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Be advised of new federal Overtime Pay rules which start December 1st

Author: Wendy Hillger

The U.S. Department of Labor has revised its rules under the Fair Labor Standards Act concerning overtime pay.  As of December 1, 2016, the salary and compensation levels needed for white collar workers (executive, administrative, and professional categories) to be exempt from overtime compensation under federal law will more than double.

California employers need to be cautious, however, because California has a different salary threshold pegged to the state minimum wage that will increase over time.  Likewise, California maintains a different test for determining whether an employee is engaged in duties that are exempt from the overtime rules.  Hence, an employee may be exempt under federal law but not under California law. If you have questions, please call us at Ad Astra Law Group.

Court Declines to Enforce Uber’s Terms of Service

Scripta Ad Astra is extremely pleased to present a guest post by Nicole Syzdek.  Ms. Syzdek is an Associate with our friends at Brand & Branch LLP, who focus on branding (trademark protection, registration and enforcement), and provides advice on privacy and data security practices.

Author: Nicole Syzdek

On July 29, 2016, the Southern District of New York in Meyer v. Kalanick declined to enforce the arbitration provision of Uber’s Terms of Service on the grounds that the plaintiff did not have adequate notice of, and consequently did not consent to, Uber’s Terms. Since each online user interface differs, there is no bright-line rule to ensure the enforceability of your terms of service. Nevertheless, decisions like Meyer are instructive in helping business owners understand how to ensure that their own terms of service are enforceable if violated.

The central issue in Meyer v. Kalanick was whether the plaintiff actually agreed to Uber’s Terms of Service when he signed up to use Uber through his mobile phone. Below is an image of what the plaintiff saw prior to registration:

The court categorized this as a “sign-in wrap” since the user was notified of the existence and applicability of the Terms while registering as a user but was not required to view them. The court took issue with the appearance and placement of the terms of service language, which was located below the options to use PayPal or Google Wallet and stated:

 

By creating an Uber account, you agree to the 
TERMS OF SERVICE & PRIVACY POLICY

 

The court found that this language was in a font barely legible on a smartphone and not prominently displayed in relation to the color and size of the overall design of the registration screen. This layout, the court said, did not adequately draw users’ attention to the Terms of Service—let alone to the fact that by registering to use Uber, a user was agreeing to Uber’s Terms.

Why Should You Care?
As a business owner, it’s your responsibility to limit risk and keep your business running smoothly. One way to limit liability with respect to your websites and mobile applications is to have strong, enforceable terms of service. Your terms of service are your contract with your website visitors; they protect you by telling your customers what they are and are not allowed to do on your website or mobile app, and what they can and cannot expect from your website or service. Your terms should also enable you to ban users who violate these terms from your website, or terminate their accounts from your service.

Your terms of use are an incredibly important and powerful tool in managing your potential liability—but only if they’re actually enforceable.

The Uber decision makes clear that “click-wrap” agreements—which require a user to click through your terms of service—are the safest bet and most likely to be enforceable. By contrast, “browsewrap” agreements—burying your terms in a link at the bottom of the page or smartphone screen—are usually only enforced against other businesses that should be knowledgeable about the terms. “Sign-in wrap” agreements like Uber’s may be enforceable, but the notice of acceptance and link to the terms of service must be prominently positioned prior to the user completing the registration process.

 

Nicole Syzdek is an Associate at Brand & Branch LLP, focusing on intellectual property and technology matters, including trademark and copyright prosecution and enforcement, Trademark Trial and Appeal Board proceedings, licensing agreements, Internet policies, and privacy. She may be reached at nicole@brandandbranch.com.

To read additional posts visit www.brandandbranch.com

In Times of Divorce, You Still Need to Properly Disclose the Financials

Author: Regina Franco

By law, spouses are subject to the general rules governing fiduciary relationships which control the actions of persons occupying confidential relations with each other. This confidential relationship imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other. Family Code § 721. This fiduciary duty arises on the date of marriage and does not end just because divorce proceedings have begun.

Among the issues requiring resolution through divorce is property division. In order to effectuate a division of property within the parameters of the law, parties must comply with the disclosure requirements of the Family Code. Parties are required to exchange complete and accurate declarations of disclosures listing all assets and debts in which a party has an interest regardless of whether the characterization of the asset or debt is separate or community property. When making disclosures, parties must uphold their fiduciary duties owed to each other and once disclosures are exchanged, the fiduciary duty requires that the parties update and augment their disclosures to the extent there have been any material changes so that when the parties enter into an agreement regarding property division, each has full and complete knowledge of the relevant underlying facts.  Family Code § 2100.

The Court will not enter a judgment of divorce unless the disclosure requirements have been met. Completing and exchanging declarations of disclosures are not only a technical step to getting divorced, but a very serious requirement. A violation of the disclosure requirements or a breach of the fiduciary duty could result in an award of 100% of the undisclosed asset to the complying spouse or a set aside of a judgment of divorce. There is no question that full disclosure is not only best practice, but also is mandated by law.

 

Wendy Hillger Provides Pro Bono Eviction Defense for Needy Tenants in San Francisco

Author: Wendy Hillger
As part of Ad Astra’s pro bono pledge , Ms. Hillger volunteers for the Housing Negotiation Project. Recently, Ms. Hillger represented a tenant who was having trouble following the house rules. The landlord wanted to evict for these lease violations. The unlawful detainer trial was set for the very next Monday. At the Settlement Conference, Wendy Hillger was able to resolve the landlord’s objections and allow the tenant to stay. The tenant and his Clinical Social Worker were very grateful to avoid imminent eviction.

A Fact Investigation Conducted by Outside Counsel in response to an Employee’s claim of Harassment and Discrimination is Privileged

Author: Wendy Hillger

The California Court of Appeal recently held that outside counsel’s fact investigation of an employee’s harassment and discrimination claims conducted prior to litigation was protected by the attorney-client privilege and work product doctrine.

It has long been California law that when there is a claim of discrimination, harassment or retaliation, the employer must inves­tigate.  This investigation must be thorough, objective and complete.  To help assist with these requirements, some companies have hired outside legal counsel.  This ruling resolves the issue about whether outside legal counsel’s work and communications were privileged.  Companies now should not hesitate to investigate an employee claim with outside counsel.

The Court also ruled that assertion of the “avoidable consequences” defense (the employer took reasonable steps to prevent and correct harassment, but the employee failed to use those measures) in the subsequent lawsuit did not waive the privilege as to a post-employment investigation.

[City of Petaluma v. Superior Court (Andrea Waters), Case No. A145437]

Not Exactly A Midsummer Night’s Dream for Some

Author: David Nied

The Ninth Circuit has handed down two significant decisions under the Computer Fraud and Abuse Act in the past week.   In the first decision, United States v. Nosal, the court affirmed the CFAA conviction of David Nosal, a former Korn/Ferry employee who left to start his own competing business with several co-workers.  After Nosal and his co-workers left, Korn/Ferry revoked their computer access credentials.  Nevertheless, the departed employees used the computer access credentials of Mr. Nosal’s executive assistant—who remained at Korn/Ferry—to obtain access to the company’s proprietary database.  The court held that “without authorization” under the CFAA was unambiguous and means “accessing a protected computer without permission.”  Nosal argued that since his former executive assistant was authorized to access the company’s computers, he had not violated the statute.  Not so, said the court:  “once authorization to access a computer has been affirmatively revoked, the user cannot sidestep the statute by going through the back door and accessing the computer through a third party. Unequivocal revocation of computer access closes both the front door and the back door.”  Ad Astra’s David Nied and Michael Dorsi, and former associate, Keenan Ng, submitted an amicus brief on behalf of a former client and in support of the United States in which they discussed the importance of the remedies under the CFAA to small, entrepreneurial businesses in the Bay Area.  You can read The Recorder’s summary of the decision here. The Recorder quoted Mr. Nied’s observation that the decision “confirms that [small businesses] have a tool available to them under the CFAA to protect their business, their intellectual property, and their trade secrets from former employees.”

In the second decision, Facebook v. Vachani, the court concluded that a social-media aggregator, Power.com, and its principal, Steven Vachani, had violated the CFAA by continuing to use Facebook users’ accounts to send spam email and messages to other Facebook users to promote Power.com after Facebook had sent them a cease and desist notice.  Like Mr. Nosal, the defendants argued that they had not violated the CFAA because they had the consent of the Facebook users to send out the emails and messages.  The Ninth Circuit, however, concluded that the cease and desist notice revoked any permission the defendants had to use Facebook’s computers and that the defendants used Facebook’s computers “without authorization” after that point in time.  The court returned the case to the trial court to re-calculate Facebook’s damages from the date of the cease and desist notice.  The takeaway for small business owners is to send out a cease and desist notice the moment you become aware that a third party may be accessing your computers or cloud-based accounts without permission.  You can read more about the decision in The Recorder.

 

 

What is CCP 170.6, and How do Attorneys Use It?

Author: Brian M. Worthington
The situation involving embattled Santa Clara County Court Judge Aaron Persky took a new turn this week when the Santa Clara District Attorney’s Office used California Code of Civil Procedure Section 170.6 to disqualify Judge Persky from an upcoming case. Some of our readers may be wondering, What is CCP 170.6?; When is it used?; and How do attorneys use it? We are here to answer those questions.

CCP 170.6 allows a party to a case (or the attorney representing that party) a one-time opportunity to disqualify a judge who is prejudiced against a party or the party’s cause. It applies equally to criminal and civil cases and has varying time restrictions depending on the type of calendaring system used in the County in which the case is being heard. A party can use CCP 170.6 to disqualify a judge assigned for all purposes, a judge assigned for a trial, or even a judge assigned for a specific motion.

The disqualification must be done in writing or orally under oath. The legal basis for a 170.6 disqualification (sometimes called “papering” a judge) is the bias against a party or cause. But in practice CCP 170.6 has almost unlimited applications—we have seen situations where a judge is disqualified due to personal conflicts with a particular attorney; where a judge has a blind spot toward a particular legal issue; or where a judge is perceived to have a habit of punishing too harshly or too leniently in particular criminal matters.

The ability to exercise a CCP 170.6 disqualification is a major tactical weapon for an attorney. For instance, if an attorney is handling a case where police misconduct is a major element of the defense, the attorney will want to avoid judges with strong law-enforcement ties or history of disregarding police misconduct. CCP 170.6 allows the attorney to do that. But an attorney must exercise great care in making the decision because the attorney can only choose which judge to disqualify, not the new judge assigned. On some occasions, the newly assigned judge may be just as bad on the particular issue as the original judge, or may even be worse on other issues that can come into play. Even using a disqualification and getting a great new judge is not always a cure-all for the client because if the new assigned judge is too favorable, the opposing party can turn around and disqualify the new judge. This leads to an interesting tête-à-tête between the opposing attorneys.

We hope this brief entry helps explain what CCP 170.6 is and how attorneys use to try help their clients. Thank you for reading.

What to Expect When You are Going Through a Divorce

Author: Regina Franco

Divorce takes time.

Once you decide to file for divorce, the next thing you want to do is quickly move on to the next chapter of your life, but divorce doesn’t happen that quickly. There is a mandatory waiting period required by California law and no judgment of divorce can be entered sooner than 6 months from the date the Petition for Dissolution was served onto the Respondent.

While 6 months may feel like a long time, there is a lot of paperwork that needs to be done and taking the proper time to work through your case will oftentimes prove to be time well spent. Divorce can be complicated. A divorce is essentially creating two new families out of one. This requires careful thought in order to make sound decisions about support, property division, and custody.

Divorce is not easy and over the course of at least 6 months, divorce will consume you. It is important that you choose your attorney wisely as the right relationship will make a positive impact on you as you transition into your new life.

Litigation Tip: Settlement vs. Trial

Author: David Nied

It has been almost eight years since the Journal of Empirical Legal Studies published “Let’s Not Make A Deal: An Empirical Study of Decision Making in Unsuccessful Settlement Negotiations.” The study compared verdict outcomes with pre-trial settlement negotiations in over 2,000 cases between 2002 and 2005. The results of the study support the conclusion that it usually is better to settle a case than to go to trial. In support of this conclusion, consider the following:

  • Plaintiffs recovered less at trial than they would have recovered by settling in 61% of the cases;
  • Defendants did worse by going to trial rather than settling in 24% of cases;
  • Both sides made the right decision to go to trial in only 15% of the cases (i.e., the verdict was between plaintiff’s last settlement demand and defendant’s last offer);
  • On average, plaintiffs who made the wrong decision to go to trial recovered $43,000 less than the defendant’s last offer;
  • On average, defendants who made the wrong decision to go to trial ended up liable for $1.1 million more than they had offered;
  • Plaintiffs were more likely to make “poor” decisions to go to trial in contingency fee cases; and
  • Defendants were more likely to make “poor” decisions to go to trial where insurance coverage was generally unavailable.

So, although defendants make fewer bad decisions to go to trial, a bad decision is much more expensive on average. Interestingly, the study also found that making the wrong decision to go trial has actually increased over time based on a study of trial outcomes over 40 years through 2004. (You can read more about the study in a New York Times article. You also can purchase a copy of the article at Wiley.)

We do our best to help our clients understand the risks of proceeding to trial. That includes explaining that no two juries are the same and that not all jurors will see a case the same way a client might see it. And, especially for plaintiffs, it includes the likelihood of making the wrong decision. In most cases, it is better to make a deal.

Silicon Valley: “Two in the Box” References Two of Ad Astra’s Cases

Author: Katy M. Young

In HBO’s show Silicon Valley, the story takes place in one character’s home which he opens up to tech entrepreneurs who need a place to live and work in exchange for equity in their companies, called Hacker Hostel. In the episode titled “Two in a Box,” the characters struggle with landlord/tenant issues that are novel in the age of Airbnb. You can read a synopsis of the plot of the episode here.

Ad Astra had a hand in both of the landlord/tenant issues featured in this episode.

 

First:

“With Pied Piper on its feet, Jared announces he’s moving out of Noah’s guest house and back into his condo, which he’s been renting out on Airbnb. When Jared arrives at his condo he finds his tenant, Ludwig, is still there, claiming he can’t afford to live in the area because people like Jared have raised the cost of living. Ludwig refuses to leave, so Jared begins the long, expensive process of eviction.”

This part of the episode has many similarities to Huang v. Hingorani, Ad Astra Partner Wendy Hillger’s AirBnB-neighbors dispute case which was written up in the San Francisco Chronicle here.

Essentially, the Jared character on Silicon Valley learns the tough truth as the landlord in our case: You get a long, expensive eviction fight.   If you rent your property to one who pays to be there for more than 32 days, even if the rental agreement came through AirBnB, the SF Rent Board has held that the renter acquires traditional tenancy rights. Therefore, to remove a short-term vacation renter who pays to stay more than 32 days yet refuses to leave and keeps paying rent, the landlord’s only course of action is an eviction.

 

Here is the second issue in the episode:

“Erlich shows the Hacker Hostel to a new tenant, and later tries to kick out Jian-Yang so that a new incubee can move into his old room. Jian-Yang doesn’t take the news well and starts freaking out. Later, after Erlich unwittingly reveals why Jared is moving back into the garage, Jian-Yang decides to use California’s tenant laws to his own advantage and also refuses to move out.”

In 2015, Ad Astra represented one of the defendants in the lawsuit Housing Rights Committee of San Francisco v. HackerHome. HackerHome is allegedly a company that rents living space to tech entrepreneurs via the AirBnB platform in violation of San Francisco’s short-term rental law.  In Silicon Valley, the storyline begins in Erlich Bachman’s “Hacker Hostel,” which mirrors the alleged HackerHome activities in both name and function. While living and working in the Hacker Hostel, the main character Richard develops an algorithm meant to help musicians avoid copyright troubles but ends up creating the world’s most powerful file compression technology and becomes the darling of Silicon Valley investors after winning the Tech Crunch competition. The character who owns the Hacker Hostel wants to remove one of the tenants, Jian-Yang, whose company is underperforming so that he can make room for more people involved with Richard’s more successful business, but upon listening to Jared’s problem with his Airbnb renter, Jian-Yang realizes that he’s lived in the Hacker Hostel long enough to acquire tenant’s rights like Jared’s tenant and announces that Hacker Hostel will have to evict him because he’s not leaving.

Now Erlich Bachman and Jared each experience the same landlord/tenant problems that Ad Astra’s clients have had to tackle, although thus far, no one has sued Erlich Bachman for his Hacker Hostel activities.

I was particularly thrilled by this episode of Silicon Valley because usually it relates to my husband’s work in big data cloud computing and the show’s creator goes out of his way to make the show full of inside jokes relevant to tech workers in the real Silicon Valley. This time, our cases featured prominently in the story line and I got to be on the inside of the inside jokes!