Litigation

A final judgment was recently issued in a long-running copyright infringement lawsuit between toy-makers  MGA Entertainment, Inc . and  Mattel Inc . involving MGA’s “ Bratz ” line of dolls.  A federal judge in California denied a request by Mattel Inc. to set aside a multi-million dollar judgment that was rendered against it five months earlier.

The dispute arose seven years ago when Mattel filed a copyright infringement lawsuit claiming a former employee who had contributed to the design of Mattel’s Barbie line of dolls had disclosed trade secrets upon going to work for MGA, a competitor.  Mattel claimed that the “inventions agreement” the employee signed prevented him from sharing any of his ideas, regardless of whether he was physically at work or home when he developed the ideas.

In addition to denying Mattel’s claims, MGA countersued, alleging that Mattel had engaged in unfair business practices and corporate spying upon realizing that they their Barbie line was unable to compete with MGA’s Bratz line of dolls.  In the ensuing litigation, a jury found that MGA was the rightful owner of the Bratz line and that Mattel did indeed steal trade secrets, awarding $88.5 million in damages to MGA.

In the recent ruling, the prior award was reduced to $85 million, but an additional $85 million was added in the form of punitive damages against Mattel.  MGA has filed a separate antitrust lawsuit against Mattel, which is scheduled to be heard in October.

The  Supreme Court, Appellate Division, First Department  was recently asked to determine an issue of first impression in New York State of whether a Japanese creditor could be granted the pre-award attachment of assets in New York, for security purposes only, in anticipation of an award that could be rendered in an arbitration proceeding in a foreign country, where there is no connection to New York by way of subject matter or personal jurisdiction. The Court answered in the affirmative.

The Court delivered a concise and articulate opinion with respect to its reasoning. As a general background introduction, under the original enactment of CPLR 7502(c), courts were granted the authority to entertain an application for an order of attachment in connection with an arbitrable controversy, provided “that the award to which the applicant may be entitled would otherwise be rendered ineffectual without such provisional relief.” However,  CPLR 7502(c) , as interpreted, did not provide the New York courts with the authority to entertain applications for the provisional remedies of orders of attachment where the situs of the arbitration is outside of New York.

The Court went on to discuss a pivotal opinion issued by the  United States Supreme Court ,  Shaffer v. Heitner , where  Justice Marshall  distinguished two types of quasi in rem actions, as well as the true in rem action. In both the true in rem action and one type of quasi in rem action, the plaintiff’s claim is directly related to the property that is the subject of the seizure. Justice Marshall noted that where that was the case, “it would be unusual for the state where the property is located not to have jurisdiction.”  But in the second type of quasi in rem action, where the property is unrelated to the cause of action, jurisdiction depends on defendant having other contacts with the forum that satisfy the standards of  International Shoe .

The Court acknowledged that they too were similarly persuaded that New York’s attachment statute does not run afoul of  Shaffer  when it is used for purposes of security rather than to confer in personam jurisdiction.  The Court reasoned that, as the  Shaffer  Court recognized, attachment for security pending litigation in a proper out-of-state forum does not raise the same due process concerns as are implicated by attachment for jurisdictional purposes. In seeking attachment pursuant to CPLR 7502(c), a party is in no way seeking to compel another party to litigate in an improper forum to save her property; the party merely seeks to have the property attached for future execution in the event a recovery is ordered by the out-of-state forum. Prithvi Information Solutions Ltd.  Read  Sojitz Corp. v. Prithvi Information Solutions Ltd.  

Bashian & Papantoniou , a full service long island law firm.

New York patent firm  General Patent Corporation  (“GPC”) is suing the Canadian Ottawa-based patent and licensing company Wi-Lan for fraud and misappropriation of confidential information. The claims allege that Wi-Lan faked an interest in acquiring GPC in order to gain access to its private trade secrets. It is further alleged that at the time a term sheet was signed in April 2011, Wi-Lan deliberately concealed facts that it knew or should have known would make a completion of the transaction impossible. Thus, after signing the term sheet, Wi-Lan became privy to a number of confidential documents for the sole purpose of finalizing an acquisition it allegedly knew would never happen. 

Furthermore, GPC highlights that Wi-Lan hired Paul Lerner, its general counsel of General Patent who had allegedly told GPC that he was leaving the company due to his desire for retirement. However, Lerner is allegedly currently setting up shop in Stamford Connecticut at Wi-Lan’s new office where he holds the title of senior general counsel. GPC notes that accepting this job with one of their competitors is a breach of Lerner’s non-compete agreement, which should have prevented him from working for any competing entity for one year following the termination of his employment. Ironically, Wi-Lan announced the appointment of Lerner at their new office to promote the growth of the company’s partnership-licensing business.

The suit is scheduled to be heard on October 11 this year. A U.S. District Court Judge will rule on whether or not Wi-Lan will be able to use or disclose any of the confidential information it has discovered as well as Mr. Lerner’s fate at his new place of employment.

Even though many Americans assume that there is no difference between a brand-name drug and its generic equivalent, the legal remedies for victims of a drug’s side-effects of medication may depend in large part on the distinction. The Supreme Court, in deciding  Pliva v. Mensing  last summer, established protections for generic pharmaceutical companies for claims alleging failure to warn; such protections do not exist for brand-name manufacturers. The difference is with regard to who controls what is said on the drug’s label.

Under federal law, drug manufacturers may establish that the drug they produce is equivalent to a brand-name drug already on the market. In doing so, the a drug manufacturer establishes that its medication is a “generic” drug, and sidesteps a lengthy FDA approval process. One consequence of this process is that the generic drug manufacturer must adopt the label of the brand-name equivalent.

Since generic drug manufacturers do not have control over the label that is placed on the drugs they produce, the Supreme Court reasoned that those manufacturers do not have liability for inadequate labels. This means that when a patient is harmed by a side-effect of a drug, that patient can sue the drug manufacturer alleging a failure to warn of those side-effects only if the manufacturer has control over the label – this requirement exempts generic drug manufacturers from liability.

However, both the FDA and Congress have the power to restore a patient’s right to sue a generic drug manufacturer for failure to warn, by providing the generic drug manufacturer the responsibility to warn about side-effects without regard to the warning label provided on the brand-name equivalent. Until such a change, however, patients who take brand-name drugs have access to a broader range of legal remedies than do patients who take generics.

Two Michigan women, Julie Brown and Kayla Molaski, have sued  Google  in a class action lawsuit stemming from the location-tracking technology included in the Android smart phone operating system.  The plaintiffs allege in the complaint that the  “Android Operating System phones log, record and store users’ locations based on latitude and longitude alongside a timestamp and unique device ID attached to each specific phone.”  The plaintiffs further claim that the “phones store this information in a file located on the phone, which allows Google to use  cell-tower triangulation  or potentially a global positioning system to obtain a user’s location.”  Google has upheld that the collection of the location data is entirely opt-in, in which “we [Google] provide users with notice and control over the collection, sharing and use of location in order to provide a better mobile experience on Android devices,” Google spokesperson Randall Safara stated last week.  The lawsuit arises from similar news, last month, in which two researchers said that location information for the Apple iPhone was stored in an unencrypted file that was backed up onto any device during the syncing process of an Apple iPhone ( http://radar.oreilly.com/2011/04/apple-location-tracking.html ).  Apple and Google have both been asked to attend a Senate Hearing on mobile device privacy on May 10 at 10am EDT in Washington, where witnesses from the US Department of Justice, Federal Trade Commission, Center for Democracy and Technology, and others will talk about what the latest mobile technology means for privacy and the law. 

 For a copy of the complaint,  click here

JPMorgan Chase & Co. recently asked a judge to toss out a $19 billion lawsuit filed against it by Irving Picard, the trustee responsible for recovering funds from the Madoff investment scandal.  In support of its request, JPMorgan cited to a recent ruling in which U.S. District Judge Ratner threw out a similar lawsuit seeking $9 billion from HSBC Holdings, Plc.  Judge Ratner stated that Picard did not have standing to bring common law claims against HSBC.      

The legal requirement of “standing” generally requires that in order for a party to bring an action against another party, they must demonstrate that they a sufficient connection to the conduct that is being complained of and have been harmed as a result of that conduct.  In finding that Picard did not have standing to bring common law claims against HSBC, Judge Ratner was referring to Picard’s customer damage claims, in which he is attempting to sue parties who allegedly violated a duty to the customers of Madoff securities by failing to detect Madoff’s fraud or, alternatively, by aiding or abetting the fraud.  Citing to the legal doctrine of “clean hands”, Judge Ratner stated that Picard lacks standing to bring the claims on behalf of the Madoff customers who were defrauded because he is responsible for liquidating the Madoff securities firm and he therefore cannot bring claims based upon wrongful conduct that the firm in which the firm itself participated.

Picard has disclosed that he intends to seek a total of $100 billion on behalf of former Madoff clients from banks such as JPMorgan and HSBC.  Should the JPMorgan lawsuit be tossed out, it would put into question Picard’s ability to accomplish this goal.

The Justice Department has filed a suit against AT&T, alleging that AT&T knowingly permitted its IP Relay system to be used fraudulently by users overseas, and then received reimbursement from the federal government for that use.

The 1990 Americans with Disabilities Act led to the creation of a nationwide telecommunications relay service, know as IP Relay, for deaf and speech-disabled people to communicate through phone lines. Pursuant to the Act, phone carriers implement the system and are reimbursed by the federal government. AT&T received $16 million in federal reimbursements in the last two and a half years alone.

The federal complaint alleges that AT&T deliberately employed a verification system that would not detect fraud, and that the company permitted the fraudulent use of its IP Relay system in order to collect government reimbursements. Fraudulent use of this system is popular among oversees con artists who intend to defraud American merchants, according to the National Law Journal.

The complaint states, “AT&T adopted electronic registration procedures that it knew would not verify that each user was located at the U.S. mailing address provided. AT&T also failed to adopt any procedure to detect and/or prevent dozens of fraudulent users from registering with the same U.S. mailing address, despite knowing that this was occurring on its system.”

For its part, AT&T denies the allegations and maintains that it is bound by federal law to complete all calls by customers who identify themselves as disabled.  The suit was spurred by whistleblower Constance Lyttle, a former employee of AT&T. The Justice Department is seeking the money paid to AT&T in reimbursements, along with $11,000 in treble damages for each abuse.

In 1994, Garden City police officers, acting on an informant’s tip, obtained a “no-knock” search warrant and forcefully entered the apartment of a mother and her six children in the Bronx.  After seventeen years, a lawsuit filed by the family claiming the search was unlawful will finally be heard by a jury. In May of 1994, a man being arrested for possession of narcotics told police he purchased the drugs from a dealer named “green eyes”.  He told police the location of the apartment where the dealer resided and warned them that the dealer had two guns in the apartment.  According to the recent ruling by the New York Supreme Court Appellate Division, the police did not conduct any independent investigation or in any other way corroborate the information.  The court found that upon obtaining a “no knock” search warrant from Bronx Supreme Court Justice Joseph Cohen, a dozen officers from the New York Housing Authority Police Department “crashed through the door of plaintiff’s apartment in the middle of the night, terrified a mother and six children, held them for hours while they searched their apartment, destroying their property and threatening plaintiff mother that they would put her children in foster care if she did not tell the truth about the presence of guns in the apartment”.  New York courts apply a two-pronged test when evaluating the validity of a search warrant issued based on information received from a confidential informant.  The search warrant application must provide the reasons why the informant is reliable and credible, and must also explain some of the underlying circumstances relied on by the informant in providing the information; in other words, how the informant came to posses the information.  The court found that neither of the prongs had been satisfied and therefore the warrant was improperly issued. 

The plaintiff’s claims, which include false arrest and false imprisonment, were dismissed against all but two of the officers.  The court found that all but two of the officers were not involved in the issuance of the warrant and acted with the understanding that they were executing a valid search.  Although the plaintiffs had made a previous motion in 2008 to sanction the defendants for doing “everything possible to delay and otherwise prevent this case from ever reaching a jury”, the court at that time found that there was insufficient proof that the delay was willful.   

The full article may be found  here .

The  New York Appellate Division, First Department , whose rulings are binding upon state courts in Manhattan and the Bronx, has ruled that the cost of producing discovery should be borne by the party who produces that discovery. The February 28 decision,  U.S. Bank National Association v. Greenpoint Mortgage Funding Inc. , applies to both physical and electronic documents, and permits courts to shift the cost of the production to the party seeking those documents in the courts’ discretion if a request would be too burdensome to the producing party.

Prior to this decision, there was no clear standard articulated in the statutes governing discovery, including the CPLR. The First Department panel was persuaded by the “strong public policy favoring resolving disputes on their merits,” which would be better served by this more liberal discovery standard, rather deterring plaintiffs from seeking discovery by making them bear the costs.

This ruling adopts the  Zubulake  standard, used in many federal courts since 2003, including the Southern District of New York, located in Manhattan.

The Fair Labor Standards Act (“FLSA”) establishes federal rules regarding minors’ ability to work. The FLSA sets a general minimum working age of 16 for most jobs, with a minimum age of 18 for “hazardous occupations.” For younger children, they may work as early as 14 years old if the employer observes certain FLSA restrictions on hours and work conditions. Children younger than 14 may only be employed subject to certain exclusions in the FLSA (e.g., a parent or guardian is the child’s sole employer in a non-hazardous job). The FLSA prohibits any “oppressive child labor.”

The FLSA does not cover all jobs performed by minors. There is no FLSA protection for entrepreneurs under 18 or minors who volunteer their time for charitable organizations. Some jobs traditionally done by minors, such as newspaper delivery, are not covered by the FLSA. Other exceptions include some situations in which a child works for a parent or guardian, children who are actors or other types of paid performers, and certain minors employed in home-based work.

The Department of Labor (“DOL”) has created a list of certain jobs and activities that are not considered oppressive child labor for children 14 and 15 years old. These jobs include, but are not limited to:

• Office and clerical work;
• Sales, retail, and advertising work;
• Errand and delivery work;
• Cleaning buildings;
• Dispensing gasoline and oil;
• Cleaning cars by hand;
• Limited kitchen work, including prep work or cooking (subject to limitations such as no cooking over an open flame);
• Serving food;
• Maintenance of grounds (without using power-driven equipment).
• Lifeguarding (if the child is at least 15 and has received proper training and certification from an accredited organization, such as the Red Cross)

Perez v. Due Milla Realty Grp. LLC is a recent court case involving a Title III ADA claim. The defendant in this case was closing operations at the subject premises effective April 9, 2023. The court held that when a public accommodation closes, an ADA claim becomes moot, and a private individual may only obtain injunctive relief for violations of a right granted under Title III; he cannot recover damages.

In this case, the district court dismissed all federal claims for lack of subject-matter jurisdiction, and as a result, the district court is precluded from exercising supplemental jurisdiction over the related state-law claims. Therefore, the case was dismissed as moot, and supplemental state law claims were dismissed.

Conclusion: This case highlights the importance of understanding the rules and requirements for pursuing an ADA claim, especially when dealing with a public accommodation that is closing its operations. As this case demonstrates, a plaintiff cannot recover damages in such a situation, and injunctive relief may only be obtained if the plaintiff can establish standing and a real and immediate threat of future injury. Therefore, it is crucial to consult with an experienced attorney who can guide you through the legal process and help you protect your rights as a person with a disability.