ADA Lawsuits Attacking Website Accessibility Mount

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Over the past few months, we have seen an increase in pre-litigation letters and lawsuits charging Americans with Disabilities Act (“ADA”) violations against commercial websites. These notice and demand letters and lawsuits allege that businesses’ websites violate the federal ADA and similar state laws because they do not give full and equal access to individuals who have disabilities (including blindness, visual impairment and hearing impairment). ADA lawsuits have been filed in federal and state courts throughout the country. No state is immune from such suits, and no business is too small to receive such ADA demands and claims.

One of the factors undoubtedly is the rise of law firms, and consortiums of firms, that specialize in filing such suits. The law firms often work with repeat-plaintiffs with disabilities, much like law firms that specialize in Proposition 65 private enforcement claims in California who work with repeat plaintiffs who purchase products that are then made the subject of notices of violations and lawsuits. The subjects of ADA and Prop 65 laws differ greatly, but the common element is that liability can be fairly easy to establish under both ADA and Prop 65, and both statutes allow awards of attorneys’ fees to the law firms that can far exceed the damages awarded. Some of the law firms that commonly send ADA letters making demands and file lawsuits about website accessibility problems include Pacific Trial Attorneys (Newport Beach, CA), Nye, Stirling, Hale & Miller (Santa Barbara, CA), The Sweet Law Firm (Pittsburgh, PA), Block & Leviton, LLP (Boston, MA), and Carlson Lynch (Chicago, IL).

While there is no universally mandated standard, many large businesses and state and federal agencies follow WCAG 2.1, Level AA standards, which were created by the Web Accessibility Initiative, an internationally recognized organization. Generally, WCAG 2.1 Level AA compliance requires that websites have text components for all images and videos such that assisted technology software may read this content to users. Among other requirements, the standards also require that websites have proper contrast between background images and overlapping font so that visually impaired individuals can use assisting software to be able to read and navigate the website.

To minimize the risk of receiving an ADA violation letter or being sued, we recommend you take at least the following steps:

  1. Request that your digital team ensure and confirm that your website conforms with WCAG standards and, if so, what version/level as there were several earlier WCAG standards prior to the current WCAG version 2.1. To reduce the chances of such claims being made against your company, request your digital team to make your website WCAG 2.1 Level AA compliant and keep it that way until a more updated standard comes into general use.
  2. Add a footer entitled “Accessibility” or “Accessibility Statement” to your website. The footer should preferably appear on the homepage and each webpage, preferably near your “Privacy Policy” and “Terms of Service” footers.
  3. Add a webpage that is linked to the Accessibility Statement footer (e.g. https://www.conklelaw.com/accessibility-statement). This webpage should include an Accessibility Statement discussing your commitment to ensuring accessibility to all and providing contact information to report accessibility barriers and assistance with purchasing products or navigating the website. If you want help formulating your Accessibility Statement, seek qualified counsel to assist you.
  4. Instruct your digital team to periodically review the website as it is updated to ensure there are no access barriers, that all newly uploaded content (including temporary pop-up offers, sale announcements, discount codes, rebates, etc.) complies with WCAG standards, and that all customer service representatives are trained to handle website accessibility inquiries. This training should include advising a responsible person in your digital team of any reported accessibility barriers, and being specifically trained to help disabled customers place orders.

Even if you have not taken these steps before receiving a demand letter or lawsuit from one of the ADA plaintiffs’ lawyers, it’s possible to reduce liability by taking prompt steps. If you received such a website accessibility notice of violation or legal complaint, contact qualified counsel promptly to assist in minimizing the impact and avoid similar future claims. All of the ADA violation matters that Conkle, Kremer & Engel attorneys have defended have been resolved fairly quickly with modest settlements. Others accused of website ADA violations have not been so fortunate, with some reporting having paid tens of thousands of dollars. CK&E attorneys are well qualified to help with all types of ADA and accessibility compliance concerns, whether for websites or physical facilities.

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It’s the First of the Month – Is the Rent Due Under COVID-19 Eviction Moratoriums?

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To mitigate some of the effects of massive unemployment and pay reductions, and the business disruptions that have resulted from stay-at-home orders, a variety of residential and commercial tenancy eviction moratoriums have been imposed.

Much has been said about eviction moratoriums, but they are far more complex and nuanced than generally portrayed. It is clear that moratoriums are already having profound effects for both tenants and landlords. Reportedly about 69% of renters paid their April 2020 rent on time, down from 81% in March 2020. If the stay-at-home orders and closures of non-essential businesses continue, the percentage of renters failing to pay on time is almost sure to increase.

A moratorium is a legally authorized period of delay in the payment of a debt, such as rent. It is important to recognize that a moratorium is not debt forgiveness – the same rent remains owed, but the effects of nonpayment are modified. There are some who are currently demanding new rent forgiveness laws to permanently relieve tenants of obligations to pay rent that comes due during the COVID-19 emergency, but no such laws have been enacted anywhere in the U.S. at this time, to our knowledge.

Even during normal times, tenants are routinely evicted for nonpayment of rent. In California, the eviction process is normally accomplished by a speedy judicial action for “unlawful detainer” that can be initiated quickly, require a tenant to respond in court within 5 days, and in some circumstances can result in a judicial eviction order and a judgment for the amount of unpaid rent against the tenant in less than a month. In one way or another the moratoriums effectively slow down that process and give tenants more opportunities to pay the accrued rent to avoid eviction. To make matters more confusing, eviction moratoriums with varying requirements and terms have been enacted by the U.S. government, and by many states, counties and cities. Exactly how each moratorium applies does depends on where the rented property is located, and whether it is subject to a U.S., state, county or city moratorium.

Here, we’ll briefly examine the U.S., California state, Los Angeles County, and City of Los Angeles moratoriums as representative samples that give insight into how rent payment obligations and evictions have changed as a result of the COVID-19 pandemic. Broadly speaking, U.S. laws can supersede state orders, and state orders supersede county and city orders, but stricter orders will usually be enforced over broader and more general ones. For that reason, it is very important to consider where the subject property is located and which state or local order may control that location.

The U.S. rent moratorium was part of the U.S. Coronavirus Aid, Relief, and Economic Security (“CARES”) Act passed on March 27, 2020, and signed into law by President Trump on March 28, 2020. The U.S. order applies only to residential homes and apartments whose owners have federally-backed mortgages (typically Fannie Mae or Freddie Mac mortgages), and tenants in federally-subsidized low-income housing. The CARES Act imposes a 120-day eviction moratorium for tenants unable to pay rent due to COVID-19 effects. While the U.S. moratorium applies to nearly half of the residential housing market, as a practical matter tenants rarely know if they can take advantage of it, so state eviction moratoriums have a bigger impact.

The California eviction moratorium order (No. N-37-20) was signed by Governor Newsom on March 27, 2020, and applies throughout the state. The March 27 order was designed to strengthen a previous directive (No. N-28-20) that merely gave local jurisdictions authority to temporarily halt residential and commercial evictions due to financial reasons related to COVID-19. The California state order now extends the time for tenants to respond to an unlawful detainer lawsuit by another 60 days, in addition to the usual 5 days. To qualify for the extension of time, the tenant must have previously paid rent to the landlord under an agreement (typically a lease) and, within seven days of the rent becoming due, must have notified the landlord of the inability to pay rent for reasons related to COVID-19 (such as being sick, losing work, or missing work while caring for a child or family member). The tenant is required to maintain documentation proving the changed financial circumstances, but only needs to provide that documentation to the landlord by the time the tenant later pays the back-due rent.

Because the California state order is tied to the unlawful detainer statute, it appears that the statewide deadline to pay the back-due rent is in effect 65 days from an unlawful detainer lawsuit being filed, provided that the tenant qualifies for the COVID-19 related relief. This puts into the landlord’s hands when to start the clock for payment of back rent by initiating an unlawful detainer action to evict the tenant, but the tenant has just over two months to even respond to the suit. There does not appear to be an expiration date for the California state moratorium, which means that the unlawful detainer process could be slowed in this manner for the foreseeable future (though some commentators believe the May 31, 2020 expiration date in the preceding Order No. 28-20 might apply to the March 27 Order No. N-37-20 as well – that remains to be clarified).

But that is not the end of the analysis, because many cities and counties have stricter orders. On March 19, 2020 Los Angeles County enacted an order forbidding a residential or commercial property owner to file an eviction suit or otherwise evict a tenant before May 31, 2020, for non-payment of rent or any other no-fault scenario (such as a lease ending or the landlord removing the unit from the market). Like the state order, to qualify for this eviction moratorium the tenant must demonstrate an inability to pay due to financial impacts related to COVID-19 and must provide notice to the landlord within seven days of the rent becoming due. Under the Los Angeles County order, tenants have six months following the termination of the order – currently meaning until the end of November 2020 – to pay all back rent. But if the moratorium expires as currently scheduled, the qualifying tenants must begin paying current rent starting June 1, 2020, and have six months to make up their back rent. The order encourages payment plans but permits tenants to pay in any increments as long as the back-due rent is paid in full within the six-month window.

The City of Los Angeles enacted a series of eviction moratorium orders, on March 15, 17, 23 and 31, 2020, that similarly restrict commercial and residential evictions. Los Angeles city’s moratorium now has no expiration period other than the end of the “Local Emergency Period,” whenever that may be declared by the Mayor of Los Angeles. As finally enacted by the Los Angeles City Council, Ordinance No. 20-0147-S19 extends, for residential tenants, the time to pay back rent to twelve months after the Mayor declares an end of the Local Emergency Period. Commercial tenants have the same protections, but only three months to pay the accrued back rent after the end of the Local Emergency Period.

But wait, there’s more. Recall that the state modification of the unlawful detainer notice requirement does not have a clear expiration date. If it is determined to extend past May 31, 2020, the state order will continue to allow 65 days for a tenant to respond to an unlawful detainer eviction lawsuit, if the nonpayment was due to COVID-19 related reasons. That effectively extends for another two months the tenant’s ability to not pay rent and yet retain possession of the property.

Despite the complexity of the many jurisdictions’ overlapping orders, at present all tenants remain obligated to pay all lawfully charged rent. So tenants who maximize their withholding of rent will build up a huge debt of unpaid rent, and eventual eviction will become much more likely. For all concerned, it is best for landlords and tenants to work cooperatively to agree on a payment plan, including partial payments and deadlines. These agreements should be committed to at least informal writings in case they are needed as evidence. Landlords should be careful to specify in any writing that these are temporary agreements that are a consequence of the Coronavirus pandemic and associated government orders, that the rent is not waived or reduced but rather delayed, and that the subject lease agreement is not modified or otherwise affected by the rent timing concession.

Lastly, it is very possible that the moratoriums will be extended if stay-at-home orders and workforce reductions continue, which could cause significant concerns for property owners who have mortgage payments due. Many lenders have instituted some kind of mortgage payment delay option – but caution is advisable because they too have pitfalls. Some jurisdictions have enacted limited moratoriums on mortgage payments, so it is advisable to investigate those for your areas and speak with lenders regarding mortgages. And stay tuned as popular pressure builds for new laws to provide some form of mortgage and rent forgiveness.

Conkle, Kremer & Engel attorneys stay abreast of Coronavirus-related issues affecting business clients, including their landlord-tenant relations. CK&E has published blogs about the Paycheck Protection Program (PPP), the Families First Coronavirus Response Act (FFCRA), and other governmental COVID-19 responses that may be useful resources for income replacement, for the benefit of both tenants and landlords.

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Can Coronavirus be a Force Majeure to Excuse Contract Performance?

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Businesses dealing with Coronavirus developments are suddenly faced with many pressing concerns, from whether they will be allowed to continue to operate, to employee relations and supply and delivery issues. One question that may become urgent is: What are the effects of Coronavirus and COVID-19 events on your business’ existing contracts? Can you cancel that big product order you placed, when government closure orders or other disruptions will make it difficult for you to sell it? Can you be forced to deliver products when you can no longer get the ingredients due to supply chain disruptions? Who bears those risks?

First, Does Your Contract Have a Force Majeure Clause?

All contracts are in some ways a method of allocating risks between the parties. Many (but not all) contracts contain what is commonly called a force majeure clause. These clauses explain what will happen when an unexpected and uncontrollable event disrupts performance of contractual obligations. Such a force majeure event is sometimes loosely referred to as an “Act of God,” but it is more accurately an unanticipated event that the parties could not have controlled. A key element is that the parties could not have reasonably anticipated the event at the time of contracting. As a result, the contract date becomes an important consideration: In a force majeure analysis, a contract entered into during March 2020 may well be treated differently than one entered into in March 2019.

Next, Read and Comply with the Requirements of the Force Majeure Clause

The primary purpose of a force majeure clause is to allocate the risk of such unanticipated events – effectively excusing one party’s failure to perform a contractual obligation due to such an event. It is regarded as a term that is negotiable between the parties, like price or delivery time. Whether the parties have any force majeure clause, and its specific terms, will vary from contract to contract. So it is essential to read your contracts carefully and be sure to comply with their terms.

If a contract has a force majeure clause, the first question that will arise is what kind of event can trigger it? Common events identified may be floods, earthquakes, wars and terrorism. Relatively few force majeure clauses refer to “pandemic,” “epidemic” or “state of emergency,” which seem most applicable here. But some may, and others may include events that result from such occurrences, such as “government action or order.” Others may refer to inability to obtain supplies, which could also be triggered by worldwide Coronavirus effects. And some may just generally refer to “force majeure” without identifying any specific event, or include a “catch all” term of some kind. Courts tend to apply such non-specific force majeure terms narrowly, so it is important to read and understand your specific contract and how its terms are likely to be applied.

Many force majeure terms include written notice requirements. Strict compliance with such notice requirements is often required, including giving written notice of inability to perform the contract within a specified time after the unanticipated event. Here, the Coronavirus pandemic and its effects, such as new government orders, may be viewed as a series of events that have varying effects – whether any one or more triggers the required notice will depend heavily on the contract terms and the specific circumstances.

The decision about whether and when to give the required notice can be daunting: Giving notice too early may itself be a breach of the contract – an anticipatory repudiation in legal terminology – but giving notice too late may waive the force majeure excuse. In many instances, it may be advisable to have communications with the other side about the issues, without formally giving notice.

Then, Give Consideration to the Controlling Law

Another important consideration is what jurisdiction’s laws control the contract. Many contracts include an agreement on which state or country’s law will control. But when the contract does not include such an agreement, it may become a fact question driven largely by where the parties were located, where the contract was made and where the performance was required.

The law of the controlling jurisdiction can be very important because states differ in what they require to apply a force majeure excuse for non-performance. California, for example, invokes a standard of “commercially impracticability,” which is more flexible than the standards of many other states. Some states require that actual impossibility be shown. All states require some showing of causation – meaning that the alleged disruption in fact was a cause of the inability to perform. But some states require that the force majeure be shown to be the sole cause of the inability to perform, and not just one among many causes.

Some states, including California, require substantial effort to mitigate the disruption (meaning, taking all reasonable alternative measures to eliminate or limit the effects of the force majeure), but other states are less demanding of mitigation efforts. For example, if the seller has unanticipated problems getting expected supplies of required ingredients, a court may require that the seller seek other more expensive supplies, or may even require that the seller take legal action against its suppliers. Courts may also require partial performance, if the unanticipated disruption does not preclude all performance.

Be Judicious in Your Use of the Force Majeure Clause

In all instances, the focus will be on the event that caused the disruption, not on the disruption itself. Just showing that performance has become more costly, difficult or inconvenient will not usually suffice to establish a force majeure. Courts may assume that the parties allocated ordinary risks of post-contract changes in costs and profitability, although contract terms can set different standards that could control this assessment.

Business managers should readily see that a contract’s force majeure clause can be a powerful tool in this Coronavirus emergency, but it can be double-edged if not wielded carefully. Managers may also have to face the difficult position of being on both sides of this issue – on the one hand, dealing with a business partner that is unable to perform a contractual obligation, and on the other hand, being unable to perform yourself. Conkle, Kremer & Engel attorneys routinely help clients with complex business matters, including contract terminations and force majeure disputes. In our next blog post on this subject, we will turn to what happens when your contract did not include any force majeure clause. In California, as in many states, the Uniform Commercial Code or other doctrines of Impossibility of Performance and Frustration of Purpose can come into play.

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AB 51 at a Crossroad: Can California Employers Still Compel Employees to Arbitrate Disputes?

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California Assembly Bill 51 (“AB 51”) has been in the news because it imposes a far-reaching ban on California employers requiring employees to arbitrate employment disputes. AB 51 was set to take effect on January 1, 2020, but its effect was temporarily stopped by a court injunction issued by U.S. District Judge Kimberly Mueller on December 30, 2019, in a lawsuit filed by the U.S. and California Chambers of Commerce. A fuller hearing on whether the court will extend the injunction is set for January 10, 2020. If the injunction is extended, AB 51 will remain in limbo as long as that case remains pending, and very possibly permanently.

AB 51, if it is allowed to take effect, would have far-reaching implications for California employers who use arbitration agreements for resolution of disputes with employees. AB 51 was signed into law by Governor Gavin Newsom on October 10, 2019, and applies to “contracts for employment entered into, modified, or extended on or after January 1, 2020.” The law prohibits any person from requiring applicants and employees, as a condition of employment, continued employment, or the receipt of any employment-related benefit, to waive any rights, forum, or procedure established by the California Fair Employment and Housing Act (“FEHA”) and the California Labor Code.

The Impact of AB 51
Although AB 51 was originally promoted to target the #MeToo movement and was characterized as a anti-sexual harassment law, because many sexual harassment claims against employers have been kept from public view by resolutions in private arbitrations rather than public court proceedings. But the new law covers much more than just sexual harassment claims. In practical effect, AB 51 would prohibit most employers from requiring employees to sign mandatory arbitration agreements for nearly all types of employment law claims, including any discrimination claims covered under FEHA and for any claims brought under the California Labor Code. AB 51 also precludes employers from threatening, retaliating or discriminating against, or terminating any job applicant or employee for refusing to consent to arbitration or any other type of waiver of a judicial “right, forum, or procedure” for violation of the FEHA or the Labor Code.

Nor can employers avoid AB 51 by having a standard arbitration agreement that requires applicants or employees to “opt out” to avoid. The law effectively prohibits employers from using voluntary opt-out clauses to avoid the reach of the bill. New California Labor Code Section 432.6(c) states that “an agreement that requires an employee to opt out of a waiver or take any affirmative action in order to preserve their rights is deemed a condition of employment.”

In addition, new Government Code Section 12953 states that any violation of the various provisions in AB 51 will be an unlawful employment practice, subjecting the employer to a private right of action under FEHA. Although this will presumably require an employee to exhaust the administrative remedy under FEHA, this provision would nevertheless lead to further exposure for California employers who utilize arbitration agreements with their employees. Importantly, however, AB 51 explicitly does not apply to post-dispute settlement agreements or negotiated severance agreements.

Federal Preemption of AB 51?
Generally, the Federal Arbitration Act, 9 U.S.C. § 1, et seq., (“FAA”) preempts state laws like AB 51 that attempt to regulate or restrict arbitration agreements. Under the FAA, a state may not pass or enforce laws that interfere with, limit, or discriminate against arbitration, and state laws attempting to interfere with arbitration have repeatedly been struck down by the U.S. Supreme Court as preempted by the FAA. AB 51, however, expressly states that it does not invalidate a written arbitration agreement that is otherwise enforceable under the FAA. Proponents of AB 51 argue that it is not preempted by the FAA because it only impacts “mandatory” arbitration agreements and does not affect “voluntary” agreements.

Impending Court Challenges
Many questions surrounding the validity and application of AB 51 remain unanswered. Therefore, legal challenges on the ground that AB 51 is preempted by the FAA were inevitable. On December 6, 2019, the U.S. and California Chambers of Commerce filed a complaint in the U.S. District Court for the Eastern District of California, alleging that AB 51 is preempted by the FAA. The complaint seeks a permanent injunction to halt enforcement of AB 51 until its legality is determined. The January 10, 2020 hearing of the preliminary injunction may give strong indication which way the Court will turn on the issue for the time being, but the ultimate determination will likely take years to wend its way through the Ninth Circuit Court of Appeal and perhaps the U.S. Supreme Court.

What Should Employers Do In Response to AB 51?
As this challenge to AB 51 makes its way through the courts, employers with ongoing arbitration agreements (or those interested in implementing arbitration programs) face a difficult choice starting in 2020: Play it safe and strike all mandatory arbitration agreements, or maintain the status quo until the litigation plays out. There is no one-size-fits-all approach that will work for every employer.

Employers currently using arbitration agreements should consider either staying the course based on the assumption that AB 51 will be held preempted by the FAA and therefore unenforceable, or suspending their arbitration programs until more clarity on AB 51 is provided. Employers implementing arbitration programs after January 1, 2020 should consider including in their arbitration agreements specific language to conform with Labor Code 432.6 and emphasizing the voluntary nature of the agreement.

The attorneys at Conkle, Kremer & Engel remain vigilant on employment law developments to advise businesses on all aspects of employee legal relations, including updates on the use of arbitration agreements as uncertainty looms.

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The Conkle Firm Presents at Personal Care Product Council’s Emerging Issues Conference in Marina del Rey

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Zachary Page and Eric Engel being introduced for PCPC Emerging Issues Panel on Product Counterfeiting and Brand Protection

Conkle, Kremer & Engel attorneys Eric S. Engel and Zachary Page presented to beauty industry professionals on hot and developing legal issues in brand protection, grey market and product counterfeiting at the Personal Care Products Council’s November 20, 2019 Emerging Issues Conference. The Conference was held on the 10th Floor of the Marina del Rey Marriott, with a spectacular view over the nearby marina and beach.

Among the topics covered by Zach were issues of registering U.S. trademarks for CBD products, and other previously unregisterable brands. The 2019 U.S. Supreme Court decision in Fourth Estate Public Benefit Corp. v. Wall-Street.com put new importance on registering important copyrights well in advance of their need for infringement claims, and Zach discussed the close relationship with the Digital Millennium Copyright Act’s “DMCA Clock” to takedown infringing online publications. Trends toward false advertising claims based on “natural” and “organic” labeling were also discussed, as were the dramatic increase in medical claim class action and other lawsuits. Zach also briefed the gathered industry experts on the various issues that affect uses of models and others without adequate documentation of consent, which can raise serious right of publicity as well as copyright concerns.

Eric addressed grey market and counterfeiting case development, including the importance of creating “materially different” packaging for U.S. and foreign products. Simple and low-cost ways to help DHS/CBP protect brands against importation of foreign-labeled versions of their own products, as well as counterfeits, was outlined. Also outlined were cost-effective techniques such as recording trademarks online with CBP’s IPR e-Recordation system, Lever Rule Protection, providing CBP with effective Product Identification Training Guides (PITG), conducting IPR Webinars for CBP distribution, and posting e-Allegations online. On combating counterfeiting, Eric addressed Amazon.com specifically because it now accounts for more than half of U.S. online consumer sales, and more than half of Amazon’s online sales are on behalf of third parties in its “marketplace.” Amazon acknowledges no responsibility for sales in its marketplace, beyond closing seller accounts and refunding its customers’ money when they can show that they were sold counterfeit and defective products. Eric discussed the developments in Amazon’s selling and fulfillment practices and in the law of counterfeiting and products liability that suggest that Amazon’s currently-strong denials of responsibility for third party’s products and sales practices may be less compelling in coming years.

CK&E attorneys regularly give presentations to personal care product industry professionals to help them understand and proactively address the latest legal concerns that affect and can inhibit growth of their businesses.

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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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CKE’s L.A. Daily Journal Article: Treble Damages for Breach of Oral Contract

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The article “Breach of Oral Contract, Treble Damages,” was published in the Los Angeles Daily Journal on August 13, 2013.  The article discusses the importance for manufacturers, distributors and sales representatives of the published decision of Reilly v. Inquest Technology, Inc., 2013 DJDAR 10164 (Cal. App. 4th Dist. July 31, 2013).  The Reilly decision is the first precedent in California to uphold a jury verdict and judgment of treble damages and attorney fees against a manufacturer who failed to pay all sales commissions owed to an independent sales representative.  Eric S. Engel and H. Kim Sim represented Peter Reilly, the sales representative, at trial in Orange County Superior Court.  They obtained a unanimous jury verdict awarding Reilly $2.1 million in unpaid commissions.  Using the Independent Wholesale Sales Representatives Contractual Relations Act, CK&E then obtained an order from Judge Frederick Horn multiplying the jury’s award by a factor of three, for a judgment of $6.2 million plus attorney’s fees and interest.  That judgment was fully upheld by the California Court of Appeal in its July 31, 2013 decision.  The decision provides a template for future cases seeking treble damages for breach of commission contracts made with independent sales representatives, and can serve as a guide to manufacturers and distributors who want to avoid exposure to such liability.

Click here for the full text of the article, “Breach of oral contract, treble damages”:  Reilly v Inquest Daily Journal Article

Click here for the full copy of the California Court of Appeal decision:  Reilly v Inquest Court of Appeal Decision, Case No. G046291 (July 31, 2013)

 

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CK&E’s Judgment of $6.2 million for Unpaid Sales Commissions Upheld on Appeal

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The California Court of Appeal has unanimously upheld the $6.2 million judgment that Conkle, Kremer & Engel won at trial for a sales representative who had been deprived of $2 million in commissions he had earned.

Peter Reilly was a retired electronics industry executive who agreed to use his extensive contacts in the industry to bring new business to a growing manufacturing company, Inquest Technology, Inc.  After Reilly was not paid commissions for the contacts that he brought to Inquest, he asked Conkle, Kremer & Engel for help.

Reilly-Inquest_Team

Reilly v. Inquest – Plaintiff’s Trial and Appeal Team

CK&E’s Eric S. Engel and H. Kim Sim were the trial lawyers who devised the case strategy.  Key to the strategy was establishing by discovery and summary judgment motion the intricate requirements to impose liability against Inquest under a rarely-used law called the Independent Wholesale Sales Representatives Contractual Relations Act of 1990, California Civil Code section 1738.10 (“the Act”).  The main attraction of the Act is that jury awards for willful violations are trebled by the court and attorneys’ fees are awarded to a successful plaintiff.  Few laws in commercial litigation impose a penalty of three-times actual damages – that is a greater multiplier than most permissible punitive damages awards.

CK&E was able to prove that the sales representative relationship that Reilly had with Inquest met the particular requirements of the Act.  At trial, a unanimous jury found that Reilly procured sales for which he should have been paid $2,065,702 in commissions, based on the testimony of Reilly’s damages expert Thomas Neches.  The trial court then applied the Act’s penalty of treble damages to award Reilly a $6.2 million judgment, plus attorneys’ fees and interest, to enter the Judgment for Peter Reilly against Inquest Technology on Jury Verdict.

Of course, the Defendants appealed the judgment.  On July 31, 2013, the Reilly v. Inquest Technology case led to the first published decision of a California Court of Appeal to uphold a judgment trebling damages and awarding attorneys’ fees under the Act.  Anthony Kornarens was the appellate lawyer for Reilly, with assistance by CK&E.  In a unanimous decision, the Court of Appeal determined that Reilly’s judgment of $6.2 million was well supported by the evidence presented at trial, and that Reilly’s claims for unpaid sales commissions were within the special protections of the Act.

Click here for the full copy of the California Court of Appeal decision:  Reilly v Inquest Court of Appeal Decision, Case No. G046291 (July 31, 2013)

Watch for our future posts about the Act, including how CK&E proved that Inquest’s owners were also liable for the full amount of the $6.2 million judgment even though they were not subject to the Act.

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Closing the Door to Class Actions for False Advertising Claims

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Advertising claims are often the subject of lawsuits in California. Ads, slogans, packaging or even product images are claimed to be “false or misleading.” Plaintiffs make claims under a variety of consumer protection laws, such as California’s Unfair Competition Law (UCL), Business and Professions Code section 17200; False Advertising Law (FAL), Business and Professions Code section 17500; and the Consumer Legal Remedies Act (CLRA), Civil Code section 1750.

But an individual who wants to sue has a problem, because a single person who claims to have been misled into purchasing a product will usually only have purchased one product and therefore has just a few dollars (or sometimes only pennies) of “out of pocket” money damages. It’s usually not realistic for a lawsuit to be pursued for just a few dollars. As a result, plaintiffs’ lawyers sometimes try to make a “class action” claim to join together many people who can each claim a few dollars of damages, which can add up to a great deal of money. In a class action, the plaintiff can assert that similar injuries happened under similar circumstances to a large number of people, and the plaintiff should be allowed to make a claim for all of the damages to that group of people. Further, the lawyers for the class action can make claims for attorneys’ fees that are much larger than they would otherwise be permitted for representing an individual claimant.

To proceed with a class action lawsuit, the plaintiff must show the court that the proposed “class” meets the rules for “certification.” That is a big hurdle in many cases, because it requires that the plaintiff show that all of the proposed class members have similar claims and issues. A recent ruling from the United States District Court, Central District of California shows how hard it can be to prove that there are such common claims and issues. In Mara Chow v. Neutrogena Corp., Case No. CV 12-04624, the plaintiff claimed that Neutrogena had made false and misleading labels and advertising for its “anti-aging” skincare products, including that the products are “clinically proven,” can cause a person to look younger, and can prevent and repair signs of aging within one week. The plaintiff tried to show that she had a proper class action because all of the class members had similar claims. But District Judge Manuel L. Real refused to certify a class.

Judge Real found that too many individual questions existed as to whether the Neutrogena product had worked as advertised for each individual class member. In other words, each member would have to individually show whether the claims were false as to that member. Further, some of the claims required that each class member would have to show that she “relied” on the false advertising when she purchased the Neutrogena product, which also could only be proved individually and not on a class-wide basis. But the news wasn’t all bad for plaintiff – the individual plaintiff was allowed to continue asserting her own individual claim for a few dollars in damages. No one will be surprised when the case is dismissed, because it isn’t worth pursuing.

CK&E’s lawyers have experience handling all aspects of claims of false or misleading advertising under the UCL, FAL and CLRA. CK&E’s lawyers are particularly well-versed in developing methods to reduce the risk of such lawsuits before they are filed. If a claim does arise, it often comes first to a business in the form of a demand letter, and CK&E attorneys are skilled at responding to such demand letters in ways that eliminate or minimize the claim and can lead to a quick and cost-effective resolution.

Update:  The plaintiff filed a petition for permission to appeal the District Court’s Order denying class certification.  On April 23, 2013, the Ninth Circuit Court of Appeals denied the petition for permission to appeal.  The lawsuit was subsequently settled and dismissed with prejudice on June 10, 2013.

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Facebook Status Update: I’ve Been Served

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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.

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