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Archive for the ‘Professional Liability and MPL’ Category

Massachusetts Appeals Court Holds a Claim for Violation of the Statute Prohibiting the Unauthorized Use of One’s Name, Portrait or Picture Does Not Require Quantifiable Damages to Survive Summary Judgment

Posted on: June 21st, 2021

By: Nancy Reimer, Victoria Fuller and Lori Eller

In Tedeschi-Freij vs. Percy Law Group, P.C., et al., the Massachusetts Appeals Court held a plaintiff need not show evidence of quantifiable damages to survive a motion for summary judgment on a claim for the unauthorized use of her name in violation of (1) M.G.L. c. 214, § 3A (Unauthorized Use of Name, Portrait or Picture of Person); and (2) the Massachusetts Consumer Protection Statute, M.G.L. c. 93A.

There, the plaintiff-attorney, Suzanne G. Tedeschi-Freij (“Tedeschi”) joined Percy & Teixeira, P.C., in 2000. While Tedeschi was advertised as a partner at the firm, and the firm’s name was changed to Percy, Tedeschi, & Associates, P.C., her equity position was never formalized. In 2012, Tedeschi left the firm and requested her name be removed from the firm name. Despite Tedeschi’s repeated requests, Percy changed the firm name with the Secretary of State’s office but continued to advertise the firm as “Percy, Tedeschi, & Associates, P.C.” until 2018. Perry stopped using Tedeschi’s name only after receiving a bar complaint concerning the unauthorized use of Tedeschi’s name, but even then failed to fully remove it from all advertisements.

The Appeals Court held Tedeschi did not need to establish quantifiable damages to avoid summary judgment on her claim for violation of M.G.L. c. 214, § 3A. The Appeals Court followed other jurisdictions in holding nominal damages were presumed in cases involving the infringement on the right to control the use of one’s identity.

In addition, the Appeals Court held Tedeschi’s claim fell outside the intra-enterprise exception to c. 93A, because no joint venture between Tedeschi and Percy ever formalized. The Appeals Court further noted it was unclear whether Tedeschi was asserting a claim for violation of c. 93A § 9 or § 11, but that if it were under § 11, she would be obligated to prove that she suffered or will suffer “loss of money or property,” which would be fatal to the claim. The Court further held if the claim was asserted pursuant to § 9, her claim would not be fatal as that section provides nominal damages.

Lawyers, particularly those in smaller firms, should take care to remove an attorney’s name from the firm name and all associated advertising when that attorney has left the firm. Failure to do so may result in legal action or a bar complaint against the remaining partners.

For more information, please contact Nancy Reimer at [email protected], Victoria Fuller at [email protected], or Lori Eller at [email protected].

Another Hit to Short-Term Rentals: Styller v. Zoning Board of Appeals of Lynnfield

Posted on: June 11th, 2021

By: Jessica Gray Kelly, Esq. & Matthew L. Schwartz, Esq.

Local governments seeking to curb short-term rentals by private homeowners received a win this week in the case of Styller v. Zoning Board of Appeals of Lynnfield, SJC-12901. The Massachusetts Supreme Judicial Court held the Plaintiff’s occasional, short-term rental of his private single-family home was not a permitted use under the zoning bylaws because the short-term, transient nature of the rentals did not meet the zoning purpose for single-resident zoning districts.

The Plaintiff owned a five-bedroom single-family home on three acres of land in Lynnfield (the “Town”).  Plaintiff’s family lived in the home, but beginning in July 2015, would occasionally rent it out to guests for two to five days.  Renters used the home for family and college reunions, business retreats and photoshoots.  In May 2016, an individual who rented the home hosted a large party during which a shooting occurred that left one person dead.

After this incident, the Town building inspector ordered the Plaintiff to cease and desist offering the property for short-term rentals because doing so was considered an impermissible hotel use, or in the alternative, a lodging or rooming house use, which were permissible only with prior approval of the Town.  The Plaintiff appealed the order to the Town’s board. While the appeal was pending, the Town amended its bylaws to explicitly prohibit short-term rentals, defined as periods of thirty-days or less, in single-resident zoning districts, unless specifically authorized by the Board of Appeals.  The Board relied on the amended bylaw and upheld the order based on the prohibition of short-term rentals of thirty days or less without prior authorization.  

The Plaintiff appealed to the Land Court, which after a jury-waived trial held the Plaintiff’s short-term rental of the property constituted an unauthorized additional use because it was equivalent to using the residence as a “tourist home” or “lodging house” under the bylaw existing at the time of the use, not the amended bylaw.  Because Plaintiff did not have prior authority to operate a tourist home or lodging house, the Land Court held  the short-term rental use violated the bylaw. 

The Supreme Judicial Court transferred the case on its own initiative from the Appeals Court and affirmed the Land Court’s ruling but on different grounds.  The Plaintiff argued on appeal that 1) the use of his property for occasional short-term rentals was not an unauthorized “additional use” but rather was a permissible principal use as a one family detached house and  2) prior to the amended bylaw, there was no prohibition against renting out single-family homes.  The Town countered, just because the prior bylaw did not explicitly prohibit renting of a single-family home, that did not make short-term rentals automatically permissible.   

The Supreme Judicial Court held,contrary to the Land Court’s holding, the use of the home as a short-term rental was neither a tourist home or lodging house because, among other things, the renters were given exclusive use of the entire house, without the owner or a manager remaining on the premises once renters arrived.  The Court also held short-term rental uses were not, as the Land Court held, “unauthorized additional uses.”

 Rather, the Supreme Judicial Court held short-term rental use of a single family home was inconsistent with single-resident zoning purposes – preserving the residential character of the neighborhood and developing a sense of community and a shared commitment to the common good of that community.  While long-term rentals would serve these zoning purposes, short-term rentals do not.  The Court then relied on the bylaw’s definition of “residence” and “family” to conclude the Town had “clearly and unambiguously” excluded purely transient uses of propriety in residential zoning districts.  Accordingly, the Court concluded the Plaintiff’s use of the property for short-term rentals was “not a permissible use under the town’s bylaws, as it existed prior to its amendment in 2016.” 

Interestingly, the Supreme Judicial Court did not directly answer the question of whether the Board properly affirmed the building inspector’s order based on the bylaw as amended after Plaintiff had originally appealed.  Massachusetts General Laws c. 40A, § 6 generally protects property uses that were lawfully in existence prior to newly adoptive restrictive zoning regulations.  By holding the short-term rental use was not a permissive use to begin with, however, the Court avoided having to decide the harder question of whether the Board’s reliance on the amended bylaw was permitted under c. 40A.

The Styller decision reflects a general trend in states, cities and towns towards restricting or banning transient and short-term rentals of privately-owned property.  On the local level, cities and towns have many ways they can restrict their residents from offering short-term rentals, especially in single-family residential zoning districts.  The Court cautioned that a different result could be obtained depending on the city or town’s bylaws, the types of permitted “additional” uses, and the customary “accessory” uses in a particular community.       

For more information, please contact Jessica Kelly at [email protected] or Matt Schwartz at [email protected].

Google’s Use of Oracle’s java Application Programming Interfaces declared “Fair Use” by the United States Supreme Court

Posted on: April 30th, 2021

By: Kirsten Patzer

In a 6-2 decision, the Supreme Court of the United States(the “Court”) reversed the US Court of Appeals for the Federal Circuit in Google LLC v. Oracle America, Inc., holding Google’s use of Oracle’s Java Application Programming Interfaces (API) in its Android operating system was “fair use.”

The Court granted Google’s certiorari petition on two issues: 1) whether Oracle’s Java API is copyrightable; and 2) was Google’s use of the Java API “fair use.” The Court declined to undertake any analysis of the first question, rendering their opinion on the assumption that the Java API is copyrightable, and examined only whether Google’s use of 11,500 lines of programming code infringed on Oracle’s copyright or if Google’s use of the code was “fair  use” under US copyright law.

To establish whether Google’s employment of the Java API did, in fact, constitute “fair use” the Court examined the four factors set forth in the Copyright Act’s fair use provision: 1) the purpose and character of the use; 2) the nature of the copyrighted work; 3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and 4) the effect of the potential market value of the copyrighted work.

Justice Breyer, writing for the majority, began his assessment with the second factor, holding the nature of the copyrighted work favored a finding of fair use. The Court differentiated between the copied Java API “declaring code” and Google’s “implementing code” explaining the former is more “utilitarian” in nature, and is inherently bound together with the latter’s more “creative” counterpart, suggesting that the Java API code, standing alone, was not at the “core” of copyright protection.

The Court then determined Google’s “purpose and character” of the use was “transformative”, noting Google used the code to create an operating system for a different platform and computing environment. Thus, Google’s use of the code was “consistent with the creative process.” The Court also found the third prong, the amount and substantiality of the use, weighed in Google’s favor, noting the 11,500 lines Google copied were less than one percent of the code in the entire API.

Turning to the fourth factor, the Court determined Google’s Android smartphone platform did not replace Java and did not usurp its place in the market. Furthermore, Oracle would benefit from the reimplementation of their code into the market. The Court noted  Oracle “was poorly positioned to succeed in the mobile phone market” and Google’s Android platform differed from Oracle’s: “Google’s Android platform was part of a distinct (and more advanced) market than Java software.”

In sum, the Court concluded that Google took “only what was needed” to allow their programmers to “put their accrued talents to work in a new and transformative program” thus, Google’s copying of Java API code was fair use of that material as a matter of law.

For more information on this topic, please contact Kirsten Patzer at [email protected].

Departing Lawyers’ “Theft of Files” May Lead to a Violation of M.G.L.c. 93A

Posted on: April 29th, 2021

By: Nancy Reimer, Jennifer Markowski and Lori Eller

The Massachusetts Supreme Judicial Court recently held in Governo Law Firm LLC v. Bergeron, 487 Mass. 188 (2021), that the inapplicability of G. L. c. 93A, § 11, to disputes arising from an employment relationship does not mean that an employee never can be liable to its employer under G. L. c. 93A, § 11. Rather, where an employee misappropriates her employer’s proprietary materials during the course of employment and then later uses the materials in the marketplace, that conduct is not purely internal and it comprises a marketplace transaction that may give rise to a claim under G. L. c. 93A.

In this case, Governo Law Firm (GLF) sued to protect materials stolen by a group of its nonequity partners as they left GLF and prepared to start a new law firm, CMBG3 Law LLC. Governo had created a research library containing over 20 years of materials it had collected on asbestos litigation, along with an electronic database used to search the library. The nonequity partners secretly downloaded the library and databases, along with administrative materials such as GLF’s employee handbook and client lists while still employed with GLF. They then made an offer to GLF’s sole owner to purchase GLF and stated if the offer was not accepted that same day, they would resign. GLF’s owner rejected the offer and—too late—locked the attorneys out of GLF’s computer systems. The next day, those attorneys opened for business under CMBG3 and began using the stolen materials.

The jury in the Superior Court action found some or all of the attorney defendants liable for conversion, breach of the duty of loyalty, and conspiracy, but found none of them liable for unfair or deceptive trade practices in violation of G.L c. 93A, § 11. CMBG3 was found liable for conversion and civil conspiracy. GLF was awarded $900,000 in damages calculated by lost profits and a permanent injunction was issued enjoining the defendants from using the library and the databases.

GLF appealed the judge’s trial instructions and his posttrial rulings regarding the 93A claim, the scope of the injunction, and interest on the damages award. The SJC on appeal agreed with GLF and held the judge erroneously instructed the jury that the defendants’ conduct prior to their separation of employment, namely the stealing of the materials while still employed at GLF, was not relevant to GLF’s claim under G.L. c. 93A § 11. The SJC held that in order for the jury to resolve the G. L. c. 93A, § 11 claim the jury should have considered whether the attorney defendants’ theft and subsequent use of GLF’s materials amounted to unfair or deceptive conduct.

The SJC further determined it was an abuse of discretion for the trial judge to exclude the stolen administrative materials, such as the employee handbook and client list, from the scope of the permanent injunction.  

Regarding interest, the SJC held that while prejudgment interest was not required due to the non-compensatory nature of the damages, which were awarded on the basis of the defendant’s profits and not to make the plaintiff whole, post-judgment interest was appropriate and would accrue from the date of entry of initial judgment until payment in full. This was contrary to the position taken by the attorney defendants and the trial judge that the deposit of damages with the court, rather than directly to GLF, would terminate the accrual of post-judgment interest.

If you have any questions of would like more information, please contact Nancy Reimer at  [email protected], Jennifer Markowski at [email protected] or any other member of our Lawyers’ Professional Liability Practice Group, or Employment Law Group a list of which can be found at www.fmglaw.com

A Quick Summary of the Ethics Rules on Discrimination for California Lawyers

Posted on: April 20th, 2021

By: Greg Fayard

For decades, the California State Bar had an anti-discrimination ethics rule applicable to lawyers. That rule prevented lawyers from unlawfully discriminating in hiring, promoting, firing, or accepting or not accepting cases based on certain protected characteristics—the big ones that people thought about in the early 1990s: race, sex, religion, sexual orientation, national origin, disability. However, for the State Bar to get jurisdiction over a lawyer for being discriminatory, a court had to first find the lawyer engaged in unlawful discrimination.

That never happened, so this rule was never enforced.

The current discrimination ethics rule addresses the prior jurisdictional gap, and now confers original jurisdiction upon the Office of the Chief Trial Counsel of the State Bar of California to investigate and prosecute discrimination claims and make recommendations on disciplinary orders to the California Supreme Court.  California’s ethics rule says lawyers shall not discriminate, harass, or retaliate in not taking a case, ending representation of case, or not hiring, or firing someone based on protected characteristics. These protected characteristics went from seven to 19 and now include genetic information, military status, veteran status, color, marital status, among others. There is no longer a requirement that a court first find the lawyer engaged in discrimination before this rule is triggered.

So in summary, rule of Professional Conduct 8.4.1, says a California lawyer cannot discriminate based on the 19 characteristics when:

  1. Representing,
  2. Terminating, and
  3. Refusing to accept a case.

As to a lawyer’s employees or potential employees, the lawyer cannot discriminate based on the 19 characteristics when:

  1. Hiring
  2. Refusing to hire or
  3. Firing.

If a lawyer is charged by the State Bar for violating this rule, the lawyer has to notify the California Department of Fair Employment and Housing, and the U.S. Department of Justice or federal Equal Employment Opportunity Commission of the disciplinary charge, depending on the type of charge. Given the breadth of civil state and federal discrimination law, this rule was controversial, passing the State Bar Board of Trustees and going to the California Supreme Court for approval on a 7 to 6 vote. In any event, civil liability is not the only penalty for the discriminatory lawyer. Now discriminatory California lawyers can be disciplined by the State Bar.

If you have any questions or would like more information, please contact Greg Fayard at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.