News, Updates & Insights
Netflix Sued for Interfering with Employment Contract
While non-competition, non-solicitation and trade secret litigation seems to be at the forefront in today's mobile gig economy, employers need to remember that they cannot go after an employee under an existing employment contract unless the contract itself provides a way out for the employee. While employers may argue that it is all just healthy business competition, inducing a breach is often wrongful in and of itself. Moreover, a potential new employer should take very seriously any letter received from the former employer’s attorney and seek to resolve these issues before allowing the new employee to begin work. Once the employer knows of possible wrongful conduct, it might find itself on the hook for damages, as well.
MSBCA Strictly Enforces No Damages for Delay Clause
A recent case before the Maryland State Board of Contract Appeals yet again illustrates the importance of understanding contractual limitations and waivers. In that case, the state contract contained a “no damages for delay” clause, which barred an approximate $1,000,000 delay claim.
Tenant’s Award for Compensatory and Punitive Damages Reversed for Lack of Pre-Suit Demand
A recent case from the Maryland Court of Special Appeals demonstrates, once again, the risks assumed by a commercial landlord when it seeks to evict a tenant itself as opposed to going through the judicial process. Although the landlord ultimately prevailed, the case offers a stark reminder of the significant damages that a tenant may recover if the landlord’s self-help actions are ultimately determined to be improper.
Maryland State Board of Contract Appeals Rules That Offeror That Did Not Submit Proposal Lacked Standing
The Maryland State Board of Contract Appeals recently addressed a prospective offeror’s standing to prosecute a protest and subsequent appeal to the Board. Because the claimant never submitted a proposal for the RFP and, therefore, there was no reasonable possibility of it being awarded the contract if it prevailed on its protest, the Board ruled that it was not aggrieved under COMAR regulations and lacked standing.
California Passes Proposition 22 – Defining App-Based Drivers as Independent Contractors
As I previously wrote about, California had pushed to make Uber, Lyft and other app-based drivers employees, with all the attendant employee protections and benefits. However, California voters rejected the efforts and passed Proposition 22, which defines these drivers as independent contractors. It appears that Uber and Lyft are safe for now in California.
OSHA Updates COVID-19 Reporting Guidance
OSHA recently updated its reporting guidance for work-related confirmed hospitalizations due to COVID-19, as well as work-related COVID-19 fatalities.
Another Nail in the Coffin for Uber and Lyft in California
Uber and Lyft recently suffered another set-back in California as a result of an appeals court there upholding a preliminary injunction requiring them to classify their drivers as employees.
Piercing the Corporate Veil for Wage Claims and the Economic Reality Test
When an employee believes that he or she has not been paid wages due to him or her, one of the most important questions is who is the “employer” under the various federal, state, and local laws. The employee may have several “employers” under these laws and against whom he or she can impose liability - especially important if the corporate employer is insolvent.
A case from the Maryland Court of Special Appeals recently addressed this issue but so with a twist. The Court utilized the well-known “economic reality test” from the FLSA, but in the context of corporate veil piercing, which allows a court to disregard entity-level protections and impute liability to the business’s owners. Piercing the corporate veil is difficult in Maryland, and a court will only disregard the corporate entity to prevent fraud or for a paramount equity.
Discovery Rule Dooms Late Filed Bid Protest
Most contractors know that a bid protest must be filed either before bid opening or, depending on the circumstances, within seven days of learning of the basis for the protest. The seven-day time limit is strictly enforced and begins to run when the contractor knew or should have known of a harm.
OCC Hits Capital One Bank With $80 Million Penalty for Failing to Properly Migrate Data to the Cloud
Earlier this month, the Office of the Comptroller of Currency (OCC) assessed an $80 million civil penalty, and ordered certain remedial actions, against Capital One Bank “based on the bank's failure to establish effective risk assessment” prior to migrating information technology operations to the cloud. Specifically, the bank violated 12 C.F.R. Part 30, Appendix B, “Interagency Guidelines Establishing Information Security Standards,” which addresses administrative, technical and physical safeguards to protect the security and confidentiality of customer information.
Tesla Sues Competitor for Trade Secret Violations
Tesla recently sued a competitor and former employees for violations of state trade secret laws, breach of contract and interference with contract. This case is a bit different because in addition to claiming that the departing employees took technical data related to the production of Tesla's electric vehicles, the lawsuit also alleges that the employees took recruiting and employment data.
Two New Noteworthy Laws Take Effect in Virginia on July 1, 2020
For those who do business or litigate in Virginia, you should be aware of two noteworthy laws that take effect July 1, 2020. With the first, Virginia becomes the latest state to ban covenants not to compete for low wage employees . The second law creates a private cause of action for misclassified workers if their employers had knowledge of the misclassification.
Bankruptcy Court Grants Tenant Partial Relief Pursuant to Lease’s Force Majeure Clause
In a recent case from the Bankruptcy Court for the Northern District of Illinois, the court addressed the tenant’s argument for relief under the lease’s force majeure clause, and ruled that the Governor's order suspending on-site operations prevented the tenant from partially performing under the lease.
Bad Reputation Precludes Defamation Claim
It is not every day that a court throws out a defamation claim because the plaintiff’s reputation is “so badly tarnished that he cannot be further injured by the allegedly false statements on that subject.” But that is what happened by a New York state court in response to a lawsuit filed by retired baseball player Len Dykstra against another former ball player, Ron Darling Jr.
Updated OSHA Guidance for the Construction Industry
OSHA recently issued updated guidance for the construction industry. It contains recommendations for engineering and administrative controls, as well as safe work practices and personal protective equipment, and contains links to pertinent CFR regulations.
General Contractor’s Statements to Supplier Sustain Claim for Unjust Enrichment
General contractors often need to interact directly with lower tiered subcontractors and suppliers in order to keep the project moving forward. However, they should be aware that sometimes their statements can give rise to legal duties to pay those lower tiered subcontractors, with which they are not in contractual privity, when the subcontractors and suppliers are not paid by their direct counterparties.
Posting on Instagram May Prevent Third-Party Copyright Claim, But Probably Not
A recent post discussed a copyright case from the federal court in the Southern District of New York brought by a professional photographer who uploaded an image on her public Instagram page. The Court dismissed the photographer’s copyright claims, ruling that when an individual uploads a picture to his or her public Instagram page, he or she grants Instagram the right to grant sublicenses of the picture. The Court has now revised its decision and allowed the lawsuit to proceed, ruling that Instagram’s terms of service are insufficiently clear to warrant dismissal.
Trademark Litigation Update - Supreme Court Settles Willfulness Issue in Profits Awards
The Supreme Court recently resolved a split among the circuits and ruled that willfulness is not a prerequisite to a profits damage award in Lanham Act cases based on false or misleading use of a trademark.
Posting on Instagram Prevents Third-Party Copyright Claim
When an individual uploads a picture to his or her public Instagram page, he or she grants Instagram a license to display it and, importantly, the right for Instagram to grant sublicenses of the picture. By operation of Instagram’s terms and conditions, Instagram granted a third-party website a valid sublicense to embed a photo on its site through Instagram’s API and, thus, the website did not violate the photographer’s rights.
COVID-19 and Contracts - Practical Issues in Maryland
In unprecedented times like this, the allocation of loss will become particularly important. The country will eventually reopen, and business will restart. With it, however, will come the inevitable tide of litigation over disputes that could not be resolved. Now is the time to carefully review contracts and leases, and begin working towards resolutions.