GDPR is Coming: If Your Business is Online, Beware the New EU Privacy Regulation

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If you sell or offer goods to EU residents, even from the U.S., it is now necessary to re-examine your data processing and privacy procedures. There is a new EU privacy law that will go into effect on May 25, 2018, with significant penalties for violations. The EU General Data Protection Regulation, or “GDPR,” covers any website, including a U.S.-based website, selling to EU residents and processing personal data of those EU residents.  Here are some basic questions and issues to address concerning your online presence:

Do you collect, store, or use Personal Data? You are subject to this regulation if your website collects, organizes, stores, disseminates, uses or otherwise processes personal data of EU residents, regardless of where your website keeps or uses such information.

“Personal Data” will likely be broadly interpreted. The GDPR defines “Personal Data” very broadly to include any information that can be used to identify an individual. This can include all sorts of data, like names, e-mail addresses, office addresses, and even IP addresses.

Can your users easily revoke consent? The GDPR takes consent seriously. The GDPR requires you to demonstrate consent was “freely given, specific, informed and unambiguous” by a “clear affirmative action” on the part of the user for the processing of personal data. When you ask for the user’s consent, you must articulate “specified, explicit, and legitimate purposes” for processing the data. Limit the data you collect to what is necessary to achieve these articulated purposes. Be extra careful if you are collecting sensitive personal data – the GDPR raises the bar for obtaining consent to process “special categories of personal data.” And make sure it is as easy for the user to withdraw consent as it is to give consent.

Can you respond quickly and effectively when the user exercises rights under the GDPR? The GDPR grants users, or “data subjects,” quite a few rights, including but not limited to knowing where and why you are taking the data and anything that happens to it, objecting to its collection or use, obtaining a copy of it, correcting or erasing it, or restricting its use. Make sure you have procedures in place to respond appropriately in the event a user exercises rights under the GDPR.

Penalties for failure to comply can be steep. Failure to comply with the GDPR can expose companies to administrative fines of up to 20 million Euros or 4% of the total worldwide annual turnover of an “undertaking” of the preceding financial year, whichever is greater. Even if you use vendors to process your data, you are still responsible for monitoring compliance. You are required to “implement appropriate technical and organizational measures to ensure and to be able to demonstrate that processing is performed in accordance with this Regulation.”

The EU GDPR is a minefield of regulatory requirements that require a close examination of your data processing and privacy procedures. Some companies, such as Microsoft, are implementing a single system worldwide to comply with the EU’s requirements, effectively granting greater-than-required  rights to non-EU residents.  There will likely be considerable uncertainty and confusion as the GDPR requirements are implemented and enforcement begins.  Contact Conkle, Kremer & Engel to help bring your data processing and privacy procedures into compliance.

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California’s New, Stricter Test for Independent Contractors and Employees

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Does Your Business Pass California’s New, Stricter Test for Independent Contractors Rather Than Employees?

On April 30, 2018, the California Supreme Court issued a decision in Dynamex Operations West, Inc. v. The Superior Court of Los Angeles County that will make it more difficult for employers to classify their workers as independent contractors.  Under the new Supreme Court test, workers are presumed to be employees, not independent contractors.  Incorrect classification can have serious consequences.

Previously, many California employers thought an agreement stating a worker was an independent contractor was enough.  No more.  The Supreme Court has adopted a strict “ABC” test to determine whether a worker is properly classified as an “employee” or as an “independent contractor.”  Under this test, the Court presumes a worker is an “employee” unless the hiring business can establish that the worker meets all three conditions of an independent contractor:

(A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;

(B) that the worker performs work that is outside the usual course of the hiring entity’s business; and

(C) apart from the independent contractor relationship, the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

The presumption means that when in doubt employers should err on the side of classifying their workers as employees.  An employer that misclassifies a worker as an independent contractor can be liable for back wages and wage and hour penalties, including willful misclassification penalties that can range from $5,000 to $25,000 per violation.  These issues may be raised by the worker after the “independent contractor” relationship has ended.

If your workers do not meet this new 3-part test for independent contractors, make sure you re-classify them as employees and pay them all the wages and benefits given to your employees under the wage and hour laws, deduct payroll taxes, cover them under your worker’s compensation insurance, and generally treat them like your other employees.

If you have questions about how the new decision applies, or whether your workers meet the new strict ABC test for independent contractors, you should promptly consult with experienced employment counsel.  Conkle, Kremer & Engel attorneys have years of experience in employment matters, advising businesses and litigating and arbitrating disputes, including class actions.

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Do You Have to Pay Your Summer Interns?

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Do I Have to Pay My Interns?

Spring will soon draw to a close.  As you prepare for the arrival of your summer interns, make sure you have asked yourself this question: Do I need to pay my interns?

The easiest answer is generally, YES!  But the easiest answer is not the whole story, because you do not have to pay your interns in accordance with wage and hour laws if the company-intern relationship meets the federal (and state, as applicable) test.

The U.S. Department of Labor’s New Test

Earlier this year, the U.S. Department of Labor helped private businesses out.  It announced that it would be using a new (more employer-friendly) test to determine whether an intern is an “employee” that must be paid in compliance with wage and hour laws.  Whether an intern must be paid in compliance with federal wage and hour laws now depends on seven factors:

  • The extent to which the intern and the company clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa;
  • The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions;
  • The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit;
  • The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar;
  • The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning;
  • The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern; and
  • The extent to which the intern and the company understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

According to the DOL, “no single factor is determinative.”  Thus, companies need to conduct a case-by-case analysis of each internship position to determine whether that intern should be paid.

I’m Located in California.  Do I Need to Be Concerned About State Laws Controlling Wage and Hour Requirements?

Here, the clear answer is YES!  For many years, the California Department of Labor Industrial Relations, Division of Labor Standards Enforcement (“DLSE”) has relied on the DOL’s old six-factor test.  For now, California businesses should also look to the DOL’s old six-factor test to determine whether they need to pay their interns.

The DOL’s adoption of this new seven-factor test this year followed a decision in the Ninth Circuit (which covers California).  In 2017, the federal Ninth Circuit Court of Appeals made a predictive statement, that the California Supreme Court would no longer use the old DOL test, and would instead apply a test more similar to the one set forth above.  Benjamin v. B & H Educ., Inc., 877 F.3d 1139 (9th Cir. 2017).  However, this statement is only predictive of what the federal court thinks the California courts would do, so it is not actually controlling law in California.

Thus, until the California state agencies and courts take a position on whether they will follow the Ninth Circuit and the DOL, companies should also check that they have considered the DLSE’s interns test to make their decision to pay (or not pay) interns.  That requires an analysis under the DOL’s old six-factor test:

  • The internship, even though it includes actual operation of the facilities of the company, is similar to training which would be given in an educational environment;
  • The internship experience is for the benefit of the intern;
  • The intern does not displace regular employees, but works under close supervision of existing staff;
  • The company that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  • The intern is not necessarily entitled to a job at the conclusion of the internship; and
  • The company and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If you have not examined your internship programs with these federal and state legal considerations in mind, you should do so immediately, before your summer interns arrive.  Review your internship materials, including your recruitment postings, company policies, and any other documents you anticipate having the intern sign before starting the summer program.

Conkle, Kremer & Engel attorneys are experienced with counseling employers in the face of a constantly changing legal landscape in employment law, and with helping companies identify and reduce areas of exposure to liability for employment claims, including wage and hour, discrimination, harassment, and retaliation claims.

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The Unintended Industry of Proposition 65: Plaintiffs’ Lawyers

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One of the unfortunate and unintended consequences of California’s extensive regulatory efforts has been to create a small industry of plaintiffs’ law firms and repeat clients apparently determined to extract settlement money from businesses.  Proposition 65 was implemented with the best spirit of consumer protection in mind.  But those regulations have since transmogrified into tools that primarily profit a small group of plaintiffs’ attorneys, to an extent that has become increasingly burdensome for consumer product manufacturers, resellers and property owners.

Proposition 65 provides for private enforcement actions, which enable individuals or groups to enforce the statutes against consumer products companies, property owners and others.  Prop 65 is a “right to know” law intended to help consumers make informed decisions about their purchases. The combination of a growing list of substances, difficulty in determining exposure levels with scientific certainty, sparse judicial and government oversight, and a right to attorneys’ fee awards under the statute, have transformed Prop 65 into a lucrative business model for a handful of law firms and closely-related consumer groups.  Hundreds of Prop 65 actions are settled each year, with about 70% of the settlement money paid being allocated to attorneys’ fees for the plaintiffs’ lawyers.

California’s published statistics from 2013-2017 show an accelerating trend of more Notices of Violations filed each year.  In 2016 alone, for example, 1,576 Notices of Violation were sent to businesses selling products in California, while 2,710 Notices of Violation were sent in 2017.  The attorneys’ fee provisions of Prop 65 undoubtedly have much to do with that trend.  In 2016, 760 judgments or settlements were reached totaling $30,150,111, of which $20,062,247 was paid as attorneys’ fees to plaintiffs’ lawyers.  In 2017, 688 judgments or settlements were reached totaling $25,767,500, of which $19,486,362 was paid as attorneys’ fees to plaintiffs’ lawyers.

With that kind of monetary motivation, it is easy to see why some law firms make a practice of filing and serving Prop 65 Notices of Violations.  This effectively creates a small industry of lawyers who pursue Prop 65 claims, often for a small group of repeat-plaintiffs who appear again and again with the same lawyers.  Public records identify at least the following law firms, attorneys and their associated plaintiff clients, who pursue multiple Prop 65 claims:

  • The Chanler Group
    • Represents repeated Prop 65 plaintiffs Anthony Held, Ph.D., P.E.; Whitney R. Leeman, Ph.D; Mark Moorberg; John Moore; Paul Wozniak; and Laurence Vinocur
  • Lexington Law Group
    • Represents repeated Prop 65 plaintiff Center for Environmental Health
  • Yeroushalmi & Yeroushalmi
    • Represents repeated Prop 65 plaintiff Consumer Advocacy Group, Inc.
  • Aqua Terra Aeris Law Group
    • Represents repeated Prop 65 plaintiffs Environmental Research Center; and Center for Advanced Public Awareness, Inc. (“CAPA”)
  • Law Office of Daniel N. Greenbaum
    • Represents repeated Prop 65 plaintiff Shefa LMV, Inc.
  • Klamath
    • Represents repeated Prop 65 plaintiff Mateel Environmental Justice Foundation
  • Lucas T. Novak
    • Represents repeated Prop 65 plaintiff APS&EE, LLC
  • Custodio & Dubey
    • Represents repeated Prop 65 plaintiff Ecological Alliance, LLC
  • Sheffer Law Firm
    • Represents repeated Prop 65 plaintiff Susan Davia
  • O’Neil Dennis, Esq.
    • Represents repeated Prop 65 plaintiff Alicia Chin
  • Bush & Henry, Attorneys at Law, P.C.
    • Represents repeated Prop 65 plaintiff Michael DiPirro
  • Brodsky & Smith, LLC
    • Represents repeated Prop 65 plaintiffs Gabriel Espinosa; Kingpun Chen; Precila Balabbo; Ema Bell; and Anthony Ferreiro
  • Law Offices of Stephen Ure
    • Represents repeated Prop 65 plaintiff Evelyn Wimberley
  • Lozeau Drury
    • Represents repeated Prop 65 plaintiffs Environmental Research Center, Inc.; and Community Science Institute
  • Robert Hancock of Pacific Justice Center
    • Represents repeated Prop 65 plaintiff Erika McCartney
  • Khansari Law Corporation
    • Represents repeated Prop 65 plaintiff The Chemical Toxin Working Group, Inc.
  • Law Office of Joseph D. Agliozzo
    • Represents repeated Prop 65 plaintiff Sara Hammond
  • Glick Law Group
    • Represents repeated Prop 65 plaintiff Kim Embry

If you are unfortunate enough to receive a Prop 65 Notice of Violation from one of these lawyers or plaintiffs, or from any others, don’t ignore it.  The problem will probably not go away by ignoring it, and prompt action can help keep the matter from getting far worse.  Handling it yourself is also usually not a great plan.  Remember that the plaintiffs who sent the Notice of Violation are almost always represented by counsel experienced in Prop 65 matters.  You should contact experienced counsel to help you respond promptly and handle the matter with minimum disruption to your business.

Conkle, Kremer & Engel attorneys have many years of experience advising clients about how to avoid regulatory compliance issues, and we regularly defend clients against Notices of Violations of Proposition 65 and other California regulations. CK&E uses its extensive experience to help clients who are accused of regulatory violations quickly and effectively resolve claims, so clients can focus on growing their business.

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California Employers’ Risks of PAGA Exposure

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If you’re a California employer, you may have heard people refer to “PAGA” and wondered what it’s all about.  PAGA is a legal device that employees can use to address Labor Code violations in a novel way, in which employee representatives are allowed to act as if they are government enforcement agents.

The California Labor and Workforce Development Agency (CLWDA) has authority to collect civil penalties against employers for Labor Code violations.  Seems simple enough.  But in an effort to relieve an agency with limited resources of the nearly impossible task of pursuing every possible Labor Code violation committed by employers, the California legislature passed the Private Attorney General Act of 2004 (“PAGA”).  PAGA grants aggrieved employees the right to bring a civil action and pursue civil penalties against their employers for Labor Code violations, acting on behalf of the State of California as if they were the CLWDA.  If the aggrieved employees prevail against the employer, the employees can collect 25% of the fines that the state of California would have collected if it had brought the action.

Penalties available for Labor Code violations can be steep – for some violations, the state of California can recover fines of $100 for an initial violation to $200 for subsequent violations, per aggrieved employee, per pay period.  These penalties can add up to serious money, especially if the aggrieved employee was with the company for some time.  But what makes PAGA particularly dangerous for employers is the ability of employees to bring a representative action (similar to a class action), in which they can pursue these penalties for violations of the Labor Code on behalf of not only themselves, but also all others similarly situated.  Under this scheme, an aggrieved employee can bring an action to pursue penalties on behalf of an entire class of current and former employees, thereby multiplying the penalties for which an employer can be on the hook and ballooning the risk of exposure.  That risk is further amplified because PAGA also permits plaintiff employment attorneys to recover their fees if their claim is successful.

There is an upward trend in use of PAGA against California employers.  A July 2017 California Supreme Court decision, Williams v. Superior Court, exacerbated the problem for employers:  The California Supreme Court decided that plaintiff employment attorneys can obtain from employer defendants the names and contact information of potentially affected current and former employees throughout the entire state of California.  This means the PAGA plaintiffs can initiate an action and then pursue discovery of all possible affected employees and former employees throughout California, which can greatly expand the pool of potential claimants and ratchet up the exposure risk for employers.

Employers in California need to be attuned to Labor Code requirements and careful in their manner of dealing with employees, so that they avoid exposure to PAGA liability to the extent possible.  Conkle, Kremer & Engel attorneys are familiar with the latest developments in employment liability and able to assist employers avoid trouble before it starts, or respond and defend themselves if problems have arisen.

 

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No Fooling! On April 1, Almost All Employers are Subject to New Employment Regulations in California

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Effective April 1, 2016, new regulations of the California Department of Fair Employment and Housing (DFEH) impose stringent new anti-discrimination and anti-harassment requirements on almost all employers having any employees in California.  Unlike in the past, the new amendments to regulations under California’s Fair Employment and Housing Act (FEHA) apply to any employer having five or more “employees,” any of whom are located in California.  The word “employees” is important, because the new FEHA regulations count toward the minimum of five “employees” unpaid interns, volunteers and persons out on leave from active employment.  Further, it appears that this new FEHA regulation is intended to apply even to employers with headquarters outside of California if any of their employees are located in California.

The FEHA regulatory amendments require all affected employers to have written policies prohibiting workplace discrimination and harassment.  The policies must apply to prohibit discrimination and harassment by co-workers, who are made individually liable for their own violations, and by third parties such as vendors in the workplace.  The regulations demand that the written policy list all currently-protected categories protected under FEHA:  Race, religion, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, and military or veteran status.  Prohibited “sex discrimination” includes discrimination based on pregnancy, childbirth, breastfeeding and related medical conditions.  Interestingly, the regulations also prohibit discrimination against employment applicants holding a special California driver’s license issued to persons without proof of legal presence in the United States.  It is not yet clear how this will work in conjunction with the employer’s existing Federal obligation to confirm eligibility for employment.

The employer’s written policy must specify a confidential complaint process that satisfies a number of criteria.  Workplace retaliation for making good faith complaints of perceived discrimination or harassment is prohibited.  The written policy must be publicized to all employees, with tracking of its receipt by employees.  If 10% of the employer’s work force speaks a language other than English, the written policy must be translated to that language.

Further, the new regulations attempt to resolve a number of uncertainties about who is protected, specifying that both males and females are protected from gender discrimination, and requiring that transgender persons be treated and provided facilities consistent with their gender identity.  There are many other changes, such as a new entitlement to four months for pregnancy leave that is not required to be taken continuously.  If an employer has more than 50 employees, there are additional requirements, such as periodic sexual harassment prevention training for supervisors.

Employers operating in California are well advised to review their policies and practices, and to consult with qualified counsel regarding changes that may be required.  Conkle, Kremer & Engel attorneys help clients remain compliant with laws, regulations and case developments affecting employers in California.

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Hot Yoga and Cold Law: Employment Retaliation Claims Can Arise Anywhere

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Most people would agree that working in a government office that supervises lawyers is quite different than working in a 104 degree “hot yoga” studio. But recent matters involving these two very different work environments show that employment retaliation claims can be asserted against any employer – whether you’re a yoga master or the master of all lawyers in California.

The California State Bar has the staid mission of regulating the admission of attorneys and investigating assertions of attorney misconduct. Yet in November 2015, the State Bar found itself charged with wrongful employment retaliation after it fired one of its top managers, John Noonen. Noonen asserted that the termination was retaliatory because, just a few weeks earlier, he submitted a 40-page internal complaint against the State Bar’s top attorney for allegedly failing to properly investigate complaints against the president of the State Bar. The State Bar has denied Noonen’s retaliation allegations and has said that Noonen’s position was eliminated as part of a cost-saving effort.

Less than two months later, the same types of claims led to a sizeable jury verdict against a completely different business run by famed yoga guru Bikram Choudhury. Choudhury made his fortune teaching yoga instructors his techniques and allowing graduates to operate yoga studios that feature a specific yoga sequence performed in a 104-degree room. In January 2016, a Los Angeles jury found that Choudhury sexually harassed his former legal advisor and wrongfully fired her for investigating others’ claims of sexual discrimination and assault against him. Choudhury asserted he had good cause to fire his legal advisor because she was not licensed to practice law in California. The jury first ordered Choudhury and his yoga business to pay $924,000 in compensatory damages, and the next day the jury upped the ante with a further award of $6.4 million in punitive damages.

In each of these recent cases, employees alleged that their bosses improperly “retaliated” against them for investigating workplace misconduct. Most employers and employees know that laws exist to protect employees from wrongful discrimination and harassment. The same laws also provide that employers cannot punish or “retaliate” against employees for making complaints about other potentially wrongful employment conduct, such as discrimination or harassment, or for participating in workplace investigations about such potential wrongful employment conduct.

“Retaliation” is prohibited by the same federal laws that prohibit employment discrimination based on race, color, sex, religion, national origin, age, disability and gender. “Retaliation” can take many forms, including termination, demotion, suspension or other employment discipline against the employee for engaging in protected activity, such as reporting perceived employer discrimination or other misconduct. Owing to its broad scope, retaliation is a claim commonly raised by disgruntled or terminated employees. In fact, according to the federal Equal Employment Opportunity Commission (“EEOC”), retaliation is the most common basis of discrimination claims in EEOC cases.

These cases illustrate some of the many circumstances in which employment issues can lead to litigation against a wide variety of employers. Conkle, Kremer & Engel regularly advises employer and individuals on workplace issues and the ramifications of retaliation and harassment claims so that all involved can take steps to resolve conflicts in a meaningful, efficient way. When circumstances do not do not allow a non-litigated solution, CK&E attorneys litigate and arbitrate employment disputes including retaliation claims, whether the claims are asserted individually or as a class action.

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The Conkle Firm Successfully Defends Employee Wage and Hour Claim

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If you’re a California employer, how well do you keep track of your employees’ meal and rest periods?  California law requires that employees be provided at least a ten-minute rest period every four hours, and a 30-minute meal period after five hours.  Non-exempt employees who work more than eight hours in a day, and more than 40 hours in a week, must be paid overtime.  Employers are required to maintain accurate records of employees’ timesheets and pay.  It sounds simple, but the devil is in the details.  If you have employees, it is important to put policies in place to ensure that all employees are taking their breaks and being paid for any overtime work.

If an employee believes he or she was deprived of meal and rest periods or not paid for overtime hours worked, the employee can file a complaint with the California Labor Commissioner.  The Labor Commissioner’s Office, also known as the Division of Labor Standards Enforcement (DLSE), is the forum for adjudication of such claims.  Often, this kind of complaint is filed after an employee is terminated.  Employers should realize that, regardless of the reasons for termination, in a wage and hour claim the deck is stacked against them from the start – it is the employer’s burden to show that the employee took breaks and was properly paid.

CK&E attorneys routinely advise clients about navigating California’s complex employer workplace requirements, and advocate for clients in disputes before the California Labor Commissioner and California state and federal courts.

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Timed Out vs Youabian: The Conkle Firm Establishes that the Right of Publicity is an Assignable Property Right

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It is virtually impossible to get through a day without seeing the “right of publicity” in action.  Everywhere, there are advertisements featuring photographs of professional models and celebrities of every variety published to sell all types of products and services.  It is strange, then, that no statute or case precedent in California specifically established that models and celebrities have the ability to assign or license those publicity rights for proper use and for enforcement if their likenesses are misused.  Until now.

On September 12, 2014, the California Court of Appeal agreed with the arguments of Eric Engel of the Conkle Firm (working with co-counsel at Hall & Lim), and established the first published precedent in California that explicitly holds that the right of publicity is assignable.  In Timed Out, LLC v. Youabian, Inc., Case No. B242820, the Second District Court of Appeal finally settled a long-simmering dispute that had confused many lower courts:  Whether the right of publicity is a “personal right” that can only be exercised during lifetime by the individual owner, or whether the right of publicity is a form of intellectual property that can be freely assigned and licensed to others for use and enforcement.

The dispute had its origin many years ago, when an influential tort law treatise by famed Professor Prosser observed that the right of publicity historically derived from the “right of privacy.”  The classic form of the “right of privacy” is protection against hurt feelings and injury to personal reputation that can occur when personal information about a private individual is published without her consent.  That type of injury is considered personal in nature and cannot generally be assigned.  But, as the Timed Out decision observed, the right of publicity has evolved away from its origin into a distinctly commercial and non-personal interest.

The right of publicity is now virtually the opposite of the original right of privacy:  The right of publicity is the ability of a person to control the commercial value of the use of her image and information.  Timed Out recognizes that a person’s likeness, voice, signature or other identifying characteristics can have substantial commercial value, regardless of whether the person is a celebrity and regardless of whether the commercial value of the identified person’s “persona” is created by happenstance or by investment of great time and effort.  Timed Out finally establishes that the value created is a form of property, freely assignable by the person who owns it.

The Court of Appeal also resolved a separate important issue that is frequently in dispute in right of publicity actions:  Whether federal copyright law subsumes and preempts right of publicity claims.  Timed Out v. Youabian established that the right of publicity is distinct from copyright interests in a photograph or image, and that right of publicity claims generally are not preempted by federal copyright laws.

The effect of Timed Out LLC v. Youabian, Inc. for models, celebrities, manufacturers, advertisers and resellers is to finally establish that the right of publicity can be licensed and assigned to third parties, and enforced by third parties such as Timed Out, and that such rights are independent of federal copyright interests.  That means models and celebrities no longer have to make the difficult decision whether it is worth their time, expense and effort to pursue claims when their publicity rights are violated – they can assign the affected publicity rights to agencies such as Timed Out to pursue the claims.  Manufacturers, advertisers and resellers will no longer waste effort and time attempting to determine whether the publicity rights were assignable.  They can and should instead focus on establishing whether they had the necessary rights to use the image, photograph, likeness, voice or other identifying characteristic of the “persona” of the model or celebrity.  This puts a premium on making sure that any “model releases” obtained prior to advertising are well-written and appropriate for each particular use of the model or celebrity’s photograph, image, likeness or other identifying features.

Conkle, Kremer & Engel counsels and helps clients avoid these kinds of issues with effective model releases, licenses and assignments.  Timed Out v. Youabian demonstrates that CK&E is also at the forefront of enforcing the right of publicity when model and celebrity rights are violated.

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You Shook Hands – But Do You Have a Deal?

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Courts have held that, in business negotiations, “Handshakes are significant. When people shake hands, it means something.”  Unfortunately, they have also held that when people shake hands, “several meanings are possible.”

In Rennick v. O.P.T.I.O.N. Care, the Ninth Circuit Court of Appeal considered a party’s contention that a deal was struck when, after months of discussion and a 4-hour negotiating session, the parties “got up and circulated around the room and shook hands with each other on having made the deal.”  The Rennick case observed that a jury could reasonably find that “the handshake was confirmation of a contract, or that it was an expression of friendship and the absence of ill will after a day of hard bargaining.”  So, given the uncertainty of its meaning, should we stop shaking hands when discussing business?  Of course not.  Indeed, the Court noted that, “By custom, it is a rude insult to reject an outstretched hand in most circumstances, and to do so at the end of a long business meeting would likely prevent a future deal.”

The issue of the parties’ intent upon shaking hands is not a small one.  In August 2014, Charles Wang, the owner of the New York Islanders was sued by a hedge fund manager who claimed that the parties had shaken hands on a deal to buy the NHA hockey team for $420 million, and that Wang had breached their agreement by demanding more money.  The frustrated purchaser sued to either enforce an apparently unsigned 70-page agreement to conclude the sale of the team, or recover a $10 million break up fee that he claims was among the terms agreed upon with a handshake.

Courts struggle with this kind of issue, with or without handshakes.  In contract disputes, courts try to enforce the parties’ expressed intentions. For example, where the parties clearly express that they do not intend to be bound until they sign a formal written contract, courts will try to honor that intention by finding that no contract exists unless a written agreement was fully signed.  Indeed, negotiating parties usually can express almost any manner of requirement before an agreement becomes enforceable.  Quentin Tarantino’s civil war era film Django Unchained featured a climactic scene in which the odious character Calvin Candie extorted Dr. King Schultz into signing an outrageous contract, and then insisted that the signed contract was meaningless unless Dr. Schultz also shook his hand.  As a general point of law that was a doubtful proposition even in Mississippi in 1858, but if the parties had been careful to express that intention in their written agreement it probably would have been an enforceable prerequisite to the validity of the contract.

In reality, too often there is no such clear delineation.  If the parties do not eliminate such possibilities by an express statement of their intentions, oral expressions or an exchange of emails or text messages might create an enforceable agreement.  That is because, when the parties aren’t careful about expressing their intentions, courts are left to divine whether the parties intended an agreement with or without signatures on paper.  Courts consider testimony about what was said and evidence of what was written and the activities that took place before, during and after the time of the purported agreement to draw conclusions about what the parties’ intentions really were. Often, the parties’ contemporaneous correspondence is the most important evidence of whether the parties intended to have a binding agreement immediately, or whether the parties intended only to express their good will or intention to negotiate further.

To avoid unnecessary disputes, a cautious businessperson should make a point to express clearly his or her intentions.  The best approach is to plan ahead and be as clear as possible in a written expression as to when the deal is considered enforceable.  The Conkle law firm counsels and represents businesses in negotiations to achieve those ends, or in disputes that can arise when the businesses handled negotiations themselves and come to Conkle, Kremer & Engel attorneys only after things did not turn out as intended.

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