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Archive for June, 2015

FCC Announces New TCPA Declaratory Rulings

Posted on: June 26th, 2015

732c1776-d8f7-4c20-bddc-a0475b62a939By: Matthew N. Foree

Last week, the Federal Communications Commission (FCC) announced in a press release that it issued a package of declaratory rulings regarding the Telephone Consumer Protection Act (TCPA).  The FCC declared that it “adopted a proposal to protect consumers against unwanted robocalls and spam texts.”

The FCC stated that its rulings were informed by thousands of consumer complaints about robocalls that it receives each month, and asserted that it received more than 215,000 such complaints in 2014.  The declaratory rulings address 21 pending petitions and other requests seeking clarity on how it interprets the TCPA.  The FCC stated that its rulings close loop holes and strengthen consumer protections that are already on the books.  It also reiterated that the TCPA requires prior express consent for non-emergency audio dialed, pre-recorded or artificial voice calls to wireless phone numbers as well as for prerecorded telemarketing calls to residential wireline numbers.

In the press release, the FCC highlights certain of its rulings.  Among these is the proposition that reassigned numbers do not create loopholes.  An exception for wrong number or ported calls was the subject of petitions pending before the FCC.  In the press release, the FCC stated that if a phone number has been reassigned, companies must stop calling the number after one call.  It remains to be seen exactly how the rule is written, especially as to how a caller can determine whether the phone number has been reassigned after one call.

Additionally, the press release highlights that the FCC affirmed the TCPA’s definition of autodialer.  The FCC stated that autodialer is defined in the TCPA as “any technology with the capacity to dial random or sub sequential numbers.”  The FCC asserted that this definition insures that robocallers cannot skirt consumer consent requirements through changes and calling technology design or by calling from a list of numbers.

The press release also highlights the availability of “Do Not Disturb Technology.”  Specifically, the FCC reported that service providers can offer robocall-blocking technologies to consumers and implement market-based solutions that consumers can use to stop unwanted robocalls.

The FCC has not yet released the declaratory rulings themselves.  At this juncture, video of the open meeting regarding the rulings is available here. Once the rulings are released, we will provide additional information and analysis.  In the meantime, the press release from the FCC tends to show that it is not providing the clarity that businesses requested and questions remain whether such rules will actually curb the number of TCPA lawsuits.

Uber Suffers Another Setback In Defending Classification Of Its Drivers As Independent Contractors

Posted on: June 26th, 2015

option 3By: William H. Buechner, Jr.

Uber, an extraordinarily successful and technology-driven transportation company, has suffered another setback in its attempt to fend off legal challenges to its practice of classifying its drivers as independent contractors rather than employees.  The final outcome of these legal challenges against Uber could have a substantial impact in determining how service workers in technology-driven, on-demand industries are classified.

Uber relies on technological innovation to provide services similar to a taxi service.  Uber utilizes software that customers who need a ride may log into on their smartphone and request a ride.  The Uber application then matches the customer with a Uber driver, who picks up the customer at the designated location and transports the customer to the requested destination.  Uber’s enormous success has been attributable to a large degree to its ability to control labor costs and other business expenses.  Uber has done so by classifying its drivers as independent contractors, which enables Uber to avoid paying payroll taxes, workers’ compensation and unemployment insurance.  By classifying its drivers as independent contractors, Uber also avoids other significant operating expenses, such as mileage.  The appeal for drivers is that they enjoy substantial flexibility in determining when and how much to work and have little or no direct supervision.  In December 2014, Uber reported that it had more than 160,000 drivers in the United States who drive at least four times per month.

Uber’s successful business model, however, may be threatened by drivers challenging their classification as independent contractors.  For example, the California Labor Commissioner issued a ruling earlier this month finding that a Uber driver was misclassified as an independent contractor and instead must be treated as an employee.  The Labor Commissioner emphasized, among other issues, that the drivers are an integral part of Uber’s regular business, which it viewed as a factor weighing heavily in favor of a driver being an employee.  The Labor Commissioner also explained that, by obtaining customers in need of a ride and supplying drivers to provide the rides, Uber retained complete control over the operation as a whole.  In addition, the Labor Commissioner observed that drivers must register their cars (which must not be older than 10 years) with Uber, that the fee paid by passengers is set solely by Uber, that Uber monitors ratings given to drivers by customers, and that Uber terminates drivers if their rating falls below a certain number.  The Labor Commissioner awarded the driver $3,622.08 for mileage and $256.00 for toll charges.  The Labor Commissioner rejected the driver’s claims for additional wages, including overtime wages, but only because the driver failed to present sufficient evidence of the amount she was paid or the number of hours she worked.  Uber quickly appealed the Labor Commissioner’s decision, and that appeal is pending.

The ruling by the California Labor Commissioner follows a ruling adverse to Uber in a federal class action lawsuit in San Francisco.  In March, the federal court denied Uber’s motion for summary judgment, finding that there were fact disputes as to whether Uber’s drivers are properly classified as independent contractors or employees.  Courts have issues similar rulings involving workers in other industries.  For example, the Ninth Circuit ruled last year that drivers for Federal Express are employees rather than independent contractors.

Consequently, employers should not assume that individuals are independent contractors simply because such individuals may retain control over when they work or how much they work, or because they are not subject to direct supervision in a traditional way.   Courts are likely to examine the degree to which an employer controls the manner and means of performance when someone is actually working, and also whether someone is subject to supervision in a less traditional or direct manner utilizing innovative technology.

Did the Georgia Supreme Court Open the Door for a Personal Injury Defendant to Challenge the Reasonableness of a Plaintiff’s Medical Bills?

Posted on: June 24th, 2015

option 2By: Abby A. Vineyard

Last week, the Georgia Supreme Court held that, where a lawsuit involves a question as to the validity of a hospital lien for charges for a patient’s care, the patient challenging the reasonableness of the charges is entitled to discover information relating to the amounts the medical provider charged other patients for similar care.  Bowden v. The Medical Center, Inc., No. S14G1632, 2015 WL 3658819 (Ga. June 15, 2015).

Danielle Bowden, who was uninsured, was treated at The Medical Center for injuries sustained in a car accident.  The Medical Center billed Bowden a total of $21,409.59 for her treatment and filed a hospital lien for the same amount.  After litigation ensued, Bowden filed a cross-claim against The Medical Center alleging “…her bill of $21,409.59 was grossly excessive and did not reflect the reasonable value in the community of her treatment.”

Bowden sought to discover information relating to how much The Medical Center charged other patients for similar treatment during the same time period.  The Medical Center objected and refused to provide the information, but the trial court granted Bowden’s motion to compel the information.  The Georgia Court of Appeals reversed the trial court’s order, agreeing with The Medical Center that the information sought was not relevant to Bowden’s claims.

The Georgia Supreme Court reversed the Georgia Court of Appeals’ opinion, holding that “the discovery Bowden sought may have some relevance to the reasonableness of [The Medical Center’s] charges for her care, and thus, assuming no other objections to her various requests are made and sustained…Bowden is entitled to see what the information and documents show and whether they support her claims and defenses.”  The Court emphasized that its ruling only applies to the discovery, rather than the admissibility, of the amounts medical providers charge other patients for similar care.  It reasoned that the concept of “relevance,” in the discovery context, has been broadly construed to mean “matter that is relevant to anything that is or may become an issue in the litigation.”

The Court’s decision opens the door for a lien defendant to challenge the validity of a hospital lien.  This decision raises a few interesting questions in the context of personal injury cases.  Can an insurer and/or a defendant in a personal injury case now challenge the reasonableness of the plaintiff’s medical bills, especially when the plaintiff is uninsured?  Will this lead to the amounts charged for other patients’ treatment being admissible at trial rather than only being discoverable?  Since medical providers have contracts with insurers under which they routinely accept a heavily-discounted percentage of the billed amount, will it be easier to argue that the actual billed amount is not reasonable?  It will be interesting to see if the Court expands its ruling when these kinds of issues are inevitably presented for the Court’s consideration.

Employers Should Start Using New FMLA Certification Forms

Posted on: June 24th, 2015

option 2

By: David Cole

The U.S. Department of Labor recently issued updated health care provider certification forms for employers to provide employees who request leave pursuant to the Family and Medical Leave Act.  The new forms include the following:

 

 

 

  • Certification of Health Care Provider for Employee’s Serious Health Condition;
  • Certification of Health Care Provider for Family Member’s Serious Health Condition;
  • Notice of Eligibility and Rights & Responsibilities;
  • Designation Notice:
  • Certification of Qualifying Exigency for Military Family Leave;
  • Certification for Serious Injury or Illness of Current Servicemember – for Military Family Leave; and
  • Certification for Serious Injury or Illness of a Veteran for Military Caregiver Leave.

The most notable update to the forms are references to the Genetic Information Nondiscrimination Act of 2008 (“GINA”), a federal law that prohibits employers from discriminating against an applicant or employee because of his genetic information.  This reference, found in the form’s opening instructions, warns health care providers not to provide information about “genetic tests, as defined in 29 C.F.R. §1635.3(f), genetic services, as defined in 29 C.F.R. §1635.3(e), or the manifestation of disease or disorder in the employee’s family members, 29 C.F.R. §1635.3(b).”  Essentially acting as a safe harbor, this instruction protects employers from a GINA violation if they inadvertently receive genetic information from a health care provider in response to a lawful request for information under the FMLA.  The DOL also revised the certification forms to instruct employers that “genetic information” received in response to the certification must be kept confidential, in accordance with GINA’s requirements.

Employers should begin using these forms immediately.  They are valid through May 2018, and can be downloaded here from the DOL’s webpage.

Eleventh Circuit Rules Software’s “Features and Functions” Not a Trade Secret in Absence of Written Confidentiality Agreement

Posted on: June 23rd, 2015

option 1

By: Michael Wolak, III

The Eleventh Circuit Court of Appeals’ recent opinion in Warehouse Solutions, Inc. v. Integrated Logistics, LLC, et al., 2015 WL 2151757 (May 8, 2015), is an important reminder that written confidentiality and non-disclosure agreements play a critical role in a party’s ability to meet its burden of establishing that its intellectual property is entitled to protection as a trade secret.  In Warehouse Solutions, Inc., the Eleventh Circuit affirmed the district court’s grant of summary judgment to Integrated Logistics, LLC (“ILL”) on Warehouse Solutions, Inc.’s (“WSI”) claim for misappropriation of trade secrets under the Georgia Trade Secrets Act, O.C.G.A. § 10-1-760, et seq., and held that the absence of a written confidentiality agreement was relevant to assessing whether WSI took “reasonably available steps” to preserve the secrecy of its software program.

WSI developed a web-based software program that interfaces with UPS and FedEx tracking systems to allow companies to track their packages.  ILL began reselling the program to its own customers under a verbal arrangement with WSI.  WSI and ILL never executed a written agreement concerning their resale arrangement or any other aspect of their business relationship.  On several occasions, WSI verbally told ILL that the software program was “highly confidential and proprietary” and instructed ILL not to share the program with anyone outside of ILL, except for ILL’s customers who had signed a contract containing a non-disclosure provision.  Without WSI’s knowledge, ILL hired a software company (Platinum) to develop its own web-based tracking system that was visually and functionally similar to WSI’s program.  ILL gave Platinum a user ID and password to log into WSI’s program.  Neither ILL nor Platinum ever had access to the WSI program’s source code.  ILL eventually terminated its business relationship with WSI and began selling the program developed by Platinum.

WSI claimed that its software program was a trade secret that ILL had misappropriated by “creating a functionally identical program.”  WSI argued that it took all reasonable means to prevent disclosure of its complicated software program, including the use of technologically advanced password protection and encryption and end-user confidentiality provisions.  ILL urged that (i) it only had access to the program’s “visible output” (e.g., the interactive screen displays), which did not constitute a trade secret because such output was readily apparent to users of the software; and (ii) WSI failed to make reasonable efforts to maintain the program’s secrecy.

The district court agreed with ILL and drew a distinction between a software program’s underlying source code, which may constitute a trade secret, and the program’s “look and feel” and “functionality.”  Unlike source code, which is written in programming language and is inaccessible to program users, “a user of [WSI’s program] can readily ascertain the appearance and functionality of the system and, thus, the visible output cannot be a trade secret.”  The district court rejected WSI’s contention that, because WSI took steps to preserve the confidentiality of its program, the “self-revealing nature” of the program’s functionality did not preclude the program’s status as a trade secret.

The Eleventh Circuit analyzed this distinction and acknowledged that a program’s visible output may still be a trade secret, “if the plaintiff can show that it worked to preserve the secrecy of its program’s functions, specifications, and pricing.”  For example, restricting access to a software program’s capabilities to licensees who are subject to confidentiality agreements can help preserve the program’s functionality as a trade secret.

The Eleventh Circuit distinguished WSI’s program, noting that dissemination of the program to users necessarily revealed the information WSI alleges to be secret – e.g., the program’s “features and functions.”  Even assuming the functionality of the program was not “readily ascertainable by proper means,” the Court of Appeals agreed with the district court that WSI’s efforts to maintain secrecy were not reasonable under the circumstances.  WSI’s failure to require ILL to sign a confidentiality agreement before granting ILL “high-level administrative access” to the program’s functionality was fatal to its claim of trade secret status.  The fact that WSI limited access to authorized users and employed encryption and password protection did not rescue its claim.  Indeed, such measures only served to restrict access to customer data – which WSI did not claim as trade secrets – rather than the functionality of the program itself.  The manner in which the program “looked and worked” was still readily apparent to authorized users with an ID and password.

The Warehouse Solutions decision underscores the importance of securing written confidentiality agreements before granting access to purported trade secrets.  While not dispositive, the absence of a written confidentiality agreement is critical to assessing whether a party took reasonably available steps to preserve the secrecy of its alleged trade secrets.  Even where the alleged trade secret information is not “readily ascertainable by proper means,” the failure to secure a written confidentiality agreement prior to dissemination can forfeit the information’s trade secret status.