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Posts Tagged ‘US Court of Appeals’

Art or Blight? Developers Should Think Twice Before Removing Graffiti

Posted on: June 3rd, 2020

By: Jennifer Adair

In an opinion heralded by the street art community, the United States Court of Appeals for the Second Circuit affirmed a $6.75 million award of statutory damages against a building developer who willfully violated the Visual Artists Rights Act of 1990 (“VARA”) when he painted over popular graffiti.  Castillo v. G&M Realty L.P., 950 F.3d 155 (2020) presented an extreme example of VARA litigation involving Long Island City’s 5Pointz, a series of dilapidated warehouses that became a popular art installation when the building developer permitted prominent street artists to cover the walls with aerosol art. The developer brought in an acclaimed street artist to act as a curator of the building, selecting artists who displayed their works on a rotating basis. 5Pointz became an area attraction, featured in movies, TV shows, music videos, and countless Instagram posts.

That is, until the developer decided to revamp the property.  Over the objections of the curator, the artists, and the community, and while litigation concerning the matter was ongoing, the developer instructed workers to enter the property in the dark of night and paint over the artwork, an act that was found to constitute a willful violation of VARA.

VARA, 17 U.S.C. § 106A, was created to give artists a non-transferable lifetime authorship interest in works, even if the artists are no longer in possession of their works, in order to prevent “distortion, mutilation, or other modification of the work which would be prejudicial to his honor or reputation.” Further, it gives artists the right to “prevent any destruction of a work of recognized stature” by requiring building owners to provide the artist with a reasonable opportunity to remove the work before its destruction.

After an extensive factual inquiry spanning three weeks, the 5Pointz artists persuaded the court to award statutory damages for the destruction of their work, even though by its very nature aerosol art is temporary. At what point does cleaning up blight become destruction of art under VARA?  Developers should ask themselves:

  • Does modification of the work prejudice the honor or reputation of the author?
  • Is the work of a recognized stature?
  • Does the work have artistic quality?
  • Has the work been recognized within the artistic community?
  • Has the high status of the work been acknowledged?

If the answer to any of these questions might be “yes,” developers would be well-served by seeking legal advice.

For more information, please contact Jennifer Adair at [email protected].

ERISA Plaintiffs Continue Their Assault on Major Universities, but Every ERISA Fiduciary is Vulnerable

Posted on: May 15th, 2019

By: John H. Goselin II

Beginning in August 2016, the ERISA Plaintiffs’ Bar launched a concerted attack on more than 20 major universities across the country filing class action lawsuits for alleged violations of ERISA fiduciary duties under ERISA Section 404 and alleged participation in ERISA prohibited transactions under Section 406.

Each side has won significant victories. Duke University, the University of Chicago and Vanderbilt University have capitulated and are paying six and seven-figure class action settlements. The University of Rochester and Long Island University fought until the plaintiffs simply walked away earlier this year. Northwestern University, New York University, Washington University and the University of Pennsylvania won impressive victories at the motion to dismiss stage.

But the battle is never over at the district court level. The United States Court of Appeals for the Third Circuit has provided new life to the plaintiffs bringing suit against the University of Pennsylvania, albeit only for 2 of the 7 counts that were originally alleged. Sweda v University of Pennsylvania, 2019 U.S. App. LEXIS 13284 (No. 17-3244, May 2, 2019). Not only does this reversal present new risks for the University of Pennsylvania, but it may put a damper on lower courts willing to dismiss these class action lawsuits.

The Third Circuit rejected a per se rule that would protect plan fiduciaries who provide a “mix and range of investment options” to plan participants. Instead, the Third Circuit held that Plaintiff Sweda had plausibly alleged that the defendants had “failed to conform to the high standard required of plan fiduciaries [under ERISA Section 404(a)(1)]” by alleging that (i) the recordkeeping fees were 6-7 times greater than the fees paid by similar plans, (ii) defendants failed to solicit competitive bids for recordkeeping and other plan services or (iii) defendants failed to hire an independent consultant to assess the plan’s administrative costs. Furthermore, the University of Pennsylvania Plan maintained high-cost investment options with historically poor performance compared to available alternatives, particularly the ongoing use of retail mutual fund shares when lower-cost institutional shares were available, but never adopted by the plan.

It is important to note that the claims being asserted against the universities apply to every business that maintains a 401(k) plan, or other ERISA investment plan, for their employees. The employer as a plan sponsor and the named and functional fiduciaries administering the plan will be held to the “prudent man” standard of care which requires all plan fiduciaries to exercise “the skill, care, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.”

In short, the structure and administration of an ERISA plan must be continually reviewed, evaluated and modified to reflect the prevailing better/best practices. Plan sponsors and individual fiduciaries should develop a process of continuing and ongoing education regarding (i) what is expected of ERISA fiduciaries and (ii) the available options in the market place. Furthermore, plan fiduciaries must have a documented process pursuant to which they periodically evaluate the ERISA plan(s) for which they are responsible and make changes when necessary and appropriate.

Once the ERISA Plaintiffs’ Bar is done with the universities, they will be looking for their next targets.

If you have any questions or would like more information, please contact John Goselin at [email protected].

Who is Protected by Privilege?

Posted on: December 27th, 2018

By: Matthew Jones

In the recent case of Day v. Johns Hopkins Health Sys. Corp., the U.S. Court of Appeals for the Fourth Circuit answered this question in the context of expert witnesses facing RICO violations. In the Day case, an expert witness testified that the evidence he reviewed regarding the coal miners’ claim for Black Lung Benefits Act benefits did not support those claims. After the claim was denied, the Center for Public Integrity alleged that the radiology unit at Johns Hopkins were much less likely to find cases of black lung disease than other doctors.

On appeal, it was argued that the expert witness misled the Court and the miners as to the standards he was applying, which amounted to a systematic violation of international standards. However, the Fourth Circuit reiterated the “absolute” nature of the litigation privilege for those witnesses who “aid the truth-seeking mission of the judicial system.” One important goal of this privilege is to prevent future witness participation deterrence or to be undermined by subsequent actions for damages arising out of the witness’s testimony.

If you have any questions or would like more information, please contact Matthew Jones at [email protected].