In House - The FindLaw Corporate Counsel Blog

August 2014 Archives

Dear Pharma GCs: Wyeth v. Weeks Isn't the End of the World

We recently reported on the Alabama Supreme Court decision allowing brand-name drug manufacturers to be held liable for injuries sustained from generics. The decision has prompted a whole host of hand-wringing and a parade of horribles from places like The Wall Street Journal and Claims Journal. The three separate dissents in the case also insisted that the ruling was anti-business and would lead to more lawsuits.

If you're the GC of a drug company, should you be worried?

FedEx Ruling: Form, Rather Than Label, Determines Independent Contractor Status

Independent contractor or actual employee? An employee gets Fair Labor Standards Act protections, including overtime and benefits. Independent contractors get, well, their salary. The appeal of contractors then, is obvious for big companies like FedEx.

Unfortunately, as FedEx just learned, often it's not the label that matters -- it's the substance of the relationship. The Ninth Circuit just held that FedEx drivers, which are labeled "independent contractors," aren't independent at all. FedEx determines their route, the color of their van, their uniform, and even their appearance -- a relationship that, in practice, looks a lot more like an employer-employee arrangement.

Employees Wrongly Fired for Complaining on Facebook: NLRB

Section 7 of the National Labor Relations Act says employers can't prohibit employees from talking about unions, working conditions, or pay. Section 8 prevents employers from punishing employees for these activities.

Employees of Triple Play Sports Bar and Grille in Watertown, Connecticut, took to Facebook to complain that Triple Play's co-owner and accountant, Ralph DelBuono, incorrectly calculated the employees' state tax withholding, and as a result, they owed the state money. Two days later, all the employees who participated in the conversation were fired.

In a decision from the National Labor Relations Board, two panel members found that employees were engaging in protected activities and were wrongly terminated in violation of the Act.

Obamacare to Blame for Cubs' 'TarpGate'? Either Way, 'Embarrassing'

Last week, Major League Baseball had its first protest upheld in more than two decades. The San Francisco Giants protested a called game, which the Chicago Cubs won 2-0 after five innings of play, thanks to a rain-out due to the Cubs' grounds crew's inability to pull the tarp over the field in time. (The Giants still lost, 2-1, when the rest of the game was made up.)

To television viewers, and the hometown Cubs fans who booed the grounds crew, it appeared that they were short-handed. And despite Major League Baseball itself stating that the tarp malfunction was caused by "the failure to properly wrap and spool the tarp after its last use," an alternate cause soon emerged after a local paper spoke with club insiders: Obamacare.

Openness, Communication Are Keys to Heading Off Whistleblowers

What happens when you learn about a potential whistleblower -- someone who's gone through an internal process to report wrongdoing? Do you tense up a little bit? Feel tempted to release the hounds? Want to circle the wagons?

Of course, you know that retaliating against a whistleblower can subject your company to penalties. Everybody does it, though. Ross Brooks, a partner with Sanford Heisler's whistleblower protection practice, told Inside Counsel that companies retaliate about nine times out of 10. Yet, there are ways to deal with whistleblowers that don't involve a pink slip.

Here are a few courses of action in-house counsel may want to consider:

Congress Members Ask FTC to Probe Alleged Outlet Store Switcheroos

Is your company engaging in false advertising? Are you sure? When was the last time someone from the marketing department walked through your door to make sure they were on the up-and-up?

Maybe it's time you checked. The Federal Trade Commission is investigating "outlet stores" -- those low-priced colonies of large clothing labels like Saks, J. Crew, Gap, and so on -- that live in outlying outlet malls around the nation.

Uber Hires Obama's Campaign Manager to Curb Regulatory Backlash

Last year, in the wake of two well-known startups (Uber and Square) clashing with local laws and regulations, we asked who was at fault -- the disruptor or the disrupted, the startups or the state?

Both startups, but especially Uber, had run headfirst into local ordinances, regulations, and cartels bent on preserving the status quo, but also hadn't done their homework or made an effort to play the political game before entering the market and upsetting the (legal) status quo -- easier to get forgiveness than permission, we suppose.

Now, Uber has pulled a U-turn and hired a noted behind-the-scenes political figure to glad-hand politicians: David Plouffe, Obama's 2008 and 2012 campaign manager.

After B&N's 'Browsewrap' Case, 5 Alternatives for Your Website's TOS

Earlier this week, the Ninth Circuit ruled that Barnes & Noble couldn't enforce an arbitration agreement against a customer. The only notice of the arbitration clause was buried in an agreement the user had to find by clicking a link to it on Barnes & Noble's website.

These agreements -- called "browsewrap" or "clickwrap" agreements -- are popular because they bury the lede in fine print -- which the Ninth Circuit said wasn't OK.

In order to protect the enforceability of your website terms of service, here are five alternatives to "clickwrap"/"browsewrap" agreements that should past the Ninth Circuit's muster:

Littler Mendelson, the largest global employment law practice, recently released a report in which it documents the "swelling tide" of class actions brought against employers under the Fair Credit Reporting Act (FCRA).

In the report, it discusses why the number of FCRA class actions is growing, and what your company can do to protect, or defend, itself from a class action. Here's a brief summary of the report, which you can read in full by clicking here.

Last week, we looked at a Gallup study that looked at the effects of "stay[ing] connected to the workplace outside of their normal working hours" and found that it was a "somewhat or strongly positive development," according to 79 percent of employees surveyed.

However, when the Harvard Business Review read those results in the context of an earlier Gallup report, "State of the American Workplace," HBR concluded that "workers will view their company's policy about mobile technology through the filter of their own engagement."

So that got us thinking, how can your company increase employee engagement? And, does it need a Chief Happiness Officer to effectuate that change? Let's find out.

5 Reminders for GCs When Mulling Mass Layoffs

Cisco Systems -- the company that makes all the networking equipment -- announced plans this week to lay off 6,000 employees, Fortune reports. This comes a scant month after Microsoft announced it would lay off 18,000 employees over the next year.

Companies lay off employees all the time, but mass layoffs at once carry with them both legal and PR challenges. All of these recommendations amount to something in-house counsel already know: Do your homework and plan ahead.

Here are five things to remember when your company considers mass layoffs:

Ex-GC Files Anti-SLAPP Claim Against Schlumberger

As you probably know, SLAPP stands for "strategic lawsuit against public participation." Many states have anti-SLAPP statutes, which allow defendants to dismiss a lawsuit on the grounds that it was filed to intimidate the defendant into ceasing certain protected conduct the plaintiff finds distasteful, like publishing a nasty review of their product.

Fearing abuse of SLAPP suits, many states also allow a plaintiff to "SLAPP back" (boy are these legislators clever), wherein a plaintiff rebuts the defendant's SLAPP claim by showing that the lawsuit is, indeed, meritorious.

What Did the Five Fingers Say to the Face?

Charlotte Rutherford, former general counsel of Texas oil field services company Schlumberger Ltd., was sued by her former employer, alleging that she took trade secrets with her to her new company. Rutherford invoked Texas' SLAPP statute, arguing that Schlumberger's suit is frivolous and little more than retaliation for her new company, Acacia Research Group, suing Schlumberger over alleged patent infringement.

In our ever-connected world, we lawyers are not strangers to the concept of always being "on call." In fact, when I picture a lawyer, the first image that comes to mind is someone checking their email on their phone -- constantly. While that may be normal for lawyers, what about the rest of your company's employees?

Earlier this year, Gallup reported that nearly eight in 10 (or 79 percent) of workers who "stay connected to the workplace outside of their normal working hours" view it as a "somewhat or strongly positive development."

Before you draft a hasty company policy regarding after-hours email, there are a few things to consider.

The Family and Medical Leave Act ("FMLA") recently marked its 21st anniversary, and with more than 100 million people using the benefits bestowed by the Act, your company's employees have probably taken some sort of medical leave.

Hopefully, your law department has already taken time to review your company's FMLA policies to make sure they meet proper standards. However, a recent case decided in the Third Circuit did away with traditional notions of notice.

Since it's the first case to address the issue, according to Business Insurance, we thought we'd let you know about the case, and give you some tips to make sure you adequately provide your company's employees with FMLA notice.

Judge Koh, dubbed (by us) "the most powerful woman in Silicon Valley," flexed her judicial strength on Friday when she rejected a proposed settlement in the Silicon Valley anti-poaching antitrust lawsuit involving some of high-tech's biggest players, reports Bloomberg.

Finding the proposed settlement amount of $324 million "troubling" in light of plaintiffs' substantial and compelling evidence, Judge Koh refused to approve the settlement. Let's take a look at the reasons why.

Did Hobby Lobby Open the Door to the 'Reverse Pierce'?

The Supreme Court's Hobby Lobby decision ruffled the feathers of all of us who believe women's health issues belong between a woman and a doctor, not a woman, a doctor, and middle management. Unforeseen issues of corporate governance and liability have also escaped from the Pandora's Box that is Hobby Lobby.

On NPR's "All Things Considered" this week, correspondent Wade Goodwyn came up with another unexpected result: the loss of the corporate veil. Goodwyn talked to Gregory S. Crespi, whose law review article "The Reverse Pierce Doctrine" was cited in Hobby Lobby's briefing. The article, published in 1990 in Journal of Corporate Law, posits a model framework for analyzing and deciding cases where a person with a claim against a "corporate insider" is actually trying to treat the insider and the corporation as a single entity.

We've already concluded that lawyers love surveys, and the latest attorney survey deals with the unique legal issues that general counsel face.

Executive conference organizer Consero surveyed 57 general counsel from Fortune 1000 companies to find out everything from top legal issues that have GCs staying up at night to legal departments' relationship with outside counsel.

Let's take a look at the results of Consero's 2014 General Counsel Data Survey:

LinkedIn's Labor Settlement: $6M for Overtime Violations

Please, please keep track of your employees' hours. You don't want to suffer the same fate as LinkedIn, which has agreed to pay $6 million in unpaid overtime and damages to employees in California, Illinois, Nebraska, and New York.

The settlement with the U.S. Department of Labor came as the result of LinkedIn's failure to adequately track its hourly workers' overtime and pay them for that overtime.

ACC Heads to New Orleans for Its Annual Meeting, Oct. 28-31

Um, Halloween in New Orleans? Do you need any other reason to attend this year's Association of Corporate Counsel Annual Meeting, October 28 to 31 in The Big Easy?

In fact, go book your flight, hotel room, and tickets to the meeting right now. We'll wait. Just leave this article open and do it in a new tab.

That's better. Now that you're all booked, what do you have to look forward to?

SLC's Comic Con Gets Cease-and-Desist From the Original Nerds

Comic Con -- the con stands for convention, obviously. Many years ago, the San Diego Comic Convention (SDCC) started the trend of nerdfests. They were also denied a trademark over the obviously abbreviated "Comic Con," but were granted the rights to the hyphenated "Comic-Con."

Fast forward to today, and there are comic conventions nationwide, including one in Salt Lake City (the Salt Lake Comic Con, or SLCC). The SLCC folks, seeking to promote their upcoming convention, drove a vinyl-skinned vehicle around the much larger SDCC last month, a feat of advertising that led the local folks to send a cease-and-desist letter to their alleged imitators to the north.

But do the original nerds have a case?

Microsoft Must Turn Over Customer Data Stored Overseas: Judge

Think that data stored in overseas data centers are outside the reach of U.S. law? Think again. A U.S. District Court judge in Manhattan has affirmed a magistrate's ruling ordering Microsoft to give overseas-stored data to federal prosecutors.

The ruling -- which Microsoft vows to appeal -- has implications for companies that store their data in other countries. In fact, email providers like Google -- which provide non-Google-branded email services that are hosted by Google -- store files in data centers around the world. Many corporations use Gmail to host their email because it's cheaper than maintaining their own email systems on-site or in-house.

If your company stores files abroad -- and there's a good chance it does -- then those files may very well be within the reach of American law enforcement.