Is It Fair to Claim That The Current US Supreme Court Is Pro-Business?

The New York Times this past Sunday had an article detailing how many times the Roberts court ruled in favor of business interests (61%).  Debra Weiss of the ABA Journal writes about the article and some other findings noting that the Roberts court ruled in favor of the same side supported by the U.S. Chamber of Commerce in 13 out 16 cases last term.  The Chamber’s interest is advocated by the National Chamber Litigation Center. 

The Times article also cited to a new study prepared for the Times by Northwestern University and the University of Chicago. The study allegedly supports a conclusion that the rate of success for business interests is increasing on the current Supreme Court.  For a different view of things, read Ted Frank on the PointofLaw blog calling it a "myth" that Supreme Court is pro business. Chris Lehmann at The Awl has another take and provides a good history of some of Roberts’ own cases before the Supreme Court when he was in private practice.

There are good points on both sides of the debate on this issue. Both sides have advocacy groups citing to data to support one view or another.  I think it is too simplistic to call a court pro-business or anti-business.  Although plenty of information is available to debate the issue, the cases before the Supreme Court are too varied in facts and law to draw a simple conclusion that a court is pro-business.     

 

New Privacy Report From Federal Trade Commission (FTC)

The FTC released its 122 page Privacy Report today.  This Report has been anticipated for some time. The FTC Chairman, Jon Leibowitz, summed up the purpose behind the FTC’s involvment in data privacy and security with release of the Report stating:

Technological and business ingenuity have spawned a whole new online culture and vocabulary – email, IMs, apps and blogs – that consumers have come to expect and enjoy. The FTC wants to help ensure that the growing, changing, thriving information marketplace is built on a framework that promotes privacy, transparency, business innovation and consumer choice. We believe that’s what most Americans want as well.

The Report is issued as "A Proposed Framework For Business and Policymakers."  The Report is intended to "inform policymakers, including Congress, as they develop solutions, policies, and potential laws governing privacy."  It is also intended to be a framework for how companies should address privacy. 

The biggest news making aspect of the Report is the endorsement of a Do Not Track system that would permit consumers to limit or control the amount of information given to advertisers that track consumers’ online behavior.  This would be similar to the Do Not Call registry. 

For an excellent review of this far reaching Report, and its implications, read this post on the Privacy and Security Law Blog.  For more information on the Do Not Track and online behavior tracking aspects of the Report, here is a post from Electronic Frontier Foundation.  In the days ahead, there will be many more blog posts about the Report.

For now, if you are a company that collects data for online behavior tracking or stores personally identifiable information (PII such as name, address, ss#, date of birth, etc),  this Report should be reviewed albeit with the understanding that it is a proposed framework and will not be a final report until sometime in 2011.  The Report will be subject to much debate and critical comment, but might also serve as a best practices guide post. 

My general take away points from the Report are that the FTC: 

  • Endorses a Do Not Track system
  • Expects privacy policies to be based on notice and choice for consumers
  • Opines that many companies "do not adequately address consumer privacy"
  • States privacy policies should reflect the level of sensitivity of the data it seeks to protect
  • Wants companies to promote consumer privacy throughout development of its services and products or adopt "privacy by design"
  • Wants Companies to make it easier for consumers to understand privacy policies and data collection
  • Wants consumers to have more choice on opt in or opt out for data collection

The FTC will take public comment on the Report (click here) until January 31, 2011.

Social Media Attorney – A New Niche To Address A Growing Concern For Business

I have written several posts on risk management and litigation arising out of social networking or media websites such as Facebook, Twitter and LinkedIn. Dan Schwartz’s Employment Law Blog includes coverage of a variety of concerns with use of social media and the need for internal policies and procedures.  While Dan’s blog covers employment law and this blog covers business litigation, social media ends up a frequent topic on both blogs.  In fact, you can read about social media on legal blogs across the country covering litigation, intellectual property, privacy, defamation, and the first amendment.  

Some say social media is a fad so why the extensive coverage on legal blogs?  The facts is that as the use of social media continues to grow and involve massive numbers of users, so does the risk of litigation and potential for numerous other legal issues.   To see some staggering statistics on social media,  check out the link to this video I came across on Tyson Snow’s blog Social Media Esq. The video is by Erik Qualman, the author of socialnomics.  Here is a link to the video on YouTube (social media revolution 2 refresh).

If you want a real world example of social media’s growing impact on the legal industry, consider Citigroup (Citi).  Citi posted on its website a job listing for Associate General Counsel.   The Citi job is not for auditing, compliance, or litigation.  Instead, in what may be a new trend, the Citi job is for Associate General Counsel-Social Media Attorney.   Citi is not alone.  Clorox also sought out an attorney to oversee its social media programs. I expect more companies will follow with new stand alone social media attorney positions.

The responsibilities posted for the Citi position give business owners a snap shot of the potential areas for concern. As posted on its website:  

The Citi Social Media Attorney will be responsible for the legal oversight of social media in three spheres:
 
A.        Citi-sponsored media such as company websites, Twitter accounts, and   YouTube;
B.        Social media interaction between Citi and the public/third parties; and,
C.        Employee participation in social media, as site user and/or site administrator.

The specific duties of the Citi Social Media Attorney provide a glimpse of the need for management of a vast array of legal areas.  The duties for the Citi job include:

•           Continued development and management of documentation for Citi-sponsored web initiatives (internal and external).
•           Lead establishment of legal risk framework for the Company’s social media efforts.
•           Work with specific business counsel to ascertain approval of content, as appropriate.
•           Consolidate, identify and address legal issues presented in content submissions for the social media sponsor.
•           Help establish consistent processes for vetting and replying to comments in interactive environments (websites, Twitter, etc) and promote consistency of policy implementation and risk-related practices.
•           Help protect Citi intellectual property in the world of social media.
•           Help oversee negotiation and drafting of contracts with third parties such as social media providers and content sources.
•           Serve as a resource for Citi’s business areas and business counsel as to inquiries regarding legal risks and parameters for social media.
 
Citi requested that the attorney for this position have experience in:
Advertising, Intellectual property, Information privacy/data security including specifically relevant sections of Lanham Act; Copyright Act as amended by Digital Millennium Copyright Act;  FTC Act and Guides (including recent Endorsements/Testimonials Guidelines); rights of publicity/privacy; promotions law; defamation law; Communications Decency Act.

 

In my view, Citi has smartly recognized that managing social media does not fall into a traditional field of law such as advertising or intellectual property alone, but rather overlaps several areas that can rapidly change.  As such, proper management of social media issues for a large company likely requires a dedicated position.  This could be a sign of a new practice area or niche: the Social Media Attorney. Either way, it certainly confirms that business and employment attorneys need to understand these areas of law to address the risks clients face as the use of social media continues to grow.

Constructive Trusts In Connecticut For Fraud and Unjust Enrichment

In business litigation in Connecticut, attorneys many times seek to impose a constructive trust over assets or income connected to wrong doing, breach of fiduciary duty, or fraud by business partners or agents.  In a decision to be officially released on November 23, 2010, the Appellate Court upheld a trial court’s  imposition of a constructive trust over certain assets of a business.  The case is Trevorrow v. Marcuccio, and you can download it here.

A constructive trust is not a real trust.  Rather, it is a judicially created trust and thus the term "constructive."  It arises when one party unjustly holds title or rights to property, such as assets or profits of a business partnership or corporation.  The wrongdoing may involve simply retaining property, misappropriating property, or converting the property into another form.  The trust is imposed against the wrongdoer who will be deemed to hold title of the property for the benefit of the innocent party.  In Trevorrow, the Appellate Court stated:

the issue raised by a claim for a constructive trust is, in essence, whether a party has committed actual or constructive fraud or whether he or she has been unjustly enriched

Typically, you see attorneys seeking constructive trusts in cases involving fraud, duress, breach of fiduciary duty, or some type of commission of a wrong.  However, the Trevorrow court clarified that the equitable remedy of a constructive trust is not only available in cases of actual or constructive fraud, but it is also available in cases where one party has been unjustly enriched at the expense of another even without a finding of wrong doing. 

In short, in Trevorrow, there was no finding of fraud or unethical conduct.  Rather, the court simply found that one person in the business relationship would have been unjustly enriched if permitted to keep the property. The Trevorrow case also serves as reminder that the trial court’s enjoy discretionary equitable powers to impose constructive trusts if proper facts are present.

Carders, Full Wallets and Identity Theft In Connecticut

I recently attended the Connecticut Privacy Forum.  One of the presentations was by Kim Peretti who is Director of Forensic Services at Pricewaterhouse and a former federal prosecutor that chased down identity thieves globally. (read an interview with Kim here about the infamous TJX case).   I learned quite a bit of information about trafficking in personal identifying information also known as PII.  You can read my live tweets from her presentation here. 

In the data theft industry, the thieves are called "carders."  They are out there looking for victims in person and online.   The primary goal is not only credit card information, but  "full wallets."  Full wallets is when the carder gets all the information you might have in your wallet.  Credit cards, license, bank cards, etc.  The thieves might get this information from you personally, but more likely through a company that keeps this type of information.  Once they get a full wallet, they typically sell it overseas where the information is stored on computer servers and offered for sale on websites.  Scary stuff. 

As a coincidence, I have had a recent uptick of inquiries from victims of identity theft.  There are many laws that are implicated in cases of identity theft such as wire fraud, computer fraud, and theft statutes. The theft may also involve a data breach such as in the case of TJX.   

Here is a quick summary of Connecticut’s statutory law for identity theft.

In Connecticut, an attorney can file a civil lawsuit on behalf of a victim of identity theft and obtain an award of one thousand dollars or treble damages, whichever is greater pursuant to statutory law. In addition, a victim can obtain an award of costs and reasonable attorney’s fees.  Damages may include documented lost wages, or any financial loss that can be tied to the identity theft. Courts have the ability to award other types of relief also, including but not limited to, not less than two years of commercially available identity theft monitoring.  

In Connecticut, attorneys may prove identity theft for civil damages by showing a violation of the criminal identity theft statutes.  This is similar to the civil theft statute and computer crime statute.  In general, the criminal identity theft statutes may be broken down under the following categories:

  • Class B felony identity theft.  This violation concerns cases where the victim is under the age of 60 and the value of money or theft exceeds ten thousand dollars or the victim is over the age of 60 and the value is greater than five thousand dollars.
  • Class C felony identity theft.  This violation occurs where the victim is under 60 and the value is greater than five thousand dollars, or if the victim is over 60.
  • Class D felony identity theft.  This occurs for any violation regardless of age or value.

To prove the underlying violation or actual identity theft, an attorney must prove in the following:

A person commits identity theft when such person knowingly uses personal identifying information of another person to obtain or attempt to obtain, in the name of such other person, money, credit, goods, services, property or medical information without the consent of such other person.

 

Personal identifying information is defined by the statute as:

any name, number or other information that may be used, alone or in conjunction with any other information, to identify a specific individual including, but not limited to, such individual’s name, date of birth, mother’s maiden name, motor vehicle operator’s license number, Social Security number, employee identification number, employer or taxpayer identification number, alien registration number, government passport number, health insurance identification number, demand deposit account number, savings account number, credit card number, debit card number or unique biometric data such as fingerprint, voice print, retina or iris image, or other unique physical representation.

 

If you are a victim of identity theft, you should take fast action.    Some of the actions you might consider: 

  • Identify potential defendants for a lawsuit, such as the actual perpetrator or the source where the perpetrator obtained the information
  • Assess provable damages
  • Seek police involvement and file a private complaint
  • Take immediate action to help restore credit ratings
  • Filing for an injunction, damages or other lawsuit against perpetrators

Consulting an identity theft attorney is also a good idea.  An identity theft attorney can help a victim sort through the various options, take direct action on behalf of the victim, and determine if there are grounds for a lawsuit to seek an injunction, restraining order, or damages. 

 

Can An Attorney Bind A Client To A Settlement Agreement Even If The Client Did Not Agree?

The answer is –   yes, under the right set of facts.  In Connecticut, attorneys must abide by a client’s decision to settle a case.  Additionally, an attorney has to consult with a client and secure consent to accept or make a settlement offer.  Seems straightfoward, right? 

However, what happens if an attorney reasonably believes he has consent, but the client later disagrees?  Or, what if the client does give consent, but later changes her mind?  Or, how about a situation where it appears to the opposing party that the client’s attorney had authority to settle based on conduct of the client.  Does it matter whether there really was express authority given to the attorney to settle?

In a recently released decision,Ackerman v. Sobol Family Partnership, et al, the Connecticut Supreme Court addressed these very issues.  In the case, the Supreme Court upheld a trial court judgment in favor of a group of defendants that sought to enforce a settlement agreement.  The case involved a history of negotiations between well known attorneys for the two sides, including a failed mediation and a few months of verbal and written exchanges on settlement terms. 

The underlying case involved a dispute concerning "management and oversight of a family partnership and various family trusts."  Shortly before trial was scheduled to start, the defendants believed that a global settlement was reached for 1.1 million dollars based on an agreement with the plaintiffs’ attorney.  The plaintiffs disagreed and claimed that their attorney did not have authority to bind the plaintiffs to the settlement.  The defendants then filed a motion to enforce the settlement agreement.  Judge Eveleigh held a hearing on the motion, made factual findings on the record, and ultimately entered judgment in the case based on the settlement agreement.  

On appeal, the Supreme Court gave deference to Judge Eveleigh’s findings and upheld his decision to enforce the settlement agreement despite one of the plaintiffs stating her attorney had no authority to settle the case.    The Court’s decision was based on the actual or apparent authority that the plaintiffs’ attorney had to settle the case coupled with the defendants’ reasonable belief that the attorney had the authority. 

The following factors, if present, can result in an attorney binding a client to an enforceable settlement agreement whether the client actually agreed or not:

  • Terms of the settlement are clear, certain, and unambiguous
  • Offer and acceptance of the terms
  • Attorney had actual or apparent authority to agree to the terms
  • If apparent authority, then opposing party must have good faith belief that attorney had authority

On the issue of apparent authority, the basic question is whether it reasonably appeared to the opposing party that the attorney had authority to settle regardless of whether there was express authority.  The relevant inquiry for the court is the conduct of the client, not the attorney.  In other words, the client can engage in conduct that permits others to believe the client’s attorney had authority to settle.  For example, a court may find apparent authority existed if the client through her own actions held the attorney out as "possessing sufficient authority" or knowingly permitted the attorney to act with such authority.   If it was reasonable for the opposing party to believe there was authority to settle, a binding agreement can exist.  In these circumstances, as in the Sobol case, the court can enforce a settlement agreement even if the client later claims that there was no actual authority for the attorney to settle the case.  

The take away here is that a settlement agreement negotiated between attorneys can, under some circumstances,  bind a client to the agreement in court even if a client did not intend to agree or the client later changes her mind.  If a client wants to have final approval over every aspect of a settlement agreement, it should be clear to not only the client’s attorney, but also communicated to the opposing party as well. 

Lawyers Going Fishing on Facebook – – Is It Ethcial?

Lawyers are all over Facebook and LinkedIn.  What are they doing?  If they are not marketing or social networking, they are fishing or "mining" for information about individuals and businesses.  They are looking for this information to help with lawsuits.  The business and employment trends involving social media are growing and as a result we will continue to see a variety of different lawsuits and legal issues involving some aspect of Facebook, LinkedIn, Twitter, MySpace and YouTube.  For example, read the posts yesterday by Dan Schwartz’s Employment Law Blog detailing how privacy settings on Facebook permit easier production in electronic discovery and how facebook wall postings might be unavailable in discovery and deemed private. 

One of the issues lawyers will have to address when mining for data on Facebook and other sites is how to get the information.  Do you seek the material in discovery and possibly risk a judge deeming the information unavailable as private or irrelevant?  Do you just limit your search to what is publicly available?  Better yet, what about having an investigator try to "friend" your target so you can get access to the information that is not available to public searches?   If you are concerned about the ethics of this type of searching, you good instincts. 

Lawyers fishing on Facebook would be well advised to read through a few ethical opinions on the issue. Recently, the New York Bar Association issued an opinion related to ethical concerns for lawyers "fishing" for information and evidence on Facebook and LinkedIn.  The verdict?  Relying in part on a 2009 Pennsylvania Bar Association opinion, it was deemed ethical for lawyers to search for this information from public pages.  Seeking to "friend" for improper purposes, however, is more problematic and may land a lawyer in ethical trouble.  Specifically, if deception was used (by either the lawyer or a third party directed by the lawyer) to gain access as a "friend," it likely would violate the rules of professional conduct. 

Clearly, LinkedIn and Facebook are treasure troves for litigation attorneys.  However, it is a good idea to be cautious about how you access any information from these sites, especially if the information is not generally available from public searches. 

Disturbing Rise in Internet Harassment and Cyber Bullying Part Of Growing Trend

The tragic suicide of Rutgers University student, Tyler Clementi, shows the potential devastating impacts arising from misuse of the Internet and social media sites such as YouTube, Facebook, and Twitter.  This incident also serves as a reminder of the rapid sea change that technology brings and how our laws struggle to keep pace especially when it comes to new forms of media and the Internet.  I have seen two trends develop as it relates to lawsuits and social networking litigation. Both of these trends will continue. 

The first trend concerns the potential problems and risks to business owners over social media.  These issue have been well documented for over a year now.  Some of these issues include privacy rights, defamation, trade secrets, non-competition agreements, electronic monitoring, evidentiary use, and concerns over social media policies in the workplace. 

The second trend that has developed is the unfortunate increase and rise in cyber bullying, harassment, and invasion of privacy from users posting content on Blogs, Facebook, MySpace, Twitter, and YouTube.  The sad fact is that this often involves school age children as victims of cyber attacks or as users who do not fully understand the significance and devastation that might result from posting content online to the entire world.

As another glaring example, Anderson Cooper of CNN reported just last night on the disturbing story of Chris Armstrong, an openly gay student at the University of Michigan.  The story detailed how a Michigan Assistant Attorney General, Andrew Shrivell, was outright harassing and stalking Mr. Armstrong both in person and on a blog.   Mr. Shrivell’s conduct was revolting and disturbing for anyone let alone a law enforcement official.   His actions are an example of someone running wild on the Internet with harassment.

Individuals facing harassment or bullying over the Internet often feel as if there is nothing that can be done to stop the conduct.  For example, as of last night, the Michigan Attorney General had done nothing to discipline Shrivell for his conduct based on purported concerns for "First Amendment" rights.  Although the available laws for bringing a lawsuit for improper use of the Internet continue to evolve, an attorney can help a victim of Internet or online harassment.  In short, something can be done.  Some of the legal theories available for a civil lawsuit include defamation, negligent misrepresentation, invasion of privacy, stalking statutes, and infliction of emotional distress.  

The explosive growth of use of social media is not going to end. Instead, these trends will continue to dominate and grow.   As use and misuse of social media and the Internet continues, litigation attorneys would be well served to stay on top of the evolving legal issues.  Businesses and individuals will continue to need legal representation  to address these growing trends.

 

 

 

Can You Record Phone Conversations In Connecticut To Help Your Lawsuit?

You might be surprised how many times I am asked this question.  Of course, the circumstances of every case warrant separate consideration, but here are the basic facts concerning recording of phone conversations in Connecticut as it relates to civil litigation and lawsuits: 

Civil Liability.  You are subject to liability in a civil lawsuit if you violate Connecticut General Statutes 52-570d entitled "Action for illegal recording of private telephonic communications."  The full text of the statute is here, but the basic summary is that an aggrieved person may bring a civil lawsuit for the recovery of damages and attorney’s fees if someone uses a device to record "an oral private telephonic communication" unless the use of the recording device involves:

  • the consent of all parties (some states only require one party consent), and such consent is obtained prior to the recording
  • the consent documented in writing or part of the recording
  • verbal notification given at the start of the recording
  • an automatic tone warning device producing a signal every 15 seconds

There are various exceptions to this rule, including for law enforcement and FCC officials.  In addition, one of the more relevant exceptions is for "any person who, [is] the recipient of a telephonic communication which conveys threats of extortion, bodily harm or other unlawful requests or demands."  For example,if your Mel Gibson’s girlfriend, and you are in Connecticut, its probably safe to record his phone calls. To recover in Connecticut, however, you have to prove actual damages related to the recording.

Many people that want to record phone conversations are trying to document conversations as evidence for potential use in a lawsuit.   However, if the recording is done unlawfully, Connecticut law prohibits the use of the recording in "any court of this state." As such, although an improperly recorded phone call might be available for use in a deposition, it will not be permitted as evidence in any court.  

Whether an improper phone recording is criminal will depend on the circumstances.  For example, it is a Class D Felony in Connecticut to engage in wiretapping or "mechanical overhearing" of a conversation.  Wiretapping and mechanical overhearing are defined to include "intentional overhearing or recording" of telephonic communication or conversations without the consent of at least one person involved.  This is more likely to apply to a situation like the allegations against Shaq O’Neal for intercepting cellular phone conversations he was not a part of as opposed to private two way conversations. However, the possibility of criminal penalty should be factored into any decision to record a phone call.

Keep in mind also that this post is only a summary as it pertains to Connecticut state law. If phone calls involve an out-of-state caller, different laws might apply.  For a good example of the intersection of various state recording laws, visit the website for the Reporters Committee for Freedom of the Press.  In addition to state law, there are federal wiretapping laws that might come into play. For an example of some federal laws, see this post on the Citizen Media Law Project.

The takeaway here is that if you improperly record phone conversations in Connecticut you could: (1) face criminal penalties; (2) face a civil lawsuit for damages and attorney’s fees; and (3) be precluded from using the recordings in court in any civil lawsuit.  As such, if you are planning on recording phone conversations of any kind, you would be well served to contact an attorney and get advice on whether to proceed.

CT Supreme Court Affirms Right To Challenge Foreign Judgment With Special Defense

One of the many issues to consider when filing a lawsuit against a party in another state is how you will go about enforcing the judgment if you win.  For example, lets assume you live in Alaska and want to sue someone who lives in Connecticut.  You decide you do not want to hire a Connecticut lawyer, but instead decide to sue in Alaska state court.  You win a "default" judgment in the Alaska case because the Connecticut resident never appeared in the case or hired a lawyer to defend the case. alaska

Typically, in these circumstances, you take the judgment from one state, hire an attorney in the state where the defendant lives, and you "domesticate" the judgment.  In this example, you would take the Alaska state court judgment to a court in Connecticut and ask the Connecticut court to enforce it.  Under the Full Faith and Credit Clause of the United Stated Constitution, states have a duty to recognize or give "credit" to the "judicial proceedings" of every other state.  

Sounds simple right?  Not always the case.  There are various ways to challenge a foreign or out of state judgment.  One of the primary methods Connecticut attorneys use to challenge a foreign judgment is to contest the personal jurisdiction of the court that rendered the judgment.  This is exactly what happened in Maltas v. Maltas (download here) which was officially released yesterday by the Connecticut Supreme Court. 

John Maltas, an Alaskan resident, sued his brother Brian Maltas in Alaska state court.  He won a default judgment because his brother stayed in Connecticut and ignored the lawsuit.  John Maltas then filed a lawsuit in Connecticut seeking to enforce the default judgment.  Brian Maltas raised as a special defense that the Alaska court lacked jurisdiction over the matter in the first place and no "credit" should be given to the judgment.

At the trial level, John Maltas won summary judgment after arguing that personal jurisdiction may only be challenged in Connecticut state court through a motion to dismiss as opposed to asserting an answer with a special defense.  On appeal, the Connecticut Supreme Court reversed the decision and stated that a special defense may be used to contest whether the Alaska state court had jurisdiction to rule on a dispute involving a Connecticut resident.  As a result, all of John Maltas’ efforts thus far, dating back to 2005, have been fruitless and reversed.  He may ultimately win at trial, but for now, jurisdictional defenses have defeated his claim without any hearing at all on the merits of the case.    

The takeaway here is that decisions regarding where to file suit are important, especially when the lawsuit will involve an out of state defendant.   There are ways to avoid or mitigate potential problems that may arise with domesticating a foreign judgment.  For example, you could elect to file the lawsuit where the defendant lives.  This may be an inconvenience in the short term, but it might also avoid jurisdictional problems when the time comes to enforce the judgment. Of course, the ability to enforce the judgment is only one of many issues to consider at the time of filing a lawsuit.