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From the Outside Looking In: Getting Hired by In-House Counsel with Jaimala Pai, Principal Legal Counsel at Medtronic Law Firm Marketing Catalyst Podcast [PODCAST]

It’s perhaps the legal industry’s most-asked question: how can attorneys get noticed by in-house counsel? Jaimala Pai, Principal Legal Counsel at Medtronic, joined the Law Firm Marketing Catalyst podcast to offer her tips, including how to stand out by finding a niche, and why diversity and inclusion are so important.

Read the transcript below.

Sharon:   Welcome to the Law Firm Marketing Catalyst podcast. Today my guest is Jaimala Pai, Principal Legal Counsel at Medtronic, where she provides legal support across all business groups. Jaimala has a strong marketing perspective and has some important tips for outside counsel in terms of making inroads with fellow attorneys in-house. Jaimala, very glad to have you.

Jaimala:  Thanks so much, Sharon. Really glad to be talking to you today.

Sharon:   Jaimala, tell us about how you got where you are. I know that you were in private practice with an outside firm. How did you segue from that into being in-house? Was it something you wanted? Was it a random call from a headhunter? How did that come about?

Jaimala:  I think I knew pretty early on that I wanted to go in-house. During law school, I was the only summer law clerk at 3M’s Office of General Counsel, and I really enjoyed my experience. Specifically, I enjoyed learning about the business, working closely with business personnel and figuring out how to provide practical advice in a business setting. So, I knew I wanted to be an in-house attorney and began networking. I met with both in-house and law firm attorneys and asked them about their careers, and I told them about my aspirations. Sure enough, when an in-house attorney reached out to one of the law firm partners I had met to look for a junior-level attorney, they provided my name. I immediately jumped on the opportunity and began my in-house career at Northwest Airlines, which is now Delta, and I’ve now been in-house for 12 years at various companies, including a Fortune 10 company.

Sharon:   So, you’ve been in a variety of industries.

Jaimala:  Yes, I have, from airline to health insurance to now med device.

Sharon:   That sounds very interesting. If I had a nickel for every time I was asked by a lawyer in private practice about how they can attract the attention of in-house counsel, I could have retired a long time ago. We’d all like to hear your advice. I’m also curious because it seems like you’ve given it a lot of thought, more than other in-house counsel that I’ve met or heard speak. You wrote an article on the subject, published in the Legal Executive Institute publication. What got you thinking about business development from the perspective of outside counsel?

Jaimala:  I think what got me thinking about it is a couple of things. One was a client looking for outside counsel. I practice in a very specific practice area. I am in health law, and beyond that, it’s fraud and abuse in health law, so I’ve had a very hard time finding people who could help me on various projects, and also just from the networking perspective. I’m friends with multiple people who are junior-level partners and even senior-level partners who come across the same thing, which is how do we break into a large company like Medtronic? How do we get noticed when these larger companies have preferred provider networks or a series of closed networks of law firms? How do I get in front of somebody to talk to a decision-maker? So, it’s really made me think about that. And you’re right, I put some of the thoughts in the article, which I will expand on in this podcast.

Sharon:   So, what is your advice? Where do we start?

Jaimala:  I think my first point is don’t be a generalist. In-house counsel are required to be generalists, like a Swiss Army Knife. We need to know a little about a lot to cover most everyday questions across innumerable subject matter areas. When we look to outside counsel, we’re looking for a specific tool that this Swiss Army Knife won’t do. The issue requires deeper experience and more specialized expertise. So, really be specific about your area of expertise and call it out on your firm online biography, because I often look up firm biographies to understand experience. I may also get a referral. I may know our network of law firms, but I need to look for one specific person, so I’ll just click on the firm website to see who has the expertise I’m looking for.

Sharon:   Will you do a Google search with healthcare technology or healthcare devices, or do you just start because you have names?

Jaimala:  Sometimes I have names. Sometimes I do Google searches, and sometimes I look at specific law firms. I may have a law firm—we have 10 law firms, for example, in Medtronic’s preferred provider network—but I don’t have a list, aside from what their website says, of who the regulatory healthcare counseling attorneys are. From there, that may give me a feed of 10 different attorneys, or sometimes it’s 20 because everybody’s thrown in everything, and then I actually click on their website and their bios to see whether they have the experience I’m looking for, and whether it’s specific enough to be able to help on the issue I have.

Sharon:   So, attorneys should be very specific. Can you give some examples?

Jaimala:  One of the main things that I see are industry phrases being used, like, “I work with life sciences companies,” and that’s helpful but it’s not helpful. I would like someone who specifically can say, “I work with med device companies versus pharmaceutical companies,” because our issues are different. One of the reasons why we use outside counsel is because we want someone who has more industry expertise and can give us information on what other companies are doing, obviously without violating privilege. They can say, “In my experience, this is how I’ve worked this issue in other companies across the same med device industry that are trying to do this, or conversely, you guys are outliers. I’ve never heard this before.” Sometimes that’s a good thing and sometimes that’s a bad thing, but if you don’t have that industry expertise and I’m still getting my narrow view of a Medtronic-only perspective on an issue, that’s not as helpful.

Sharon:   I know lawyers are so resistant to focusing. I can’t tell you how many times we’ve suggested that perhaps a laundry list is not the best way to go. These are lawyers who often have distinct expertise, but they don’t want to focus in on it. Why do you think that is?

Jaimala:  I think you hit the nail on the head in the past, when we had a conversation, and it’s the fear of missing out. They think if they don’t have the laundry list on their bio, a client may come in and not see an area they can help on and not be interested in them. I actually think it’s more the other way around. In this day and age, companies are looking for law firms that have a varied practice area, but they’re looking at lawyers for a specific expertise. Your firm may have everything but the kitchen sink under it, but your specific expertise needs to show, so that I know you’re the person I should call when I have a fraud and abuse issue for med devices. You will be the person that can talk me through and be the expert, versus us muddling through something together because you think you can do it, but you haven’t really ever done it in the past.

Sharon:   Yes, I think it is the fear of missing out, and I wish every lawyer we’ve talked with could hear what you’re saying. So often we hear, “Nobody’s going to look for me online,” or “Nobody’s going to find me online.” What are your thoughts about that?

Jaimala:  I do think networking is key, too. It’s not just online. I understand why people will think that, but the other information I would give is oftentimes, we don’t have these great, big areas of information in-house. For example, I know my network of law firms that I’m supposed to use my budget towards, but I don’t have a list of regulatory attorneys from each of those law firms. I still have to go online and look for these things. Even if you’re in my network, it doesn’t necessarily mean I know the lawyers that are in that firm. So, I do think we look online more than law firms expect, and we don’t always just hire our friends. That’s another misconception that people have, that you only hire someone you know. I’d love to hire people I know, but sometimes you can’t. Like I said, you have a network you have to work in, or conversely, your friend doesn’t practice in the area you need. There are a lot of times that we just look straight to websites to find people.

Sharon:   What a missed opportunity, in terms of not introducing themselves to you and making it clear who they are.

Jaimala:  I think my second tip, Sharon, would be to really invest in relationships; network with everyone including mid-level and junior-level lawyers. Take an interest in what they do for your client and how you might be able to help them. Oftentimes, at these networking events, people go straight to the GC of a business, and I think they don’t realize that junior-level attorneys and even mid-level attorneys have considerable authority and influence on who companies hire and evaluating the quality of services that firms provide. Honestly, you never know who will be a general counsel tomorrow. I think you have to realize that there may not be an immediate return, but if you invested in the relationship and built a good reputation, in-house attorneys will find a way to work with you when they’re in a position to be able to make outside counsel hiring decisions.

Sharon:   That’s such a good point, in terms of not just going to the top, especially because time goes by so quickly. It seems like no time at all when you have a new attorney entering a firm and all of a sudden, they’re partner. You have to plant the seeds early on.

You’ve talked about diversity and diverse teams producing more profitable results. Can you tell us about what you look for when you’re hiring and your experience with that?

Jaimala:  For me, it’s at these networking events. Who treated me well? Who didn’t just gravitate towards people who look like them? I’m a female minority in the legal profession, and in some ways, I’m a little bit of a unicorn at this stage of my career because so many of us have left the profession or never even joined it. So, I appreciate when people come over and talk to me and don’t just gravitate towards those who look like them. There are numerous studies that show that diverse teams produce better economic results. Most companies have taken these studies seriously and made diversity and inclusion a focus and goal. Many law firms require diverse teams to work on their issues, and they want to have both diversity in their in-house teams and their outside counsel.

It feels to me that if law firms remain homogenous, it’s almost an impossible task for an in-house department to be diverse, because in-house pulls talent from law firms. To me, if you commit to diversity in the profession and invest in it, you’re going to feel more comfortable talking to someone like me. You’re going to come up to me in a networking event, and I’m going to think of you when I need to hire somebody and think about how well you treated me. You didn’t seem intimidated by me. You were good, so we’re going to have a great working relationship, because if in a networking setting you could talk to me, then you could definitely talk to me in a working relationship.

Sharon:   Have you seen changes? Are there more firms to choose from? What are the trends that you’ve seen?

Jaimala:  I do think more companies are making this a priority for them, and as a result, more law firms are focusing on it, too. If you demand this, if your clients are demanding something from you, you’re going to put focus on it and effort into it. I think recruitment has gone up for sure. I think there are more pipeline organizations. One particular organization that I’m very close to is LCLD, the Leadership Council on Legal Diversity, which is a national organization that doesn’t just focus on one affinity group. It’s an organization of more than 285 corporate chief legal officers and law firm managing partners and it’s dedicated to creating a diverse legal profession. Through the fact that so many companies and managing partners have joined this group, you can see that there is a commitment and a focus on it in the profession, so I have seen some positives. Just being in a room full of other folks that look like me has been great, because most of the time, I’m the only one in the room.

Sharon:   Have you ever been in a meeting where a law firm has put a token minority in, even though they may not be relevant to what they’re pitching?

Jaimala:  I think just about every minority has been that token at some point, including myself. I think it’s up to the clients to ask, “O.K., so Jaimala’s in the room. What is Jaimala going to work on on this project? Is she only going to be doing doc review, or is she going to be writing these briefs? Is she going to be the core team that takes this to litigation? Is she going to be part of this, or is she going to be relegated to the sidelines?” It’s that follow-through that the client needs to do to ensure that you’re not just bringing someone to the pitch who’s not going to get meaningful work. I think the numbers you put out, saying, “We want 20 percent diversity on a team,” doesn’t mean anything if that 20 percent is just doc review.

Sharon:   I’m looking at some of your suggestions you have for law firms, like committing to a diversity program and investing in it or joining a mentor program with a local school or college. I think that’s so important, because we’ve worked with quite a few law firms, smaller law firms who would love to diversify, but it’s a very tight pool to draw from. For whatever reason, they haven’t been able to retain people, so right now, there are a bunch of white males. So, these are great suggestions in terms of how they can at least start to support diversity.

Jaimala:  Yes, LCLD is a large organization and it takes money to join, and that is something a lot of smaller law firms and even smaller companies can’t necessarily commit to, but there are other ways, like you mentioned. It’s so easy. You can just reach out to a local law school and offer to be a mentor to a diverse law student. That gives you a different perspective. That gives you incoming talent into the profession as well, and that opens that individual up, who may not have had a lawyer in their family or ever even known a lawyer before they went to law school. You’re a network, and I think just doing simple things like that makes a difference.

There are also numerous organizations such as Just the Beginning, which is a pipeline organization that focuses on showing high school and middle school students of color and those of low income backgrounds that there is a path to law school and the legal profession. There are also national affinity bar associations that are great resources and offer wonderful networking opportunities. I think it’s good to remember that just because I’m not in this diverse community, that doesn’t mean I don’t have to join these things, and it doesn’t mean this isn’t my problem. This is a problem across our profession that everybody needs to own. It’s not for women and minorities to solve on their own.

Sharon:   That’s a great point. We’ll put links to the Leadership Council on Legal Diversity and we can also put a link to Just the Beginning, which I haven’t heard of before, but it sounds very interesting. How else can outside lawyers get in front of in-house counsel?

Jaimala:  I think presentations are huge. This could be CLEs or presentations at different trade associations. When I say presentations, I mean outside counsel is typically tapped to do these presentations, and if they take a step back and think, “This might be more meaningful if I bring someone who’s in-house to give industry examples and real-world examples of what’s going on. These anecdotes of what really goes on in a company will make me better off connecting with the audience.” It’s a win-win, because in-house just doesn’t get those types of opportunities as much, and we would love to be a part of that and be able to add that to our résumés. I do think it would make the presentation better, because those in-house folks in the audience will say, “Hey, this person has a great relationship with the client, but not only that, I can understand what the client’s saying because I go through that all the time. Here’s someone who knows how to work with in-house people.” I think that’s a great way to get in front of in-house and connect, and it’s a way that your in-house clients will know that you’re thinking of them and opportunities to help their careers. If they, let’s say, move companies, they’ll still remember that, and in an opportunity where they can hire you, they’ll try to do that. I think co-writing an article is another example. Oftentimes, Sharon, as we’ve talked about, people at law firms think, “Oh, in-house folks are too busy. They don’t want to do things like that. They don’t have time for it.” We may not have as much time in some ways, but we do want to do those things. We do want to continue to grow professionally and get our résumés in order and have publications on them. That’s another good opportunity. The best one that I’ve seen a couple of companies offer is to do CLE presentations for free at various companies, just saying, “Hey, I saw that you’re a big government contractor. I’d like to come in and give a great presentation on the ABCs of government contracting. I’ll do it for free. I’ll fly out to you. What do you think?” Almost any company would take you up on that.

Sharon:   Those are great suggestions, and once again, I’m looking at missed opportunities when you say that in-house counsel don’t have as many chances to be on a panel or co-write an article. I rarely hear that discussed when we’re talking with lawyers in private practice. That is such a fabulous opportunity, in terms of helping in-house counsel build their credibility. I think that’s something to be considered.

Jaimala:  I think it’s great, because sometimes when you get various law firm attorneys on a panel, it’s sort of an ego thing, “Hire me versus them. I’m better.” That ends up being what the presentation sounds like, which is obviously not what it’s intended to do. If you have that in-house person on the panel, I think it changes the dynamic. They will give a real-world example of what’s happened and you’ll have the outside counsel giving their expertise, and it really does make for a better presentation.

Sharon:   I’m also thinking, it’s great to ask an in-house lawyer to be on a panel, but why not just create your own opportunities? You could put a presentation together with a bank or an insurance company and ask in-house counsel to participate. It could just be doing a webinar and asking in-house counsel to join, just to get that perspective and also to let them know that you’re thinking about them.

Jaimala:  Yes, I think so. That would be great. Like I said, a lot of these opportunities don’t come to us as much, partly because we’re not as connected in the industry as law firm attorneys are, and we don’t know folks who are putting these on. We’re not on those associations necessarily at the highest levels. Those tend to be attorneys at law firms, so the opportunities don’t come to us as much.

Sharon:   That’s a great point to keep in mind. Jaimala, I want to thank you so much for being here. This is great information and it’s not just a marketing person saying it. It’s from you talking from your experience, so I really appreciate it.

Jaimala:  Thank you so much, Sharon, I really appreciate you having me on here.

Sharon:   I want to let people know that if they want to contact you, they can do that through LinkedIn. That will be in the show notes. I want to thank everyone for listening to the Law Firm Marketing Catalyst podcast. Please join us for our next conversation on topics that will propel your firm forward. Thank you so much.

END OF AUDIO

Click here to listen to Jaimala’s Law Firm Marketing Catalyst podcast episode: From the Outside Looking In: Getting Hired by In-House Counsel. Make sure to download/subscribe.

© 2019 Berbay Marketing & Public Relations
For more on attorney hiring, see the National Law Review Law Office Management page.

Qui Tam Defendants’ Presentations to Government During Investigation Unprotected from Discovery in Other Lawsuits, Federal District Court Ruled

In a recent decision, a federal district court judge ruled that a defendant’s presentations to the Department of Justice, made during the course of the Department’s investigation of a pending False Claims Act qui tam lawsuit, are not protected from discovery by the whistleblower who brought that lawsuit. The case is the United States and State of California ex rel. Higgins v. Boston Scientific Corp., 11-cv-2453 (D. Minn. Aug. 28, 2019), and was decided by Judge Joan Ericksen.

The relator (the term for the whistleblower in a False Claims Act lawsuit), Higgins, alleged that Boston Scientific made certain false certifications relating to the company’s defibrillators, thereby causing physicians to submit false claims for payment relating to the use of those devices. As is usual in qui tam cases, after filing the lawsuit, the Department of Justice opened an investigation and requested documents (known as a “civil investigative demand” under the False Claims Act) to Boston Scientific. The company turned over documents to the Department, but then also created and made “presentations” to the government. While the court’s decision does not describe those “presentations,” presumably they were slideshows or other materials, put together by Boston Scientific’s lawyers, to try to convince the Department of Justice to shut down the investigation or to decline intervention in the lawsuit.

Unscrupulous companies have found many different ways to take advantage of vital government programs. The False Claims Act is an essential weapon in the fight against government programs fraud since it was first enacted during the Civil War to combat war profiteering. The system often depends on whistleblowers telling their story with the help of an experienced False Claims Act attorney.

These private citizens bring qui tam (whistleblower) lawsuits under the False Claims Act (“FCA”), which allows them to act on behalf of the U.S. government in exposing government programs fraud committed by companies serving the federal government. Under the FCA, relators (fraud whistleblowers) receive a portion of the money that has been recovered by the government, known as the relator’s share.

After the government declined intervention in the case, Higgins decided to pursue the case on his own (which a relator is permitted to do), and he served a document request on Boston Scientific demanding production of any such presentations. Boston Scientific did not want to turn over the materials and therefore raised four separate legal objections. It was those objections that Judge Ericksen addressed in her opinion.

First, Boston Scientific objected to turning over the presentations because they were akin to “settlement negotiations” with the government, and thus not “relevant” to relator’s lawsuit. The court, however, ruled that although settlement negotiations might not be admissible at trial, they were still subject to discovery by Higgins because “they were related to his claims about the medical devices at issue.”

Second, Boston Scientific objected because “public policy” required protection of the presentations, arguing that “the government will not be able to settle False Claims Act cases if a defendant’s presentations to the government could later be revealed to relators.” Judge Erickson, however, found nothing in the False Claims Act that supported this position. While the government might not be able to turn over such presentations under certain circumstances, nothing in the statute prevented Boston Scientific from turning them over to relator.

Third, Boston Scientific claimed an “expectation of confidentiality” in the presentations, citing a 1977 decision by the Eight Circuit Court of Appeals. Judge Erickson rejected that contention, finding that the earlier Circuit Court decision related to attorney-client privilege, but not to the work product doctrine. Because the materials that Boston Scientific had provided to the Department of Justice were not covered by attorney-client privilege, the company’s only argument was “work product,” and that argument was not sufficient to support its claimed “expectation of confidentiality.”

Finally, Boston Scientific argued that the work product doctrine itself protected the presentations from disclosure. Judge Erickson easily disposed of that argument, noting that work product protection “is waived by intentional disclosure to an adversary,” and that the government was indeed Boston Scientific’s “adversary,” even though the Department of Justice later declined to intervene in the case.

The court’s decision was correct. Although Boston Scientific’s attorneys came up with several creative arguments in an attempt to protect the “presentations” from discovery, none of them had any merit. Although a defendant in a False Claims Act case is free to communicate with the Department of Justice, the defendant cannot assume that those communications will remain secret, particularly from the relator who has brought the very lawsuit under investigation by the Department. The relator is entitled to know about those communications, especially if they are relevant to the merits of the relator’s case (which they almost always will be). Accordingly, Judge Erickson reached the correct result and established useful precedent on this recurring issue.

© 2019 by Tycko & Zavareei LLP

For more on qui tam cases, see the National Law Review Litigation / Trial Practice page.

California Arbitration Roundup: Employers Are 3-1 For Favorable Arbitration Rulings

California employers received mostly good news this past month on the arbitration front, with a trio of pro-employer arbitration-related rulings.  The California Supreme Court’s recent ruling invalidating an employer’s arbitration agreement (discussed below) is a notable exception.

California Supreme Court Invalidates Employer’s Arbitration Agreement As Unconscionable.

In OTO LLC v. Ken Kho, the California Supreme Court ruled that an Oakland Toyota dealership’s arbitration agreement with a former employee was unenforceable and was so unfair and one-sided that it was procedurally and substantively unconscionable.  “Arbitration is premised on the parties’ mutual consent, not coercion, and the manner of the agreement’s imposition here raises serious concerns on that score,” the majority opinion said.

In 2013, Ken Kho, then an employee of the dealership, One Toyota, was asked to sign several documents, including an arbitration agreement.  Kho signed it, and was later terminated.

The California Supreme Court acknowledged that California and federal laws strongly favor arbitration. However, the Court considered the following factors in determining that One Toyota’s arbitration agreement was unconscionable:

  • The arbitration agreement purported to waive Kho’s right to file a wage claim with the Labor Commissioner and to have a “Berman” hearing before the Labor Commissioner (while not dispositive, the Court noted that this remains a significant factor in considering unconscionability of employee arbitration agreements);

  • The agreement was presented to Kho in his workspace, along with other employment-related documents;

  • Neither its contents nor its significance was explained;

  • Kho was required to sign the agreement to keep the job he had held for three years;

  • Because One Toyota used a piece-rate compensation system, any time Kho spent reviewing the agreement would have reduced his pay;

  • A low-level employee (a porter) presented the agreement to Kho, “creating the impression that no request for an explanation was expected and any such request would be unavailing”;

  • By having the porter wait for the documents, One Toyota conveyed an expectation that Kho sign them immediately, without examination or consultation with counsel;

  • There was no indication that the porter had the knowledge or authority to explain the terms of the agreement;

  • Kho was not given a copy of the agreement he had signed;

  • The agreement was written in an extremely small font in the form of a “single dense paragraph” of 51 lines, and the text was “visually impenetrable” and “challenge[d] the limits of legibility”;

  • The sentences were complex, filled with statutory references and legal jargon;

  • Kho was not offered a version to read in his native language (while the Court noted this factor, it did not consider it because it did not know Kho’s English proficiency);

  • The arbitration agreement did not make clear One Toyota’s obligation to pay arbitration-related costs (and rather cited to statutory provisions and referenced legal precedent; the Court noted “It would have been nearly impossible to understand the contract’s meaning without legal training and access to the many statutes it references. Kho had neither.”);

  • One Toyota’s agreement did not mention how to bring a dispute to arbitration, nor did it suggest where that information might be found (e.g., by citing to a commercial arbitration provider such as JAMS or AAA); and

  • One Toyota’s arbitration process was complicated to navigate and would likely require an attorney, making it cost-prohibitive for Kho.

The Court concluded that “[w]e have not said no arbitration could provide an appropriate forum for resolution of Kho’s wage claim, but only that this particular arbitral process, forced upon Kho under especially oppressive circumstances and erecting new barriers to the vindication of his rights, is unconscionable.”

Employers would thus be well-advised to revisit their employee arbitration agreements to ensure that they do not contain any of the defects discussed by the Supreme Court in the Kho case.

NLRB Upholds Employer Conduct Related to Mandatory Arbitration Agreements

In Cordúa Restaurants, Inc., 368 NLRB No. 43 (2019), the National Labor Relations Board (NLRB) addressed the lawfulness of employer conduct surrounding mandatory arbitration agreements for the first time since the U.S. Supreme Court’s 2018 decision in Epic Systems v. Lewis, where the Court held that mandatory arbitration agreements do not violate the National Labor Relations Act (NLRA) (see here).  In Cordua Restaurants, the NLRB ruled in part that employers are not prohibited under the NLRA from: (1) informing employees that failing or refusing to sign a mandatory arbitration agreement will result in their discharge; and (2) promulgating mandatory arbitration agreements in response to employees opting in to a collective action under the Fair Labor Standards Act or state wage-and-hour laws.

The NLRB’s decision in Cordua Restaurants is a natural extension of the Supreme Court’s analysis and ruling in Epic Systems.  There, the Court held that Congress, when passing the Federal Arbitration Act (FAA) in 1925, instructed courts to enforce arbitration agreements as written.  Since the passage of the FAA predates the NLRA by ten years, and since the NLRA says nothing about overruling the FAA, the NLRB could not, under the guise of enforcing the NLRA, rule that an arbitration agreement that otherwise is lawful on its face violates the NLRA.  This decision by the NLRB is further evidence of that agency’s retreat from past policies advanced by the NLRB in the prior administration and likely will not be overruled.

California Court of Appeals Compels Employee to Arbitrate Claims Even Though He Filed Suit Before Signing Arbitration Agreement

In Quiroz Franco v. Greystone Ridge Condominium, the California Court of Appeals compelled an employee to arbitrate his claims against his employer even though the employee filed his lawsuit two days before he signed an arbitration agreement.  The Court held that the arbitration agreement was clear in that it required arbitration of any claims and that it did not contain any restriction based on when a claim was filed.

In the case, Quiroz Franco, the employee, was given an arbitration agreement on March 9, 2018, and a Spanish translation shortly thereafter.  On March 19, 2018, he filed a lawsuit against his employer, alleging harassment, discrimination, and wage and hour claims among others.  On March 21, 2018, Quiroz Franco handed in his signed arbitration form, which the employer used to attempt to compel him to arbitrate. The lower court ruled that the claims in the employee’s suit started to accrue before he signed the arbitration agreement, so arbitration couldn’t be compelled.  The employer appealed and the Court of Appeal overturned the lower court’s decision.

California Court of Appeals Rules that Unfair Competition Law Claims Are Arbitrable

In Clifford v. Quest Software Inc., the California Court of Appeals addressed whether an employee’s claim against his employer for unfair competition under Business and Professions Code section 17200 (the UCL) was arbitrable, ruling that it was.  The employee brought various wage and hour claims against his employer, and the employer moved to compel arbitration based on the parties’ arbitration agreement.  The trial court granted the motion in part and ordered to arbitration every cause of action except the employee’s UCL claim, which the court concluded was not arbitrable.  The Court of Appeals reversed, holding that the employee’s UCL claim was subject to arbitration along with his other causes of action—more good news for California employers.

© 2019 Mitchell Silberberg & Knupp LLP

Online Reviews for Lawyers: The Good, The Bad, The Ugly.

As long as attorneys have been advocating for clients, word-of-mouth has been the best way to build a strong returning clientele. Great attorneys who treat their people well have always gathered a positive “buzz” which boosts business.

Today, word-of-mouth is still key for generating business, but the mouth is billions of voices strong and the word is “reviews.”

The evidence for the importance of positive online reviews is an avalanche of statistics. On the Small Business Radio Show, Jeremy Lessaris said that “a one star drop at a plastic surgery office can cost the company millions of dollars.” A study from Speigel Research Center shows that higher-priced goods and services (like attorney’s fees) rely even more heavily on reviews: the better and more reviews, the higher the conversion rate (up to 380% higher than those businesses without reviews).

The Good

Having even a few five-star reviews puts you on a track to have more business and stronger clients in the digital word-of-mouth culture. There are also a number of review-curating sites dedicated to the legal profession that can boost your firm’s online profilel for free.

Google Business Pages. This is one of the easiest ways for potential clients to find you. As long as you have claimed your listing, your clients can share their experiences with you instantly.  And, with Google’s massive search engine behind them, great reviews translate to new leads effortlessly.

LinkedIn. One of the more underutilized review-gathering tools, this is another free and ubiquitous tool to get great feedback on your firm’s business. The added benefit here is that you personally can get reviews from friends, family, colleagues, and clients, with every positive interaction given equal weight.

Facebook Business Pages. Sixty-eight percent of Americans use Facebook daily, the highest-traffic social media outlet second only to YouTube. This makes the reviews on a Facebook Business Page the most likely place for people to find reviews about you.

Avvo. If you are a licensed attorney, it is 97% likely that you have a free listing on the attorney-only review site, Avvo. In addition, their profile listings are searchable by Google and Bing, so they are often one of the first search results that a potential client will find when they search your firm’s name.

Martindale-Hubbell. This is another attorney-specific review site that utilizes Google’s vast search algorithm to bring results to the top of the page. Having great reviews here (especially from colleagues and former clients) can be an excellent source of new business.

The Bad

Unfortunately, like in any game of “telephone,” not every piece of information shared online is correct or even kind. Bad reviews can be devastating to the online reputation of even the best law firm. Unfortunately, potential clients who have never met you do not have anything else to go on except these online reviews.

In addition, potential clients actually seek out negative reviews in an attempt to decide what the “worst case scenario” is in working with your firm. That means that it is vital to police your online brand and be proactive about keeping it spotless.

So, how do you deal with bad review? Here are three things that will almost always work to keep you looking your best online.

  1. Keep your brand consistent and positive. Make sure that your brand comes across loud and clear across all social channels, including branded headers, standard language, and images and posts that fit with your professional image.
  2. Encourage people who leave glowing reviews. When you chime in with a quick “thank you,” or “I am glad you had a great experience,” it sets a tone for your business that you are gracious and willing to take time to engage with your audience.

Deal with negative reviews quickly and impassively. If you are regularly monitoring your reviews, you will know when someone has had a bad experience. The faster you deal with it, the better. It is also important to respond without being defensive. I

The Ugly

Although online reviews are important, there are some things you should never do in order to improve your online branding. A recent case in Pittsburgh highlighted one of these—buying or soliciting positive reviews in exchange for goods or financial rewards.

The case was brought by a former client of a Pittsburgh employment law firm who the plaintiff said defrauded her by soliciting positive reviews from non-legal clients and friends of employees in exchange for paid time off. The case was settled out of court, with the law firm promising never to pay for reviews again, but the trust with the community will be difficult to repair.

Another thing that will absolutely ruin your online reputation is responding to negative reviews with malice or denigration. This can be especially tempting when the person leaving the review is someone who has a personal grudge—I know of a few instances where disgruntled former clients or colleagues will send messages to review outlets like Super Lawyers as a means to lower the attorneys review ranking on the site.

Instead of trying to buy or argue your way out of a bad review, always take the high road. Do a little online research on the person writing the review and imagine that your potential client audience or referral sources are looking at how you respond. If word-of-mouth is the key, you want to make sure that what people hear about you is that you are classy and graceful under negative pressure.

Conclusion – The Best

The great thing about online reviews it that you have power to present your law firm and yourself with dignity and class, regardless of how good or bad your online reviews are. With the right kind of proactive brand management and a positive, responsive, and flexible attitude towards what others say about you, you can rise above the worst and reflect the glowing praises of the best.

© 2019 Denver Legal Marketing LLC

For more on legal marketing, see the National Law Review Law Office Management page.

California Senate Bill 206-The Immediate National Impact

While California Governor Gavin Newsom considers placing his signature on Senate Bill 206 and making his state the first state in the country to allow college student-athletes to market and profit from their name, image and likeness without affecting their student-athlete status, the legislation is already having an impact nationally. In response to the unanimous support for Senate Bill 206,

two South Carolina State Legislators intend to make South Carolina the second state to recognize the rights of student-athletes to profit from their name, image and likeness.

South Carolina State Senator Marlon Kimpson and Representative Justin Bamberg have announced that they intend to introduce a bill similar to California SB 206 when the South Carolina General Assembly reconvenes in January. Their proposal would allow the state’s largest schools to pay $5,000 a year in stipends to athletes in profitable sports like football and basketball. It would also allow other student-athletes who would be eligible to receive athletic scholarships benefits, but not the stipend, an opportunity to earn money from potential sponsorships and sales of their personal autograph.

In response to questions about introducing his proposed legislation, Senator Kimpson said, “The legislation passed in California is a sign of the time. The NCAA is not an amateur sports league. This is a multibillion dollar sports empire where everyone involved makes money except the players on the field who earn it.”

In an interesting twist to current law, Senator Kimpson also said his bill would compensate players for their hourly work, allow them to make money from using their likeness to sell merchandise, and establish a fund to assist players who suffer from sports-related injuries later in life.

Despite California’s success is achieving unanimous support from its Legislature for its bill, it is thought that South Carolina Legislators will voice strong opposition to Kimpson and Bamberg’s bill. Prior efforts put forth by South Carolina legislators, including legislation introduced by Senator Kimpson in 2015, to allow student-athletes to receive compensation beyond their athletic scholarships have failed to gain support.

University of South Carolina Athletic Director Ray Tanner has already expressed opposition stating that any such proposal “gives him angst.’ In addition, Clemson Head Football Coach Dabo Swinney, who recently signed a multi-year contract extension making him the highest paid college football in the nation, has already publically stated that if college players are paid, “I’ll go do something else because there’s enough entitlement in this world as it is.”

Despite anticipated opposition, South Carolina Senate Education Committee Chairman Greg Hembree, the head of the committee that will initially consider the bill when it is introduced, said he is open to the idea, comparing the NCAA student-athlete to Olympic participants and their rights to benefit from their name, image and likeness.

Representative Bamberg expressed his feelings as to why he believes the bill is an important measure for South Carolina to consider. “Our job is to take care of our citizens, our schools, our players. If another state wants to continue the proverbial football farm, that’s their problem.” He added,

That extra money — even just a few thousand dollars a semester — could go a long way for underprivileged athletes and their families.

Jackson Lewis P.C. © 2019

Trade Mark Re-filing And Bad Faith – Go Directly To Jail. Do Not Pass Go, Do Not Collect $200

Hasbro Inc. (Hasbro), owner of the well-loved board game Monopoly, suffered a defeat on 22 July 2019, before the EUIPO Board of Appeal in relation to the MONOPOLY trade mark. The EU registration for the MONOPOLY trade mark was partially invalidated as it was found that Hasbro had acted in bad faith when filing the application as part of a ‘trade mark re-filing’ programme.

Background

Hasbro applied to register the trade mark MONOPOLY for goods and services in Classes 9, 16, 28 and 41 of the Nice Classification. The application was published on 9 August 2010 and the mark was registered on 25 March 2011. Kreativini Dogadaji d.o.o (KD) filed an application for invalidation of the trademark in 2015, arguing that it had been registered in bad faith on the basis that the mark was a repeat filing of three identical earlier trade mark registrations for MONOPOLY.

Acting in bad faith

The EUTM Regulation states that a trade mark shall be declared invalid where the applicant acted in bad faith at the time of filing the application for the trade mark. However, EU trade mark law does not provide a definitive clarification of bad faith and ‘bad faith’ is not defined in the EUTM Directive or Regulation. The most notable case from the CJEU dealing with bad faith is the Lindt Goldhase-case (C-529/07) which sets out three areas of consideration:

  1. the applicant knows that a third party is using, in at least one member state, an identical/similar sign for an identical/similar product or service for which the registration is sought

  2. the applicant’s intention of preventing that third party from using the sign, and

  3. the degree of legal protection enjoyed by the third party’s sign and by the sign for which registration is sought.

Nonetheless, these factors are only examples and are not exhaustive, ‘bad faith’ cannot be restrained to a limited set of circumstances.

Findings of Board of Appeal

The Board of Appeal found that Hasbro had a dishonest intention at the time of filing the contested EUTM on the basis that Hasbro had previously filed and successfully registered MONOPOLY as an EUTM on three previous occasions. This dishonest intention was found because Hasbro had repeated filings in effect to circumvent the legal risk of removal due to non-use after five years. Although Hasbro claimed it had been adding more goods and services with each subsequent re-filing, the Board of Appeal did not deem it an acceptable excuse. The Board therefore invalidated the MONOPOLY mark for all goods and services identical or similar to those covered by the earlier trade marks.

The Key Takeaways

Hasbro did try to argue that their re-filing tactic was common practice in maintaining ownership of a trade mark, which it is, but the decision highlights that a tactics popularity does not equate to acceptability or legality. Brand owners should carefully consider the risk of invalidation or opposition on the basis of bad faith when filing future trade mark applications for existing brands.

Copyright 2019 K & L Gates
ARTICLE BY Niall J. Lavery and Simon Casinader of K&L Gates.
For more trade mark cases, see the Intellectual Property law page on the National Law Review.

What are Consumers Claiming in Juul Lawsuits?

Within the past decade, regular tobacco users have turned to electronic cigarettes in an effort to wean off of traditional cigarettes, believing them to be a safer option for human health. E-cigarettes, also known as nicotine vaporizers, vaporizer cigarettes, or simply vape pens, have grown in popularity over the past several years, partially driven by the debut of Juul’s e-cig devices in 2015. Now, Juul Labs is a leading manufacturer of e-cigarette devices and e-liquid flavors nationwide. Despite its growing popularity, especially among teens and young adults, Juul has been at the center of several consumer legal battles, most of which allege that Juul’s e-cig devices are extremely detrimental to users’ health. Several suits have been filed by parents or guardians on behalf of teenage children.

Several consumers have accused Juul Labs of deliberately marketing its products to appeal to the younger generation. A lawsuit recently filed by the father of a Carmel, Indiana teen in the U.S. District Court in Indianapolis alleged that his son was enticed by the rainbow colors and fruity flavors of Juul’s e-cigarette products, which contained excessive levels of nicotine. The teen later developed an intense nicotine addiction and fears that his addiction may lead to health problems throughout his life.

Other suits have similarly claimed that Juul specifically targets underage markets with its presence on several social media platforms and use of online influencers to attract teen users.

This is not the first attack against Juul’s advertising practices. Stanford University researchers evaluated Juul’s marketing campaigns over its first three years on the market, and the resulting impact on teens and young adults, in a January 2019 study.

By analyzing Juul’s website, social media platforms, hashtags, and customer campaign emails, the researchers concluded that, “Juul’s advertising imagery in its first [six] months on the market was patently youth oriented.” Though Juul representatives have repeatedly denied that the company intentionally targets a younger generation in its marketing, the study revealed how Juul, “continued to engage in advertising either targeted to youth…or by placing its promotional material preferentially in youth consumed media channels…”

Juul lawsuits have also been filed in response to defective vape batteries and device explosions. Juul’s e-cigarette products are operated by lithium-ion batteries, which can allegedly overheat and explode. In several instances, vape explosions have damaged users’ mouths, hands, and other body parts, causing burns, broken jaws, and even deaths. Treacy Gangi, for example, filed a lawsuit in November 2017 on behalf of her husband who was killed by an exploding e-cigarette, similar to a Juul device.

Another lawsuit recently filed by an Ohio mother on behalf of her two teen daughters claimed that Juul failed to warn its customers of the high levels of nicotine in its devices. The complaint stated that the two twin daughters, who are now 16 years old, began vaping in 2016 and initially purchased the devices in a store that “knowingly sold e-cigarettes to underage customers.” The teens quickly became addicted to their e-cigarettes and were eventually vaping two Juul pods a day. According to the lawsuit, one Juul pod contains the same amount of nicotine as two packs of cigarettes.

Similar lawsuits have claimed that in addition to containing excessive levels of nicotine, Juul products are advertised as being a healthier alternative to traditional cigarettes. Recent cases, however, have shown that vaping Juul e-cigarettes is linked to a number of health conditions, including heart disease, lung damage, and seizures. The Centers for Disease Control and Prevention (CDC) is inspecting the recent hospitalizations of more than 149 individuals whose health problems are linked to vaping. The patients, who are predominantly teens and young adults, reportedly developed severe lung illnesses that have been associated with vaping.

According to recent cases, vaping also puts users at risk of experiencing seizures, which is a known symptom of nicotine poisoning. The FDA has received about 127 reports of seizures linked to vaping since 2010, and issued a warning about the potential correlation between vaping and seizures (convulsions) in April 2019.

Amid a lack of research and information on the health risks of using e-cigarettes, an Illinois patient was reportedly the first to die of a lung illness that was associated with vaping. Health experts say that more research needs to be done in order to understand the health implications of vaping, before other users face a similar fate.

Copyright © 2019 Katy Moncivais, Ph.D.

For more on vaping related litigation see the National Law Review Biotech, Food & Drug law page.

Claim Construction Disputes Must Be Decided Before Applying Alice

On August 16, 2019, the Federal Circuit issued a 2-1 decision holding that a lower court erred by adjudicating patent eligibility without resolving the parties’ claim construction dispute. See MyMail, Ltd. v. ooVoo, LLC et al., Nos. 2018-1758, 2018-1759 (Fed. Cir. Aug. 16, 2019).

The patents at issue in MyMail cover methods for modifying toolbars displayed on Internet-connected devices. In response to defendants’ motion for judgment on the pleadings that the patents claim ineligible subject matter, MyMail raised a legal dispute over the proper construction of “toolbar.” The district court granted defendants’ motions without addressing the parties’ claim construction dispute, and without construing “toolbar.” The Court found in a split decision that the district court erred.

The majority held that “[d]etermining patent eligibility requires a full understanding of the basic character of the claimed subject matter.”  Accordingly, “if the parties raise a claim construction dispute at the Rule 12(c) stage, the district court must either adopt the non-moving party’s constructions or resolve the dispute to whatever extent is needed to conduct the § 101 analysis.”  Because the district court never addressed the parties’ claim construction dispute, or otherwise construed “toolbar,” the Federal Circuit vacated and remanded for further proceedings.

In his dissent, Judge Lourie argued that the facts of the case demonstrate that the parties’ claim construction dispute is “little more than a mirage,” and the claims at issue are “clearly abstract, regardless of claim construction.”

Implications

This decision provides patentees with another tool to help delay early patent eligibility decisions by raising legal issues over the proper scope of the claims. It is important to note, however, that this decision does not mean that judges must always construe the claims before ruling on patent eligibility—only when the parties raise a dispute. Further, patentees should weigh the relative pros and cons of raising claim construction issues early in a case, as this may come with some risks including putting a stake in the ground without sufficient discovery concerning the accused products.

© 2019 Brinks Gilson Lione. All Rights Reserved.

For more on patent law see the National Law Review Intellectual Property law page.

How Are You Investing in Business-Building Relationships?

“Discipline is the bridge between goals and accomplishment” – Jim Rohn, international business management expert

Some things appear to be so simple that we assume (dangerously) that everyone “gets it.” Bear with me a moment.

For lawyers, it is imperative to consistently and persistently cultivate and nurture their relationships within their network; with clients, to receive more work and strengthen the loyalty bond; with referral sources, to receive more referrals; with prospects, to develop new work; and so on.

Why, then, is it that a significant number of lawyers either have no system — formal or otherwise — for getting and staying in touch with these people or do a dismal job of staying connected?

‘Getting and Staying in Touch’?

Again, a seemingly obvious question, but in my legal marketing practice of more than 25 years, I have worked with very few lawyers who realistically understand, as a practical matter, the fundamental principle of this phrase.

It is a widely known statistic that it takes 7-10 “touches” to achieve “top-of-mind awareness” status. Lawyers are implored to develop – often with the support of their legal assistant/marketing or IT team, a consolidated contact list including clients; industry and professional contacts; referral sources; prospects; friends and family; school classmates — law school, college, high school, etc.; co-workers and former co-workers; contacts from former clerkships; association contacts; community contacts; holiday card recipients; and so on.

Though it may be an arduous task to assemble all the business cards, old Rolodexes (yes, I’m showing my age), database printouts, etc., it is important to have all your contacts in one system. Can we say “CRM” (contact relationship management) system?

As I often relay to my clients, no list equals no connections, no communications with friends, peers, industry contacts and prospects, and, ultimately, no clients. Remember, we’re in the “relationship-building” business, and it becomes much more daunting to foster relationships if we don’t proactively get and stay in touch.

What does this mean to me?

For purposes of communicating regularly with your various constituents (clients, referral sources, prospects, etc.), no one communication message will be of interest to everyone on your contact list. That is to say, if you develop an e-newsletter or legal update on the importance of developing social media policies for the workplace and send it to your human resource clients, that topic may be of little interest to your charitable organization contacts unless they are involved in employment law issues. There is great efficiency and merit to tailor your message to an intended audience and there is no better way than to develop “categories” of contacts.

When it comes to knowing how, when and how often to reach out, paramount on most attorneys’ minds is that they do not want to be perceived as “too pushy” “aggressive” or otherwise annoying. Understandable. One principle I often convey to my clients is that most people are so involved in their own world, business, family, etc.; you are not capturing 100 percent of their attention most of the time. In other words, to adequately “register” on your targets’ radar, there must be regular, consistent and persistent “touch points”, be they via e-mail, phone call, face-to-face contact and social media outlets. You get the point.

Check Motivations

To build and grow a healthy practice, it is imperative to develop a system of getting and staying in touch but doing so with the appropriate mindset. In short, “It’s not about you.”

Lawyers often query, “What is it that I’m saying to all these people?” Lawyers sometimes say, “I don’t want to bother these folks”? Understandable.

My response is usually a variation on the theme of reaching out with a service mindset and with authentic intentions of checking in on your contacts’ business, seeing how they are making out with a recent transition or starting a new position, or a company move, etc. The universal sowing of seeds of goodwill will ultimately reap only good things. Or, relating another way, employing Newton’s Laws of Motion, “For every action, there is an equal and opposite reaction.” The more “goodwill” you put out, the more it will come back to you … usually multifold.

Time Considerations

Lawyers are very busy. Where do they “find” the time to get and stay in touch with everyone and have the oft-needed downtime?

Just today, I explained to a junior partner client that, if addressed productively, his contacts will soon become his friends. Consider this: we all have certain people with whom we enjoy sharing time. What if those special individuals could be the same ones in your categorized contact lists? How cool would that be? Kill two birds with, well, you know.

Many successful senior attorneys have worked most of their professional careers to create this very scenario though it didn’t happen overnight. It took years, in some cases, one contact at a time. This brings me to my next point.

Leverage Technology

In our digital age, it has never been easier to “get and stay connected” via a host of technological tools (e.g., LinkedIn, Facebook, Twitter, Instagram, blogging). Not a technophile? No sweat; there are “people” who make a career of helping clients “connect”. One such job title is “certified social media specialist”.

Net-Net

In the fiercely competitive legal services arena, cultivating strong relationships is more important than ever before. As a successful lawyer and business owner, you must find a way to get and stay in touch with your desired audiences, targeted constituents and those folks who ultimately can help you grow a healthy practice. It is most easily done by:

• Commit to making it happen.

• Seek buy-in from your support resources (internal and/or external) so everyone is on the same page.

• Develop a viable and workable system for gathering, categorizing and maintaining contacts on an ongoing basis.

• Schedule dates/calendar regular communication with your contacts in addition to the other regular “touches”.

  • For example, on Mondays, review last week’s business development actions. Schedule in two blocks of 15-minute increments to follow up with each contact, offering something of value to them…a copy of a new relevant report, a link to an interesting article, a professional announcement of a common acquaintance.
  • On Tuesdays, place three phone calls to inactive clients to check in on their status/business. Ask if there is anything with which you can help them.
  • On Wednesdays, invite three referral sources to schedule a coffee in the next month. Mark your calendar and make it happen.
  • On Thursdays, research upcoming targeted networking events in an industry you serve, a Bar association event and/or other relevant organization.
  • On Friday, consider what concrete steps you’ve taken during the week and consider next steps to nurture the relationships you’ve cultivated. Take the afternoon off to recover from a busy week.
  • Repeat.

 

© 2019 KLA Marketing Associates.

For more on legal marketing, see the National Law Review Law Office Management page.

Corporate Closedown Does Not Shield Boss From Potential TCPA Culpability

So, your corporation is sued under the Telephone Consumer Protection Act (TCPA). One defense strategy if you are the founder and sole owner: cease operations, terminate your employees, close your offices, formally dissolve the corporation and live in British Columbia. No potential individual exposure for TCPA violations in Alabama – right?

Not so fast, said the United States District Court for the Northern District of Alabama in Eric K. Williams v. John G. Schanck. 2019 U.S. Dist. LEXIS 151778, Case No.:5-15-cv-01434-MHH, decided September 6, 2019. Mr. Williams originally sued Stellar Recovery, Inc., a company founded and solely owned by Schanck, for collection calls made to the plaintiff’s cellphone in Alabama. Mr. Schanck then told the Court in a telephone conference call that “Stellar Recovery had dissolved and did not intend to participate in this lawsuit.” Mr. Williams moved to amend his complaint to add Mr. Schanck individually and Judge Madeline Hughes Haikala granted his motion.

But, wait a minute, countered Mr. Schanck. Service of the amended complaint on me in Vancouver, British Columbia does not afford the Court personal jurisdiction. Furthermore, Mr. Williams is too late because he added me as a defendant after the four-year TCPA statute of limitations had passed. So, Mr. Schanck moved to dismiss under Federal Rules of Civil Procedure (FRCP) 12(b)(2) and 12(b)(6), respectively.

The Court was unconvinced on both counts.

First, on the jurisdictional issue, the Court examined whether Mr. Schanck’s alleged contacts with the State of Alabama were sufficient to satisfy specific jurisdiction (i.e., “contacts within the forum state give rise to the action before the court”). Mr. Williams asserted that Mr. Schanck “guide[d], over[saw], and ratifie[d] all operations of…Stellar” and knew of the “‘violations of the TCPA alleged’ in the complaint and ‘agreed to and ratified such actions of his company.’” Indeed, throughout the complaint, Mr. Williams contended that “Stellar acted on behalf of Defendant Schanck.”

Mr. Schanck did “not challenge the factual allegations concerning his ownership interest in Stellar or his managerial control over the company.” Rather, he contended that the “corporate shield doctrine” precluded the Court from exercising jurisdiction over him. However, Judge Haikala noted that the “express language of the TCPA allows actions against corporate officers who authorize TCPA violations” and Mr. Williams “has alleged just that – that Mr. Schanck directed and authorized the alleged TCPA violations that purportedly occurred in this District.” Motion to dismiss for lack of personal jurisdiction under FRCP 12(b)(2) denied.

Second, the Court also dispensed with the statute of limitations issue. The Court concluded that the claim against Mr. Schanck as an individual arose out of the “conduct, transaction or occurrence set forth or attempted to be set forth in the original pleading.” Under such circumstances, the claims in the amended complaint could relate back to Mr. Williams original complaint.

But, Mr. Schanck argued, Mr. Williams knew about him and his status in Stellar yet chose only to sue the latter. Therefore, there could have been no mistake on his part about the “identity” of the proper party (i.e., Mr. Schanck) to sue and the FRCP 15(c) requirements regarding the timing of serving Mr. Schanck as a new defendant were not met.

Correcting Mr. Schanck’s application of that requirement, the Court noted that the issue was not about Mr. Williams knowledge, but “whether Mr. Schanck himself knew or should have known that he would be named as a defendant ‘but for an error’” by Mr. Williams. And at this stage, “if Mr. Williams contentions about Mr. Schanck’s involvement with Stellar prove correct,” then Mr. Schanck “reasonably should have known that he would be named as a defendant but for an error.” Motion to dismiss for failure to state a claim under FRCP 12(b)(6) denied.

So some TCPAWorld lessons learned about the solidity of the “corporate” shield when one person allegedly runs the company show.

© Copyright 2019 Squire Patton Boggs (US) LLP