Tag: lawsuits

Tenth Circuit Declares No Remedy for Hemp Farmer Whose Federally Legal Plants Were Seized

In January, the United States Court of Appeals for the Tenth Circuit issued a published opinion in Serna v. Denver Police Department, No. 21-1446 (10th Cir. Jan. 24, 2023), upholding the dismissal of a hemp farmer’s lawsuit against local government officials in Colorado who confiscated his plants.

The farmer – Francisco Serna – brought suit under the Agriculture Improvement Act of 2018 (the “2018 Farm Bill”) which legalized hemp across the country and included limitations on states’ ability to prohibit the transportation of certain hemp plants and products across state lines. However, the three-judge panel concluded that no provision within the law allows for a private right of action by an individual to challenge instances of perceived unlawful governmental interference.

Serna grew hemp in Texas and intended to bring several plants home with him from Colorado. But when he attempted to get the plants – consisting of “plant clones or rooted clippings” – through Denver’s airport, a police officer confiscated them under a departmental policy to seize plants containing any discernible level of THC. Even though Serna had documentation showing that the plants’ THC level was beneath the limit authorized by the 2018 Farm Bill – and therefore compliant under federal law –  the officer took the plants anyway.

Serna’s Legal Proceedings

Serna sued the Denver Police Department and the confiscating officer under Section 10114(b) of the 2018 Farm Bill, which prohibits states from interfering with interstate transport of hemp and products that comply with the law. Serna asserted that because his plants were complaint, the defendants violated the provision. However, a federal magistrate judge granted the defendants’ motion to dismiss, which the district court adopted.[1] Serna then appealed to the Tenth Circuit.

The Tenth Circuit also held that no private right of action existed for Serna to employ. The court’s conclusion rests on the determination that Congress did not intend that hemp farmers, like Serna, should constitute a protected class under the 2018 Farm Bill. Without that status, they cannot sue. The court focused on the plain language of Section 10114(b), reasoning that it “makes no mention of [a] purported class of licensed [hemp] farmers” and merely provides that “no state…shall prohibit the transportation or shipment of hemp” across its borders. Thus, the provision pertains only to “the person regulated rather than the individuals protected,” which is fatal to the private right of action inquiry. The court compared Section 10114(b) with other federal statutes that do create private rights of action, such as Title VI of the 1964 Civil Rights Act, which specifies that “[n]o person…shall…be subjected to discrimination.” 42 U.S.C. § 2000d.

Takeaways

The unfortunate result of this decision is that individuals who comply with the provisions of the 2018 Farm Bill during the course of their business operations cannot seek recourse from improper government meddling. As a result, the law is significantly less protective than anticipated. Rather than suing to protect their interests, entrepreneurs like Serna must instead depend upon other actors – perhaps state attorneys general – to pursue these types of cases. However, those non-stakeholders generally have less incentive to pursue lawsuits, particularly against peer law enforcement agencies, leaving hemp operators with no remedy to enforce their rights under the 2018 Farm Bill.

In a broader sense, the Serna case is a cautionary tale for those who expect federal descheduling of marijuana to resolve the regulatory complexities currently faced throughout the cannabis industry. If hemp operators working with products that are federally legal are unable to utilize the courts to challenge unlawful seizure of their products, then the effectiveness of federal legalization of cannabis may require an express private right of action.

Going forward, Serna has a limited period of time to request that the case be re-heard by the Tenth Circuit en banc (i.e., by the entire eleven-judge court) – otherwise, the three-judge panel’s opinion will remain the operative, binding outcome.

[1] The magistrate judge and the district judge differed on their bases for concluding that Serna could not sue under the 2018 Farm Bill. Specifically, the magistrate judge determined that Section 10114(b) neither created a private right of action nor a private remedy. The district judge, on the other hand, concluded that Congress did authorize a private right of action but no private remedy to enforce it was evident. This additional divergence is another example of how the 2018 Farm Bill is susceptible to conflicting interpretations, which will likely only increase going forward as other courts consider the issue.

Article By Emily M. Leongini, Shahiedah Shabazz, and Morgan R. Pankow of ArentFox Schiff LLP

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

© 2023 ArentFox Schiff LLP

10 Tips When Hiring a Federal Appeals Lawyer

When hiring a federal appeals attorney, it is important not to take your decision lightly. There is a good chance that the outcome of your appeal will have a major impact on your life or business—whether positive or negative—and your choice of counsel will have a major impact on your chances of success.

For many people, their first instinct is to engage their trial counsel for their appeal. On its face, this makes sense. Trial counsel is already intimately familiar with the facts of your case, and trial counsel is—or should be—well aware of the grounds that are available for seeking relief at the appellate level.

But, while trial counsel can be a good option in some cases, defendants should not engage their trial counsel by default. There are many circumstances in which hiring trial counsel to continue forward with an appeal will not be the right choice. There are several factors to consider, and considering all of these factors is essential for making an informed decision.

“Some lawyers are better equipped to handle federal criminal appeals than others. This is not a slight toward lawyers who don’t handle federal appeals, but rather simply an acknowledgment that federal appeals are a unique practice area just like white collar criminal defense, healthcare fraud defense, or defending against allegations of serious violent crimes. If you need to appeal the outcome of your federal criminal case, it is imperative that you choose a lawyer who has been there many times before.” – Dr. Nick Oberheiden, Founding Attorney of Oberheiden P.C.

Due to the unique challenges involved in successfully pursuing a federal criminal appeal, the considerations involved in choosing a federal appeals attorney are not the same as those involved in choosing trial counsel for a federal criminal case. This is important to keep in mind, and understanding the unique nature of the federal appeals process will help you make an informed choice about your appellate representation.

How To Choose Appellate Counsel for a Federal Criminal Appeal

So, how should you choose appellate counsel for your federal criminal appeal? Here are 10 tips to keep in mind when hiring a federal appeals lawyer:

1. Understand that an Appeal is Not a Re-Trial

The first thing to understand that will help you make an informed decision about your choice of appellate counsel is that an appeal is not a re-trial. As a result, being an effective trial lawyer does not necessarily translate to having the skills needed to provide effective representation at the appellate level. The federal trial and appellate processes are very different, and many of the arguments and strategies that work at trial are completely irrelevant to the process of seeking relief from an unjust conviction or sentence on appeal.

For example, while providing effective trial representation requires the ability to effectively question witnesses and argue the facts to the jury, providing effective appellate representation requires persuasive writing abilities and the ability to effectively argue the law to a panel of judges who aren’t necessarily focused on the defendant’s guilt or innocence. On appeal, the focus is instead on determining whether errors at the trial level entitle the defendant to the opportunity to pursue a different outcome.

2. Focus on Hiring a Lawyer with Significant Federal Appellate Experience

Given the unique nature of the federal appeals process, relevant experience is undoubtedly the most important factor to consider when choosing a lawyer to represent you. This means experience handling federal criminal appeals in cases similar to yours—and ideally experience handling federal criminal appeals in the U.S. Circuit Court of Appeals that will hear your case. Although, this latter consideration is definitely the less important of the two. While each U.S. Circuit Court of Appeals has its own rules of practice, it is far easier to adapt to a new set of procedural rules than it is to get up to speed on the substantive issues involved in a complex federal case.

3. Carefully Consider Whether Your Trial Counsel is Your Best Option

As we touched on above, continuing to work with your trial counsel for your federal criminal appeal may or may not be your best option. As a baseline, you should only consider engaging your trial counsel for your appeal if he or she has extensive experience in federal appellate practice. While some lawyers handle trials and appeals, many devote their careers to handling one type of case or the other.

Even if your trial counsel also has significant experience, you will still want to weigh other factors as well. How effective was your trial representation? Do you have any concerns about whether your trial counsel was able to effectively preserve your grounds for appeal? Does your attorney have other major trials in the pipeline? These are all important questions to consider when making your decision.

4. Expand Your Search

When choosing a federal appeals attorney, you don’t necessarily have to stay local—and, in fact, staying local might not be your best option either. There are federal appeals lawyers who handle cases throughout the country; and, depending on where you live or your business is located, your local options may be fairly limited. You can (and should) expand your search to law firms with a nationwide presence, and you can (and should) choose a lawyer based on relevant experience rather than geographic proximity.

5. Schedule a Consultation to Discuss Your Appeal

Whether you are considering your trial counsel or you are looking elsewhere for your appellate representation, you should schedule a consultation to discuss your appeal. Before you invest in an appeal, you need to make sure it makes sense to move forward. Scheduling a consultation also gives you the opportunity to speak with a lawyer one-on-one and decide whether he or she seems like the right choice to handle your case on appeal.

6. Do Some Legwork Yourself

In addition to scheduling a consultation, you can also do some legwork to help you make an informed decision—and to help yourself and your lawyer begin preparing for your appeal. When it comes to choosing a federal appeals lawyer, this includes taking steps such as:

  • Visiting the lawyer’s website and reading about his or her experience

  • Reading client reviews and testimonials online

  • Preparing a list of questions to ask during your initial consultation

When it comes to preparing for your appeal, some of the steps you can take to prepare in advance of your initial appellate consultation include:

  • Taking notes about any potential grounds for appeal that you have discussed with your trial counsel

  • Taking notes about any other specific issues during your trial that you think may have led to an unjust result

  • Familiarizing yourself with the unique aspects of federal appellate practice

7. Do Not Fall for a Sales Pitch

While a lawyer should only be willing to take your case if he or she is capable of representing you effectively, you still need to be careful to avoid falling for a sales pitch. Unfortunately, if you schedule a consultation with a lawyer who isn’t the right choice to handle your case, there is a possibility that he or she may still try to convince you otherwise. While these instances are relatively rare, they do happen. If you feel like a lawyer is pressuring you to move forward with an engagement, this is most likely a sign that you should choose someone else for your federal criminal appeal.

8. Schedule Another Consultation if Necessary

This brings us to another important point: If you schedule a consultation with a lawyer and you are not confident in the lawyer’s ability to handle your appeal effectively for any reason, you should not hesitate to schedule another consultation at another firm.

9. Make Your Decision Carefully

If it is not already abundantly clear, when hiring a federal appeals attorney, you need to make your decision carefully. You should not rush, and you should not make your decision out of convenience or the desire to avoid putting in effort. Your effort to find the right lawyer for your appeal will be well worth it. Whether you are facing a conviction as an individual or your business has been convicted of corporate fraud or any other crime, you need to have unwavering confidence in your counsel’s ability to provide strategic and efficient appellate representation. The more effort you put into choosing the right lawyer, the more confidence you will have in your decision.

10. Make Your Decision Promptly

Finally, while it is important not to rush your decision, you still need to make your decision promptly. Under the Federal Rules of Appellate Procedure, you only have 14 days to file a Notice of Appeal. While a Notice of Appeal is a simple form filing, you cannot afford to risk any mistakes or delays. So, whether it has been hours or days since the trial court’s decision, finding the right federal appeals lawyer to represent you (or your business) needs to be your top priority.

Article By Dr. Nick Oberheiden of Oberheiden P.C.

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

Oberheiden P.C. © 2023

4 Frequently Asked Questions About MSO Investigations and 3 Defense Strategies

In the last decade, Management Services Organizations, or MSOs, became popular service providers and investment tools for the medical and health care field. Unfortunately, the way some MSOs are structured, they can violate several important laws against healthcare fraud, like the Stark Law or the Anti-Kickback Statute.

Because this is such a novel issue in the medical field, lots of healthcare providers have questions about it. Some want to know how they can defend themselves if they get accused of wrongdoing for their activity with an MSO.

Dr. Nick Oberheiden is an MSO investigation lawyer at Oberheiden P.C. Here are some questions that he frequently gets asked and a few defense strategies that can help.

FAQs About MSO Investigations

1. What are MSOs?

An MSO is a company that provides administrative services to medical professionals. They can help healthcare providers with their:

  • Human resources
  • Operations
  • Coding and billing services
  • Office space management
  • Compliance
  • Contract management

Healthcare companies can either contract with an MSO to provide these services or can outright sell the administrative wing of their practice to an MSO so they can focus on the medical side of their business.

2. Why are MSOs Problematic?

MSO arrangements can become legally problematic when they act as an investment tool for medical professionals. Physicians could buy an ownership stake in an MSO that provided services to, say, a pharmacy. Those physicians could then begin referring patients to that same pharmacy.

In theory, that referral is going to a company – the pharmacy – that neither the physician nor his or her immediate family members have a financial interest in. In reality, though, the distinction gets blurred if the MSO – and therefore the physician – makes money off the referral. This can arguably amount to a kickback, which is unlawful.

3. Is Law Enforcement Actually Looking Into MSOs?

Yes, the justice department or the U.S. Department of Justice (DOJ) has recently begun investigating MSOs that appears to be a medium for illegal kickbacks from one healthcare provider to a referring physician.

Together with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), the DOJ has taken the position that MSOs that are only indirectly recouping physicians for referrals is enough to violate anti-kickback laws. In one case, the agencies are pursuing False Claims Act (31 U.S.C. § 3729) violations in addition to violations of the Stark Law (42 U.S.C. § 1395nn) and the Anti-Kickback Statute (42 U.S.C. § 1320a-7b).

However, not all MSOs have come under the scrutiny of federal law enforcement. The DOJ has not declared a blanket rule that all MSOs are unlawful. Instead, it is only targeting those that show the signs of potential healthcare fraud.

4. What are the Potential Penalties for Investing in the Wrong MSO?

At this stage, it is hard to tell. MSOs are still a new development, and we are only seeing the very first charges getting filed against physicians who invest in the “wrong” MSOs. Courts have not yet ruled whether MSOs can facilitate a kickback or amount to a false claim.

If courts do go along with the DOJ’s interpretation of the law, then physicians can face steep penalties for sending business to another healthcare facility that contracts with an MSO that they own or invest in.

The Anti-Kickback Statute is a criminal law that carries up to five years in prison for a conviction, as well as fines of up to $25,000 and program exclusion. The Stark Law is a civil law that, while it does not carry criminal sanctions or jail time, does impose:

  • Denial of payments provided
  • Disgorgement of ill-gotten gains
  • Civil penalties of up to $15,000 for each violation
  • Treble damages
  • Program exclusion

Defense Strategies for Investigations into Your MSO

If you do have an ownership stake in an MSO and are concerned about a potential investigation, or if you are interested in investing in one of these new companies and want to do it right, there are several things that you can do. While every case is unique, here are three defense strategies and compliance procedures that MSO investigation attorney Dr. Nick Oberheiden often recommends considering.

1. Look for Signs That an MSO is Problematic

Not all MSOs are attracting the attention of federal law enforcement. Instead, it is the ones that do not comply with the requirements of anti-kickback statutes and illegal referrals.

Some signs that an MSO is lacking in that department include:

  • A lack of a compliance officer in the company
  • No training regarding important laws like HIPAA, the Stark Law, or the Anti-Kickback Statute
  • The MSO is paid on a percentage basis, rather than through a flat fee (payments should be at fair market value rates)
  • The MSO charges unreasonably high service fees
  • There are incentives for investing physicians to refer clients to the company

All of these are strong signs that the MSO is at risk of civil or even criminal action for healthcare fraud and illegal referrals. Unfortunately, many of these signs also give an investing physician the power to increase his or her return on the investment – a feature that makes the investment seem especially lucrative.

2. Tighten Up the Compliance

If you are invested in an MSO and suddenly see proof that it was too good to be true, you are not powerless. You are a partial owner, after all. You can push the company to tighten up its compliance with anti-kickback laws. In the best cases, this can successfully protect you and avoid scrutiny from law enforcement. Even if it does not, though, it can reduce the restitution that you can be made to pay, and the efforts to fix the MSO can be used to show your good intentions.

3. Stress the Distance Between an MSO’s Ownership and Its Clients

At this point, we still have not seen whether law enforcement’s interpretation of the law will get adopted by a court. Until we know for sure that an indirect payment is enough for anti-kickback liability, a strong defense should be that the MSO’s ownership was too far removed from the MSO’s clients to amount to a violation of the law.

As Dr. Nick Oberheiden, an MSO investigation attorney at Oberheiden P.C., says, “The law is still very much in flux at this point. Kickbacks are generally seen to be direct payments for referrals, and the whole point of the MSO investment opportunity was to avoid that exact setup.”

Article By Dr. Nick Oberheiden of Oberheiden P.C.

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

Oberheiden P.C. © 2022

California Law Prohibits Cooperation with Out-of-State Entities Regarding Lawful Abortion

In response to Dobbs v. Jackson Women’s Health Organization, California Governor Gavin Newsom recently signed AB 1242 into law, which “prohibits law enforcement and California corporations from cooperating with out-of-state entities regarding a lawful abortion in California.”

In particular, AB 1242 prohibits California companies that provide electronic communication services from complying with out-of-state requests from law enforcement regarding an investigation into, or enforcement of, laws restricting abortion.

Sponsored by California Assembly member Rebecca Bauer-Kahan and California Attorney General Rob Bonta, AB 1242:

takes an innovative legal approach to protect user data. The bill prohibits California law enforcement agencies from assisting or cooperating with the investigation or enforcement of a violation related to abortion that is lawful in California. This law thereby blocks out-of-state law enforcement officers from executing search warrants on California corporations in furtherance of enforcing or investigating an anti-abortion crime. For example, if another state wants to track the movement of a woman traveling to California seeking reproductive health care, the state would be blocked from accessing cell phone site tower location data of the woman by serving a warrant to the tech company in California. In addition, if another state wants Google search history from a particular IP address, it could not serve an out-of-state search warrant at Google headquarters in CA without an attestation that the evidence is not related to investigation into abortion services. Although the first state to enact such a law, as California often is when it comes to privacy rights, we anticipate that other states will follow suit and that these laws will be hotly contested in litigation.

Article By Linn F. Freedman of Robinson & Cole LLP

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

Copyright © 2022 Robinson & Cole LLP. All rights reserved.

How To Help a Jury Understand Complex Litigation

We hear this quite a bit from our clients. An attorney, when introducing us to his pending complex litigation matter, tells us up front, “This is a complicated case.” It’s code for, “I don’t think jurors will understand this case.”

We hear it again in opening statements: “This is a complicated case.” So now, the attorney knows it’s a complicated case; the consultants know it’s a complicated case; the jurors know it’s a complicated case. Great. What now?

Here are a few ideas to help you connect your complex litigation to the jurors and make them more comfortable hearing it.

Change the Question

Instead of asking, “How can I make jurors understand my complex case?”, how about asking, “How can I simplify my case for the jurors (and the judge and the witnesses)?” This basic reframing can change your focus—instead of concentrating on the complexity, you and your team begin to think about simplification. There’s a big difference.

Don’t Tell the Jury It’s a Complicated Case

When you tell a juror the case is complicated, they hear one of two things: “They think I’m too stupid to understand this” or “This is going to be way above my head.” The first can cause them to feel offended and the second tends to stop them from listening. Finding ways to explain the unfamiliar in familiar terms helps them understand the concepts underlying your case. Characterizing the case does no good for anyone.

Tell the Jury a Story

 

 

 

Try thinking about your case as a story: What tale do you want to tell? Or think of it this way: If someone at a dinner party asked about your case, what would your side of the story sound like?

We all think in stories, especially from the jury box. Jurors want to know what happened between these opposing parties that landed them in court, not a list of evidence and intricate facts. Instead, tell a story that answers jurors’ questions about motives for the lawsuit and the significance of your case, which should (again) simplify the details. Talking in stories makes your complex litigation more jury-friendly.

There’s a saying that goes, “What you focus on expands.” Ultimately, the key to helping jurors understand your complicated case lies in focusing not on its complexity, but on its simplicity.

Article By Robert Gerchen of IMS Consulting & Expert Services

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

© Copyright 2002-2022 IMS Consulting & Expert Services, All Rights Reserved.

U.S. Supreme Court Agrees with HHS Payment Methodology for Disproportionate Share Hospitals

The fight about how Medicare compensates disproportionate share hospitals (“DSH”) is one of the longest-running reimbursement disputes of recent years, and it has generated copious work for judges around the country.  In a 5-4 decision, the U.S. Supreme Court settled one piece of the conflict:  the counting of “Medicare-entitled” patients in the Medicare fraction of the “disproportionate-patient percentage.”  Becerra v. Empire Health Found., 597 U.S. ___ (2022) (slip op.).  The Supreme Court concluded that the proper calculation, under the statute, counts “individuals ‘entitled to [Medicare] benefits[,]’ . . . regardless of whether they are receiving Medicare payments” for certain services.  Id. (slip op., at 18) (emphasis added).

DSH payments are made to hospitals with a large low-income patient mix.  “The mark-up reflects that low-income individuals are often more expensive to treat than higher income ones, even for the same medical conditions.”  Id. (slip op., at 3).  The federal government thus gives hospitals a financial boost for treating a “disproportionate share” of the indigent population.

The DHS payment depends on a hospital’s “disproportionate-patient percentage,” which is basically the sum of two fractions: the Medicare fraction, which reflects what portion of the Medicare patients were low-income; and the Medicaid fraction, which reflects what portion of the non-Medicare patients were on Medicaid.  Historically, HHS calculated the Medicare fraction by including only patients actually receiving certain Medicare benefits for their care.  In 2004, however, HHS changed course and issued a new rule.  It counted, in the Medicare fraction, all patients who were eligible for Medicare benefits generally (essentially, over 65 or disabled), even if particular benefits were not actually being paid.  For most providers, that change resulted in a pay cut.

The new rule sparked several lawsuits.  Hospitals challenged HHS’s policy based on the authorizing statutory language.  These hospitals essentially argued in favor of the old methodology.  Appeals led to a circuit split, with the Sixth and D.C. Circuits agreeing with HHS, and the Ninth Circuit ruling that HHS had misread the statute.

The Supreme Court has now resolved the issue.  The majority opinion, authored by Justice Kagan, sided with HHS.  The majority concluded that, based on the statutory language, “individuals ‘entitled to [Medicare] benefits’ are all those qualifying for the program, regardless of whether they are receiving Medicare payments for part or all of a hospital stay.”  Id. (slip op., at 18).  The majority also explained that if “entitlement to benefits” bore the meaning suggested by the hospital, “Medicare beneficiaries would lose important rights and protections . . . [and a] patient could lose his ability to enroll in other Medicare programs whenever he lacked a right to [certain] payments for hospital care.”  Id. (slip op., at 11).

Justice Kavanaugh dissented, joined by Chief Justice Roberts and Justices Gorsuch and Alito.  The dissent argued that those lacking certain Medicare coverage should be excluded from HHS’s formula, based on “the most fundamental principle of statutory interpretation: Read the statute.”  Id. (Kavanaugh, J., dissenting) (slip op., at 2).  According to the dissent, the majority’s ruling will also restrict hospitals’ ability to provide care to underprivileged communities.  “HHS’s misreading of the statute has significant real-world effects: It financially harms hospitals that serve low-income patients, thereby hamstringing those hospitals’ ability to provide needed care to low-income communities.”  Id. (slip op., at 4).

There was one point of agreement among the majority and dissenting justices: the complexity of the statutory language for DSH payments.  Echoing the thoughts often held by healthcare advisors, Justice Kagan found the statutory formula to be “a mouthful” and “a lot to digest.”  Id. (majority opinion) (slip op., at 4).  And in his dissent, Justice Kavanaugh called the statute “mind-numbingly complex,” and resorted to an interpretation that he found “straightforward and commonsensical”: that patients cannot be “simultaneously entitled and disentitled” to Medicare benefits.  Id. (Kavanaugh, J., dissenting) (slip op., at 1, 3).

Article By Jeffrey DeBeer and Keith Bradley of Squire Patton Boggs (US) LLP

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

© Copyright 2022 Squire Patton Boggs (US) LLP

“Levitating” Lawsuits: Understanding Dua Lipa’s Copyright Infringement Troubles

Even global stardom will not make copyright woes levitate away from British superstar Dua Lipa. The pop icon is making headlines following a week of back-to-back, bi-coastal lawsuits alleging copyright infringement with her hit “Levitating.” First, on Tuesday, March 1st, members of reggae band Artikal Sound System sued Dua Lipa for copyright infringement in a Los Angeles federal district court1. Then, on Friday, March 4th, songwriters L. Russell Brown and Sandy Linzer filed their own copyright infringement lawsuit against the pop star in a New York federal district court2. Both lawsuits were filed claiming violations of the Copyright Act, 17 U.S.C. §§ 101 et seq.3

The Artikal Sound System lawsuit is short and alleges that Dua Lipa and the co-creators of “Levitating” copied Artikal Sound System’s 2017 song “Live Your Life.”4 The lawsuit does not provide any details in the allegation, other than explaining that “Live Your Life” was commercially released in 2017, was available during the time Dua Lipa and her co-creators wrote “Levitating,” and that because the two songs are substantially similar “Levitating” could not have been created independently.5 As a remedy, Artikal Sound System seeks actual damages, a portion of Dua Lipa’s profits stemming from the alleged infringement, the cost of the lawsuit, and any additional remedies the Court sees fit.6

Similarly, the Brown and Linzer lawsuit alleges that Dua Lipa and her “Levitating” co-creators copied their works “Wiggle and Giggle All Night” and “Don Diablo.”7 More specifically, the Brown and Linzer lawsuit alleges that “Levitating” is substantially similar to “Wiggle and Giggle All Night” and “Don Diablo.”8

Accordingly, the lawsuit claims that the defining melody in “Levitating,” the “signature melody,” is a direct duplicate of the opening melody in “Wiggle and Giggle All Night” and “Don Diablo,” and therefore appears in all three songs.9 As additional support, the lawsuit points to professionals and laypersons noticing a similarity between the three songs, and Dua Lipa previously admitting that she “purposely sought influences from past eras for the album Future Nostalgia.”10

As for a remedy, Brown and Linzer request full compensatory and/or statutory damages, punitive damages, an injunction on “Levitating,” a portion of Dua Lipa’s profits stemming from the alleged infringement, the cost of the lawsuit, and any additional remedies the Court sees fit.11

The copyright infringement legal framework

A general overview of the copyright infringement legal framework is helpful in assessing the potential outcomes of the “Levitating” lawsuits. Specifically, the legal framework from the 9th Circuit, where one of the “Levitating” lawsuits was filed, provides great guidance.

In order to establish copyright infringement, one must prove two elements: owning a valid copyright and copying of “constituent elements of the work that are original.”12 Importantly, when there is no direct evidence of copying, but rather circumstantial evidence, plaintiffs must show that:

  1. the accused infringers had access to the copyrighted work, and

  2. the infringing work and the copyrighted work “are substantially similar.

Plaintiffs can easily show access to the copyrighted work, but “substantial similarity” is harder to show.

2-Part Test

Luckily, the 9th Circuit devised a 2-part test to prove “substantial similarity.”13 Under the test, there is sufficient copying, and therefore “substantial similarity,” if an infringing work meets an “extrinsic” and “intrinsic” prong.14 The intrinsic prong is met if there is “similarity of expression” between the works, as evaluated from the subjective standpoint of an “ordinary reasonable observer.”15 The extrinsic prong is objective and requires comparing the “constituent elements” of the copyrighted and infringing works to see if there is substantial similarity in terms of the “protected” elements in the copyrighted work.16

As such, if the commonality between the copyrighted and infringing works is not based on “protected” elements, then the extrinsic prong is not met, and there is no “substantial similarity” between the works for purposes of a copyright infringement action. It must be noted that the 9th Circuit recognizes that, in certain situations, there can be a “substantial similarity” even if the constituent elements are individually unprotected, but only if their “selection and arrangement” reflects originality.17

To understand “substantial similarity” one must define what is “protectable” under copyright law. Copyright protection extends only to works that contain original expression.18 In this context, the standard for originality is a minimal degree of creativity.19 According to the Copyright Act, protection does not extend to ideas or concepts used in original works of authorship.20 In the musical context, copyright does not protect “common or trite musical elements, or commonplace elements that are firmly rooted in the genre’s tradition” because “[t]hese building blocks belong in the public domain and cannot be exclusively appropriated by any particular author.”21

Katy Perry “Dark Horse” case and an ostinato

While the “Levitating” lawsuits are still young, a recent decision by the 9th Circuit in the infamous Katy Perry “Dark Horse” case is a good example of how courts conduct legal analyses in copyright infringement cases. The precedential ruling (Gray v. Hudson), released on March 10th, affirms a U.S. District Judge’s decision to vacate a jury verdict that awarded US$2.8 million in damages to a group of rappers who claimed Katy Perry’s “Dark Horse” copied their song “Joyful Noise.”22

The 9th Circuit’s opinion cogently applies copyright law to hold that the plaintiffs in the original lawsuit did not provide legally sufficient evidence that “Joyful Noise” and “Dark Horse” were “extrinsically similar” in terms of musical features protected by copyright law.23

Specifically, the Court reasoned that while “Dark Horse” used an ostinato (a repeating musical figure) similar to the one in “Joyful Noise,” the resemblance in the ostinatos stemmed from “commonplace, unoriginal musical principles” and made them uncopyrightable.24 Without the ostinatos, the plaintiffs could not point to any “individually copyrightable” elements from “Joyful Noise” that were “substantially similar” in “Dark Horse.”25

Additionally, the Court held that the “Joyful Noise” ostinato was not original enough to be a protectable combination of uncopyrightable elements.26 In turn, under the legal framework for copyright infringement the plaintiffs failed to meet their burden.27 The Court put it best by opining that:

“[a]llowing a copyright over [the] material would essentially amount to allowing an improper monopoly over two-note pitch sequences or even the minor scale itself, especially in light of the limited number of expressive choices available when it comes to an eight-note repeated musical figure.”28

“Levitating” lawsuits likely outcomes

Applying the copyright infringement framework to the “Levitating” lawsuits allows us to understand the likely outcomes. First, the Artikal Sound System lawsuit does not allege any direct evidence of copying. As such, Artikal Sound System must show that Dua Lipa had access to “Live Your Life” and that “Levitating” is “substantially similar” to their song under the 2-prong test. Access is easily proved, as “Live Your Life” was commercially available on multiple streaming services when Dua Lipa wrote “Levitating.”29

However, the Artikal Sound System lawsuit does not provide enough information to pass the 2-prong “substantial similarity” test. The lawsuit only alleges that “Levitating” is “substantially similar” to “Live Your Life,” but does not detail any similarities much less provide any evidence that there is similarity of expression between the works from the point of view of a reasonable observer, as required by the intrinsic component of the test.30

More importantly, the lawsuit does not even mention any protectable elements from “Live Your Life” copied in “Levitating” and would, therefore, fail the extrinsic prong of the “substantial similarity” test.31 In turn, as submitted, the Artikal Sound System lawsuit fails to make a prima facie case of copyright infringement by Dua Lipa’s “Levitating.”

The story may be different for the Brown and Linzer lawsuit. Like the first suit, the Brown and Linzer lawsuit does not provide direct evidence of copying and will therefore only succeed if it passes the circumstantial evidence requirements of 1) access and 2) “substantial similarity.” Unlike the first suit, however, the Brown and Linzer complaint includes comparisons of the notes in “Levitating” to the notes in “Wiggle and Giggle All Night” and “Don Diablo” as support for the allegation of “substantial similarity.”

The 2nd Circuit, where the lawsuit was filed, held that a court can determine as a matter of law that two works are not “substantially similar” if the similarity between the two works concerns non-copyrightable elements of the copyrighted work.32 In practice, this means that the 2nd Circuit can apply the 2-prong “substantial similarity” test. Brown and Linzer can easily prove access to “Wiggle and Giggle All Night” and “Don Diablo” since both songs are internationally popular.33

Brown and Linzer can also meet the intrinsic prong of the test because, as they point out, “laypersons” (ordinary reasonable observers) have noticed the commonality between their copyrighted works and “Levitating,” as supported by widespread postings on mediums like TikTok.34 The extrinsic prong of the test is more uncertain.

In their lawsuit, Brown and Linzer point to a “signature melody” that repeats in “bars 10 and 11 of all three songs… [and] with some slight variation, in bars 12 and 13.”35 The court may find that this “signature melody” is not protected by copyright if it reasons that a melody is a basic musical principle, much like the 9th Circuit did for ostinatos in the Katy Perry “Dark Horse” case.

At its core, it seems like Brown and Linzer will have to convince the court that a melody, which they define as “a linear succession of musical tones,” qualifies as copyrightable because it is an original creative expression. Conversely, Brown and Linzer can concede that a melody is not copyrightable, but that their original arrangement and use of the melody in their copyrighted songs is copyrightable. In the end, it will be up to whether or not a court finds that the “signature melody” is copyrightable. As such, the outcome of Brown and Linzer’s action for copyright infringement is uncertain.

Nonetheless, one thing is for sure, copied or not, “Levitating” will continue powering gym visits and nights out dancing.

Footnotes

  1. See Complaint, Cope v. Warner Records, Inc., Case 2:22-cv-01384 (C.D. Cal. 2022).

  2. See Complaint, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022).

  3. See Complaint at ¶ 7, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022); Complaint at ¶ 12, Cope v. Warner Records, Inc., Case 2:22-cv-01384 (C.D. Cal. 2022).

  4. See Complaint at ¶ 17, Cope v. Warner Records, Inc., Case 2:22-cv-01384 (C.D. Cal. 2022).

  5. See Complaint at ¶ 15-18, Cope v. Warner Records, Inc., Case 2:22-cv-01384 (C.D. Cal. 2022).

  6. See Complaint at ¶ 19-22, Cope v. Warner Records, Inc., Case 2:22-cv-01384 (C.D. Cal. 2022).

  7. See Complaint at ¶ 2, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022).

  8. See Complaint at ¶ 2, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022).

  9. See Complaint at ¶ 3, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022).

  10. See Complaint at ¶ 49, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022).

  11. See Complaint at 13-14, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022).

  12. Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991).

  13. Apple Comput., Inc. v. Microsoft Corp., 35 F.3d 1435, 1442 (9th Cir. 1994).

  14. Id.

  15. Id.

  16. Swirsky v. Carey, 376 F.3d 841, 845 (9th Cir. 2004).

  17. Satava v. Lowry, 323 F.3d 805, 811 (9th Cir. 2003).

  18. See 17 U.S.C. § 102(a); Feist, 499 U.S. at 345.

  19. See Feist, 499 U.S. at 345.

  20. See 17 U.S.C. § 102(b); Skidmore as Tr. for the Randy Craig Wolfe Tr. v. Led Zeppelin, 952 F.3d 1051, 1069 (9th Cir. 2020) (en banc).

  21. Skidmore, 952 F.3d at 1069.

  22. Gray v. Hudson, No. 20-55401, slip op at 26 (9th Cir. Mar. 10, 2022).

  23. Id.

  24. Id. at 14-21.

  25. Id. at 17.

  26. Id. at 22.

  27. Id. at 26.

  28. Id. at 24.

  29. See Complaint at ¶ 16, Cope v. Warner Records, Inc., Case 2:22-cv-01384 (C.D. Cal. 2022).

  30. See Complaint at ¶ 18, Cope v. Warner Records, Inc., Case 2:22-cv-01384 (C.D. Cal. 2022).

  31. See Complaint at ¶ 18, Cope v. Warner Records, Inc., Case 2:22-cv-01384 (C.D. Cal. 2022).

  32. Peter F. Gaito Architecture, LLC v. Simone Dev. Corp., 602 F.3d 57, 63-65 (2d Cir. 2010).

  33. See Complaint at ¶ 35, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022).

  34. See Complaint at ¶ 4, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022).

  35. See Complaint at ¶ 38, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022).

Article By Adrian Gonzalez Cerrillo and Sana Hakim of K&L Gates

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

Copyright 2022 K & L Gates

February 2022 Legal News Roundup: Women in Law, Promotions & More

Happy belated Valentine’s Day from the National Law Review team. Please read on for new legal industry hires, promotions and awards.

Firm Recognition & Awards

Much is included on the 2022 Top Workplaces USA list, which recognizes organizations with a people-centered culture.

“At Much, our culture centers on people: our employees, our clients, and our community partners,” said Managing Partner Mitchell Roth. “We work each day to support a collaborative, kind, and service-oriented environment, so to be recognized for our culture on a national level is a tremendous honor.”

The rankings are based on employee feedback from a survey administered by Energage, an employee engagement technology partner. The survey gauged various aspects of workplace culture, including  alignment, execution, connection, and more.

Womble Bond Dickinson is one of the Best Places to Work for lesbian, gay, bisexual, transgender and queer (LGBTQ+) workplace equality, earning a perfect score of 100 percent on the 2022 Corporate Equality Index (CEI).

The survey is administered by the Human Rights Campaign, and acts as a benchmarking tool to track how businesses are adopting equitable workplace policies, practices and benefits for LGBTQ+ employees. Womble Bond Dickinson earned perfect scores every year since 2015.

“We are honored to be named one of the HRC’s Best Places to Work for LGBTQ+ Employees once again,” said Betty Temple, Chair & CEO of Womble Bond Dickinson (US) LLP. “We at Womble Bond Dickinson have worked hard to promote diversity and inclusion. These efforts include earning Mansfield Rule 4.0 Certification. The goal of the Mansfield Rule is to boost the representation of historically underrepresented lawyers—including LGBTQ+ attorneys—in law firm leadership, partner promotions and lateral hires by broadening the pool of candidates considered for these opportunities. We have much more work to do, but we are proud to be recognized for the progress we have made.”

Lawdragon recognized Foley & Lardner partners Daniel Kaplan, John (Jack) Lord, Jr., and Rachel Powitzky Steely on its 2022 edition of 500 Leading U.S. Corporate Employment Lawyers, an annual recognition of the nation’s top advisors on workforce issues. Lawdragon selected the honorees based on submissions, editorial vetting and journalistic research.

Lawdragon said that this year’s honorees “specialize in defending corporations in everything from wage and overtime claims to trade secret disputes, while helping companies maintain global workforces throughout a pandemic.”

Law firm Hiring & Additions

Varnum LLP expanded its intellectual property practice with the addition of Timothy D. Kroninger. Joining the firm’s Detroit office as an associate, Mr. Kroninger focuses his practice on copyright law, trade secret law, patent and trademark prosecution and more. He also has experience in drafting design patent applications, as well as participating in United States Patent and Trademark Office (USPTO) trademark opposition proceedings.

Beyond his practice at Varnum, Mr. Kroninger works as a supervising attorney in the Trademark and Entrepreneur Clinic at University of Detroit Mercy College of Law. There, he instructs law students on copyright registration, drafting corporate documents, and protection of trademarks.

Beveridge & Diamond PC elected four new principals: Eric Christensen, located in Seattle; Allyn Stern, located in Seattle; Michael Vitris, located in Austin; and Gus Winkes, located in Seattle. Mr. Christensen practices in energy law, assisting companies and consumers in navigating the legal and regulatory landscape. Ms. Stern, former U.S. EPA regional counsel, helps clients develop environmental compliance strategies. Mr. Winkles practices in a variety of fields, providing solutions-oriented legal representation in the areas of enforcement defense, regulatory compliance, and contaminated site cleanup. Mr. Vitris, former litigation attorney with the Texas Commission on Environmental Quality, defends companies in class actions and environmental mass torts.

“Each of these Principals’ talents, skills, and expertise deepen and enhance B&D’s dynamic regulatory compliance and litigation practice as environmental and energy law continue to evolve,” said firmwide managing principal Kathy Szmuszkovicz. “They’ve proven their ability to deliver top-notch service to clients and to serve as thought-leaders at a particularly exciting time in our practice. We look forward to their continued success and contributions in their new roles.”

Barnes & Thornburg LLP added five new attorneys and legal professionals across various offices. Associate William Choi  joined the firm’s Los Angeles office, and associate Albert D. Farr joined the New York office. Mr. Choi focuses his practice on product liability and complex civil litigation, and he is well-versed in all aspects of pretrial case management. Likewise, Mr. Farr practices in transactional tax law, counseling multinational strategic and private equity clients on transaction tax structuring, tax diligence and more.

Furthermore, legal professionals Amit Datta, Al Maloof, and Soyoung Yang joined Barnes & Thornburg’s Chicago, Indianapolis, and Washington D.C. offices, respectively. Dr. Datta, a business transaction advisor, provides targeted legal advice and strategic insight for European clients conducting business in the U.S. Mr. Maloof, a client relationship specialist, provides strategic consultation among the firm’s government services, compliance and regulatory attorneys. Ms. Yang, a legal fellow, aids attorneys and clients on matters related to international trade, customs and the supply chain.

William L. Nimick  joined the Construction Litigation and Counsel practice group at Goldberg Segalla LLP. An experienced litigator, Mr. Nimick is located in the firm’s Raleigh office, where he counsels insurers, contractors, subcontractors and corporate entities in liability claims including but not limited to property damage, personal injury and construction defects.

Previously, Mr. Nimick worked as a civil litigator across North Carolina, representing clients in areas such as wrongful death, workers’ compensation, and subrogation. Specifically he  handled subrogation claims such as motor vehicle accidents, product liability lawsuits and large fire losses.

Women in the Legal Industry

Angela Bowlin of Frilot LLC law firm has accepted a position serving on the International Association of Defense Council (IADC), an organization for attorneys who represent corporate and insurance matters. Ms. Bowlin focuses her practice on mass torts and class actions, with experience in asbestos and other toxic tort cases.

“I am honored to have been selected as a member of IADC and look forward to working on the many important committees related to the law and its many facets,” said Ms. Bowlin.

Nicole Archibald joined Foley Hoag LLP as their Director of Legal Recruiting. Ms. Archibald will work alongside the Foley Hoag team to attract and promote a diverse group of attorneys to help the firm achieve its diversity and inclusion goals.

“We’re very pleased to welcome Nicole to Foley Hoag, and are confident that she will be a great asset to the firm and its culture. Her considerable prior experience as a director of recruiting, legal search consultant and practicing litigator will prove a valuable asset as we look to 2022 and beyond. Our executive committee, practice leaders, hiring committee and I are excited to begin working with Nicole to attract new talent and strengthen our market-leading practices,” said Foley Hoag Co-Managing Partner Kenneth Leonetti.

“I look forward to collaborating with Foley Hoag’s management, department chairs and practice leaders, and hiring committee to develop, implement and execute proactive recruiting initiatives to further the firm’s hiring goals and strategic growth plan,” said Ms. Archibald.

Norton Rose Fulbright appointed New York partner Robin Adelstein as the Co-Head of Commercial Litigation, joining Houston partner Andrew Price. Ms. Adelstein brings extensive experience in litigating complex commercial disputes and advises companies with respect to antitrust issues regarding mergers, joint ventures and more.

“Robin has long been respected as a leader within the firm as our Global and US Head of Antitrust and Competition, and she is a highly-recognized practitioner in her field. I look forward to seeing the great work that our commercial litigation group will do under Robin’s and Andrew’s leadership,” said Jeff Cody, Norton Rose Fulbright’s US Managing Partner.

“Our firm has a longstanding reputation for advising clients on their most complex and significant matters. It is an honor to head Norton Rose Fulbright’s commercial litigation group along with Andrew; I am proud to be leading such a talented group of lawyers,” said Ms. Adelstein.

Article By Rachel Popa, Hanna Taylor, and Chandler Ford of The National Law Review / The National Law Forum LLC

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Copyright ©2022 National Law Forum, LLC

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.

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