Technology – Conkle, Kremer & Engel, PLC

Facebook Status Update: I’ve Been Served

Social media is entering a new legal realm: At least one court has recognized that a Facebook message can be used to serve a defendant with documents in litigation. Historically, service of process has been most often accomplished by serving papers in person, or sometimes by U.S. Mail, to assure the court that a party has received due notice and an opportunity to respond to the legal proceedings. But service of process is not always accomplished by such old fashioned means. In a new twist, in Federal Trade Commission v. PCCARE247 Inc., United States District Court, Southern District of New York, Case No. 12 Civ. 7189 (PAE), Judge Paul A. Engelmayer ruled that the FTC could serve legal papers on defendants who were located in India by a combination of email and Facebook messages. Service by email has been recognized in limited circumstances by other courts, and Judge Engelmayer emphasized that service of process by Facebook message would not be appropriate in every circumstance. The court noted that the FTC had shown that the particular email and Facebook accounts were actively used by the defendants, and the defendants had already appeared in the litigation through counsel that had since withdrawn from representing them.

The rapidly expanding legal importance of social media is illustrated by the fact that less than a year earlier, in Fortunato v. Chase Bank USA, another USDC case in the Southern District of New York, Case No. 11 Civ. 6608, Judge John F. Keenan refused to accept Facebook as a means of service of process on a party. Observing that “[s]ervice by Facebook is unorthodox to say the least,” Judge Keenan found that Facebook service would violate constitutional due process requirements, in large part because the court had not been shown to reasonable certainty that the Facebook profile actually belonged to the defendant who was being served.

Legislatures have also noticed the increasing legal importance of social media. In February 2013, Texas State Representative Jeff Leach introduced a bill that would allow substituted service through social media websites. If enacted, H.B. No. 1989 would allow Texas courts to prescribe as a method of service an electronic communication sent to the defendant through a social media website if the court finds: (1) the defendant maintains a social media page on that website; (2) the profile on the social media page is the profile of the defendant; (3) the defendant regularly accesses the social media page account; and (4) the defendant could reasonably be expected to receive actual notice if the electronic communication were sent to the defendant’s account. The Texas bill is the first of its kind, and it is likely that other states will consider similar legislation.

It seems safe to say that email and Facebook messages will not be the only technological methods by which service of process will be permitted in the future. As Judge Engelmayer observed, “history teaches that, as technology advances and modes of communication progress, courts must be open to considering requests to authorize service via technological means of then-recent vintage, rather than dismissing them out of hand as novel.” While people may not feel ready to be informed they are being sued by messages on Facebook, Twitter or LinkedIn, that day may not be far off. The cautionary lesson is that email and other electronic means of communication need to be monitored for legal demands, notices or court filings, because a prompt legal response may be required.

19
MAR

Litigation, Arbitration and Mediation, Technology

Email, Facebook, LinkedIn, Service of Process, Social Media, Twitter

Prop. 65 Reform — Is a Safe Harbor from Bounty Hunters on the Horizon?

Posted by: Conklelaw

California’s now-infamous Proposition 65 (Prop. 65, Cal. Health & Safety Code § 25249.5) allows a private citizen to file a lawsuit against any business that fails to post adequate warnings about the presence of chemicals known to cause cancer or reproductive harm. The private enforcer may seek an injunction, penalties of up to $2500 per violation, per day, and an award of attorneys’ fees.

Assembly Member Mike Gatto (43rd District of California) recently proposed legislation, Assembly Bill 227, that would reform Prop. 65 by providing a “safe harbor” in the form of a 14-day period for businesses to correct alleged violations. If enacted as proposed, a business who receives a demand under Prop. 65 would have a brief opportunity to demonstrate its compliance with Prop. 65 requirements to the California State Attorney General, or the responsible city attorney or district attorney. If the business takes advantage of that “safe harbor” then the claimant would be barred from filing a lawsuit against that business.

While the purpose of Prop. 65’s private enforcement provision is to allow private citizens to act on behalf of the public to ensure warnings are properly posted, supporters of AB 227 criticize Prop. 65 as a “bounty hunter” statute that primarily benefits plaintiff’s attorneys. In 2011, businesses paid a total of nearly $16 million to settle lawsuits brought by private citizens, of which almost $12 million was paid to the plaintiffs’ attorneys. In fact, nearly half of the attorneys’ fees were paid to a single firm: The Chanler Group.

AB 227 would give businesses the opportunity to come into compliance with Prop. 65 warning requirements without paying exorbitant settlement fees to prevent costly litigation. But businesses would have to take swift action. As CK&E attorneys John A. Conkle, Amy Burke and Mark Riedel discussed in their November 2012 presentation to the Personal Care Products Council, What’s Your Game Plan?, it is important for businesses to develop strategies for ensuring regulatory compliance and for handling notices of violation quickly and efficiently. AB 227, if signed into law, would be another reason that businesses should prepare contingency plans for the day that they receive a notice of violation from plaintiffs seeking to take advantage of Prop. 65 — a business could avoid being sued at all if it responds quickly and correctly to take advantage of the safe harbor. CK&E advises clients in regulatory compliance, responding to warning and demand letters, and developing an individualized game plan to suit each client’s needs.

18
MAR

Beauty Industry, Food, Craft Beer and Nutrition, Manufacturing, Proposition 65, Regulatory Compliance, Sales, Technology, Unfair Competition

AB 227, Assembly Member Mike Gatto, Bounty Hunters, Injunctions, Injunctive Relief, Lawyers, Notice of Violation, Prop 65 Reform, Proposition 65 Reform, Warning Letter

Keeping "Competition" in California’s Unfair Competition Law

Posted by: Eric S. Engel

California’s Unfair Competition Law (UCL) provides broad protections to both consumers and businesses, prohibiting any form of conduct that can be found to be an “unlawful, unfair or fraudulent business act or practice.” (California Business & Professions Code § 17200) The UCL is particularly powerful because it can reach conduct that is not specifically illegal under any other law, and can also provide a remedy for any acts or omissions that are prohibited under other state or federal laws even if those laws do not allow private citizens to sue when they are violated. A recent example is the case of Law Offices of Mathew Higbee v. Expungement Assistance Services, in which a lawyer used the UCL to sue a credit repair service that was not licensed to practice law. The lawyer alleged that he too was in the credit repair business and, as a result of the defendant’s violations of California’s attorney licensing requirements, the competing lawyer was required to lower his prices and spend more money on advertising, lost clients and revenue, and the value of his law firm had diminished. Ordinarily, the statutes requiring a license to practice law cannot be enforced by private citizens. But here, the UCL was held to “borrow” the statutory violation to show an “unlawful business act or practice” that gave the plaintiff a claim.

Those already familiar with UCL know that it was modified by Proposition 64 in 2004, tightening the standing requirements so that an action could only be brought by a “person who has suffered injury in fact and has lost money or property” as a result of the alleged unfair competition. (B&PC section 17204) Some courts had struggled with this new requirement, at times suggesting that the plaintiff would have to show that the defendant had directly taken money from the plaintiff as a result of the unfair competition. Such a requirement would effectively eliminate “competition” out of the Unfair Competition Law: It is rare that a business competitor could show that it gave money or property directly to a competitor as a result of unfair competition – and if it did happen, the plaintiff would probably have a breach of contract or fraud claim and probably would not need to use the UCL.

But over time it has become clear that Prop 64 did not not eliminate unfair competition claims between competitors. In the Law Offices of Mathew Higbee case, the Court of Appeal in Orange County held that the UCL does not require that the parties have had direct dealings with each other in order to succeed “in alleging at least an identifiable trifle of injury as necessary for standing under UCL.” The Court surveyed the law before and after Prop 64, and found the cases supportive of a rule that permitted business competitors to make unfair competition claims. The standing requirement does not require in every instance that the parties have had direct dealings with each other. The Court emphasized that, provided that the “identifiable trifle of injury” resulting from the acts of unfair competition can be shown, “the UCL does not leave the court hamstrung, unable to even consider an action seeking injunctive relief just because the defendant engages in its purportedly unlawful activity via the Internet and has not had any direct business dealings with the plaintiff.”

18
MAR

Banking and Finance, Beauty Industry, Contracts, Business and Finance, Fashion, Food, Craft Beer and Nutrition, Manufacturing, Real Estate & Construction, Sales, Technology, Unfair Competition

Competitors, Disgorgement of Profits, Injunctions, Injunctive Relief, Lawyers, UCL, Unfair Business Practices

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