Yoga and Massage Therapist Fired for Being “Too Cute” Sees Gender Discrimination Revived on Grounds of Unjustified Spousal Jealousy

A New York appeals court recently ruled in Edwards v. Nicolai (153 A.D.3d 440 (N.Y. App. Div. 1st Dep’t 2017)) that an employment termination motivated by the sexual jealousy of an employer’s spouse may support a claim for gender discrimination under the New York State Human Rights Law (“NYSHRL”) and the New York City Human Rights Law (“NYCHRL”).

Defendants Charles Nicolai and his wife Stephanie Adams – a former Playboy model – were co-owners of a chiropractic center located in New York City. In 2011, Nicolai hired plaintiff Dilek Edwards, a female yoga and massage therapist, and was her direct supervisor. Edwards’s complaint alleged that during the course of her employment, her relationship with Nicolai was “purely professional” and that Nicolai “regularly praised [her] work performance.”

However, in June 2013, Nicolai purportedly told Edwards “that his wife might become jealous of [her], because [Edwards] was too cute.” Several months later, Adams sent plaintiff a text message saying, “You are NOT welcome any longer at Wall Street Chiropractic, DO NOT ever step foot in there again, and stay the [expletive] away from my husband and family!!!!!!! And remember I warned you.” A few hours later, Edwards allegedly received an email from Nicolai stating, “You are fired and no longer welcome in our office. If you call or try to come back, we will call the police.” One day later, Adams filed an allegedly false complaint with the New York City Police Department claiming that Edwards placed “threatening” phone calls to Adams which caused Adams to change the locks at her home and business. Edwards’s complaint alleges that she has “no idea what sparked . . . Adams’ [sic] suspicions.”

Edwards’s NYSHRL and NYCHRL gender discrimination claims were dismissed at the trial court level. However, that decision was overturned on appeal, with the court holding that “adverse employment actions motivated by sexual attraction are gender-based, and therefore, constitute unlawful gender discrimination.” The court explained that while Edwards does not allege that she was subjected to sexual harassment, it can be inferred that Nicolai was motivated to terminate Edwards “by his desire to appease his wife’s unjustified jealousy.” Further, it can also be inferred that Adams was motivated to terminate Edwards based on Adams’s own jealousy. Accordingly, the court found it plausible that each defendant’s motivation to terminate Adams was sexual in nature and therefore unlawful.

In reaching its decision the court observed that, “while it is not necessarily unlawful for an employer to terminate an at-will employee at the urging of the employer’s spouse,” a plaintiff may find relief for such a discharge if the spouse requested the termination for unlawful, gender-related reasons. Here, assuming Edwards’s allegations are true, her termination was unlawful not because Adams asked Nicolai to fire Edwards, but because she did so for no other reason than her belief that Nicolai was sexually attracted to Edwards.

Laura Doyle contributed to this post.

This post was written by Jonathan Sokolowski of Sheppard Mullin Richter & Hampton LLP., Copyright © 2017
For more Labor & Employment legal analysis, go to The National Law Review

Sears Seeks to Modify FTC Order on Online Tracking

In 2009, Sears Holding Management settled with the Federal Trade Commission (FTC) over allegations that the company’s online tracking activity exceeded what they told consumers. Now, Sears has submitted a petition requesting that the FTC reopen and modify its settlement order, arguing that changing technology since 2009 has made the order’s definition of “tracking applications” too broad and has put them at a competitive disadvantage.

The 2009 FTC complaint charged that Sears “failed to disclose adequately the scope of consumers’ personal information it collected via a downloadable software application, telling consumers that the software would track their “online browsing,” without telling them that it also collected information from third-party websites consumers visited such as their shopping cart information, online bank statements, and drug prescription records. Sears was required to stop collecting data from participating consumers and to destroy what they’d collected.

Sears now argues that the definition of “tracking application” in the FTC’s order now applies to most software on nearly all platforms, making them “out of step with current market practices without a corresponding benefit in combatting threats to consumer privacy.” The definition of tracking applications is so broad, Sears claims, that it “encompasses all of Sears’ current mobile apps, forcing Sears to handle disclosures differently than other companies with mobile apps and disadvantaging Sears in the marketplace.” Sears claims that modification of the order would allow the retailer to align with current tracking practices used by their competitors.

 This post was written by Sheila A. Millar ,Tracy P. Marshall Nathan A. Cardon of Keller and Heckman LLP.,© 2017
For more legal analysis, go to The National Law Review 

Construction Liens on Leased Commercial Premises

In general, a contractor or supplier is entitled to file a lien against a commercial property if they have performed work or provided materials pursuant to a written contract with the owner. These lien claims must be filed within 90 days of the last date of providing materials or services for the project.

On the other hand, if a contractor or supplier is providing materials or services for a tenant of a commercial property, the rules are different. The differences as to what the lien may attach to are discussed in detail below.

If the tenant of the property entered into a contract for the improvement of the property and the owner directly authorized the improvement in writing, the lien may attach to the real property. The proper way to ensure that a lien may attach to the real property is to have the owner of the property sign off on and approve any contract for the improvement of the real property.

As a contractor or supplier, it is suggested that you obtain the owner’s authorization which would thereby allow you to assert a lien claim against the property itself in the event of non-payment. This can become a very powerful tool on collecting an unpaid balance, as an action to foreclose upon the lien could be brought. This would place a great deal of pressure on the tenant to pay the outstanding balance.

Conversely, if the owner of the property does not sign off on or agree to the improvement to the real property, a lien claim would only attach to the lease hold interest of the tenant. Under these circumstances, the lien claim would not attach to the real property itself, but instead, solely to the lease hold interest held by the tenant.

The question then becomes what would be the value of the lease hold interest.

Depending upon the use of the property by the tenant, the lease hold interest could be quite valuable, or it may be close to worthless. Obviously, if the tenant is fully invested in the property the lien claim may carry substantial value, as it may force the tenant to satisfy the claim. Then again, if the lease hold interest is solely an office or two within a commercial property the lien claim may not possess significant value.

The above provides a general overview as to a lien claim on a commercial property which is occupied by a tenant. It is suggested, as a contractor or supplier, that you have the owner sign off for improvements. This gives you greater leverage when attempting to collect on a lien claim, and also, could force the sale of the property to satisfy same.

This post was written by Paul W. Norris of STARK & STARK.,COPYRIGHT © 2017
For more Construction & Real Estate legal analysis, go to The National Law Review

CNN Investigates Expanding Use of Nuedexta in Nursing Homes

A recent investigation by CNN brought to light the expanding and allegedly inappropriate use of the prescription drug Nuedexta in nursing homes throughout the country. Nuedexta is FDA-approved to treat a rare condition known as pseudobulbar affect (PBA).

What is Pseudobulbar Affect?

Pseudobulbar affect is characterized by sudden and uncontrollable laughing or crying. It is associated with people who have multiple sclerosis (MS) or amyotrophic lateral sclerosis (ALM), known as Lou Gehrig’s disease. Avanir Pharmaceuticals has been aggressively targeting elderly nursing home residents with the drug, the CNN investigation found, although PBA reportedly impacts less than 1 percent of Americans, based on a calculation using the drug maker’s own figures.

What the Investigation Revealed

Nuedexta prescription use in nursing homes is rising at a rapid rate, even though Avanir Pharmaceuticals acknowledges that the drug has not been extensively studied in elderly patients, according to CNN.

CNN found that Avanir Pharmaceutical’s sales force is focused on expanding the drug’s use among elderly patients suffering from dementia and Alzheimer’s disease, coupled with “high-volume prescribing and advocacy efforts by doctors receiving payments from the company.”

Since 2012, more than half of all Nuedexta pills have gone to long-term care facilities, according to data obtained from QuintilesIMS, which tracks pharmaceutical sales. Total sales of Nuedexta reached almost $300 million that year.

In response to requests to be interviewed for the CNN article, Avanir reportedly responded by email with a statement that PBA is often “misunderstood” and that the condition can affect people with dementia and other neurological disorders that are common in nursing home residents.

Nuedexta is approved by the Food and Drug Administration (FDA) to treat anyone with PBA, including those with neurological conditions such as dementia. But geriatric physicians, dementia researchers, and other medical experts reportedly told CNN that PBA is extremely rare in dementia patients.

How Can Nuedexta Impact Nursing Home Residents?

One study of 194 patients with Alzheimer’s disease found that patients taking Nuedexta suffered more than twice as many falls as those patients taking a placebo.

CNN reports that Lon Schneider, director of the University of Southern California’s California Alzheimer’s Disease Center, reviewed information from several hundred reports obtained by CNN through the Freedom of Information Act. Schneider expressed concern about potential interactions between Nuedexta and other medications intended to treat problematic behaviors. These medications may include antipsychotic drugs, antidepressants, and anti-anxiety medication which are often given to nursing home residents to suppress anxiety or aggression that may occur with Alzheimer’s disease and other dementia types.

Why Are Doctors Prescribing Nuedexta to Nursing Home Residents?

According to CNN’s analysis of government data, between 2013 and 2016, Avanir and its parent company, Otsuka, paid almost $14 million to physicians for Nuedexta-related consulting, promotional speaking, and other services. The companies also spent $4.6 million on travel and dining costs. CNN found that in 2015 nearly half the Nuedexta claims filed with Medicare came from doctors who had received money or other perks.

According to the investigation, state regulators have found that doctors may inappropriately diagnose nursing home residents with PBA to justify the use of Nuedexta to treat confusion, agitation, and unruly behavior. Further, doctors may inappropriately diagnose nursing home residents with PBA to justify the use of Nuedexta to treat confusion, agitation, and unruly behavior. A diagnosis of PBA may be used because “off-label” prescriptions written by doctors using Nuedexta to treat patients who have not been diagnosed with PBA would typically not be covered by Medicare.

What Adverse Events Have Been Reported With Nuedexta Use By Nursing Home Patients?

Soon after Nuedexta came on the market, doctors, nurses, and nursing home patients’ family members began filing reports including rashes, dizziness, and falls as well as comas and death. CNN found that Nuedexta was listed as a “suspect” medication in nearly 1,000 adverse event reports received by the FDA. These reports disclosed side effects, drug interactions, and other issues. According to CNN, the FDA declined to comment on adverse events or the approval process for Nuedexta.

This post was written by Denise Mariani  of STARK & STARK, COPYRIGHT © 2017
For more legal analysis, go to The National Law Review

Education Secretary Signals Shift in Title IX Policy for Dealing with Sexual Misconduct Allegations

On September 7, 2017, Secretary of Education, Betsy DeVos announced a marked policy shift in how the Department of Education will approach Title IX enforcement with regard to sexual misconduct. DeVos indicated that the Department plans to withdraw the controversial Dear Colleague Letters issued during the Obama administration. Instead, the Department will issue formal regulations that will establish a new Title IX framework for educational institutions investigating and responding to sexual misconduct allegations. The full text of Secretary DeVos’s speech can be found here.

Title IX has been a dominant topic in higher education since 2011, when the Obama Administration issued the “Dear Colleague Letter” explaining that a failure to adequately address sexual misconduct on campus constituted discrimination on the basis of sex in education programs under Title IX.[1] Among other things, the Dear Colleague Letter set forth how schools should respond to sexual misconduct, dictated specific procedures schools must follow to investigate and adjudicate such misconduct, and established various other requirements such as climate surveys, standards of proof, and survivor sensitivity. The Letter made clear that a failure to meet these expectations, and the expanded guidance issued by the Department in 2014, could result in a loss of federal funding, and thus had a swift and substantial impact on the way educational institutions responded to reports of sexual assault or harassment.

In a speech at the George Mason University School of Law on September 7, 2017, Secretary DeVos said that schools will still be required to address sexual misconduct. However, she announced the Department would be rescinding the Dear Colleague Letters and instead regulate through actual regulations, subject to notice and comment. Secretary DeVos lamented that “for too long, rather than engage the public on controversial issues, the Department’s Office for Civil Rights has issued letters from the desks of un-elected and un-accountable political appointees.” She made it clear that “the era of ‘rule by letter’ is over.” DeVos emphasized the Department’s ongoing commitment to protecting victims of sexual violence. But she also clearly signaled that the Department will pay more attention to the due process rights of the accused, including questioning the “preponderance of the evidence” standard that the Department required all schools to use in adjudicating sexual misconduct cases. DeVos promised to work more closely with educational institutions, rather than operating “through intimidation and coercion.” And she said the Department would be open to exploring alternative methods of enforcing Title IX, including the possibility of voluntary regional centers where outside professionals would be available to handle Title IX investigations and adjudications.

DeVos did not indicate exactly what the new Department rules might entail, or when they will come into effect, nor has there been an official withdrawal of the Dear Colleague Letter yet. DeVos did indicate, however, that the Department will base the new rules on public feedback and will take into account the views of educational institutions, professionals, and individual students. In her closing remarks, DeVos noted that the Department of Education’s “interest is in exploring all alternatives that would help schools meet their Title IX obligations and protect all students. [The Department] welcome[s] input and look[s] forward to hearing more ideas.”[2]

Schools should take advantage of the Secretary’s call for comments, as the Department moves towards the development and implementation of a different and hopefully clearer set of rules governing the enforcement of Title IX. However, schools should also anticipate a period of uncertainty until final rules are issued. Moreover, schools should be aware of the continuing (and possibly conflicting) state law obligations that have been put into place following the Dear Colleague Letter. For example, many states including Connecticut and New York have passed legislation mandating use of the preponderance of the evidence standard in evaluating sexual misconduct on college campuses. We anticipate further, more detailed guidance in the next few weeks as the Department of Education works to implement Secretary DeVos’s policy announcements.


[1] 20 U.S.C. §§ 1681 et seq.; 34 C.F.R. Part 106.

[2] Secretary DeVos Prepared Remarks on Title IX Enforcement, available here.

 This post was written by Benjamin DanielsAaron Bayer, & Dana M. Stepnowsky of Wiggin and Dana LLP., © 1998-2017

The Supreme Court Enters the Digital Age

Electronic filing is coming to the U.S. Supreme Court! Effective November 13, 2017, amendments to the Supreme Court’s rules take effect that require represented parties (and their amici) to submit petitions, briefs, and most other filings through the Court’s electronic filing system. The Rules explain that the new e-filing requirements are “[i]n addition to the filing requirements” already set forth in the Rules. Accordingly, parties and their amici will still be required to submit forty copies of their briefs on paper in booklet form, and they now must additionally submit one paper copy on 8.5 x 11 inch paper (in case the Clerk’s office needs to scan the brief for any reason). The paper submission remains the “official filing” for purposes of determining timeliness, but e-filing is supposed to occur “contemporaneously” with the paper filing. Pro se parties will continue to file submissions exclusively on paper; those submissions will be scanned by the Clerk’s office and posted on the Court’s web site.

Attorneys practicing before the Supreme Court will be required to register for an account on the Court’s electronic filing system. The Court warns that it could take two days for a new account to be approved, so attorneys should register well in advance of a filing deadline. Attorneys of record will also now be required to file notices of appearance using the Court’s e-filing system. Under the previous regime, the submission of a brief with an attorney’s information constituted a notice of appearance. Now, an attorney need not file a notice of appearance to submit a case-initiating document, such as a cert petition, but must make an appearance before filing any other document.

While the advent of e-filing creates a few new procedural hurdles, it also presents some obvious benefits to litigators. Primarily, all documents e-filed with the Court will be made available to the public free of charge, which will make it easier to access briefs and petitions filed in other cases. Moreover, counsel who enter an appearance will receive immediate notifications of any activity in the case. Under the old system, a party would not learn of an adversary’s filing until it arrived on paper by courier sometimes three days later, unless opposing counsel was courteous and emailed a courtesy copy.

E-filed documents will be posted immediately to the Supreme Court’s web site. (The lone exception is a document that commences a new case, which will first be reviewed by the Clerk’s office and the case assigned a number before the document becomes available to the public). Accordingly, the Court has promulgated new rules and guidelines to ensure that confidential information does not accidentally become public. Specifically, new Rule 34.6 incorporates the privacy protections found in Fed. R. Civ. P. 5.2 in most cases. Moreover, documents containing material under seal must not be submitted electronically but only in paper form.  (This also holds true also for redacted forms of briefs submitted for the public record).

Given the Supreme Court’s arcane procedural rules, Proskauer’s Appellate Department recommends that any party or amicus practicing before the Court use an appellate printer to assist with filings. Printers are typically well-versed in the Court’s procedural minutiae and will be able to help you navigate the Court’s new e-filing process.

This post was written by John E Roberts of Proskauer Rose LLP., © 2017
For more legal analysis, go to The National Law Review

Cannabis Prop 65 Liability: Lessons Learned from the Dietary Supplement Industry

The cannabis industry appears to be next on the liability “hit list” under California’s notorious Proposition 65 statute. In June 2017, more than 700 Prop 65 notices were served on California cannabis businesses. Companies in this emerging market should start mitigating risk under Prop 65 now. Fortunately, lessons can be learned from the dietary supplement industry’s expensive Prop 65 battles over the past decade.

California’s Prop 65, also known as the Safe Drinking Water and Toxic Enforcement Act, requires a warning on all products that contain chemicals known to cause cancer or reproductive harm, even in amounts a fraction of what is deemed safe by federal standards. Prop 65 has caused havoc within the dietary supplement and herbal product markets over the past decade, led by a cottage industry of “bounty hunter” attorneys who have weaponized the statute, ostensibly in the public interest but in reality as a lucrative for-profit business. These bounty hunters are now turning their attention to cannabis. Though amendments to the statute were adopted in 2016 for the purpose of reducing this abuse, Prop 65 litigation will continue and cannabis companies must stay vigilant.

Many businesses faced with the necessity of using a Prop 65 warning have no concern with the impact that a warning may have on sales or with consumer confidence in the product. After all, who would look twice at a Prop 65 warning on motor oil or insect repellent? Like the dietary supplement industry before them, however, many cannabis businesses will resist including a warning that the product contains a chemical known to cause cancer or reproductive harm. Many cannabis products rely on the consumers’ belief that the product is harmless and even therapeutic. For many, this will be an important business decision that may give rise to expensive mistakes − a decision should be made with an understanding of the basis for Prop 65 liability and exposure.

What Is Prop 65 and What Does It Require?

Prop 65 was passed by California voters in 1986 after an aggressive lobbying campaign by environmental and public health activists. The stated purpose of Prop 65 was to improve public health. The general consensus, however, is that Prop 65 has placed an undue burden on California businesses while achieving no significant impact on public health over the past 30 years.

As noted above, Prop 65 requires a warning on all products that contain chemicals known to cause cancer or reproductive harm. There are more than 900 such chemicals listed, and marijuana smoke has been included on the list since 2009.

For a warning to be acceptable under Prop 65, it must (1) clearly make known that the chemical involved is known to cause cancer and/or birth defects and/or other reproductive harm and (2) be given in such a way that it will effectively reach the person before he or she is exposed. The warnings must be “clear and reasonable,” meaning that the warning may not be diluted by other language. Various means of communicating the warning are allowed, including product-specific warnings on a posted sign or shelf, warnings on the product label or electronic warnings for internet purchases.

Important Exemptions

There are several important exemptions to Prop 65 that make a warning unnecessary. Businesses with nine or fewer employees are exempt from the statute. There also is an exemption involving chemicals that occur naturally in food. Lead, for example, will be considered naturally occurring only if it “is a natural constituent of a food” and is not added as a result of human activity such as pollution or poor manufacturing processes. The burden is on the company to prove the exemption, however, which is typically time-consuming and expensive.

Another important exemption is provided by “safe harbor” exposure levels for many chemicals on the Prop 65 list, below which no warning is required. The listed chemicals include additives or ingredients in pesticides, food, drugs and common household products. Most food contains at least some level of one or more of these substances. Prop 65 safe-harbor levels, however, are in many cases around 1,000 times lower than levels set by the Food and Drug Administration (FDA), Environmental Protection Agency (EPA) and World Health Organization (WHO). The exposure levels established by Prop 65 are often lower than what occurs naturally in fruits, vegetables, grains and even drinking water.

For example, the Prop 65 limit for lead is 0.5 mcg / day, which is below the amount of lead naturally found in many fruits, vegetables and herbs grown in non-contaminated soil. By comparison, the FDA allows 75 mcg / day and the European Union allows 250 mcg / day for lead. The European Food Safety Authority estimates the average adult consumes around 50 micrograms per day, which is 100 times the Prop 65 limit. It is nearly impossible to manufacture herbal products, including cannabis, without trace amounts of lead. Therefore, despite the “naturally occurring” exemption, discussed above, it can be dangerous to simply assume that an herbal product, including cannabis, complies with safe-harbor levels.

Only about 300 of the more than 900 Prop 65 chemicals have specific safe-harbor levels. For those chemicals without a safe-harbor limit, the burden will be on the cannabis business to establish that the subject chemical is within a safe range. This typically requires expensive testing, the results of which may be open to multiple interpretations as to whether a warning is required.

Determining the Exposure Level

Determination of the “exposure level” also is an important consideration. Prop 65 focuses on the level of a chemical to which the consumer is actually exposed. Although a product may have a very low amount of a chemical on the Prop 65 schedule that is below the safe-harbor level, liability under the statute may nevertheless be triggered based on the recommended serving size. It is advisable for companies to work with a laboratory that specializes in Prop 65 testing to determine the cumulative exposure level in order to verify the recommended serving size.

Enforcement of Prop 65

Prop 65 is enforced through litigation brought by the government or by private attorneys that “act in the public interest.” It is the threat of these private lawsuits that causes such consternation among those targeted with Prop 65 liability. After a 60-day notice period, the attorney may file a civil suit against the offending company. Typically, the plaintiff will demand that the defendant provide warnings compliant with Prop 65, pay a penalty, and either recall products already sold or attempt to provide health hazard warnings to those who purchased the products.

Though purportedly brought in the public interest, it is the collection of penalties and attorneys’ fees that in reality drives this litigation. Prop 65 allows individuals who bring suit to recover 25 percent of the penalties awarded, which by statute is calculated at $2,500 per violation per day. Amendments made to Prop 65 in 2016 allow for certain voluntary actions by the defendant – reformulation of the product, for example – in lieu of penalties. The threat of paying the plaintiff’s attorney’s fees makes litigating Prop 65 cases potentially very expensive. The attorney is incentivized to drag out the litigation, and the longer the case goes on, the more difficult it becomes to resolve because of the mounting fees.

This framework has created a cottage industry of Prop 65 “bounty hunter” lawyers who affiliate with “public interest” organizations that bring these cases for profit. According to the California Attorney General, 760 settlements were reported in 2016 with total settlement payments of more than $30 million. Attorneys’ fees accounted for 72 percent of that amount. The 2016 amendments to the statute have attempted to address these abuses to some extent by requiring a showing that the public benefits derived from the settlement are “significant” and by requiring contemporaneous record keeping for fees and costs sought to be recovered. Prop 65 litigation nevertheless continues to burden many industries in California, now including the cannabis industry. For Prop 65 liability, prevention is certainly less costly than a cure.

 

This post was written by Ian A. Stewart of Wilson Elser © 2017

For more legal analysis go to The National Law Review