Iced Out: Use of Ice Cube’s Image and Catchphrase Was Not Endorsement

Rapper and actor O’Shea Jackson, professionally known as Ice Cube, lost his day in court (for now) on claims of false endorsement against trading platform Robinhood because he failed to plausibly allege that Robinhood’s use of his image and catchphrase implied endorsement.  Robinhood had published a newsletter on its website “Robinhood Snacks” which featured an article discussing market corrections for technology stocks with an alteration of Ice Cube’s lyric and catchphrase “Check yo self before you wreck yourself”—here, “Correct yourself before you wreck yourself”—along with the below image of Ice Cube from Are We Done Yet? (2007):

In response, Ice Cube filed a complaint in the U.S. District Court for the Northern District of California, alleging that Robinhood’s article falsely implied that he had endorsed Robinhood and its services.  He claimed false endorsement under the Lanham Act as well as misappropriation of likeness and unfair competition under California law.  Robinhood filed a motion to dismiss the complaint for lack of standing and a motion to strike the state law claims under California’s Anti-SLAPP statute as protected speech.

As noted by the court, to establish standing a plaintiff must demonstrate an “injury in fact,” meaning the plaintiff suffered “an invasion of a legally protected interest” that is “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.”  Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).  Citing Waits v. Frito-Lay, Inc., 978 F.2d 1093, 1110 (9th Cir. 1992), the court further held that “a celebrity whose endorsement of a product is implied through the imitation of a distinctive attribute of the celebrity’s identity, has standing to sue for false endorsement” under the Lanham Act.

While the court acknowledged that a celebrity could establish standing under Waits, Robinhood argued that Ice Cube failed to plausibly plead (1) his celebrity status, (2) he was deprived of compensation, and (3) use of his identity and catchphrase implied endorsement.

In ruling on the motion to dismiss, the court found that Ice Cube sufficiently pleaded celebrity status.  It discredited Robinhood’s argument that Ice Cube lacked such status because he relied on his music in the 1980s and movies in the 1990s.  The court questioned why Robinhood would have used Ice Cube’s image and catchphrase in the first place if he had no status as a celebrity.  The court also found that Ice Cube robustly alleged he had commercialized his celebrity status and therefore adequately pleaded economic injury.

In the end, however, the court held that Ice Cube did not plausibly plead that the use of his likeness or catchphrase suggested he endorsed Robinhood’s products.  Although Ice Cube cited Robinhood’s other celebrity endorsements from rappers Nas and Jay-Z, the court found those endorsements were irrelevant.  It also contrasted Robinhood’s use of his likeness and catchphrase with other cases cited by Ice Cube, which all involved explicit endorsements.  Furthermore, without explaining the distinction, the court noted that the article was part of a newsletter, not an “advertisement” as Ice Cube claimed, and that under such circumstances no other court had found standing.  Thus, the court concluded that Ice Cube lacked standing because “he did not allege how Robinhood’s use of his identity created the misapprehension that the plaintiff sponsored, endorsed, or is affiliated with Robinhood.”

Although the court granted Robinhood’s motion to dismiss, it allowed Ice Cube to amend his complaint, which he amended and refiled on July 6, 2021.   Whether Ice Cube has now plausibly pleaded endorsement remains to be seen.

The case is Jackson v. Robinhood Markets, Inc., No. 21-CV-02304-LB (N.D. Cal. June 15, 2021).

© 2021 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP

For more articles on trademark misappropriation, visit the NLR Communications, Media & Internet section.

The Secondment Trap: When Should Law Firms, Legal Departments & Attorneys Avoid a Traditional Law Firm Secondment?

For more than half a century, corporate law departments and law firms have used secondment arrangements as a way to solve the law department’s need for high-caliber, interim additional counsel to alleviate leaves of absence or sudden increases in legal work. These law firm-provided flexible talent arrangements have largely been considered symbiotic, with each side convincing itself how happy it is with the deal. As it turns out, however, many of these attorney staffing arrangements are not, in fact, strategic and often negatively impact clients, law firms and the lawyers who serve as secondees.

Why law firm secondments? Secondments are sometimes perceived as a viable flexible talent solution when additional bandwidth is needed in-house, but where hiring new team members doesn’t make sense for the legal department. Typical circumstances include major litigation and during pre- and post-merger integration phases. Secondments are also frequently used to fill the role of existing team members who take time off due to illness, military or family leave. Some companies use law firm secondments when headcount limitations or hiring freezes preclude adding a needed permanent hire.

What makes a secondment symbiotic? For law firms, secondments can sometimes provide a means to accommodate a good client’s request, with the potential added benefit of having a law firm team member embedded at the client, presumably producing enough revenue to at least cover the firm’s cost of employing the attorney. For the law department, its immediate needs for additional resources are filled by a talented, high-quality attorney, as vetted by one of its prestigious law firms.

Law firm secondment arrangements are symbiotic when the goals of firm and client are aligned. For example, a secondment can sometimes offer a convenient avenue for in-house teams to embed knowledge of the company at their law firm and for the law firm to gain greater visibility regarding its client’s needs. It may also be a way to help young attorneys develop experience “on the business side” before moving back into the firm to better serve the client in the future. In some cases, the company is test-driving a potential future hire for the company and the firm doesn’t mind losing the attorney permanently based on the expectation that new work will flow back to the firm if the attorney moves in-house permanently. Sometimes a firm is happy to simply outplace an attorney who is not a long-term fit with the firm.

But there are many instances—most of the time, actually—where the disadvantages of secondments outweigh the benefits. Clients often seek secondment arrangements—and firms agree to them—simply because “that’s the way it’s always been done.” A deeper analysis indicates secondments are often not actually beneficial for law firms, clients or especially the lawyers who serve as secondees.

Let’s start with law firms. First, secondees are usually billed at deep discounts, resulting in the firm taking a substantial financial hit. Often, firms bill out secondees much closer to the cost of their employment than their bill rate. In these cases, the firm misses out on the revenue that attorney could have earned for the firm by billing out at normal market rates. This often results in the firm’s loss of hundreds of thousands of dollars in profits for each secondment.

Second, clients also often request a firm’s most talented or marketable associates, leaving them unable to serve other important clients. A top associate may be working with multiple clients simultaneously; devoting them full-time to a single client may disappoint the other clients or, at a minimum, impact the workflow on those projects. That workflow disruption often results in the firm writing off hours so clients do not bear the cost of substitute personnel getting up to speed. Then, when – or if – the secondee comes back, the same workflow difficulties arise again as the attorney is reintegrated.

Third, pulling an associate off a team can have the same feel as if you lost them to another job (as is often what, in fact, occurs). For smaller teams, especially, the effect can be pronounced, including lowering morale on already stressed team members, and risks further attrition due to burnout. There is also the issue of a potential drop in the quality of work product caused by the transition.

From a client’s perspective, attorneys made available by law firms are often junior attorneys. And even if they are more senior attorneys, they almost never have experience working in-house. That limits the secondee’s near-term effectiveness and results in increased stress on the existing in-house team, which must devote time to training the secondee to practice law in a new way. Attorneys with in-house experience understand that the skills necessary to be an outstanding associate at a law firm are not necessarily the same skills needed to immediately be an outstanding in-house attorney. Law firms seek analysis of many issues that require detailed thought, consideration of many different permutations of issues, precise drafting – and the layered review of work product by sometimes multiple more senior attorneys. Firms are looking for precise answers to legal questions – and this takes time.

Law departments, on the other hand, are required to work at “the speed of business.” In-house counsel need to provide actionable answers, often immediately, consistent with the business objectives and risk tolerance of the company. Law departments are looking for answers to business questions – as quickly as possible. The shift between the law firm style of practice and in-house practice often takes time and training – yet legal departments often turn to secondments because they need an attorney who can begin taking work off others’ plates immediately.

Finally, even when a secondee is provided at a significant discount, law firm resources are not cheap and typically significantly more costly to the law department than comparable alternatives.

Perhaps most importantly, secondment agreements can also negatively impact the lawyers that serve as secondees. Many associates who agree to serve as secondees do so with the perception that it will be an easier way of fulfilling their billable-hour requirement or that in-house work will be less demanding. However, as discussed above, the skill sets needed in-house are different than those at a firm. That may frustrate the client, but it can also be a big shock to the secondee.

Second, from the perspective of their law firm career, the time seconded is time not generating the same revenue as their peers due to discounted work. That can be problematic, depending on the stage of the attorney’s career and the firm. While partners may understand that less revenue was generated because the attorney was seconded, it does not change the fact that many of the secondee’s peers will have far outpaced them in billings and in exposure to decision-making partners. (Secondees that are out of sight are also out of mind.) Upon their return, secondees often find they have been passed by other associates, have difficulty getting back onto the same client teams or are now out of the loop with other clients because they have missed key events. In some instances, upon their return secondees can face resentment from their peers who had to pull their weight while they were gone. Some returning secondees can even be considered failures for not having been permanently hired by the client.

Third, that period in-house likely requires the attorney to pause or at least deprioritize up to a year of traction toward being able to originate their own business. This often makes it more difficult to make partner.

In an era when law firm and corporate leaders are striving to better develop young attorneys, secondments can in many situations have the opposite effect on a promising young attorney’s career. In short, as often as not, a secondment opportunity is not in a young associate’s best long-term interest.

The legal industry is moving into a new era, with many new options for getting work done. So why are nonsymbiotic secondments often still used? Sometimes it is due to not being aware of other, better options, and often it is due to both firms and clients not fully understanding the disadvantages to all involved. Some, however, continue to be hesitant to embrace alternative means due to concerns over the quality of lawyers outside of traditional law firms. We are past the days when only law firms and legal departments employ top-tier attorneys, so there is no need to compromise on quality. There are now many outstanding attorneys with sophisticated Big Law and in-house backgrounds available on a flexible basis. These attorneys have track records of success that enable them to embrace the type of very well-compensated, flexible practice that is only available to the most accomplished attorneys.

While in the past law firms may have had little choice but to accede to a client secondment request despite the negative consequences to the firm and secondee – or refuse and risk driving the client into the arms of a competing law firm – now law firms have great alternatives to traditional secondments. Likewise, legal departments no longer have to press their law firms for a secondment and can instead preserve that request for a favor for other occasions.

With the growing pace of legal teams requiring highly developed specialties and rapidly changing activities, including the rise in proactive investigations and ESG-related compliance, there has never been more need for attorneys with a Big Law pedigree to bridge the gaps for corporate legal departments. But, in an increasing number of instances, traditional law firm secondments are not the best model. Instead, it will be imperative to find legal team members that can quickly and cost-effectively start working and fit in with the existing in-house team, without putting undue pressure on law firms or negatively impacting the careers of promising law firm attorneys. And flexible talent legal service companies may provide the key to filling in the gaps and avoiding those costly traps.


© 2021 Latitude. All Rights Reserved.
ARTICLE BY Ross Booher and Tim Haley of Latitude
For more articles on the legal industry, visit the NLRLaw Office Management section.

Chobani Sued Over “Fair Trade” Claims

  • On July 12, 2021, private plaintiffs filed a proposed class-action lawsuit against Chobani LLC. The plaintiffs allege that Chobani misrepresented its certification from Fair Trade USA, leading plaintiffs to overpay for Chobani’s products because they believed in the certification labeling.

  • Chobani became the first in the U.S. dairy industry to be certified with the Fair Trade USA seal of approval in May 2021. Fair Trade USA is a nonprofit that grants and sets standards for the fair trade label. However, the suit claims that Chobani’s immigrant laborers work in “dangerous conditions,” dealing with hazards including slippery surfaces, aggressive cows, and heavy machinery being poorly operated on dairy farms in upstate New York. The complaint relies on a nonprofit worker groups’ report that states dairy workers did not succeed in getting Chobani’s support in unionization efforts at farms from which Chobani purchases milk.

  • Chobani stated that the lawsuit is meritless and makes “unfounded attacks on Fair Trade USA, one of the most highly-regarded third-party verification programs for environmental, social and economic standards.” This lawsuit is the most recent action filed by Sheehan & Associates, which has been prolific in recent years in lawsuits against food companies.

© 2021 Keller and Heckman LLP

For more articles on fair trade, visit the NLRBiotech, Food, Drug section.

The Biden Administration Takes Aim at Noncompete Clauses

Employers – in light of recent action by the Biden administration, it is time to review and evaluate restrictive covenants being used with your workforce. Courts, state legislatures, and the president are increasingly scrutinizing such covenants, including noncompete agreements.

President Joe Biden campaigned on a platform to eliminate and reduce barriers for employees seeking higher wages and better benefits. As part of this commitment, he promised to prohibit all noncompete agreements, except those essential to protecting a narrowly defined category of trade secrets. President Biden took a concrete step towards making good on this promise on July 9, 2021, by signing a sweeping executive order.

Noncompete provisions have become commonplace. According to data the Biden administration cites, approximately one-half of private-sector businesses require at least some segment of their workforce to execute noncompete agreements, affecting between 36 to 60 million workers in the United States. The Biden administration claims these agreements limit wage growth and hamper employee mobility.

In its wide-ranging executive order, the Biden administration signaled an aggressive approach to curtailing the use of noncompete agreements. The executive order declares “that a whole-of-government approach is necessary to address overconcentration, monopolization, and unfair competition in the American economy.” Of particular interest to many employers is the executive order’s directive to the Federal Trade Commission (FTC), which encourages the FTC to use its rulemaking authority to restrict and reduce — and even ban — certain types of non-compete agreements. Specifically, it provides that “the Chair of the FTC is encouraged to consider working with the rest of the Commission to exercise the FTC’s statutory rulemaking authority under the FTC Act to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.”

The executive order, which builds upon an executive order issued during President Obama’s final year in office, represents a potential sea change to the enforcement of noncompete agreements because it adds a layer of federal considerations to an already complex and ever-evolving array of state requirements.

To be clear, the July 9 executive order does not immediately change anything. The FTC must exercise its rulemaking authority under the FTC Act to accomplish its mission. It could be months or years before the FTC announces any specific rules. And challenges to the FTC’s authority will likely follow whatever rules the Commission ultimately promulgates.

The executive order also directs a newly created White House Competition Council to identify any potential legislative changes necessary to advance the policies outlined in the executive order. This may spur Congress to pass federal legislation in addition to anticipated agency rules. Beyond that, the Biden administration’s aggressive and prominent action on this front may inspire state legislatures across the country to evaluate their laws and potentially pass additional measures regulating enforceability of noncompete agreements. At bottom, this executive order represents an inflection point as the Biden administration aims to increase competition and wages by eliminating what it views as hindrances to achieving those goals.

While awaiting action by the FTC, employers should to take the time to scrutinize and evaluate the terms of restrictive covenants they use to ensure the restrictions are narrowly tailored. Such diligence may increase the likelihood of enforceability. In addition, employers should explicitly state the reasons for the restrictive covenants (e.g., protection of trade secrets, company goodwill, etc.). And, as always, employers need to also keep abreast of any state-law developments.

©2021 Greenberg Traurig, LLP. All rights reserved.

For more articles on noncompete clauses, visit the NLR Labor & Employment section.

The Supreme Court’s Transgender Bathroom Case Rebuff, What Direction Should School Districts Take?

On June 28, 2021, the Supreme Court denied the Gloucester County School Board’s petition for a writ of certiorari or stated another way denied to hear an appeal from the School Board from a Federal Appellate court.  So at this juncture,  it appears the Justices don’t seem inclined to intervene in disputes over transgender rights and bathrooms.  So what are the implications of the Court’s action or more accurately inaction in Grimm v. Gloucester County School Board?

The Background and Twisting Litigation in Grimm v. Gloucester

Prior to appeal to the Supreme Court, the United States District Court for the Eastern District of Virginia denied a motion by the Gloucester County school board to dismiss the Title IX and Equal protection lawsuit brought by student Gavin Grimm.

In Grimm v. Gloucester County School Board the Plaintiff Gavin Grimm, a transgender student, challenged a school board resolution that required him—and other transgender students—to use the bathroom associated with his “biological gender.” G.G. ex rel. Grimm v. Gloucester Cty. Sch. Bd., 822 F.3d 709, 716 (4th Cir. 2016), cert. granted in part, No. 16-273, 2016 WL 4565643 (U.S. Oct. 28, 2016). Grimm sued the school board, alleging that the policy violated Title IX as well as the equal protection clause of the Constitution.

What does Title IX Protect?

Title IX of the Education Amendments of 1972 (Title IX) is a federal law that states in part:

“No person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance.”

What does the Equal Protection Clause of the Constitution Protect?

The Equal Protection Clause is part of the Fourteenth Amendment to the U.S. Constitution and the part most frequently litigated reads:

“No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”

Specifically, the phrase “equal protection of the laws” has been used by the Supreme Court to find constitutional protection in a number of gender and public education related situations.

What Does the Due Process Clause of the 14th Amendment Protect?

The Due Process clause of the 14th Amendment which explicitly applies to the states,   essentially mirroring the protections of the 5th Amendment, which only applies to the Federal Government , thereby adding additional protections for individual rights from intrusion by the states.  The Due Process clause guarantees the following rights from interference by the states:

In addition to his Title IX and equal protection clause claims, the plaintiff in Grimm v. Gloucester relied heavily on a Department of Education (DOE) /  Office of Civil Rights Letter (OCR) known as a “Dear Colleague Letter” interpreting Section 106.33 (34 CFR 106.33 Comparable Facilities)  to require schools to “treat transgender students consistent with their gender identity.” G.G., 822 F.3d at 718.

In response to the Fourth Circuit Court of Appeals decision in Grimm v. Gloucester County School Board, 2016 WL 1567467 (4th Cir. April 19, 2016), on May 13, 2016, the Department of Labor (DOL) and the Department of Education under the Trump Administration issued a joint directive to school districts summarizing “a school’s Title IX obligations regarding transgender students and explains how the [DOE] and the [DOL] evaluate a school’s compliance with these obligations” or another a “Dear Colleague Letter.”

The Fourth Circuit’s majority opinion in Grimm (2106) relied heavily, if not exclusively, on the Obama Era’s DOE’s interpretation of Title IX and that requiring transgender students to use the restroom associated with their biological sex equated to discrimination on the basis of sex.

The school district in Grimm, along with several state attorney generals, petitioned the Fourth Circuit for a hearing before the full panel.  The Fourth Circuit denied the and School District appealed to the United States Supreme Court for review and the Supreme Court granted certiorari in 2016, but after the change of administration the Department of Education withdrew the “Dear Colleague Letter”, the Supreme Court opted to not to hear the case and vacated and remanded the case back to the Fourth Circuit.

Grimm then filed an amended complaint, and in 2020, the Fourth Circuit affirmed the district court’s ruling in favor of Grimm.  The Fourth Circuit, in its 2020 ruling relied on 2020 landmark Supreme Court case, Bostock v. Clayton County, which held that Title VII’s prohibition of discrimination on the basis of sex necessarily includes discrimination on the basis of sexual orientation and gender identity. The Fourth Circuit extended the Supreme Court’s reasoning in Bostock  to Title IX’s analogous prohibition of discrimination on the basis of sex.

The School District once again appealed and the Supreme Court refused to grant certiorari on June 28, 2021, so the underlying 2020 Fourth Circuit opinion stays intact.

What Impact will Grimm v. Gloucester Actually Have?

According to Shannon Farmer a Labor & Employment partner in the Philadelphia office of Ballard Spahr, with extensive litigation experience related to civil rights:

“As the Fourth Circuit’s decision and the Supreme Court’s denial of certiorari makes clear, the Court’s landmark ruling in Bostock changed the legal landscape surrounding LGBTQ+ discrimination. When Grimm was before the Court in 2016, the underlying Fourth Circuit decision was based on administrative guidance with limited authority. The Fourth Circuit’s most recent ruling, however, was grounded in the Court’s reading of statutory language. Although the Supreme Court explicitly stated that the Bostock opinion did “not purport to address bathrooms, locker rooms, or anything else of the kind,” its decision not to hear the Grimm case allowed Bostock to be extended to provide exactly those protections. In addition, the Biden Administration’s March 8 Executive Order and a subsequent memorandum from the DOJ have extended Bostock to the educational context.”

Although many institutions have created or are beginning to create policies for transgender students, the long and winding road of the Grimm case shows there are still challenges ahead and changes in direction from the DOL, DOE and OCR  with different administrations, can make keeping up with the rules a moving target. As it stands today, revisions to existing policies will call for more clearly-defined inclusivity provisions for the LGBTQ community.

According to Nikki Hatza, an associate in the Philadelphia office of Ballard Spahr with previous experience with the Employment Litigation Section of the U.S. Department of Justice’s Civil Rights Division:

“Given the Biden Administration’s guidance and the existing appellate court decisions interpreting Title IX and the Equal Protection Clause to prohibit discrimination on the basis of gender identity, schools should review and adjust their policies as needed to comply.”

Per Art Coleman, of EducationCounsel and past Deputy Assistant Secretary for Civil Rights, U.S. Department of Education, who along with his team, last year filed an amicus brief in the U.S. Court of Appeals for the Fourth Circuit on behalf of Gavin Grimm:

“The U.S. Supreme Court’s decision not to consider the appeal in the Grimm case is not surprising in light of the unbroken string of recent federal appellate decisions that affirm that the protections of Title IX extend to transgender students.  Coupled with recent U.S. Departments of Justice and Education actions that align with those rulings, clear consensus has emerged under federal law.”

The federal court rulings that affirm the extension of Title IX protections to transgender students have continued to affirm the reality of consequential harm to transgender students that occurs when they are denied from full participation and opportunities in education.  In the end, the cases really are about the indisputable harm to students that results from lack of equal opportunity—medically, psychologically and educationally.  The federal courts—and the Biden administration—have recognized that reality, and won’t countenance it.  Because the law doesn’t.

Jessica Clarke, a professor of law and co-director of the George Barrett Social Justice Program at Vanderbilt University believes that Grimm v. Gloucester will cause groups with concerns related to LGBTQ rights to shift their attention from the bathroom issue and served as the impetus for school districts to adopt more trans-friendly bathroom policies.

“The decision not to grant certiorari is important because it did not disrupt the emerging consensus among federal courts–not just the Fourth Circuit–that schools may not forbid transgender students from using restrooms consistent with their gender identities. One factor that has been important in this development is that school districts around the country have adopted trans-inclusive restroom policies without experiencing any of the disruption that was feared. As a result, we are likely to see conservative advocacy groups shift the focus of their attacks on the LGBTQ community from restrooms to other issues.”

Copyright ©2021 National Law Forum, LLC

For more articles on the Supreme Court, visit the NLRLitigation / Trial Practice section.

Should Virtual Depositions Survive the Pandemic? The Answer is Yes and No.

As the “new normal” of pandemic virtual legal proceedings appears to be waning, a question arises as to which, if any, practices initially born out of necessity, but no longer so, should continue to be utilized. One such device previously employed sparingly, but which became de rigueur during COVID, is the virtual deposition. In some but not all circumstances, virtual depositions can remain an effective tool for litigators.

The critical considerations in determining whether to continue using this mechanism will hinge on the purpose of the deposition and the stature of the particular witness. For example, if a deposition is being conducted for basic discovery purposes, i.e., understanding the broad strokes of a dispute, or determining generally what the opposing side knows or has, it might make sense to conduct it virtually. What may be obtained from such witnesses over video-link likely would not be enhanced by conducting the depositions in person. Moreover, the technical hiccups sometimes incidental to a video deposition, such as audio deficiencies and temporarily frozen screens, likely would not diminish the value of such “low-stakes” testimony.

But, if the purpose is to obtain testimony that will be presented to a trier of fact, there is no substitute for a live deposition. Like cross-examining an opponent’s witness during a trial, being in the same room to control that witness without the delay of a video feed or the interference of opposing counsel who may be present with the witness while you are not, makes a world of difference. Due to the unavailability of witnesses, cases may be won and lost during depositions. Consequently, it is important to treat these depositions as if you are eliciting trial testimony. Doing so live will give you the best chance at a successful examination.

A second important consideration is the stature of the witness. A virtual deposition would certainly be appropriate for a low ranking company employee with no ability to bind an organization, or a document custodian whose elicited testimony would likely be mechanical in nature. However, the deposition of a critical fact witness, high-ranking company official, or corporate designee most definitely should be conducted live, if possible. There simply is no substitute for looking a witness in the eyes during questioning to gauge their credibility, or obtaining a face-to-face assessment of their composure and demeanor. That type of evaluation is simply not possible over a video-link, particularly given the possibility of technical mishaps.

These considerations should not be viewed in a vacuum, of course. For more and more clients, a primary concern is legal cost containment. For those attorneys with national practices, being able to conduct the video deposition of a witness who resides on the other side of the country surely will provide significant cost savings for such a client. Similarly, a busy litigator’s life will be made easier by having the option of deposing a witness virtually, rather than committing to otherwise avoidable travel time.

Like most legal conundrums, the answer to this question is not clear-cut. But, having options like those outlined above to address the different types of witnesses and circumstances will increase the likelihood of eliciting valuable testimony.

©2021 Epstein Becker & Green, P.C. All rights reserved.

For more articles on depositions, visit the NLR Litigation / Trial Practice section.

Do What You Learned in Kindergarten: Fight Fair and Play by the Rules—Avoiding Litigation Misconduct

Holding

In Performance Chemical Company v. True Chemical Solutions, LLC, No. W-21-CV-00222-ADA (W.D. Tex. May 21, 2021), Judge Albright of the Western District of Texas found that True Chemical Solutions (“True Chem”) violated the Court’s discovery order in bad faith and caused substantial prejudice to Performance Chemical Company (“PCC”). The district court granted PCC’s motion for sanctions against True Chem and dismissed the case.

Background

PCC filed suit alleging that True Chem infringed PCC’s patented Automated Water Treatment Trailers, or frac trailers. Id. at 2. Throughout the litigation, a key issue was whether True Chem automated its frac trailer by using a programmable logic controller (“PLC”) to automate the pumps within the trailer.

During discovery, PCC requested that its expert be allowed to inspect a True Chem frac trailer, which True Chem resisted. Id. The Court ordered True Chem to allow the inspection. When PCC expressed concern that True Chem would present an incomplete trailer for inspection, the Court specifically ordered that the inspection be of a trailer that was complete and included all relevant components. Id. at 3.

In response to the Court’s order, True Chem produced trailers for inspection. However, when PCC inspected the trailers, it found no PLC automation device, even though the trailers were manufactured to be capable of automation. Id.

PCC also tried to ascertain from True Chem’s employees in depositions whether True Chem’s frac trailers were automated. Under oath, True Chem employees repeatedly testified that True Chem did not automate frac trailers by installing a PLC. Id. Due to these representations, PCC could only rely on circumstantial evidence to prove its infringement theories regarding automation. Id. at 4.

After the close of discovery and in response to a court-ordered document search, True Chem produced more than 50,000 new documents. Id. Those documents contained information appearing to show that third-party automation companies had been retained by True Chem to automate its frac trailers. Id.  PCC deposed representatives of these third-party companies, which confirmed that, in 2019, True Chem had hired a third party to install a PLC on frac trailersand that those PLC devices were still mounted the last time the third-party company interacted with the trailer. Id. at 5.  The PLC device in question was large and would have required considerable effort to install and maintain. Id. PCC argued, and the Court agreed, that removing it from a trailer would have required considerable effort. Id.

True Chem did not dispute that the third-party company installed a PLC on frac trailers but, unsurprisingly, disputed the implication that it removed the PLC device specifically to dodge discovery.

Legal Standard

Under the Federal Rules of Evidence, a court may issue sanctions against a party who “fails to obey an order to provide or permit discovery.” Fed. R. Civ. P. 37(b)(2)(A). One of the sanctions allowed by Rule 37 is “rendering a default judgment against the disobedient party.”

The Fifth Circuit requires a finding of bad faith or willful conduct for the severest sanctions under Rule 37, such as striking pleadings, dismissing a case, or rendering default judgment. Additionally, before dismissing a case for discovery abuse, the Fifth Circuit requires that several factors be met. The factors include: (1) that the violation of the discovery order be attributable to the client instead of the attorney; (2) that the violating party’s misconduct must cause substantial prejudice to the opposing party; and (3) a finding that less drastic sanctions would not be appropriate. Performance Chemical Co., No. W-21-CV-00222-ADA (W.D. Tex. May 21, 2021), at 2 (citing FDIC v. Conner, 20 F. 3d 1376, 1380-81 (5th Cir. 1994)).

First Factor: Violation of the Discovery Order be Attributable to the Client Instead of the Attorney

The Court found that True Chem committed discovery violations with a pattern of “contumacious conduct and delay.” The Court issued a specific order that True Chem make all components in its custody or control, whether attached to trailers or not, available for inspection.

A True Chem employee testified that the company did not employ automation—even though True Chem had received an invoice for the automation project. Id. at 6. True Chem had not produced the PLC, or even notified counsel of the PLC’s existence, or taken steps to amend pleadings, supplement interrogatories, or notify opposing counsel or the Court, until a year later. Id. at 7. In fact, it was only after PCC subpoenaed a third-party company that it could determine the nature of the invoices and discover the PLC device.  It was only 154 days after the close of discovery as part of a 50,000-piece document dump that True Chem produced invoices pertaining to the allegedly non-existent automation. Id. at 4, 7.  Even then, True Chem still had not turned over the PLC device for inspection.

The Court found that, for a full year, True Chem stonewalled production of the PLC device. This led the Court to determine that the first factor, violation of the discovery order, was attributable to True Chem.[1]

Second Factor: Violating Party’s Misconduct Must Cause Substantial Prejudice to the Opposing Party

The Court found that PCC was forced to incur unnecessary attorneys’ fees and discovery costs as a result of the misconduct of True Chem and its counsel. Specifically, PCC was forced to engage in thorough and extensive third-party discovery, including up to the week before trial, when True Chem finally disclosed the PLC device. Id. at 8.

True Chem tried to use its failure for its own gain by arguing that, since PCC forced disclosure by True Chem of the PLC project, PCC had to limit its timeframe for damages. Id. at 8-9. The Court rejected that argument, stating that it “cannot understand why any attorney would attempt to use its own blatant discovery violations as a sword to argue that the opposition must limit its properly pleaded claims.” Id. at 9.

The Court found that True Chem’s actions caused substantial prejudice to PCC, preventing PCC’s “timely and appropriate preparation for trial.” Therefore, the Court found that the second factor was satisfied.

Third Factor: Less Drastic Sanctions Would Not be Appropriate

The Court held that the third factor was satisfied because True Chem demonstrated “flagrant bad faith and callous disregard of its responsibilities.” Id. at 9.  Specifically, the Court found that had it not been for the diligent comb through of 50,000 documents at the eleventh hour, the continuous and lengthy egregious conduct of the case would have gone undiscovered. Id. at 10.

Since all three prongs were satisfied, the Court held that it was only adequate to sanction True Chem with a “death-penalty sanction,” and that anything less would not provide sufficient deterrence from similar behavior in other cases. Id. at 10.

The Court granted PCC’s motion for sanctions and struck True Chem’s non-infringement defense and invalidity counterclaims. The Court further found that True Chem willfully infringed the asserted patents, ordered that True Chem be permanently enjoined from continuing its infringing activity, and that PCC be awarded its attorneys’ fees.

Further Developments

On June 7, 2021, PCC moved for entry of a damages award of $16.9M (representing treble lost profits through 2019 ($5.6M) plus prejudgment interest ($0.6M)) and attorneys’ fees. PCC argued no damages trial was necessary for a number of reasons: the Court’s inherent powers in connection with its sanctions ruling, the status as a default case with no party entitled to a jury trial on damages, the fact that PCC’s evidence conclusively established lost profits, and the fact that True Chem’s damages expert’s opinions had been struck “in their entirety.”

On June 15, 2021, Judge Albright granted True Chem’s attorneys’ motion to withdraw from the case.

Takeaways

While this case may seem like an outlier, it is important to remember that litigation is supposed to be a fair fight. Each side should timely disclose any relevant documents during discovery and adhere to any Court orders to allow trial to proceed in a timely manner and to prevent undue burden on the opposing party. Flagrantly disrespecting these principles may lead to an unforgiving response by the court.

The same is true in patent prosecution. The duty of good faith and candor set forth in Rule 56 is supposed to guarantee that patents are procured in a fair and timely proceeding that avoids placing an undue burden on the USPTO. As prosecution counsel, you should ask hard questions, which here would have involved questions regarding possible public use or sale. The prosecutor should consider asking those questions in writing. And if the patent prosecutor has suspicions of untruthful statements or other misconduct by the applicant, withdrawal from prosecution may be the best move.


[1]Note that on March 25, 2021, PCC seems to have argued TrueChem’s counsel was also complicit.  According to a Law360 article, in PCC’s Response in Opposition to True Chemical Solutions LLC’s Motion to Strike Scott Weingust’s Expert Report (sealed), “PCC replied that True Chem’s response highlighted for the first time that True Chem’s former attorneys . . . were ‘complicit’ and that they made things worse in the two months since they were informed of the misconduct.” Hu, Tiffany, “Chemical Co. Wants to Skip IP Damages Trial After Sanctions,” Law360, June 16, 2021. Although Judge Albright only assigned responsibility to True Chem and not its counsel, in the sanction order he commented, “it is worth noting that True Chem’s counsel . . . knew of the existence of the automation project on January 20, 2021, two months before such information was revealed to PCC.” See Order, FN1, (emphasis in original). Also, “PCC located invoices that were either concealed or overlooked as the result of willful incompetence on the part of the attorneys and then had to engage in third-party discovery to determine the nature of the invoices. Id. at 7.

© 2021 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP

For more articles on IP law, visit the NLR Litigation / Trial Practice section.

Justice Thomas Criticizes Federal Marijuana Policy, Questions Whether Prohibition Remains Necessary or Proper

U.S. Supreme Court Justice Clarence Thomas has issued an unexpected statement questioning whether the federal government’s continuing prohibition on marijuana is necessary or proper. His statement was made in conjunction with the denial of a writ of certiorari in the matter of Standing Akimbo LLC v. United States, which asked the court to address whether a medical marijuana dispensary could properly deduct ordinary business expenses in violation of section 280E of the federal tax code.

In his statement, Justice Thomas bluntly acknowledges that the reasoning behind the U.S. Supreme Court’s 2005 decision in Gonzales v. Raich ‒ which held that the power of Congress to regulate interstate commerce authorizes it to prohibit the local cultivation and use of marijuana ‒ has been “greatly undermined” by federal policies over the past 16 years. He characterized the federal government’s current approach as a contradictory and unstable “half-in, the half-out regime” that “strains basic principles of federalism and conceals traps for the unwary.”

Examples of the federal government’s mixed signals include the 2013 Cole Memorandum issued by the Department of Justice (DOJ) and Congress’s prohibition in place since 2015 that restricts the DOJ from spending funds to prevent states from implementing their own medical marijuana laws. These actions by the federal government have “broad ramifications” according to Justice Thomas, given that 36 states allow medical marijuana use and 18 of those states also allow adult use of cannabis.

Behind the Statement

In this environment, Justice Thomas rhetorically asks whether it is now reasonable for an ordinary person to think that the federal government “has retreated from its once absolute ban on marijuana,” and for cannabis business owners to think “that their intrastate marijuana operations will be treated like any other enterprise that is legal under state law.” He points out, however, that “legality under state law and the absence of federal criminal enforcement do not ensure equal treatment.”

Justice Thomas clearly is bothered by the strict enforcement of the federal tax code to the detriment of state-legal businesses and the simultaneous absence of federal enforcement in areas such as cultivation and distribution of marijuana that is legal under state law. He describes the federal government’s willingness to look the other way as “more episodic than coherent.” Justice Thomas identifies other harmful results caused by this schizophrenic federal approach, including federal prohibitions on financial institutions providing services to the cannabis industry, which has resulted in significant public safety issues, and civil lawsuits brought against individuals and businesses under the Racketeer Influenced and Corrupt Organizations (RICO) Act.

Justice Thomas concludes by noting that the federal government’s current approach to marijuana bears little resemblance to the uniform policy of prohibition upon which a closely divided Supreme Court based its decision in Raich 16 years ago. He warns that by allowing states to act as laboratories that try novel social and economic experiments, the federal government may no longer have authority to intrude on the states’ core police powers. “A prohibition on intrastate use or cultivation of marijuana may no longer be necessary or proper to support the Federal Government’s piecemeal approach.”

Marijuana Policy

Though Justice Thomas’ statement has no formal precedential value, it nevertheless represents the most explicit statement yet from a sitting – and conservative – Supreme Court Justice that questions the rationality of current federal marijuana policy. For court watchers, this represents a seismic shift on marijuana policy within the highest court of the land. Justice Thomas’s bold defense of federalism also should prove influential to members of the other branches of government who remain cautious on broad marijuana reform.

© 2021 Wilson Elser

For more articles on marijuana policies, visit the NLR Biotech, Food, Drug section.

Supreme Court Offers Clarification on Protection for Off Campus Speech: Implications for School Boards & First Amendment

On June 23, 2021, the U.S. Supreme Court held that the Mahanoy Area School District violated the First Amendment rights of Brandi Levy, a high school student who went to Snapchat to voice her frustrations when she didn’t make the varsity school cheerleading team.

Ms. Levy posted on her personal Snapchat a few photos showing the middle finger, one with the caption, “F*** school f*** softball f*** cheer f*** everything,” and the other saying, “Love how me and [another student] get told we have another year of jv before we make varsity but tha[t] doesn’t matter to anyone else.” which was visible to about 250 people at the time, many of whom were fellow students.  Snapchat messages, by design are meant to go away not long after they are sent.

In this circumstance, at least one other student took a screenshot of the post(s) and shared it with her mother, who was also a coach, to express concern, the school district decided Ms. Levy violated school and team rules, and was ultimately suspended from the junior varsity cheer squad for the remainder of the year.

Ms. Levy and her parents sued Mahanoy School District (“School District”) under 42 U.S.C. § 1983, stating that her suspension violated the First Amendment, and Mahanoy’s team and school rules were overbroad and unconstitutionally vague. The School District argued that they were within their rights to suspend Ms. Levy because of the previous Supreme Court decision Tinker v. Des Moines Independent Community School District, which ultimately held that school officials could regulate speech that would disrupt the work and discipline of the school.

Both the United States District Court for the Middle District of Pennsylvania and the Third Circuit Court of Appeals sided with Ms. Levy, and the Mahanoy School District filed a petition for certiorari, asking whether Tinker standard did or did not apply to this case.

The Supreme Court needed to decide whether the First Amendment prohibits public schools from regulating off-campus speech, and whether the Third Circuit correctly held that the school violated Ms. Levy’s first amendment rights. It was an 8 to 1 decision, with Justice Stephen Breyer drafting the majority opinion and Justice Clarence Thomas authoring the dissenting opinion.

The Supreme Court previously outlined three instances where a school may regulate student speech: (1) incident, lewd or vulgar speech uttered during a school assembly on school grounds, (2) speech uttered during a class trip that references illicit drug use, and (3) speech that others may perceive as bear[ing] the imprimatur of the school, such as in a school newspaper.

Ms. Levy’s words of criticism were outside of school hours and not on school property, and although they were vulgar, they were not threatening in nature, so the Supreme Court held the School District did not have the right to punish Ms. Levy and she was not outside of her First Amendment rights.

What are the Free Speech Implications?

While the Supreme Court ruled in favor of Ms. Levy in this case, the ruling does not necessarily protect all off-campus speech. For example, in Tinker v. Des Moines Independent Community School District, the Supreme Court said schools may regulate speech that disrupts the order of the school or infringes on others’ rights. In his dissenting opinion, Justice Thomas said schools have the authority to regulate speech off-campus when it harms the school and threatens its faculty.

The Court said exceptions to the ruling in Mahanoy Area School District v. B.L. would be limited, and would have to be worked out in future cases. Justice Samuel Alito said in his concurring opinion that “the regulation of many types of off-premises student speech raises serious First Amendment concerns, and school officials should proceed cautiously before venturing into this territory.”

According to previous precedent, students do not lose their First Amendment rights when they set foot on school grounds.

“I think this result is foreseeable insofar as the Court seemed unlikely during oral argument to adopt the Third Circuit’s broad view that schools can’t regulate off-campus speech at all, but they also seemed to think the school had overreached here,” said Gautam Hans, assistant clinical professor of law and director of the Stanton Foundation First Amendment Clinic at Vanderbilt University Law School in a statement to the National Law Review.

The Court outlined three facets that distinguish schools’ efforts to regulate off-campus speech. First, it’s the parents’ responsibility to regulate students’ speech off campus. Additionally, if a student is subjected to speech regulations on and off campus, then their speech is regulated 24 hours a day.

“That means courts must be more skeptical of a school’s efforts to regulate off-campus speech, for doing so may mean the student cannot engage in that kind of speech at all,” per Justice Breyer writing for the majority. Lastly, the Court said schools are America’s “nurseries of democracy,” and therefore have an interest in protecting students’ unpopular opinions.

“Justice Breyer’s adoption of a flexible standard for when schools can regulate speech off-campus demonstrates the real challenges for schools and the need to balance competing interests. I suspect this will get litigated a fair amount in the coming years as courts try to figure out what to do with the standard articulated here,” Professor Hans said.

The Court specifically pointed out that in this case, Ms. Levy’s Snapchats were sent outside of school hours on her own time and were not sent on school grounds. She also did not identify the school itself in the posts, and did not target any person in particular. Therefore, the school did not have the right to suspend her.

“Likewise, there is little to suggest a substantial interference in, or disruption of, the school’s efforts to maintain cohesion on the school cheerleading squad,” the Court said.

What are the Implications for School Boards & Administrators?

In his dissenting opinion, Justice Thomas criticized the Court’s majority opinion for being too vague, and for its lack of guidance to schools on how to discipline students moving forward.

“Because the Supreme Court declined to set forth a uniform rule and give leeway to schools to regulate off-campus speech, the lower courts will further shape the landscape of First Amendment application to student speech,” per  Christine V. Hamiel, Chair of the School Law Section at von Briesen & Roper. “School boards and administration must be mindful that such further interpretation will continue to lay the foundation for what action a school may take with respect to student off-campus speech.”

Due to the ruling’s lack of uniformity, school administrators will have to think about the specific characteristics of off-campus speech when deciding whether or not to respond with disciplinary action.

“While acknowledging that there can be circumstances where off-campus speech may be regulated, it is clear from the decision that the characteristics of off-campus speech that differentiate it from speech at school or at a school function will make it more difficult to pass constitutional muster when dealing with off-campus speech,” per  Robert Burns, Chair of the School and Higher Education Team at Davis Kuelthau. “School administrators will have to analyze such issues carefully when contemplating responding to off-campus speech.”

Moving forward, schools will have to consider multiple factors of the impact of students’ speech when determining if and how to respond.

“The Supreme Court recognized that there can be circumstances where off-campus speech implicates the regulatory interests of schools,” Mr. Burns said.  “It concluded that the facts in Mahanoy did not rise to that level, but going forward school districts are in a position to respond to such speech if they conclude it is creating a substantial disruption of learning or threatening the protection of the school population.”

Should a school decide to take action against a student for off-campus speech, they must also determine the circumstances around the student’s speech.

“Schools must carefully consider each situation and the unique circumstances of each situation on a case-by-case basis, taking into consideration three key features: the authority a school has over the off-campus student; the content of the speech at the time it is made (given that off-campus regulation opens the door to school regulation of all student speech); and a school’s responsibility in maintaining a free ‘marketplace of ideas,’” Ms. Hamiel said.

Copyright ©2021 National Law Forum, LLC


ARTICLE BY Rachel Popa and Hanna Taylor of
For more articles on the Supreme Court, visit the NLRLitigation / Trial Practice section.

Ohio Supreme Court Rules that School Employees Must Undergo Training in Order to Carry Firearms on School Grounds

On June 23, 2021, in a 4-3 decision, the Ohio Supreme Court ruled that a resolution passed by the Madison Local School District Board of Education which allowed certain employees of the District to carry firearms on school grounds did not comport with Ohio law.

In 2016, a school shooting took place at Madison Junior-Senior High School, which left four students injured. In response, the District’s Board of Education approved a resolution in April 2018 “to allow armed staff” in a school safety zone, which was subsequently followed by a “Firearm Authorization Policy.” The resolution and the corresponding policy stated that some “teachers, school support staff, administrators, and others” would be permitted to carry a firearm on school grounds if the individuals: (i) were designated by the superintendent after a mental health assessment and background check; (ii) had a concealed carry license; and (iii) completed 24 hours of active shooter training.

In response, a group of parents of students enrolled in the District commenced an action seeking a declaratory judgment that the resolution violated O.R.C. §109.78(D), as well as an injunction prohibiting the District from implementing the resolution regarding District employees who did not meet the requirements of that statute. O.R.C. §109.78(D) indicates that public education institutions, such as the District, cannot “employ a person as a special police officer, security guard, or other position in which such person goes armed while on duty, who has not received a certificate of having satisfactorily completed an approved basic peace officer training program, unless the person has completed twenty years of active duty as a peace officer.”

The trial court ruled in favor of the District and held that the requirement in O.R.C. §109.78(D) only applied to “positions that inherently require the employee to be armed while on duty.” On appeal, the Twelfth District reversed the trial court’s judgment and its “limited reading” of O.R.C. §109.78(D), and held that the statute applies to teachers and other school staff who are authorized to carry a firearm while on duty by a board of education.

The Ohio Supreme Court affirmed the ruling of the Twelfth District and held that because the April 2018 resolution authorized certain employees to be armed while on duty “without also requiring that these employees satisfy the training-or-experience requirement” of O.R.C. §109.78(D), the resolution violates the statute, and does not comply with Ohio law. The Ohio Supreme Court also analyzed O.R.C. §2923.122, a criminal statute which makes illegal the possession of a deadly weapon in a school safety zone, with certain exceptions—including a caveat that the statute does not apply to (among others) “any other person who has written authorization from the board of education or governing body of a school to convey deadly weapons or dangerous ordnance into a school safety zone or to possess a deadly weapon or dangerous ordnance in a school safety zone….” The Court held that the exception in O.R.C. §2923.122(D)(1)(a) does not give school boards the ability to circumvent the requirements of O.R.C. §109.78(D), nor does it “constitute a legislative grant of power for school boards to authorize their employees to go armed so long as the employees undergo whatever training a board might deem advisable.”

The dissenting opinions indicated the peace officer training requirements were not applicable to teachers and other school staff, and that school districts had discretion in creating policies regarding arming teachers and other staff.

The Court also explained that when the General Assembly enacted O.R.C. §2923.122, O.R.C. §109.78 had already been in effect for more than 20 years – and further held that if the General Assembly had “perceived any conflicts between the statutes,” it could have amended either one of the statutes but did not. In response to this discrepancy, Representative Thomas Hall, whose father was the school resource officer who chased the shooter out of the building in 2016, introduced House Bill 99. House Bill 99 would give school districts throughout Ohio the discretion to allow teachers and other school staff to be armed in school so long as they have completed the concealed carry training, which is 8 hours in length. The Bill also includes proposed amendments to O.R.C. §2923.122 and O.R.C. §109.78. It remains to be seen whether House Bill 99 will be signed into law, but it is clear that the issue of armed teachers and school staff is one that is under continuous scrutiny.

©2021 Roetzel & Andress


For more articles on education, visit the NLRPublic Education & Services section.