Conviction of Harvard Researcher for Chinese Ties Serves as Caution to Universities

Charles Lieber, former chair of the chemistry and chemical biology department at Harvard University, was convicted on December 21st by a jury on two counts of making false statements to federal authorities, two counts of making a false income tax return, and two counts of failing to file reports of foreign bank and financial accounts with the IRS due to his relationships with China’s Thousand Talents Program (TTP) and the Wuhan University of Technology (WUT). He received cash and living expenses from TTP and more than $1.5 million to establish a WUT research lab. Lieber opened an account at a Chinese bank into which WUT made salary deposits, but he did not report the existence of the account as required by U.S. law.

In a statement released by the U.S. Attorney’s Office for the District of Massachusetts following the verdict, Lieber was said to have assumed the role of “Strategic Scientist” for WUT, a position that he did not disclose, and served as a TTP contractor from at least 2012 through 2015. As the Department of Justice described TTP, “China’s Thousand Talents Plan is one of the most prominent Chinese talent recruitment plans designed to attract, recruit, and cultivate high-level scientific talent in furtherance of China’s scientific development, economic prosperity, and national security.”

Lieber will face maximum jail terms of up to three to five years for each of the counts for which he was convicted, as well as fines of up to $250,000 for each count. Lieber’s sentencing hearing has not yet been scheduled.

Lieber’s activities serve as just the most recent example of unlawful foreign involvement which negatively impacts U.S. higher education institutions and their personnel, research scientists, and affiliated research and fund-raising organizations. While Lieber’s actions appear to have been clearly intentional, government authorities have also voiced concern regarding the potential for inadvertent disclosures of valuable intellectual property to foreign agents by institutional researchers.

Higher education institutions will need to be prepared for enhanced federal scrutiny of their international relationships if the US Innovation and Competition Act (Senate) and the EAGLE Act (House) are adopted by Congress as appears possible next year. As a footnote, Reuters and The Guardian reported in November that China’s embassy in Washington, D.C. sent letters to executives urging them to oppose the Acts.

© Steptoe & Johnson PLLC. All Rights Reserved.

SEC Rejects Listing of Two Bitcoin ETFs

The SEC rejected two proposals to list and trade shares in two Bitcoin exchange-traded funds (“ETFs”).

The SEC rejected a proposal from NYSE Arca, Inc. (“Arca”) to list and trade shares of the Valkyrie Bitcoin Fund. The SEC also rejected a proposal from CBOE BZX Exchange, Inc. (“BZX”) to list and trade shares of the Kryptoin Bitcoin ETF Trust.

The SEC assessed whether the exchanges (i) had a comprehensive surveillance-sharing agreement with a significant, regulated market, and (ii) could effectively prevent fraudulent and manipulative activity. In the rejected proposals, the SEC noted its concerns over the abilities of the exchanges to adequately meet the requirements under SEA Section 6(b)(5) (“Determination by Commission Requisite to Registration of Applicant as a National Securities Exchange”) in protecting investors and the public interest by preventing fraudulent and manipulative practices.

The SEC rejected Arca’s argument that (i) liquidity, (ii) price arbitrage, and (iii) frameworks to value assets would be sufficient to mitigate potential manipulation.

Similarly, the SEC rejected BZX’s proposal, concluding “that BZX has not established that it has a comprehensive surveillance-sharing agreement with a regulated market of significant size related to bitcoin,” and “that BZX has not established that other means to prevent fraudulent and manipulative acts and practices are sufficient to justify dispensing with the requisite surveillance-sharing agreement.”

As a result, the SEC found that both exchanges had failed to prove that they could meet their burdens under SEA Section 6(b)(5).

© Copyright 2021 Cadwalader, Wickersham & Taft LLP
For more articles on cryptocurrency exchanges, visit the NLR Financial Securities & Banking.

OSHA’s COVID-19 Vaccine, Testing Mandates Back On – Effective Jan. 10, 2022

On December 17, the U.S. Court of Appeals for the Sixth Circuit lifted the stay of OSHA’s Emergency Temporary Standard (ETS) that had been imposed by the Fifth Circuit, putting the ETS’ employer vaccination and testing requirements for COVID-19 back into effect. Following the decision, OSHA announced a Jan. 10, 2022, effective date, but added it will not cite employers for noncompliance with the testing requirements prior to Feb. 9, 2022.

Accordingly, employers can consider these dates as the new compliance deadlines: Jan. 10 for all ETS requirements except testing and Feb. 9 for testing requirements. Notably, OSHA will require employers to demonstrate good faith efforts to come into compliance. So employers covered by the ETS should begin taking steps to demonstrate compliance and documenting all such efforts.

Right now, employers should conduct vaccination inquiries, create a roster of employee vaccination status, and decide whether to require vaccinations for all employees or allow weekly testing as an alternative.

Employers should also consider reviewing options from payroll providers or HRIS software for the confidential storage and retrieval of vaccination and test information. Unionized employers need to consider their bargaining obligations over the discretionary aspects of the ETS, as well as over the effects of its nondiscretionary requirements.

This court decision adds another twist in the winding litigation challenging President Biden’s federal vaccine mandates. Following the Dec. 17 decision, the parties challenging the ETS immediately filed emergency applications with the U.S. Supreme Court to reimpose the stay. Justice Brett Kavanaugh will review and make a decision on the applications, as he is the justice assigned to hear such petitions arising from the Sixth Circuit. Justice Kavanaugh will have the option to grant the applications and stay the ETS pending review by the full Supreme Court, refer them to the full court for a decision, or take no action pending review.

It is possible the Supreme Court will weigh in on the emergency applications quickly, so employers can expect updates in the coming days and weeks.

© 2021 BARNES & THORNBURG LLP
For more about OSHA Mandates, visit the NLR Coronavirus News section.

Study Demonstrates Earlier Physician Retirement Overall and Increased Pay Equity Concerns for Female Doctors During the Pandemic

This month, Doximity issued its Fifth Annual 2021 Physician Compensation Report. With the continued strain of the pandemic spanning 2021, the self-reported physician data reflected widespread burnout and early retirement, especially by female physicians. With respect to physician compensation, Doximity findings demonstrated:

  • While average doctor pay increased 3.8 percent between 2020 and 2021, there was a decline of real income compared to 2020 given the CPI 6.2% rate of inflation in 2021.
  • The top five metro areas with the highest physician pay were Charlotte, NC; St. Louis, MO; Buffalo, NY; Jacksonville, Florida; and, Orlando, Florida.
  • The top five metro areas with the lowest physician pay were Baltimore, MD; Providence, RI; San Antonio, TX; Washington, D.C.; and Boston, MA.
  • A widening gender pay gap of 28.2% this year, with female physicians making $122,000 less than male physicians in 2021.
  • Based on 2014-2019 data, Doximity estimates that over the course of a career, female physicians will earn over $2 million less than male physicians.

Specialties with the largest pay equity gaps between men and women are oral & maxillofacial surgery; allergy and immunology; ENT; pediatric nephrology; and thoracic surgery. Significantly, there is no one medical specialty where women earned the same or more than men in 2021. All specialties had a pay gap over 10%, except Pediatric Rheumatology (which had a gap of 7.9%). To compound matters, a recent Jama Network Open research letter found that physician residents who were mothers – compared to physician residents who were fathers – were more likely to be responsible for childcare or schooling (24.6% v. .8%), household tasks (31.4% v. 7.2%), to work primarily from home (40.9% to 22%), and to reduce their work hours (19.4% to 9.4%). The study reflected the significant concern that these “short-term adjustments can have serious long-term repercussions as they may lead to lower earnings and negatively impact advancement.”

Doximity’s research also revealed that due to the pandemic, over 1% of physicians retired before expected, which is feared to strain an already tight labor market. The report also highlighted studies suggesting about half of doctors are considering an employment change due to the “COVID-related overwork.” The overwork also had a disproportionate impact on women physicians, with 25% of them reporting they are “considering early retirement” due to increased work during the pandemic.

This research reflects the importance of a physician/employer in any setting reflecting on the impact of the pandemic on its healthcare team. Moreover, the research shows continued pay equity deficits between female and male physicians, which may be exacerbated by the pandemic. Internal reflection on current pay practices to identify the factors contributing to it are critical to maintain top talent, improve morale amidst very difficult times and avoid wage and hour litigation.

Article By Dorothy Parson McDermott of Jackson Lewis P.C.

For more healthcare and health law legal news, click here to visit the National Law Review.

Jackson Lewis P.C. © 2021

The Legal Challenges to the OSHA ETS and CMS Vaccine Mandate Move to the Supreme Court

On December 22, 2021, the Supreme Court of the United States issued orders granting review of legal challenges to the Occupational Safety and Health Administration’s COVID-19 Vaccination and Testing Emergency Temporary Standard (“OSHA ETS”) and the Centers for Medicare and Medicaid Services Omnibus COVID-19 Health Care Staff Vaccination Interim Final Rule (“CMS Vaccine Mandate”). In a rare move, the Supreme Court set an accelerated timeline for the cases, scheduling oral arguments in both cases on January 7, 2022.

Following a ruling out of the United States Court of Appeals for the Sixth Circuit on December 17, 2021, OSHA announced that it would not issue citations for non-compliance with any requirements of the OSHA ETS before January 10, 2022 and will not issue citations for noncompliance with testing requirements before February 9, 2022, so long as an employer is exercising reasonable, good faith efforts to come into compliance with the OSHA ETS. While it is unknown whether the Supreme Court will be able to issue a ruling by OSHA’s January 10, 2022 compliance date, the Supreme Court’s expedited schedule seems to indicate that it is attempting to give employers some finality concerning their obligations under the federal mandates.

Article By Lilian Doan Davis of Polsinelli PC

For more COVID-19 legal news, click here to visit the National Law Review.

© Polsinelli PC, Polsinelli LLP in California

Supreme Court to Consider Whether the FAA Mandates Arbitration of PAGA Actions

On Dec. 15, 2021, the United States Supreme Court granted certiorari in Viking River Cruises, Inc. v. Moriana, and likely will decide by summer 2022 whether the Federal Arbitration Act (FAA) preempts California public policy and requires enforcement of arbitration agreements that purport to waive an employee’s ability to pursue representative actions under the California Private Attorneys General Act (PAGA). Employers have been waiting for the Supreme Court to take up this issue and are watching the case with interest.

Currently, per the California Supreme Court’s decision in Iskanian v. CLS Transportation Los Angeles, LLC, arbitration agreements that waive an employee’s right to pursue PAGA representative actions are considered void and unenforceable. In Iskanian, the California Supreme Court held the FAA does not preempt California state law prohibiting prospective PAGA waivers because PAGA actions are between the employer and the state, not the employee. Thus, the state of California is the real party in interest, not the employee bringing suit, and although the employee may have executed a binding arbitration agreement, the state of California did not. Thus, arbitration agreements that purport to waive the right, expressly or otherwise, to bring a PAGA representative action are not enforceable.

In Viking River, the employee filed a PAGA representative action seeking civil penalties for various alleged violations of the California Labor Code, despite signing an arbitration agreement with her employer agreeing to resolve all future employment-related disputes with the employer via individual arbitration. Relying on the agreement, the employer moved to compel the action to arbitration. The trial court denied the motion, and the Court of Appeal affirmed the denial citing California state law as articulated in Iskanian. The California Supreme Court subsequently denied the employer’s petition for review.

Viking River then petitioned the U.S. Supreme Court for certiorari, relying on the Supreme Court’s decisions in AT&T Mobility LLC v. Concepcion and Epic Systems Corp. v. Lewis. These decisions held that courts may not disregard bilateral arbitration agreements or reshape traditional individualized arbitration by mandating class-wide arbitration procedures without all parties’ consent. Viking River argued the Supreme Court needed to review the case to reaffirm the FAA and national policy in favor of arbitration. Viking River further argued review was necessary to ensure that Concepcion and Epic promote bilateral arbitration, rather than simply result in “representational litigation” under PAGA by those who agreed to arbitrate individually. In granting review, the Supreme Court will decide “[w]hether the Federal Arbitration Act requires enforcement of a bilateral arbitration agreement providing that an employee cannot raise representative claims, including under PAGA.”

This will be a closely watched decision for both sides of the bar and will likely have a groundbreaking effect on California employment litigation. Should the Supreme Court decide in Viking River’s favor, PAGA-only actions, which have become the preference of California plaintiffs’ attorneys in the face of arbitration agreements containing class action waiver provisions, will largely become a thing of the past for those employers who mandate individual arbitration for employees. Although it is by no means certain how the Supreme Court will decide this issue, employers should certainly be ready to revisit any arbitration agreements with California employees and consider what if any changes the ultimate ruling may warrant.

Article By Ashley M. Farrell Pickett and Radha D.S. Kulkarni of Greenberg Traurig, LLP

For more litigation legal news, click here to visit the National Law Review.
©2021 Greenberg Traurig, LLP. All rights reserved.

California Supreme Court Cases Employers Should Be Watching in 2022

The California Supreme Court has been busy in 2021 deciding cases that affect employers from how to pay meal and rest period penalties to when the statute of limitations for a failure to promote runs.

While the state’s high court answered some big questions in this last year, they still have several cases pertaining to employment law awaiting their attention.

Here are the cases employers should be watching in the new year and why.

People ex rel. Garcia-Brower v. Kolla’s Inc.

In this case, a complainant filed a timely retaliation complaint with the Division of Labor Standards Enforcement (“DLSE”) claiming immediate termination after complaining about non-payment of wages. Her complaint did not allege any disclosure to a governmental agency, but the retaliatory act of termination upon her direct complaint to her employer. The DLSE undertook an investigation and determined that respondents had violated several Labor Code sections, notably 1102.5 (“Section 1102.5”), California’s whistleblower statute. The DLSE notified the parties involved of its determination on December 22, 2015. Respondents were ordered to do several things, including paying the complainant lost wages and civil penalties of $20,000 each for violations of sections 1102.5 and 98.6. Respondents never complied.

On October 17, 2017, the Labor Commissioner filed an enforcement action against Respondents under the authority of section 98.7, subdivision (c)(1)5, alleging violations of these statutory provisions. Eventually, through a lack of response by the employer-defendant, the Labor Commissioner sought to take a default judgment.

The trial court, however, determined that the Labor Commissioner had not stated a claim under section 1102.5, because the complainant had not approached a governmental agency until after her termination. The trial court found that retaliation under the statute required the complainant to have been terminated as a result of disclosure to a governmental agency, which was not alleged. The trial court also found insufficient evidence for the claimant’s unpaid wages, and that the penalties under Section 98.6 were not appropriate.

The Court of Appeal disagreed with the trial court’s reasoning, but nevertheless affirmed the denial of Section 1102.5 claim as it found the after-termination complaint to be defective. It also reversed as to the penalties awarded under Section 98.6 and remanded that portion of the judgment.

The question before the California Supreme Court is limited to whether Labor Code section 1102.5, subdivision (b), which protects an employee from retaliation for disclosing unlawful activity, applies when the information is already known to that person or agency.

Why Employers Should Watch This Case

Depending on the direction the California Supreme Court takes, its holding will affect the burden on employers defending against whistleblower claims – especially those arising out of allegations that an employee told an employer or agency information that the employer or agency was already aware of.

Grande v. Eisenhower Medical Center

FlexCare, LLC (“FlexCare”), a temporary staffing agency, assigned Plaintiff to work as a nurse at Eisenhower Medical Center (“Eisenhower”). Plaintiff alleged that during her employment at Eisenhower, FlexCare and Eisenhower failed to ensure she received the required meal and rest periods, wages for certain periods she worked, and overtime wages. She then filed a class-action lawsuit on behalf of FlexCare employees assigned to hospitals throughout California. Plaintiff’s claims were based solely on her work on assignment to Eisenhower. FlexCare settled with the class and plaintiff executed a release of claims. The trial court entered a judgment incorporating the settlement agreement.

A year later, Plaintiff brought a second class action suit against Eisenhower, who had not been named in the previous lawsuit, alleging the same labor law violations. FlexCare intervened in the action asserting Plaintiff could not bring the separate lawsuit against Eisenhower because she had settled her claims in the prior class action.

The trial court held a limited trial on the issue of the propriety of the lawsuit and ruled that Eisenhower was not a released party under the settlement agreement. Accordingly, Eisenhower could not avail itself of the doctrine of res judicata because the hospital was neither a party to the prior litigation nor in privity with FlexCare. The Court of Appeals agreed with the trial court.

Why Employers Should Watch This Case

This case could affect staffing agency employers who may want to utilize broad releases if their “clients” are not also named to avoid duplicative litigation – for which they may have to pay twice – through indemnity clauses.

Lawson v. PPG Architectural Finishes, Inc.

This case will explore whether the evidentiary standard set forth in Labor Code section 1102.6 (“Section 1102.6”) replaces the McDonnell Douglas test as the relevant evidentiary standard for retaliation claims brought under section 1102.5.

In this case, Defendant was a manufacturer of paint, stains, caulks, and other products. Plaintiff Lawson (“Lawson”) was a territory manager whose duties included merchandising and claims that he was directed by his supervisor to handle a product in a way that fraudulently removed a slow-selling product from its inventory. Lawson told his supervisor he would not do this, then reported the directive to the company’s ethics hotline on two separate occasions. The second report to the ethics hotline resulted in an investigation. During this time, Lawson received poor ratings for his work, was placed on a performance improvement plan, and eventually, Defendant terminated his employment.

Lawson then filed a complaint against the company in the United States District Court, alleging that he was retaliated against as a whistleblower.

The trial court applied the McDonnell Douglas test, which employs burden-shifting between the plaintiff and the employer. This test originated in the context of Title VII, the federal statute governing workplace discrimination, harassment, and retaliation. The trial court concluded that Lawson failed to carry his burden to raise triable issues of fact regarding pretext and granted Defendant’s motion for summary judgment.

On appeal, Lawson argued to the 9th Circuit that the trial court should have applied the evidentiary standard outlined in Section 1102.6. Section 1102.6 states that once it has been demonstrated by a preponderance of the evidence that the whistleblower activity was a contributing factor in the retaliation against the employee, the employer’s burden of proof is to demonstrate by clear and convincing evidence that the alleged action would have occurred for legitimate, independent reasons.

In its question to the California Supreme Court, the 9th Circuit noted that application of the McDonnell Douglas test to whistleblower claims under Labor Code section 1102.5 “seems to ignore [a] critical intervening statutory amendment” by which the California legislature established the evidentiary burdens of the parties participating in a civil action or administrative hearing involving a violation of the statute. Though this statement by the Circuit seems like a decision, the 9th Circuit pointed out three published California appellate court decisions that expressly applied McDonnell Douglas after the amendment.

This contradiction between California’s statute and the court rulings is the root of the 9th Circuit’s question.

Why Employers Should Watch This Case

If the California Supreme Court rules that the evidentiary requirement under Section 1102.6 applies, disposing of whistleblower retaliation claims prior to trial will become extremely difficult due to the high clear and convincing evidentiary standard imposed on the employer.

Naranjo v. Spectrum Security Services, Inc.

This case involves a class of security guards who alleged meal break violations and sought premium wages, waiting time penalties, inaccurate pay stub penalties, and attorney’s fees.

The Court of Appeal held that unpaid premium wages for meal period violations did not entitle employees to pay stub penalties or waiting time penalties.

Why Employers Should Watch This Case

This case will resolve a long-standing debate on whether waiting time penalties are recoverable for meal and rest period violations. If the California Supreme Court disagrees with the lower courts, it will increase potential penalties for California meal and rest period violations, as violations could be compounded by alleged pay stub penalties and waiting time penalties.

Article By Leonora M. Schloss and Karen Luh of Jackson Lewis P.C.

For more litigation and legal news, click here to visit the National Law Review.

Jackson Lewis P.C. © 2021

BREAKING: Seventh Circuit Certifies BIPA Accrual Question to Illinois Supreme Court in White Castle

Yesterday the Seventh Circuit issued a much awaited ruling in the Cothron v. White Castle litigation, punting to the Illinois Supreme Court on the pivotal question of when a claim under the Illinois Biometric Privacy Act (“BIPA”) accrues.  No. 20-3202 (7th Cir.).  Read on to learn more and what it may mean for other biometric and data privacy litigations.

First, a brief recap of the facts of the dispute.  After Plaintiff started working at a White Castle in Illinois in 2004, White Castle began using an optional, consent-based finger-scan system for employees to sign documents and access their paystubs and computers.  Plaintiff consented in 2007 to the collection of her biometric data and then 11 years later—in 2018—filed suit against White Castle for purported violation of BIPA.

Plaintiff alleged that White Castle did not obtain consent to collect or disclose her fingerprints at the first instance the collection occurred under BIPA because BIPA did not exist in 2007.  Plaintiff asserted that she was “required” to scan her finger each time she accessed her work computer and weekly paystubs with White Castle and that her prior consent to the collection of biometric data did not satisfy BIPA’s requirements.  According to Plaintiff, White Castle violated BIPA Sections 15(b) and 15(d) by collecting, then “systematically and automatically” disclosing her biometric information without adhering to BIPA’s requirements (she claimed she did not consent under BIPA to the collection of her information until 2018). She sought statutory damages for “each” violation on behalf of herself and a putative class.

White Castle before the district court had moved to dismiss the Complaint and for judgment on the pleadings—both of which motions were denied.  The district court sided with Plaintiff, holding that “[o]n the facts set forth in the pleadings, White Castle violated Section 15(b) when it first scanned [Plaintiff’s] fingerprint and violated Section 15(d) when it first disclosed her biometric information to a third party.”  The district court also held that under Section 20 of BIPA, Plaintiff could recover for “each violation.”  The court rejected White Castle’s argument that this was an absurd interpretation of the statute not in keeping with legislative intent, commenting that “[i]f the Illinois legislature agrees that this reading of BIPA is absurd, it is of course free to modify the statue” but “it is not the role of a court—particularly a federal court—to rewrite a state statute to avoid a construction that may penalize violations severely.”

White Castle filed an appeal of the district court’s ruling with the Seventh Circuit.  As presented by White Castle, the issue before the Seventh Circuit was “[w]hether, when conduct that allegedly violates BIPA is repeated, that conduct gives rise to a single claim under Sections 15(b) and 15(d) of BIPA, or multiple claims.”

In ruling yesterday this issue was appropriate for the Illinois Supreme Court, the Seventh Circuit held that “[w]hether a claim accrues only once or repeatedly is an important and recurring question of Illinois law implicating state accrual principles as applied to this novel state statute.  It requires authoritative guidance that only the state’s highest court can provide.”  Here, the accrual issue is dispositive for purposes of Plaintiffs’ BIPA claim.  As the Seventh Circuit recognized, “[t]he timeliness of the suit depends on whether a claim under the Act accrued each time [Plaintiff] scanned her fingerprint to access a work computer or just the first time.”

Interestingly, the Seventh Circuit drew a comparison to data privacy litigations outside the context of BIPA, stating that the parties’ “disagreement, framed differently, is whether the Act should be treated like a junk-fax statute for which a claim accrues for each unsolicited fax, [], or instead like certain privacy and reputational torts that accrue only at the initial publication of defamatory material.”

Several BIPA litigations have been stayed pending a ruling from the Seventh Circuit in White Castle and these cases will remain on pause going into 2022 pending a ruling from the Illinois Supreme Court.  While some had hoped for clarity on this area of BIPA jurisprudence by the end of the year, the Seventh Circuit’s ruling means that this litigation will remain a must-watch privacy case going forward.

Article By Kristin L. Bryan of Squire Patton Boggs (US) LLP

For more data privacy and cybersecurity legal news, click here to visit the National Law Review.

© Copyright 2021 Squire Patton Boggs (US) LLP

Court Rejects Netflix’s Challenge to Poaching Injunction

In the latest blow against Netflix’s aggressive recruiting practices, a California appellate court has affirmed a trial court’s injunction against Netflix and in favor of Twentieth Century Fox Film Corporation (“Fox”), thus permanently barring the streaming giant from poaching Fox executives by inducing them to breach their fixed-term employment contracts.

Netflix challenged the injunction, which was issued two years ago under California’s Unfair Competition Law (“UCL”), on two grounds. Netflix argued that there are triable issues of fact as to whether: (1) Fox had suffered damages; and (2) Fox’s employment contracts were void as against public policy. The Court of Appeal rejected both arguments, finding that the extent of damages to Fox was not relevant to its UCL claim. The Court also rejected Netflix’s public policy arguments, noting that there is well-settled law that fixed-term contracts are beneficial to both employers and employees and that, in any event, the challenged contractual provisions can be severed, even if they are in any sense unenforceable or unlawful.

The Court of Appeal also rejected Netflix’s challenges to the trial court’s permanent injunction, which barred Netflix from soliciting employees who are subject to fixed-term employment contracts with Fox or inducing such employees to breach their fixed-term employment contracts. Specifically, the Court rejected the argument that the injunction was vague or overbroad because Netflix had failed to explain the basis for the objection at the summary judgment hearing, despite having been given ample opportunity to do so. The Court also rejected Netflix’s argument that the injunction resulted in specific performance of personal services contracts, pointing out that the injunction only applied to Netflix’s tortious conduct—and did not bind any current or former Fox executives.

This decision follows a similar ruling late last year, when a trial court ruled in favor of our client Viacom in its anti-poaching lawsuit against Netflix.

A holding the other way for Netflix could have upended the way California employers solicit and retain employees, especially in the entertainment industry, where fixed-term employment agreements are relatively commonplace. Although the recent Court of Appeal decision is unpublished, it presumably sends a strong message to those who would poach the employees of a competitor who are subject to fixed-term employment agreements.

Article By Anthony J Oncidi, Philippe A. Lebel, and Dixie M. Morrison of Proskauer Rose LLP

For more labor and employment legal news, click here to visit the National Law Review.

© 2021 Proskauer Rose LLP.

SCOTUS Shelves Request to Review 11th Circuit Dark Tower Decision, Ending Copyright Saga

The Supreme Court’s refusal to review the Eleventh Circuit’s decision in DuBay v. King marks an end to a 4-year copyright battle concerning the lead character of Stephen King’s acclaimed series, The Dark Tower.  The Eleventh Circuit’s decision affirmed that the King’s anti-hero, Roland Deschain, is not substantially similar to William DuBay’s The Rook comic book character, Restin Dane. The decision illustrates the complexity of literary copyright infringement disputes, where a claim is brought based on a mix of original and stock character elements.

In 2017 William DuBay’s heir, Benjamin DuBay, sued novelist Stephen King, Marvel Entertainment, Sony Entertainment, and others for various counts of copyright infringement, alleging that King copied DuBay’s artistic expression based on purported similarity between lead characters of The Rook (Restin Dane) and The Dark Tower (Roland Deschain). The district court granted summary judgment to King, determining (1) that any similarities between the characters comprise unprotectable general ideas and scènes à faire elements; and (2) that the protectable original character elements in dispute are different, such that “no reasonable jury…could find the works substantially similar.” DuBay appealed.

The principal issue on appeal was whether the district court erred in assessing substantial similarity.  DuBay argued that the characters were substantially similar based on several shared characteristics, including: (1) similar names; (2) interaction with time-travel related towers; (3) having a bird as a companion; (4) having knightly characteristics; (5) wearing Western-style clothing; (6) surviving a fictionalized interpretation of The Alamo; (7) the use of knives; and (8) traveling back in time to save a young boy who becomes a gunslinger. DuBay also argued that the unique combination of these elements made Dane a distinctive character, and that Deschain is a copy of DuBay’s artistic expression in that character.

The Eleventh Circuit addressed DuBay’s contentions in two parts.

First, the court assessed whether each of the claimed character elements merit copyright protection. The court affirmed the district court’s holding that “character names do not merit copyright protection,” since mere words and short phrases cannot be protected under copyright law.  The court reiterated that only original elements of a copyrighted work can be afforded protection, and that certain claimed elements (i.e., “knightly heritage,” time travel to “different times and parallel worlds,” “western attire,” “fictionalized Alamo histories,” and “knife wielding”) are merely general ideas or scènes à faire that are “too general to merit copyright protection.”  The court then reviewed the remaining elements to determine whether the shared characteristics rendered the characters substantially similar.  Although both characters may be broadly similar in having bird companions, a relationship to towers and tower imagery, and past time travel experiences involving the rescue of a young boy, the court found that the depiction of these elements was different in each work.  For example, whereas Dane lives in and travels via tower shaped structures shaped like the namesake chess piece, Deschain embarks on an endless mission to find an elusive Gothic tower that connects parallel worlds and time periods.  Because the portrayals of each original element are distinguishable, the court determined that no reasonable jury could have concluded that the works were similar.

Second, the court examined whether the characters are substantially similar based on each character’s combination of the claimed elements (or the “look and feel” of the characters).  The Court recognized of the potential dangers of comparing works based on individual similarities alone because an original combination of unoriginal elements can potentially sustain a claim of copyright infringement.  However, the court found that any similarities of combined elements were “superficial” at best, and that the “look and feel” analysis actually hurt, rather than helped, DuBay’s case by highlighting differences in expression of shared original character elements.

Takeaway:

The Supreme Court’s refusal to hear Dubay reinforces the basic tenet of copyright law that general ideas or scènes à faire cannot be protected by copyright.  It also reminds litigants that although a combination of original and non-original elements can be protected under copyright law, broad similarities are usually insufficient to sustain a copyright infringement claim.

The case is DuBay v. King, 844 Fed. Appx. 257 (11thCir. 2019), cert. denied, 142 S. Ct. 490 (2021).

Article By Spencer K. Beall and Margaret A. Esquenet of Finnegan

For more intellectual property legal news, click here to visit the National Law Review.

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

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