by ·0 Comments

Court finds that Coyote president/founder’s blog post and director of operation’s Facebook status update could qualify as “adverse action” against employees for purposes of FLSA retaliation claims—Stewart v. CUS Nashville, LLC,  2013 WL 456482 (M.D.Tenn. Feb. 6, 2013)

We’ve seen cases  where employees were disciplined or fired for venting online (see posts here and here).  But what about when the employer does the venting?  That can create legal problems as well.

Employees of different bars in the well-known Coyote Ugly Saloon franchise filed a class action against corporate entities related to the franchise and Coyote Ugly’s president and founder, Liliana Lovell.  The lawsuit claimed violations of the Fair Labor Standards Act.  One of the plaintiffs (Stewart), claims that her employer retaliated against her shortly after the lawsuit was filed.  The alleged retaliation came in the form of this entry on Lovell’s “Lil Spills” blog, which appears on Coyote Ugly’s website:

“By the way Lil, you should be getting served with a lawsuit. No worries just sign for it”. This particular case will end up pissing me off cause it is coming from someone we terminated for theft. I have to believe in my heart that somewhere down the road, bad people end up facing bad circumstances!
I have been reading the basics of Buddhism and am going to a class on Monday. The Buddhist way would be to find beauty in the situation and release anger knowing that peace will come. Obviously , I am still a very new Buddhist cause my thoughts are ” fuck that bitch”. Let me do my breathing exercises and see if any of my thoughts change. Lol

Stewart claimed that the entry falsely accused of her theft.

A second employee (Stone), claimed that Coyote Ugly’s Director of Operations (Huckaby) made the following post to his Facebook page: “Dear God, please don’t let me kill the girl that is suing me .… that is all …..”  Huckaby was intoxicated when he made this post.  According to Stone, Huckaby was sitting across the bar from her when he made the post.  Stone, who at the time was Facebook friends with Huckaby, saw the post on her phone almost an hour later, but the post was removed the next day.  Huckaby did not remember making or removing the Facebook post.

Stone further claimed that Huckaby made retaliatory comments the next night after learning that a customer threatened to sue after falling down some stairs.  Huckaby allegedly said: “Why does everyone sue?  I’m tired of all these bi***es taking their issues out on our company.  They’re f***ing idiots.”  Huckaby made the statements while Stone was approximately two feet away.  Stone quit her job the next day.

The defendants moved for summary judgment on the two individual retaliation claims.  One of the issues relating to Stewart’s claim was whether the Lil Spills blog entry was an “adverse action.”  A plaintiff claiming retaliation “must show that a reasonable employee would have found the challenged action material adverse, which in this context means it well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.”  Burlington N. & Santa Fe. Ry. V. White, 548 U.S. 53, 67 (2006).  Applying that standard, the court found that a blog entry written by the employer’s founder and president accusing an employee of theft could constitute an adverse action.  A jury could find that the blog entry would have likely dissuaded a reasonable worker from making or supporting a FLSA claim.  Because genuine issues of material fact existed, the court denied summary judgment on Stewart’s retaliation claim.

Similarly, factual issues precluded summary judgment on Stone’s retaliation claim.  The court found that a reasonable person could find that Huckaby’s Facebook post was directed at Stone given that he knew she had joined the lawsuit and had made the post while seated across from her at the bar.  The Facebook post, together with the comments Huckaby made the following night, could be reasonably construed as the employer’s official hostility toward employees who bring lawsuits against it.  The court found that a reasonable person in Stone’s situation would have felt compelled to resign.  On the flip side, the court also denied Stone’s motion for summary judgment on the retaliation claim because there were factual disputes over Huckaby’s state of mind.  There was no evidence that Huckaby mentioned the lawsuit or Stone’s name while making either of the statements, and it was undisputed that he was drinking in both instances.

LegalTXTS Lesson: Authenticity can be an important part of a company’s brand or social engagement strategy, but sometimes a company’s self-expression can go too far.  As this case illustrates, even stray remarks can have legal consequences.  Like employees, employers need to exercise good judgment when posting content online.  Complaining about employees on the Internet rarely constitutes good judgment.  This is especially true if managers are connected to their subordinates on the same social network and therefore share content with each other.

by ·0 Comments
Creative Commons image courtesy of Daigo Oliva on Flickr

Creative Commons image courtesy of Daigo Oliva on Flickr

The Hawaii anti-paparazzi bill eponymously named after its chief supporter is back after getting an extreme makeover, and it just took another step toward becoming law in Hawaii.  The Senate Judiciary Committee has recommended passage of a revised version of the Steven Tyler Act (SB426, S.D. 1).  The revised bill is a big improvement from the original version.  It goes a long way toward remedying the problems discussed in my previous post on the Act, and now it looks much more like the California statute after which it was patterned.  But despite the revisions, the Act remains quirky in some ways, and it still doesn’t answer the question of why we need a brand-new privacy law.

Here are the highlights of the revised bill.  The revised bill:

  • creates an actual tort for constructive invasion of privacy, not just one in the name.  The original bill tried to create a constructive invasion of privacy tort, but the parameters of the tort were not well-defined.
  • defines certain concepts that are key to liability under the Act, like “personal and familial activity.”
  • makes it very difficult to impose liability on those publicizing or selling images or sound recordings that were captured in violation of the Act.
  • carves out exceptions to liability, including one for law enforcement activities.
  • creates a fairly novel process for raising a defense against invasion of privacy claims in court based on the First Amendment or its counterpart in the Hawaii State Constitution.

Now, let’s look at some of the features of the revised bill in greater detail.

Constructive Right of Privacy

The revised bill creates two types of invasion of privacy, one physical in nature and the other constructive.  Both require an intrusion into land owned or leased by the plaintiff.  This is an important revision because it gets rid of the “taking pictures at the beach” scenario (i.e., why should a celebrity complain about invasion of privacy if her picture is taken on a public beach?)

An intrusion, however, does not necessarily require a physical trespass onto the plaintiff’s property.  Spying and eavesdropping could constitute intrusion, but does not necessarily involve a physical trespass.  The tort of constructive invasion of privacy accounts for this distinction, stating that non-physical intrusions will be treated as invasions of privacy.  The use of “visual or auditory enhancing devices” to probe into the plaintiff’s private affairs, regardless of whether it involves a physical trespass, counts as an invasion of privacy.  That’s how constructive invasion of privacy works.

The original bill bungled the concept of constructive invasion of privacy by not tying liability to the use of visual or auditory enhancing devices.  The revised bill fixes that problem.

“Personal and Familial Activity”

The original bill left out definitions of key concepts.  A notable one was “personal and familial activity,” which is what the plaintiff must have been engaged in when the defendant captured images or recordings of him or her.  The original bill did not define the term.  The revised bill adopts the definition used in the California anti-paparazzi law.

Having a definition rather than none is a step in the right definition, but the definition is still too vague.  The revised bill defines “personal and familial activity” as “intimate details of the plaintiff’s personal life, interactions with the plaintiff’s family or significant others, or other aspects of the plaintiff’s private affairs or concerns.”  What range of activities does “the plaintiff’s private affairs or concerns” include?  The revised bill doesn’t say.

Liability of Sellers of Images and Recordings

One criticism of the Act was that it punishes sellers of images or recordings of celebrities.  The Act imposes liability on those who sold images or recordings that were captured in violation of the Act if they had “actual knowledge” of the violation and received compensation for the rights to the images or recordings.  One problem of the original bill is that “actual knowledge” was not defined, so the level of intent needed to trigger liability wasn’t clear.  The revised bill remedies that problem by defining “actual knowledge.”  The definition requires “actual awareness, understanding, and recognition” that the image or recording was taken or captured in violation of the Act.  That’s difficult to prove.

But the revised bill goes one step further in limiting publisher and seller liability.  The plaintiff has the burden of establishing actual knowledge by “clear and convincing evidence.”  This is the highest standard of proof in a civil matter (just below the “beyond a reasonable doubt” standard in criminal cases).

The plaintiff’s burden to prove the liability of publishers and sellers is reminiscent of the “actual malice” standard applicable in libel cases brought by a public official or public figure.  In other words, the revised bill makes it very, very difficult to prove publisher and seller liability.

The revised bill also makes clear that there is no derivative liability for publicizing or selling an image or recording if it had been previously publicized or sold before without violating the Act.

Exceptions to Liability

The revised bill creates exceptions to liability, most notably for activities relating to law enforcement and investigation into illegal conduct.  The revised bill also clarifies that the Act does not preclude suits for other legal or equitable relief under other theories, including the Hawai‘i anti-SLAPP law or a claim for publication of private facts.

First Amendment Defense

Perhaps the most interesting feature of the revised bill is an expedited process for handling defenses based on the First Amendment or its Hawaii counterpart, i.e., Hawaii Constitution, Article I, Section 4 (the revised bill does not cite specifically to Section 4, which is the section that parallels the First Amendment, so the expedited process apparently applies to a defense based on any portion of Article I is raised).  The basic idea is to give first priority to resolving questions of the constitutionality of enforcing the Act in a particular situation.

Here’s how the expedited process works.  If the defendant files a motion to dismiss a claim for violation of the Act based on First Amendment/Article I grounds, the case basically comes to a halt until the motion is decided.  The court cannot look outside the allegations in the pleadings to decide the motion, and all discovery is suspended until the motion is decided.  The court must hold a hearing and rule on the motion on an expedited basis.  If the court denies the motion, the defendant may immediately appeal the denial.

The revised bill also flips the burden of proof.  When the defendant files a motion to dismiss based on a First Amendment/Article I defense, the plaintiff has the burden to prove that, more likely than not, the plaintiff’s “claim is [not] barred by a defense based on the First Amendment of the United States Constitution or article I of the Hawaii State Constitution” (note that the quoted language in the revised bill omits the word “not”; that’s probably a typo).  If the defendant wins the motion, it can recover damages, attorneys’ fees, costs, punitive damages, and other sanctions against the plaintiff and even the attorneys and law firm representing the plaintiff.

Thoughts on the Revised Bill

The revised bill is much better than the original version.  I’m still not convinced, though, that the solution to the problem of overzealous paparazzi is a new law.  Hawaii already recognizes the privacy tort of inclusion into seclusion, and that seems to cover the type of intrusion addressed in the concept of “constructive invasion of privacy.”  The tort of intrusion into seclusion does not require a physical invasion into the plaintiff’s personal space.  The use of visual or auditory enhancing equipment to remotely gain access to the plaintiff’s private affairs would seem already covered under existing law.  Creating a new law to deal with the issue would add little new benefits while potentially creating more problems.

Take the expedited process for dealing with First Amendment issues, for example.  According to a Standing Committee Report, the expedited process was created in response to constitutional concerns about the Act.  As a lawyer who represents media defendants, I welcome extra procedural protections for airing out First Amendment issues.  But I do think the expedited process is somewhat sloppy.  The process gives too much incentive to a defendant to respond initially to a Tyler Act claim with First Amendment defenses, even unmeritorious ones.  The defendant has nothing to lose and everything to gain by using such a tactic.  By filing a motion to dismiss on First Amendment grounds, the defendant can freeze discovery in the case, shift the burden of proof to the plaintiff, and potentially reap the benefit of recovering fees, costs, and damages from the plaintiff, his or her attorney, and even the attorneys’ law firm!  There are few circumstances in which a defendant should not raise a First Amendment defense.  And on the flip side, true victims of constructive invasion of privacy might think twice before suing under Tyler Act due to the risks involved.  Which again begs the question: Do we really need the Tyler Act?

by ·0 Comments

Sharing a link to unauthorized video capture of proprietary information is not a violation of Stored Communications Act—Castle Megastore Group, Inc. v. Wilson, 2013 WL 672895 (D. Ariz. Feb. 25, 2013)

In closing arguments to the jury at the O.J. Simpson murder trial, defense attorney Johnnie Cochran famously quipped, “If it doesn’t fit, you must acquit.”  Plaintiff’s attorneys looking to add a Stored Communications Act (SCA) claim to their complaint would do well to heed Cochran’s advice.  There have been a rash of cases dismissing ill-fitted SCA claims (see my recent posts here and here).  Castle Megastore Group, Inc. v. Wilson is the latest.

Castle Megastore Group, Inc. (CMG) sued its former employees for allegedly sharing confidential company information with other companies while they were still employed at CMG.  CMG claimed that Flynn, who was employed by CMG as its “Social Media Specialist,” violated the SCA by posting a video of a confidential CMG managers meeting on Vimeo, a third party website, and sending co-workers the link to the video and the password to his personal Vimeo account.

This scenario didn’t fit into within the prohibitions of the SCA, the court said.  CMG argued that Vimeo was an “electronic communication service” within the meaning of the SCA, that the defendants knew the video contained confidential content before accessing it, and that Flynn lacked authority to give others access to the video.  The court agreed that Vimeo is an electronic communication service, but Vimeo is where Flynn shared the video, not where he obtained it.  The CMG did not allege that Flynn obtained the video through unauthorized access to a CMG-owned electronic communication service.  Flynn was authorized to grant access to his personal Vimeo account.  Sharing a link and password to that account did not violate the SCA, the court ruled.

LegalTXTS Lesson:  Read the SCA carefully before making a claim under it.  Understand how the various concepts in the statute (like “access,” “without authorization,” “facility,” and “electronic communication service”) fit together.  Just because one or more of the concepts is present in a given situation doesn’t mean you’ve a viable SCA claim.

by ·0 Comments

Single words and subject lines in electronic messages are “content” protected by the Stored Communications Act—Optiver Australia Pty, Ltd. v. Tibra Trading Pty. Ltd. & Ors., 2013 WL 256771 (N.D. Cal. Jan. 23, 2013)

Optiver sued its former employees in Australia for allegedly stealing its proprietary source code and using the code to start a competing company, Tibra.  The Australian court allowed Tibra to conduct discovery of emails from Google after finding Tibra’s discovery responses inadequate.  Optiver subpoenaed Google to produce documents relating to emails and Google Talk messages containing the terms “PGP” or “Optiver.”  Tibra moved to quash the subpoena, arguing that the Optiver was improperly requesting the content of communications in violation of the Stored Communications Act (SCA).

Optiver countered with three arguments.  First, “PGP” is the name of an encryption system, not content.  Second, Optiver said that it wanted the documents not to discover the substance of the communications, but to locate communications that might be relevant to the foreign litigation.  Third, if the email has been encrypted through PGP, Optiver cannot access the content without the proper encryption key and pass phrase, which it did not have.  The court was unpersuaded.  Content is content, no matter how insignificant, the court said.  The words “PGP” or “Optiver” in the body of a message qualify as content that the SCA protects.

Optiver also argued that subject lines of email communications and Google Talk messages are not protected by the SCA and should be disclosed.  Wrong again, the court said.  The subject line is “nothing less than a pithy summary of the message’s content.”  For support, the court pointed to the legislative history of the SCA.

by ·0 Comments

A personal cell phone is not a “facility” within the meaning of the Stored Communications Act—Navarro v. Verizon Wireless, L.L.C., 2013 WL 275977 (E.D. La. Jan.24, 2013)

A federal court in Louisiana recently ruled that a hacking and “sexting” victim could not sue under the Stored Communications Act (SCA).  The plaintiff (Navarro) visited a cell phone store and accepted the offer from a Verizon sales associate to try a new cell phone model for two weeks.  Navarro later returned the trial phone to the store and had a different Verizon sales associate (Stillwell) transfer data from the trial phone back to her phone.  After leaving the store, she received a message on her phone from an unknown number.  The message contained nude photographs of Navarro that she had taken using her phone’s camera.  When Navarro’s mother confronted the manager of the cell phone store, Stillwell admitted that he copied the photos from Navarro’s phone for his own use and accidentally sent them to Navarro from his phone.

Navarro sued Verizon and the cell phone for violating the SCA, among other theories.  She inadvertently omitted a claim for punitive damages under the SCA, however, and asked the court for permission to add such a claim.  The defendants argued that the claim would be futile because a personal cell phone is not a “facility” under the SCA.  Liability under the SCA requires the unauthorized intentional access of “a facility through which an electronic communication service is provided” to obtain, alter, or prevent “authorized access to a wire or electronic communication while it is in electronic storage in such system.”  18 U.S.C. § 2701(a).

The court agreed with the defendants.  In a Fifth Circuit case, the court concluded that the SCA envisions regulation of network service providers (like Verizon).  A home computer of an end user does not qualify for SCA protection.  Relying on that case, the court ruled that a personal cell phone is not a “facility.”  While a cell phone enables the use of an electronic communication service, it is not itself such a service.  The information stored on a cell phone therefore is not in “electronic storage.”  Navarro suggested that the defendants might have copied her photographs from a “cloud based” storage system run by Verizon, but there was no evidence of that, so the court rejected the theory.  Navarro was denied permission to add a punitive damages claim under the SCA.