although the Court found that Mr. Martin’s expert approach held some merit since law schools operate in a largely fixed-price market, both the New Jersey and Delaware Supreme Courts have rejected this type of theory of proof outside of the securities context. Because this theory was the only one presented to establish damages on a class-wide basis for the plaintiffs’ state-law consumer fraud claims, the Court found that class certification was inappropriate.

Harnish highlights the importance of expert evidence at the class certification phase. Although plaintiffs are not required to prove their case, they must present a coherent theory showing damages on a class-wide basis, and one that is cognizable under substantive law.

For more information on class certification or consumer fraud claims or the Court’s decision in Harnish v. Widener University School of Law, please contact Kathleen Barnett Einhorn, Esq., Chair of the firm’s Complex Commercial Litigation Group, at keinhorn@genovaburns.com or Jennifer Borek, Esq., a Partner in the Complex Commercial Litigation Group at jborek@genovaburns.com.

Share

Bakery’s Apple Pie Design is Functional and Ineligible for Trademark Protection, Third Circuit Affirms

The U.S. Court of Appeals for the Third Circuit recently affirmed a district court’s determination that the key element of a gourmet bakery’s registered pastry design was functional, and therefore ineligible for trademark protection, in Sweet Street Desserts, Inc. v. Chudleigh’s Ltd., Nos. 15-1445 & 15-1548.

In the mid-90’s, Chudleigh’s developed a single-serving apple pie, with a round shape and six overlapping folds of pastry encircling the pie filling. Chudleigh’s registered a trademark for its pie—the “Blossom Design”—and entered into discussions with Applebee’s from 2008-2010 to supply apple pies without reaching a deal. In 2010, Applebee’s asked Sweet Street Desserts, also a dessert manufacturer and restaurant supplier, to develop a single-serve apple pie. Sweet Street Desserts entered into a contract with Applebee’s to supply a “round ‘apple pocket’ that consisted of a unitary, pie-like bottom with an open top covered by six rectangular pieces of dough folded around the filling in a counter-clockwise spiral pattern ….” Sweet Street Desserts entered into discussions with Chudleigh’s to outsource the production of the product, but the parties did not reach an agreement and Sweet Street Desserts produced the dessert itself.

Chudleigh’s complained to Applebee’s that the Sweet Street Dessert’s apple pie infringed on Chudleigh’s “Blossom Design,” and featured the same “six-fold spiral pattern.” Sweet Street Desserts then filed a declaratory action in federal court, seeking a declaration that its product did not infringe on Chudleigh’s Blossom Design.

In its July 21, 2016 Opinion, the Third Circuit affirmed the district court’s grant of summary judgment to Sweet Street Desserts. Quoting the Supreme Court’s decision in TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 32 (2001), the Third Circuit reiterated that “a product feature is functional, and cannot serve as a trademark, if it is essential to the use or purpose of the article or if it affects the cost or quality of the article.” Chudleigh’s Blossom Design was functional because the number of folds in a pie must be proportional to the size and amount of filling in the pastry. Indeed, Chudleigh’s owner testified that during his creation of the Blossom Design, the “single-serving size and round shape of the design were critical to minimizing the cost of the pastry and to filling the need in the restaurant industry to reduce waste and ease serving.” The Blossom Design was functional and the cancellation of Chudleigh’s trademark was affirmed.

Sweet Street stands as a reminder that product designs that are essential to the use of the item or go to the item’s cost or performance are the province of patent protection, not trademark. The decision also reminds businesses of the usefulness of declaratory judgment actions in protecting against allegations of infringement of intellectual property rights.

For more information on the Lanham Act or implications of Sweet Street Desserts, Inc. v. Chudleigh’s Ltd., please contact Kathleen Barnett Einhorn, Esq., Director of the firm’s Complex Commercial Litigation Group, at keinhorn@genovaburns.com or Jennifer Borek, Esq., a Partner in the Complex Commercial Litigation Group at jborek@genovaburns.com.

Share

Third Circuit Lets Google Give Cookies to Kids

Rarely does whether a child has a cookie rise to the level of a federal question.  However, on June 27, 2016, in In re Nickelodeon Consumer Privacy Litigation, No. 15-1441, a panel of the Third Circuit Court of Appeals substantially affirmed the dismissal of a multi-district, class-action lawsuit against Viacom and Google alleging that the defendants unlawfully used internet site-tracking cookies to target advertisements at children who watched videos and played games at Nickelodeon’s website.  This decision substantially relied on a November 2015 decision from the same court, finding Google not liable under federal privacy laws for bypassing cookie-blockers on Apple’s Safari and Microsoft’s Internet Explorer web browsers.  The Nickelodeon Court did permit plaintiffs’ claim against Viacom for invasion of privacy under New Jersey law to proceed.

The plaintiff class—children under the age of 13—alleged that Viacom and Google tracked their web-browsing and video-watching habits by installing cookies on their computers through Viacom websites like Nick.com, and shared this information with Google.  Plaintiffs also alleged that Google used the cookies it installed to track users across any website on which Google displays ads.  Plaintiffs alleged that Viacom’s and Google’s conduct violated federal laws such as the Wiretap Act, the Stored Communications Act, and the Video Privacy Protection Act (VPPA), and also brought state statutory and common law claims.

After finding that the plaintiffs had standing, the Court dismissed plaintiffs’ Wiretap Act, Stored Communications Act, and state statutory claims based on the Court’s previous Google decision.  The Court also dismissed plaintiff’s claim for violation of the VPPA, holding the VPPA: (i) only prohibits the disclosure, not the receipt, of personally identifying information relating to viewers’ consumption of video-related services; and (ii) only prohibits the disclosure of information that would allow an ordinary person to identify a specific individual’s video-watching behavior, not disclosures of IP addresses, as occurred in Nickelodeon.  The Court revived one count against Viacom and remanded the case to the district court, finding that a reasonable jury could find Viacom liable for invasion of privacy, based on Viacom’s representation on Nick.com that it did not collect or share any personal information about its visitors.

For more information on internet privacy law or the implications of In re Nickelodeon, please contact Kathleen Barnett Einhorn, Esq., Director of the firm’s Complex Commercial Litigation Group at keinhorn@genovaburns.com, or Jennifer Borek, Esq., a Partner in the Complex Commercial Litigation Group at jborek@genovaburns.com.

Share

U.S. Supreme Court Clarifies Standard for Awarding Attorneys’ Fees to Successful Copyright Litigants.

On June 16, 2016, the U.S. Supreme Court in a unanimous decision, clarified the standard for awarding attorneys’ fees under the Copyright Act.

This is the second time the case of Kirtsaeng v. John Wiley & Sons, Inc, No. 15-375, has come before the Supreme Court.  Kitrsaeng was sued by respondent John Wiley & Sons, Inc., a textbook publisher. Kirtsaeng won the first Supreme Court appeal, which resulted in a clarification of the “first sale” doctrine.  Having prevailed, Kirtsaeng sought more than $2 million in attorney’s fees under § 505 of the Copyright Act.  The Second Circuit affirmed the district court’s denial of this request, finding that Wiley had taken reasonable positions throughout litigation, and awarding fees would not serve the Copyright Act’s underlying purpose—enriching the public through access to creative works.

Although the Copyright Act gives the district court discretion to award attorneys’ fees, the Supreme Court emphasized that the discretion must be exercised under set standards to increase the predictability of the result for both plaintiffs and defendants.

The Supreme Court noted that the Second Circuit appeared to focus solely on the objective reasonableness of the parties’ litigation positions, which is an important factor, but not the only factor to be considered.   By focusing too narrowly on the parties’ litigation positions, a court may lose sight of the goals of the Copyright Act. The Court acknowledged the fundamental nature of litigation, that “both plaintiffs and defendants can (and sometimes do) make unreasonable arguments,” a fact which “favors plaintiffs because a losing defendant will virtually always be found to have done something culpable.” Slip op. at 9 (emphasis in original).

In addition to the objective reasonableness of the parties’ litigation positions, the Supreme Court held that lower courts should address “a range of considerations,” including, frivolousness, motivation, objective reasonableness, and the need in particular circumstances to advance considerations of compensation and deterrence.  “Although objective reasonableness carries significant weight, courts must view all the circumstances of a case on their own terms, in light of the Copyright Act’s essential goals.” Slip op. at 11.

Because it was unclear if the Second Circuit (or district court) considered all of these factors, the Supreme Court vacated and remanded, emphasizing, however, that it was not suggesting that any different outcome would necessarily occur in this case.

For more information regarding the Copyright Act or Kirtsaeng v. John Wiley & Sons, Inc, please contact Kathleen Barnett Einhorn, Esq., Director of the firm’s Complex Commercial Litigation Group at keinhorn@genovaburns.com, or Jennifer Borek, Esq., a Partner in the Complex Commercial Litigation Group at jborek@genovaburns.com.

 

Share

Federal District Judges May Recall Discharged Civil Jury To Correct Errors, Supreme Court Holds

Eschewing an old common-law rule for practicality, the U.S. Supreme Court held today in Dietz v. Bouldin, No. 15-458, that federal district judges may recall a civil jury it has discharged to correct errors in certain circumstances.  In the case, an automobile accident trial in the federal district court in Montana, the jury was tasked with determining if the plaintiff was entitled to additional damages over the $10,136 in medical expenses the parties stipulated were reasonable.  The jury returned a verdict for $0 and the district judge discharged the jurors before realizing that the verdict was “legally impossible” because of the parties’ stipulation.  At common law, when jurors were always formally sequestered, once a court discharged the jury, its only option to correct an error was to call for a new trial.

This bright-line rule should give way to modern trial practice, the Supreme Court held in a 5-2 decision.  Writing for the Court, Justice Sotomayor noted that district judges have the inherent authority to control the proceedings before them, including the analogous ability to amend interlocutory orders at any time before final judgment.  Although judges should exercise their inherent authority cautiously, the recall of a discharged jury may be appropriate if the court is confident that the jurors were not “tainted” by outside influences.  Federal district judges should look to factors such as the length of time between discharge and recall, whether the jurors spoke to anyone about the verdict in person or on their smart phones, and the reaction to the verdict in the courtroom—a gasp or sob in the gallery might cause the jurors to question their decision and affect the jurors’ impartiality.  Finally, the majority limited its holding to civil juries.  The Court left the issue of whether the rule should extend to criminal juries for a different day because criminal jury practice raises different issues, such as whether double jeopardy would attach.

With respect to Dietz, the Court affirmed the district court’s decision to recall the discharged jury because the jurors had only left the courtroom minutes before and only one had left the building (to retrieve a hotel receipt).  When questioned, the jurors indicated that they had not spoken to anyone about the case.

“All judges make mistakes. (Even us.),” Justice Sotomayor quipped. Although district judges must exercise their authority cautiously, they should retain the ability to correct a civil jury verdict error even if the jury has already been discharged.

For more information regarding Dietz v. Bouldin, No. 15-458, or jury practice please contact Kathleen Barnett Einhorn, Esq., Director of the firm’s Complex Commercial Litigation Group at keinhorn@genovaburns.com, or Jennifer Borek, Esq., a Partner in the Complex Commercial Litigation Group at jborek@genovaburns.com.

Share

NJ Appellate Division Decertifies Class in Suit Over TGI Friday’s Menus and Drink Prices

New Jersey bar patrons alleging that the chain restaurant, TGI Friday’s, Inc. (TGIF), violated consumer protection laws by omitting drink prices from its menus will have to proceed with their claims as individual plaintiffs after the New Jersey Appellate Division decertified their class.

The Panel reversed the trial court’s class certification in a lawsuit against TGIF that began more than six years ago, when a woman claimed that she was charged $2.00 for a beer at the restaurant’s bar and later charged $3.59 for the same beer at a table in the restaurant. The woman claimed that the price discrepancy and the fact that TGI Friday’s does not print drink prices on its menus were in violation of the New Jersey Consumer Fraud Act (NJCFA), N.J.S.A. 56:8-1, et seq., and the Truth in Consumer Contract Warranty and Notice Act (TCCWNA), N.J.S.A., 56:12-11, et seq.  Two additional plaintiffs joined the lawsuit and the trial judge granted class certification to anyone who ordered unpriced drinks at any corporate owned TGI Friday’s in New Jersey from 2004 through 2014.

The Panel’s decision to decertify the class relied on the requirement of New Jersey Court Rule 4:32-1(b)(3), the class action rule, which requires that “questions of law or fact common to the members of the class predominate over any questions affecting only individual members.”  In a published decision dated March 24, 2016, the Panel held that the plaintiffs did not meet the “predominance” requirement for class action certification because “individualized inquiries” would be necessary to establish whether individual plaintiffs received a TGIF menu that violated the law and whether the lack of pricing on the menu caused plaintiffs’ damages.  Dugan v. TGI Fridays, Inc., 2016 WL 1136486, at *4 (N.J. Super. Ct. App. Div. Mar. 24, 2016).

With respect to the NJCFA claim, the Panel concluded that people who either were not given menus or did not ask for the price before ordering a drink could not prove causation, while those who relied upon the stated price could conceivably have claims. Therefore, claims for damages would necessarily involve inquiries to determine whether or not individual class members were provided a menu in order to determine whether each class member sustained a loss caused by the absence of prices on the menus.

Similarly, with respect to the TCCWNA claim—which  does not contain the NJCFA’s fee shifting or treble damages provisions but does provide for statutory and actual damages—each individual class member would be required to demonstrate that they were actually provided with a menu that contained technical violations of state or federal law.  Id. at *9-10.

Significantly, the Panel’s decision may slow the sudden rush of class actions brought under the TCCWNA by eliminating cases based on technical violations where consumers cannot actually prove that they received the material that forms the basis for thein violation.

For more information regarding the NJ Consumer Fraud Act, TCCWNA, or the Court’s decision in Dugan, please contact Kathleen Barnett Einhorn, Esq., Director of the firm’s Complex Commercial Litigation Group at keinhorn@genovaburns.com, or Jennifer Borek, Esq., a Partner in the Complex Commercial Litigation Group at jborek@genovaburns.com.

 

Share
Page 2 of 41234