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Posts Tagged ‘#FMGLaw’

Illinois Chips Away at Use of Non-Compete Agreements for Low-Wage Earners

Posted on: October 4th, 2016

By: Timothy Holdsworth

The political storm that has been brewing around the appropriate minimum wage amount now seems to have spread into the non-compete world.  Last month, Illinois enacted the Freedom to Work Act, which prohibits employers from entering into non-compete agreements with workers that earn $13 per hour or less.  Effective January 1, 2017, this law prohibits so called “low wage workers” from entering into agreements that restrict:

  1. Working for another employer for a specified period of time;
  2. Working in a specified geographic area; or
  3. Performing “similar” work for another employer.

Any non-compete agreements containing any of these provisions entered into after January 1, 2017 will be considered “illegal and void.”  The silver lining is that this law does not prohibit employers from entering into non-solicitation, non-disclosure, or confidentiality agreements with these employees.  Nonetheless, employers operating in Illinois should review and update their new-hire paperwork for employees earning $13 per hour or less to ensure they are not relying on non-compete agreements that they will not be able to enforce.

Feel free to contact counsel at Freeman Mathis & Gary if you have any questions or would like guidance on these issues.

District Court Dismisses Suit for Failure to Meet the Pleadings Requirements Under the U.S. Telephone Consumer Protection Act

Posted on: October 3rd, 2016

By: A. Ali Sabzevari

A federal judge recently dismissed a class action lawsuit accusing CrossCountry Mortgage, Inc. of contacting consumers nationwide with unsolicited calls, finding that plaintiffs did not clearly show the mortgage lender made the calls in dispute. Filed in May, the lawsuit alleged that CrossCountry contracted with Direct Source to conduct a telemarketing campaign to promote CrossCountry’s mortgages. The lawsuit alleged the defendants’ “overzealous marketing” included repeated, auto-dialed or “robo” calls to consumers’ cellphones without their consent.  The Judge dismissed claims that CrossCountry violated the U.S. Telephone Consumer Protection Act, 47 U.S.C.§ 227 et seq. (“TCPA”).

Passed in 1991 to limit nuisance phone calls, the TCPA bars automatically dialed calls to cell phones without permission.  Companies are not generally liable under the TCPA for calls made on their behalf by third-party telemarketers, but they can be liable if the telemarketer acted as their agent. Under FCC rules, a telemarketer may be an agent if it received a script from the company to use on calls or proprietary information about the company’s products or customers.

To state claim under 42 U.S.C. § 227(b), a complaint must allege that a defendant (1) made any call, (2) using any automatic telephone dialing system, (3) to any telephone number assigned to a pager service or cellular telephone service, (4) absent the prior express consent of the recipient.  To state a claim under § 227(c), moreover, a plaintiff must allege (1) receipt of more than one telephone call within any 12-month period (2) by or on behalf of the same entity (3) in violation of the regulations promulgated by the FCC.

The district court found that plaintiffs failed to allege that CrossCountry physically made or initiated the disputed calls or that Direct Source was acting as CrossCountry’s agent when it made calls.  Attorneys should be cognizant of the federal pleading requirements, especially in cases involving the TCPA, where a failure to plead with specificity could result in a quick dismissal of the lawsuit.

The case is Seri v. CrossCountry Mortgage, Inc. et al., U.S. District Court, Northern District of Ohio, Case No. 16-cv-01214-DAP (Sept. 28, 2016).

The Jury Did WHAT? The Recent Trend towards Large Verdicts in Personal Injury Cases

Posted on: October 3rd, 2016

By: Andrew Treese

The time may have come to ask whether we can continue to cling to the notion – it if was ever true – that evaluation of verdict range may be based upon some integral multiplier of special damages.  More and more, seven and eight figure verdicts are being awarded in personal injury cases.  Several factors appear to be driving this reality.  The first is the plaintiff’s bar: the best attorneys have become adept at utilizing the “reptile” theory, playing to a juror’s fears that they or a loved one might someday be in the same position as plaintiff (whether they actually use the “reptile” arguments or not).   Jurors, too, are a factor.  They often feel their role is to “send a message” to corporate defendants and therefore funnel their rage or sympathy into an award of compensatory damages.  The problem is that in many cases, that is not legally proper.  In many states, a jury may “send a message” to punish a defendant or deter future misconduct – but only in an award for punitive damages, not compensatory damages.  Some plaintiff’s attorneys are foregoing punitive damages claims altogether: they want the jury angry, but they want the anger reflected in the compensatory award to avoid state law caps on punitive damages.

Two recent verdicts illustrate the point.  Three weeks ago, a Fulton County jury awarded a $20 million verdict in a wrongful death claim arising from claims of negligent security against an apartment complex.  The verdict was reduced to “only” $10 million because the jury apportioned 50% of fault to the shooter.  Two weeks ago, a Fulton County jury returned a verdict of nearly $31 million in an auto wreck case including awards of $391,000 in medical bills, slightly under $94,000 in attorneys’ fees, and $30 million in general damages (i.e. pain and suffering).  Plaintiff’s counsel told a local media outlet that he had spoken with the jury and they reported reaching their decision in 10 minutes – before spending six additional hours deliberating whether or not they should award punitive damages.  The defense plans to seek post-judgment relief.

At Freeman Mathis & Gary, we work together with our clients to identify potential “large verdict” cases as early as possible.  Our discovery efforts are focused equally on liability, causation and damages, but tailored specifically to the case. It is important to remember, however, that there is no “silver bullet” to predicting large cases and even a “non-death” injury case may have potential for a runaway verdict.

FTC Finds Data Security Practices Unreasonable, Even Without Evidence of Unauthorized Access

Posted on: September 30th, 2016

By: Matt Foree

Recently, the Federal Trade Commission (“FTC”) issued a significant decision in which it held that LabMD, a former clinical laboratory, engaged in “unfair” practices in violation of Section 5 of the FTC Act because it failed to provide reasonable and appropriate security for personal information stored on its computer network.  The FTC held that LabMD’s “failures resulted in the installation of file-sharing software that exposed the medical and other sensitive personal information of 9,300 consumers on a peer-to-peer network accessible by millions of users.”  The FTC also found that LabMD left the data “freely available, for 11 months, leading to the unauthorized disclosure of the information.”  Significantly, the FTC reached its decision even though there was no evidence that consumer information was accessed by unauthorized persons.

The case centered on an analysis of whether LabMD’s practices were likely to cause substantial injury to consumers. The FTC stated that, “[i]n determining whether a practice is ‘likely to cause a substantial injury,’ we look to the likelihood or probability of the injury occurring and the magnitude or seriousness of the injury if it does occur.”  In issuing its decision, the FTC also restated its position on reasonableness:  “The touchstone of the FTC’s approach to data security is reasonableness: a company’s data security measures must be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.”

Applying these principles, the FTC found that “LabMD’s security practices were unreasonable, lacking even basic precautions to protect the sensitive consumer information maintained on its computer system.”  Specifically, “it failed to use an intrusion detection system or file integrity monitoring; neglected to monitor traffic coming across its firewalls; provided essentially no data security training to its employees; and never deleted any of the consumer data it had collected.” The FTC concluded that “the privacy harm resulting from the unauthorized disclosure of sensitive health or medical information is in and of itself a substantial injury under Section 5(n)” such that disclosure of data caused substantial injury.

LabMD has filed a Motion to Stay the effective date of the FTC Order pending review by a United States Court of Appeals, which is currently pending before the FTC.

The FTC’s decision sets forth an interesting precedent for violations under Section 5 of the FTC Act.  The decision expands the FTC’s ability to find violations of Section 5 without the need for evidence of access by unauthorized persons, which portends that the number of enforcement actions taken by the FTC will increase.

Let’s Go to the Replay: Effective Use of Video Footage to Defend Constitutional Claims

Posted on: September 27th, 2016

By: Andrew Treese and Kevin Stone

The 1989 premier of COPS, and more significantly the Rodney King incident in 1991, marked the beginning of a new era in law enforcement: the era of “policing on video.”  Technological advances, combined with lower prices and the availability of state and federal grants, spurred law enforcement agencies across the country to equip patrol cars with dash-cam systems.  More recently, the advent of portable digital recorders has prompted departments across the country to deploy body-cams — and in at least one case, the FBI obtained drone-mounted footage of a law-enforcement shooting incident.  Occasionally our clients ask whether this trend is helpful to the defense of civil claims.  The answer?  Yes.  Here’s why:

Our goal in defending excessive force claims is not only to obtain a win for the defense, but to do so as quickly as possible – preferably on a motion to dismiss or for summary judgment.  Without video, excessive force claims often boil down to a “he said / she said” dispute between police officers and suspects. Unfortunately, the presence of conflicting testimony can bar summary judgment, even where the plaintiff’s testimony seems to lack facial credibility, so long as the testimony creates a “genuine dispute” as to material facts in the case.

Fortunately, not all disputes are genuine.  Several years ago, our law partners Phil Savrin and Sun Choy won Scott v. Harris in the United States Supreme Court.  Scott is the principal case addressing the constitutionality of the use of force in police pursuits.  Equally as important, however, is the portion of the opinion that addressed summary judgment in cases involving incidents recorded on video. In no uncertain terms, the Court explained, “At the summary judgment stage, facts must be viewed in the light most favorable to the nonmoving party only if there is a ‘genuine’ dispute as to those facts. … When opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, a court should not adopt that version of the facts for purposes of ruling on a motion for summary judgment. … Respondent’s version of events is so utterly discredited by the record that no reasonable jury could have believed him. The Court of Appeals should not have relied on such visible fiction; it should have viewed the facts in the light depicted by the videotape.”

Since it was issued, Scott has been cited for this principle nearly 2,500 times.  The result is that dash-cam, body-cam, surveillance, and bystander video footage, which are becoming increasingly more prevalent, may provide defendants with a pathway to summary judgment that would not have been available otherwise.  Notably, video is not always a “silver bullet” to obtaining summary judgment.  Key events may take place out of the frame of the camera, audio tracks might not capture key statements or comments, or a court could simply decide that summary judgment is inappropriate based on the facts as depicted in the video.  Dashcam video may also fail to fairly show what the defendant officer would have seen from his position.  Even body-cam video may not fairly depict the officer’s perspective if the video is slowed, paused, and/or viewed numerous times.  Officers, after all, get one chance to watch events unfold at full speed.  Video footage can, however, eliminate disputes about what happened, allowing the court to focus on the legal analysis, rather than parse through each party’s version of the event.

The importance of securing relevant video footage as soon as possible after an incident occurs cannot be understated – not only to permit early case evaluation and avoid spoliation arguments, but to maximize the odds of obtaining summary judgment if suit is filed.  To this end, some states — including Georgia — have begun implementing mandatory retention periods for police video recordings, a topic we will address in a future blog.