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Author: David Nied

It no doubt was extremely distressing for Ellen Pao to lose her pioneering gender discrimination lawsuit against her former employer, Kleiner Perkins Caufield & Byers, LLC, earlier this spring.  On Friday, however, the pain got worse.  San Francisco Superior Court Judge Harold Kahn awarded KPCB nearly $276,000 in costs against Ms. Pao.  How did this happen?

One of the tools available to litigants in California is the ability to make a pre-trial offer to settle a case pursuant to California Code of Civil Procedure section 998.  If you do better than your offer at trial, you can ask the court to have many of the costs that you incurred after the offer was made shifted to the “loser.”  KPCB decided in November 2014, several months before trial and before it had incurred most of its costs, to offer Ms. Pao nearly $1 million dollars under section 998.  Ms. Pao decided not to take the offer.  Her gamble didn’t pay off.

After the trial concluded, KPCB submitted a cost bill to the court totaling nearly $1 million dollars, the vast majority of which consisted of expert witness fees.  Ms. Pao opposed the bill on a number of grounds, some of which worked and some of which didn’t.  Most importantly, Ms. Pao argued that a recent California Supreme Court decision, Williams v. Chino Valley Independent Fire District, 61 Cal. 4^th 97 (2015), precluded an award of costs against her because her lawsuit was not frivolous, which is the standard that applies when a successful defendant seeks to recover its costs under the Fair Employment and Housing Act.  Not so, said Judge Kahn.  Section 998 is different—it is a separate and distinct statute that a prior appellate court had found did not conflict with the FEHA.  Judge Kahn concluded that KPCB’s 998 offer of nearly $1 million was made in good faith and not token.  Although not addressed directly in the court’s order, the problem with the offer from Ms. Pao’s perspective is that it probably did not come anywhere close to covering her attorneys’ fees after nearly three years of hard-fought litigation.  Such is the dilemma that plaintiffs in a FEHA lawsuit face.

So what about those expert witness fees totaling nearly $865,000?  In determining whether the amounts were reasonable, Judge Kahn considered the parties’ respective resources in an effort to “scale” the expert fee award.  Conceding that his evaluation required a “rough” approximation of the parties financial positions, Judge Kahn noted that KPCB had “vastly” greater resources than Ms. Pao—but that Ms. Pao was not indigent.  Ultimately, Judge Kahn awarded KPCB expert witness fees that approximated what Ms. Pao herself had spent on her own experts.  And that is how you get to a cost award of nearly $276,000.

It might be of some solace to Ms. Pao that she was able to knock down KPCB’s request by $670,000, but it still can’t feel good.  And while a spokesman from KPCB described the ruling as a “fair result,” most savvy defense lawyers will recognize that the award probably won’t deter many employees from pursuing lawsuits under FEHA, since most of them have minimal economic resources.

Author: Wendy Hillger

An Uber driver filed a complaint against Uber Technologies, Inc., asserting she was an employee of the ride-hailing company and thus owed back-wages and employee expenses. Uber has consistently maintained that its drivers are independent contractors. The California Labor Commission disagreed, and ruled recently that Uber is an employer.

The California Labor Commission examined the numerous factors identified by the Supreme Court (S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341) to evaluate the relationship between the driver and Uber. The commissioner noted that Uber maintains a substantial amount of control over its drivers: such as the equipment they must use (an Uber-provided iPhone), the fares they can charge, the model of cars they drive, and, to some extent, how often they work. Uber also does not allow drivers to negotiate their percentage of the fare and thus controlled their wages.
Uber was ordered to have to pay its employee reimbursable expenses and interest in the amount of $4,152. Uber did dodge a bullet by being spared from having to pay the driver an hourly wage, liquidated damages or waiting time penalties for this employee. The employee failed in her burden of proof on these issues by not providing the commissioner with her pay records.

The decision was appealed in the San Francisco County Superior Court on June 16, 2015, in the matter of CGC-15-546378. A copy of the Order is HERE. A timeline for the Superior Court’s ruling is unknown, but if the Labor Commission’s Order is upheld, the decision will have wide-ranging impacts upon the ride-hailing company and its competitors like Lyft.
For information as to whether your company may be improperly classifying its workers as independent contractors, please contact Ad Astra Law Group LLP.

Author: Katy Young

This month, I sat in on a microconference on forensics put on by DTI, Inc.- a major litigation support company that we use frequently for discovery matters. The presenters spent an hour discussing the evidentiary considerations of social media. As I listened, I was reminded of a fun case that I worked on years ago when I was a solo practitioner.

In that case, I represented a woman who had made a contract by email with a former friend/business partner of hers who had moved to Germany to get an MBA from a university there. The two parties to the contract had once been very close friends and they made a film together in New York. My client’s friend/ex business partner owed her monies from the fallout of the filmmaking process and they made a contract by email. The contract stated that he would pay her when he returned from Germany and obtained a job back in the U.S.

The parties lost contact for years, but all of the sudden, the person who owed my client money under the contract posted on Twitter “First day at my new job at Deutche Bank…damn it feels good to be a banker! #paid”. At this point, my client knew that he was back in the U.S. and clearly had a good job and would be able to resume payments as agreed. She was able to find out through social media that he had moved to Berkeley, CA, but we still could not locate him for the purpose of serving upon him the breach of contract lawsuit I had filed. Not to leave his loyal followers in the lurch about his exciting life, this man went on to tweet about his next new job “First day at Robert Half in San Francisco!” Someone responded to his tweet asking where the office is and he responded “50 California.” It just so happened that I worked at 50 California for many years and I was very familiar with the reception practices for the company called Robert Half in that building. I had once interviewed there, so I knew that although Robert Half is a huge company, they have a central reception agency on a low floor. I called my process server and directed him to go to the central reception floor at 50 California and tell the receptionist that he has a package for the new employee and give the defendant’s name. My process server did just that, the defendant came bounding out to reception excited to receive a package and was personally served with the lawsuit.

The case settled at mediation a couple of months later. The defendant was dumbfounded as to how we located him. A word to the wise: if you are trying to stay under the radar, Twitter is your enemy.

           

Written by Michael S. Dorsi

Leap, a new comfortable-looking private bus service in San Francisco, recently came under scrutiny for removing wheelchair accessibility equipment from buses it purchased and retrofitted. Chris Pangilinan, a former San Francisco Municipal Transportation Agency engineer, recently filed a complaint with the Department of Justice alleging that Leap violated the  Americans with Disabilities Act.

President George H.W. Bush signing the Americans with Disabilities Act into law.

If anything, it is surprising that Leap has not already been sued. Hotel and restaurant owners in California are often familiar with so-called “serial plaintiffs  who bring hundreds— sometimes thousands — of disability access lawsuits. They keep doing so because the law favors their cases.

A person harmed by a violation of the Americans with Disabilities Act may sue under California’s Unruh Civil Rights Act.[1] Successful plaintiffs are awarded damages of triple the harm suffered, no less than $4000, plus mandatory attorneys’ fees.[2] Attorneys’ fees are only available to plaintiffs; defendants may not recover their fees even if they win a defense verdict.[3] The damages and fees rules create a strong incentive for defendants to quickly settle their cases and remedy any conditions that do not conform to ADA rules.

California State Assembly Speaker Jesse Unruh, after whom the Unruh Civil Rights Act is named, with Willie Brown, who would go on to serve as Assembly Speaker after Unruh’s retirement.

The Unruh Civil Rights Act does require that the plaintiff be directly harmed.[4] Mr. Pangilinan, who now works in New York, may not be directly harmed, but there are likely other potential plaintiffs. Leap may have defenses, but defending an Unruh Civil Rights Act case is difficult, costly, and risky.

*Mr. Dorsi is an attorney with Ad Astra Law Group, who has represented plaintiffs and defendants in fee-shifting litigation under public interest statutes, including disability access litigation the Unruh Civil Rights Act.

[1] Cal. Civil Code § 51(f).

[2] Cal. Civil Code § 52(a).

[3] Turner v. Association of American Medical Colleges, 193 Cal.App. 4th 1047, 1060 (2011).

[4] Surrey v. TrueBeginnings, LLC, 168 Cal. App. 4th 414, 420 (2008).

 

 

Written by Michael S. Dorsi

Smartphone applications, or apps, control an increasing share of internet traffic, and also an increasing share of litigation. Disputes about apps range from copyright infringement to contract disputes. But unlike car accidents or real estate disputes, there is no physical place where the wrongdoing happened. So where to sue? Where is the App Store? California?

The Rules of Jurisdiction

A person may only be sued either where the person is, or where the person may reasonably be called into court.[1] In the case of disputes concerning a specific product or service, the court will need to be satisfied that:

1. The defendant has purposefully directed activities at the forum state,
2. The plaintiff’s claim arises out of or relates to those activities, and
3. The assertion of personal jurisdiction is reasonable and fair.[2]

What About The Internet?

The expanded use of the internet in the mid-1990s forced courts to examine this test in a new light. Concerning the first part of the test — purposeful direction — a federal court in Pennsylvania set out the rule, known as the Zippo test, that has been adopted in most of the country: websites fall along a sliding scale, with websites that engaged in commercial interactions at end of the scale toward finding jurisdiction, and websites that did not interact with their users at all, just showing a page, at the other.[3] Many other courts adopted the sliding scale from Zippo.[4]

Are Apps Like Websites?

Courts have not yet clearly stated whether Apps will be treated like websites. Two cases show potentially different outcomes with Apps based on being filed in different districts. In Intercarrier Communs. LLC v. WhatsApp Inc.,[5] a federal court in Virginia found that customers using WhatsApp — an instant messenger application — was insufficient to find jurisdiction. Of note, WhatsApp users did not make purchases through WhatsApp, but paid third parties such as Apple and those third parties delivered the app to the user’s phone.

But in Zherebko v. Reutskyy,[6] a federal court in California concluded that an interactive app — in that case a game that sold hints to players — satisfied the first part of the personal jurisdiction test because, under the sliding scale from Zippo, the app was commercially interactive.

The court also found that the second part — the relation to activities in the forum state — was satisfied because according to Apple’s terms and conditions, title to the app transfers electronically through Apple in California.

Although the court concluded that the case did not satisfy the third part of the test — jurisdiction was not reasonable because none of the parties were from California — the court’s analysis indicated that California will be an one of the best places bring cases about iPhone apps, and future courts may reach a similar conclusion about Android apps. In effect, a plaintiff suing about a smartphone app may only need to prove the third part of the test in order to establish jurisdiction in California.

[1] See International Shoe Co. v. Washington, 326 U.S. 310, 320 (1945).

[2] See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-77 (1985).

[3] See Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997).

[4] See Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, 419 (9th Cir. 1997).

[5] Intercarrier Communs. LLC v. WhatsApp Inc., 2013 U.S. Dist. LEXIS 131318 (E.D. Va. Sept. 12, 2013), available at https://casetext.com/case/intercarrier-commcns-llc-v-whatsapp-inc.

[6] Zherebko v. Reutskyy, 2013 U.S. Dist. LEXIS 113493 (N.D. Cal. Aug. 12, 2013), available at https://cases.justia.com/federal/district-courts/california/candce/3:2013cv00843/263828/31/0.pdf?ts=1377209210.

Written by Michael Dorsi

As this post goes up, the jury in Ellen Pao v. Kleiner, Perkins, Caufield & Byers has been sent back to deliberate on the fourth claim — that Ellen Pao was fired in retaliation for her bringing this lawsuit.

The case has been closely watched for the scrutiny of the culture of Kleiner Perkins, venture capital, and Silicon Valley, which Ms. Pao’s attorneys characterized as a boy’s club. In the end, only two of the twelve jurors agreed with Ms. Pao’s case concerning gender discrimination, but two more found that Ms. Pao was the victim of retaliation.

While watching Kleiner Perkins’ attorney Lynne Hermle give her closing argument, I suspected that there could be a split verdict, finding Kleiner Perkins liable only for retaliation, not for gender discrimination.

What did not cross my mind in the audience was that the jury might end up without a sufficient majority on the fourth claim, or more bizarre result today: that the jury thought they had enough votes, but counted wrong.

Kleiner Perkins Story of Ellen Pao in Performance Reviews

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