More Pain for Ellen Pao

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. 4th 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.

The Computer Fraud and Abuse Act and Shutting Down @realDonaldTrump

By:  Michael S. Dorsi

The Washington Post published an article suggesting that the Twitter employee who deleted @realDonaldTrump might be criminally liable under the Computer Fraud and Abuse Act (“CFAA”).[fn1] The article, which draws on comments by Lawfare’s Benjamin Wittes and Chris Calabrese of the Center for Democracy and Technology, focuses on the misdemeanor access without authorization provision, 18 U.S.C. § 1030(a)(2)(C).[fn2] This provision attracts a lot of attention because it is very broad.[fn3]

The article focuses on whether the Twitter employee accessed without authorization, but then twists around to whether, while using that access, the employee did something he was not supposed to do. That is an invalid reading of the law, at least in the Ninth Circuit.[fn3] The access without authorization provision only criminalizes access, not what a person does once he or she has access. So the Twitter employee has nothing to fear, right? Wrong.

Just because the most notable part of the law is not implicated does not mean the law does not apply. A different provision, 18 U.S.C. § 1930(a)(5)(A), makes it a crime to “knowingly cause[] the transmission of a . . . command, and as a result of such conduct, intentionally cause[] damage without authorization, to a protected computer.” The story, as reported, indicates that the Twitter employee knowingly caused the transmission of a command that shut down @realDonaldTrump. The question is whether that shut down caused “damage” without authorization.

And a note of caution here: this offense does not require the defendant to access without authorization — it doesn’t require the defendant to access the system at all.[fn5] It just requires the defendant to lack authorization to cause damage.

What does it mean to cause damage? Unlike many words in the CFAA, damage actually has a definition in the law. “[T]he term ‘damage’ means any impairment to the integrity or availability of data, a program, a system, or information.”[fn6] Deleting a Twitter account probably impairs the availability of data, a program, a system, and information.

Does an 11-minute interruption qualify? One federal court in California held that changing someone else’s password and refusing to reveal it for two hours was insufficient under both the CFAA and its state-law analog.[fn7] Another case, in San Francisco, held that the CFAA and its state-law analog applied during “extended unavailability of the data.”[fn8] Maybe 11 minutes is not “extended unavailability,” but if I was the Twitter employee, I’d lawyer up.

And if I was his lawyer, I’d read the cases cited in this blog post. Free research. Because information wants to be free, or something like that.

P.S. The trial would probably have to be in San Francisco. Good luck asking Northern California jury to send someone to jail for shutting down Trump’s twitter.[fn9]

 

Footnotes

[fn1] 18 U.S.C. § 1030.

[fn2] Subsection (a)(2)(C), confers misdemeanor liability on any person who “intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains . . . information from any protected computer.”

[fn3] See, e. g., United States v. Nosal, 676 F.3d 854, 862 (9th Cir. 2012) (Nosal I) (en banc), Michael S. Dorsi & Keenan W. Ng, Computer Criminal Intent, 51 U.S.F. L. Rev. 469, 503–506.

[fn4] Nosal I, supra, at 855.

[fn5] Cf. United States v. Nosal, 844 F.3d 1024, 1039 (9th Cir. 2016), cert. denied, No. 16-1344, 2017 WL 1807382 (U.S. Oct. 10, 2017) (Nosal II)

[fn6] 18 U.S.C. § 1030(e)(8)

[fn7] Welenco, Inc. v. Corbell, 126 F. Supp. 3d 1154, 1168 (E.D. Cal. 2015)

[fn8] NovelPoster v. Javitch Canfield Grp., 140 F. Supp. 3d 954, 961 (N.D. Cal. 2014). Your author argued the motion that resulted in this order in NovelPoster.

[fn9] See United States v. Auernheimer, 748 F.3d 525, 533 (3d Cir. 2014) (quoting United States v. Rodriguez–Moreno, 526 U.S. 275, 279 (1999)).

 

 

 

Do I have to Pay a Job Applicant for “Try Out” Time?

Author: Trina M. Clayton

When hiring a new employee, many employers find it valuable to observe a candidate perform essential job skills, to help them select the right applicant.  An employer may ask a candidate to demonstrate how they would actually perform the job – for instance – having a delivery driver lift heavy boxes, having a cook demonstrate food preparation skills, or having an office worker perform a typing test.  Employers should be mindful, however, that depending on what the applicant is asked to do during an interview, and how much time it takes, they may need to pay the applicant for this “try-out” time.

Primary Considerations

According to the California Division of Labor Standards Enforcement (DLSE), there are three principal factors to consider when determining whether “try-out” time needs to be paid.Read More >

Social Media and the Law: Defendant Breaches a Contract and Draws Fire via Twitter

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.

Hiring Seasonal Employees – Don’t End Up on the “Naughty” List

Author: Trina Clayton

For many retailers, the holiday shopping season is a “make or break” period that can define their bottom lines for the entire year.  Other businesses such as restaurants and hotels also see a huge uptick in traffic associated with holiday shopping and travel.  Temporary and part-time employment spikes as retailers and other businesses increase staffing to accommodate this seasonal increase in business.

As with hiring any employee, well-planned hiring practices that comply with applicable employment laws can help ensure seasonal employees are well-suited for the job and the company is prepared to defend any possible claims.   Below are a few actions employers can take to avoid common legal pitfalls when hiring seasonal workers.

  • Abide by All Wage and Hour Laws: With few exceptions, California law requires employers to pay any non-exempt employees one-and-one-half times their regular rate of pay for any hours worked in excess of 8 hours in any workday, or 40 hours in a given workweek.  An employee is further entitled to double their regular rate of pay for all hours worked in excess of 12 hours in any workday and for all hours worked in excess of 8 on the seventh consecutive day of work in a workweek.  These overtime laws apply equally to seasonal workers, as do state and local minimum wage laws.

 

  • Properly convey hiring duration: You may presume seasonal employees understand they have been hired on a temporary basis, but it is particularly important for employers to explicitly specify the limited duration of employment both at the onset and in writing. In addition, employers should require any seasonal employees to acknowledge, in writing, that they understand they are being hired for a limited duration and are “at-will” employees – meaning the employer has a legal right to terminate the employee, with or without cause, at any time.

 

  • Proper Classification: Employers often misclassify employees as independent contractors – this practice is especially common when hiring seasonal employees.  Employers should be sure to avoid designating a seasonal worker as an independent contractor without first determining that the circumstances legally justify such a classification.

 

  • Proper Training: Even though seasonal employees may only be with your company for a relatively short time, providing proper training is critical for maintaining a productive, fair, and safe workplace.  Employers commonly forget to give seasonal employees handbooks (and have them sign off on them) – if your business has “regular” employees sign arbitration agreements, you should do this for seasonal employees as well.  Seasonal employees should generally receive the same training as other new hires, such as training in anti-harassment, nondiscrimination, safety, and other important workplace issues.

 

LOCAL ORDINANCES

As an important reminder, both San Francisco and San Jose have enacted local ordinances designed to allow “regular” part-time employees the first opportunity to work additional shifts before an employer can hire temporary or seasonal workers.

  • Under San Jose’s “Opportunity to Work” ordinance passed earlier this year, San Jose businesses with 36 or more employees must offer, in writing, extra work hours to existing qualified part-time employees. If those employees aren’t qualified or decline the extra hours, an employer can then hire additional workers to fill the shifts.

 

  • Under San Francisco’s Retail Workers Bill of Rights, “formula retail establishments” with at least 40 retail sales establishments worldwide and 20 or more employees in San Francisco, must, before hiring new employees, offer additional work hours to qualified part-time employees who have performed similar work for the covered retail establishment, and afford those part-time employees 3 days to accept the offered hours.

Employment law, especially in California, is in a state of constant flux.  Employers must keep apprised of new legislation, and comply with all federal, state and local employment laws.  For specific legal advice regarding any employment issue, please contact Ad Astra for guidance.

 

Familial Status Discrimination – Part I: Pre-Tenancy

Author: Trina M. Clayton

Federal and California fair housing laws, most notably the Fair Housing Act (42 U.S.C. 3601, et seq.) and the Fair Employment and Housing Act (Cal. Gov. Code §§ 12900, et seq.), prohibit discrimination in housing rental or conditions based on specific protected classes, such as race, sex, religion, disability, and (the subject of this blog post) familial status.

Familial status refers to any household with children under the age of 18.  It applies whether the minor is a biological child, adopted, a foster child, or legally under the custody or guardianship of an adult tenant.  It applies to both traditional and non-traditional families.  It also applies to pregnant women, as well as families that are in the process of securing legal custody of children through adoption, foster care, or divorce.  It is illegal to discriminate against a prospective or current tenant because there is a child, or will be a child, in the home.

It is important to understand that familial status discrimination may occur at any stage of property rental.  This blog will explore some of the pitfalls a landlord might run into, during the pre-tenancy period.Read More >

Congress Readies Itself to Tackle Cybersecurity Legislation

Written by Keenan W. Ng

With Congress coming back from its summer recess, it will be focusing on a few cybersecurity related bills. One of the most controversial of these bills is the Cybersecurity Information Sharing Act of 2014 (“the Act”), introduced by Senator Dianne Feinstein (D-CA) and Senator Saxby Chambliss (R-GA) for the fourth consecutive year. The Act is supposed to “improve cybersecurity in the United Sates through enhanced sharing of information about cybersecurity threats, and for other purposes.” While some of the ideas and the language behind the Act seem reasonable and commonsense, the devil is in the details- or rather, the definitions in the Act- and could have some very interesting implications for individuals and businesses.

Read More >

Will the new proportionality rule in federal discovery help plaintiffs or defendants? O’Connor v. Uber may be the first test.

Author: Michael S. Dorsi

Effective December 1, 2015, new amendments to Federal Rule of Civil Procedure 26 took effect. Notably, Rule 26(b)(1) now requires that discovery be “proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, . . . and whether the burden or expense of the proposed discovery outweighs its likely benefit.”

Initial published responses viewed this rule as pro-defendant.[1] Some suggested that this was a rule designed to address large company versus company disputes not appropriate for other types of cases.[2] Plaintiff-side employment lawyers were particularly concerned because their cases often require defendants to disclose far more in discovery than their clients disclose.

However, it seems that the first high profile test of this new rule came out in favor of employment class action plaintiffs—at least at the magistrate judge level. In O’Connor v. Uber Technologies, Inc. (N.D. Cal. Case No.  13-cv-03826-EMC (DMR)), Uber propounded an interrogatory and five requests for production of documents concerning all communications with over 1,700 of the putative class members.[3]

Invoking the new proportionality requirement in Rule 26(b), Magistrate Judge Donna Ryu held that “ Uber’s wildly overbroad discovery requests fail Rule 26(b)’s proportionality requirements.”[4] Judge Ryu continued, “While Uber may be entitled to conduct discovery that is probative of the Borello factors, it may do so through appropriately targeted means, rather than calling for information about every class member contact with class counsel. Again, Uber fails to meet Rule 26(b)’s proportionality test.”[5]

Concerned employee-side plaintiffs lawyers should of course remain vigilant, but there is a lesson from O’Connor v. Uber concerning discovery. Deep-pocketed defendants will often try to outspend a plaintiff. The new proportionality requirement in Rule 26 can help individuals and less deep-pocketed litigants fight back.

 

 

[1] See, e.g., Henry J. Kelston, FRCP Discovery Amendments Prove Highly Controversial, Law360.com, available at www.law360.com/articles/512821/frcp-discovery-amendments-prove-highly-controversial (discussing comments by Prof’s Paul Carrington and Arthur Miller)

[2] See, e.g., id. (“To the extent that excessive discovery costs are a problem, the problem exists in a very small percentage of high-stakes and, often, highly contentious cases.”)

[3] See O’Connor v. Uber Technologies, Inc. (N.D. Cal. Case No.  13-cv-03826-EMC (DMR)) (Dkt. No. 458.),

[4] Id. at p. 6:10–11.

[5] Id. at p. 7:8–11.

Unexpected Litigation Costs

Author: Michael S. Dorsi

Many clients actively work with their attorneys to minimize their bills, and understandably so. Some choices are within the client’s control, such as making a motion for summary judgment. Others are not — like when the other side files a motion.

I have always understood the conventional wisdom to be that the moving party ends up with a larger bill for motion work – at least in California where the moving party writes two briefs, while the opposing party writes only one.[1] But a review of past matters suggests this may be incorrect.

Looking at federal court motions in the 2014-2016 timeframe, I found that opposing a motion often consumed more attorney hours — and resulted in higher bills — than making a similar motion. It was a small sample size, but the result is consistent with a different analysis: when you decide the strategy, you have more control over costs. But when the other side picks their spots, maybe lawyers end up spending more time adjusting to the other side’s focus.

Attorneys: does this match your experience?

Academics: there are a lot of attorney bills in the public domain because of fee applications — perhaps this would be a good subject for research . . .

 

 

[1] Some courts, such as the U.S. District Court for the District of Massachusetts, have only one brief by each side unless there is a reason to have additional briefing. See D. Mass. Local Rule 7.1(b)(2)–(3).

Familial Status Discrimination – Part II: Tenancy

Author: Trina M. Clayton

It is important to understand that familial status discrimination may occur at any stage of property rental.  Our earlier blog described some of the pitfalls a landlord might run into during the pre-tenancy period.  Here, we will explore potential areas of concern during tenancy.

Examples of Familial Status Discrimination

  • Refusing to rent to families with children.
  • Charging a higher security deposit to families with children even if the family has a good rental history.
  • Increasing rent (called a “rent surcharge”) because a resident brings a child into the household.
  • Steering families with children to downstairs units, certain sections of a building, or to certain buildings or areas in a development (such as near the playground).
  • Restrictions on children’s outdoor recreation activities or use of common areas.  This could include an “adults only” pool policy or pool hours; curfew rules that target children, or general premises rules regarding adult supervision of children.
    • Examples of rules which violate the Fair Housing Act include, “children on the premises are to be supervised by a responsible adult at all times” and “persons under the age of 18 must abide by the set curfew of 10:00 P.M.”
  • No playing rules such as, “Under no circumstances may children play on stairwells, walkways, or carports. Under no circumstances may children[s’] toys or vehicles be used in the above areas or in pool area.”

Read More >