Thursday, October 11, 2018

Lynyrd Skynyrd drummer did not violate consent order in making a movie about his life

Lynyrd Skynyrd was a southern rock band that struck gold in the 1970s before several band members died in a plane crash in 1977. One of the survivors was Artimus Pyle, the drummer. The survivors entered into a "blood oath" promising "never to use the name Lynyrd Skynyrd" again, and years later, they entered into a consent decree that prevented them from exploiting the band name while allowing them to exploit their life stories and portray their experience with the band in movies. The question here is whether Pyle violated that consent order when he agreed to participate in a movie about his life.

The case is Van Zandt v. Cleopatra Records, decided on October 10. The district court said Pyle violated the consent order, and plaintiffs were awarded over $600,000 in legal fees. That victory has now been taken away by the Second Circuit (Carney, Hall and Newman), which carefully analyzes that order under First Amendment principles in holding that the order is internally inconsistent, or at least insufficiently specific, such that, under its terms, "Pyle is permitted to make a movie that describes his experiences with Lynyrd Skynyrd and to refer to the band, but he may not make a movie that is a history of the band." To phrase the issue that way is to answer it.

As the Court of Appeals sees it, the script for the movie "illustrates the inconsistency, or at least the insufficient specificity, of the terms of the Consent Order."

The script tells the story of the plane crash in which Ronnie and other members of the band were killed and from which Pyle walked away. That crash is part of the “history” of the band, but it is also an “experience” of Pyle with the band, likely his most important experience. Provisions of a consent decree that both prohibit a movie about such a history and also permit a movie about such an experience are sufficiently inconsistent, or at least insufficiently specific, to support an injunction.
Two judges concur, stating that the movie script does not exceed the authority that the consent decree. Under the decree, 

Each of the Individual Defendants . . . shall have the right to exploit his . . . own respective life story in any manner or medium, including . . . [a] motion picture[] [and] shall have the right to refer to “Lynyrd Skynyrd” and related matters and to describe and portray his experience(s) with “Lynyrd Skynyrd;” provided that no such exploitation of life story rights is authorized which purports to be a history of the “Lynyrd Skynyrd” band, as opposed to the life story of the applicable individual.”
Reviewing the script page by page, the two judges (Newman and Hall) say the movie is mostly about Pyle's life, which happens to include his extraordinary experience with the band (surviving a plane crash). The judges conclude:

Clearly, the plane crash and Pyle’s escape from it are a major experience of his life. Because the plane was carrying members of the band, two of whom were killed, it would have been impossible for Cleopatra to depict this experience of Pyle’s without some references to the band. The script does not portray the history of the band. It portrays an experience from Pyle’s life, precisely what section 3 of the Consent Order explicitly permits, and, in doing so, it refers to the band, as section 3 also explicitly permits.

Wednesday, October 10, 2018

These guys better call Saul

This is kind of a wild case. The Court of Appeals holds that the police had the right to detain a driver and his passengers while they searched the car for contraband (finding nothing) even though there was no probable cause to detain these people.

The case is United States v. Fiseku, decided on October 4. Having binge-watched all of Breaking Bad and now watching Better Call Saul, this sounds like something out of those TV shows. The police officer, Groppuso, saw Fiseku's car stopped on the side of the road in the middle of the night. Fiseku told the officer his car was not working properly and he was in town (Bedford, Westchester County) visiting a friend. The officer drove away, but something smelled fishy about all this so he immediately returned to the scene, but in doing so, he saw Fiseku drive into a parking lot, where he met up with two men who had somehow materialized out of thin air. The officer radioed for backup and they all questioned and/or cuffed these three men, who gave inconsistent answers to their questions about where they were going and what they were up to. The officers searched the care with the driver's consent, finding guns, walkie talkies, a screwdriver and some duct tape. And some gloves.

The detention was legal. The police can conduct an investigative stop under Terry v. Ohio, the Supreme Court's seminal 1968 ruling, if they have reasonable suspicion that criminal activity is afoot. The parties agree the officers had reasonable suspicion to question these guys but that they did not have probable cause to arrest Defendant until the officers looked inside the trunk. This case, the Second Circuit holds, "presents 'unusual circumstances' under which an officer may handcuff a suspect without 'transforming a Terry stop into an arrest.'"

Groppuso had reason to think these men were up to no good when he saw them in the parking lot. As this was a quickly evolving situation, the officer recognized how little he knew about the situation, prompting the pat-down frisk and handcuffs as a means to prevent them men from attacking the officer. While handcuffs are normally the "hallmark of a formal arrest," officers may take "reasonable steps to protect" themselves in special circumstances like this one. Here is the reasoning:

Gruppuso stumbled upon a suspicious scenario in the middle of the night in a remote, wooded location where three suspects had, it appeared, arranged to meet. His goal was not simply to identify the men, but to confirm or rebut his suspicion that they had committed, or were poised to commit, a home invasion or some other crime. The likelihood of ongoing or imminent criminal activity heightened the risk that one or more suspects might be armed and that they might attempt to fight or flee. Gruppuso made quick decisions about how best to protect both himself and the public, acting in
the face of uncertainty about how many associates might be present, what sort of criminal activity they might be involved in, or whether any of them might have access to a weapon.

Gruppuso made the cautious choice to restrain Fiseku in handcuffs at the outset of the investigatory stop so he could safely turn his attention to the two suspects in the vehicle and the two newly arrived police cruisers. Under these circumstances, “handcuffing was a less intimidating—and less dangerous—means of ensuring [officer] safety . . . than holding [Fiseku] at gunpoint.”

Wednesday, October 3, 2018

No double damages in wage-and-hour case

The plaintiffs in this class action won their trial alleging they were denied minimum and overtime wages. They won under state and federal law. The district court said the plaintiffs are not able to recover liquidated damages under both statutes. The Court of Appeals affirms.

The case is Tapia v. BLCH 3rd Avenue, decided on October 1. The trial court awarded liquidated, or double, damages under the state law claim. But federal law also provides for these double damages. Why can't plaintiffs get liquidated damages under state and federal law? Because, the Second Circuit says, the Fair Labor Standards Act does not allow for duplicative liquidated damages. The Court of Appeals said that in Rama v. Islam, 887 F.3d 118 (2d Cir. 2018). The Court reaffirms Rama in this brief opinion.

Plaintiffs also appeal because they want damages against an individual, Sharma. The trial court said Sharma was not personally liable because plaintiffs could not satisfy the relevant factors guiding that inquiry, including whether Sharma had control over the plaintiffs' employment. The multi-factor test is inherently factual, and since the Court of Appeals will not second-guess the district court's factual findings if they have some basis in the record, the ruling in Sharma's favor stands.

Judge Calabresi concurs. He writes that he is "happy" to do so on these issues, but he adds that the Court has never held that the FLSA bars a state from awarding double or even treble damages for labor law damages in cases like this. Instead, "our holding [in Rama] is limited to reading the FLSA to vacate the federal damage award, given the existence of state labor law damages." What bothers Judge Calabresi is that Rama could be read to mean that the FSLA damages should be vacated because state law does not allow double recovery. He worries that other federal courts "will read Rama as making a holding as to what is required by New York state labor law," which would "create all sorts of problems." He thinks the State Court of Appeals should take on this issue through Second Circuit certification. But while that may happen, it will not happen in this case.

Monday, October 1, 2018

Student due process case probably headed for state Court of Appeals

This case out of the Appellate Division looks at the due process rights of students who are accused of sexual misconduct at public universities. Since this case was decided by a 3-2 vote, it is sure to wind up in the New York Court of Appeals.

The case is In the Matter of Bursch v. SUNY Purchase, decided on September 19. After Bursch was charged with having nonconsensual sex with a student while she was under the influence of alcohol, the school scheduled a disciplinary hearing before a school-designated hearing board. The college told Bursch the hearing would take place on October 7, 2014 at 9:00 a.m. After Bursch got a lawyer and belatedly completed the FERPA forms that allowed the school to communicate with this attorney, the lawyer asked the school to schedule the hearing for noon that day because of a prior commitment. The school rejected that request because of witness availability. As a result, when the hearing proceeded on the morning of October 7, Bursch's lawyer was not present to advise Bursch (lawyers are not allowed to actually litigate at these hearings), and the charges were sustained, resulting in Bursch's expulsion from school.

The due process challenge is rejected. The majority rules that while the student handbook allows students to request a one-time extension of the hearing, that provision is nowhere to be found in the record and, in any event, this provision simply gives you the right to request an extension without actually changing the hearing date. Given the logistical difficulties in scheduling the hearing (lining up witnesses, judges, etc.) and the last minute request for an adjournment, it was not arbitrary and capricious for the college to deny the adjournment request. Moreover, due process does not require the college anything more than an opportunity to present a defense, the names of witnesses and written notice of the ruling. You have no right to a lawyer at these hearings, and as the attorney can only advise you at the hearing.

Two justices dissent. The justices summarize their reasoning this way:

The respondent Purchase College of the State University of New York (hereinafter Purchase) violated the petitioner’s right to due process and abused its discretion when it denied his timely request for a three-hour adjournment of the administrative hearing so that his attorney could attend. Given the gravity of the administrative charges facing the petitioner, and the threat of additional criminal charges stemming from an active police investigation, the petitioner’s right to secure the assistance of his designated attorney at the administrative hearing was fundamental. This right was wrongfully extinguished by Purchase when it summarily refused to accommodate the petitioner’s request for this exceedingly minimal delay.

This case should not be analyzed as if it involved a routine application for an adjournment in a proceeding before the Department of Motor Vehicles. Aside from the punishment of expulsion, which effectively ended the petitioner’s pursuit of higher education, the petitioner faced the prospect of serious criminal charges that could have resulted in a significant prison sentence. In light of the potential impact of the administrative hearing, the failure to grant a three hour adjournment was no ordinary administrative determination with consequences confined to the administrative realm, but a decision which deprived the petitioner of his right to due process. Every participant in an administrative proceeding is entitled to be treated fairly and in accordance with due process, regardless of the nature of the charges lodged against them. Accordingly, we must respectfully dissent.
State appellate practitioners know that 3-2 cases are ripe for review by the Court of Appeals, as the two dissenters are allowed to certify the case for review by that court. That is probably where this case is going.

Friday, September 28, 2018

NLRB finds employer retaliated against employees for approving a labor union

The National Labor Relations Act prohibits employers from retaliating against employees for voting in favor of a union. In this case, the National Labor Relations Board ruled against an employer that engaged in such retaliation. The Court of Appeals confirms the ruling.

The case is NLRB v. Dawn Trucking, Inc., a summary order issued on September 21. The Board said that Dawn fired six employees for voting in favor of union representation. That ruling has factual support in the record, says the Court of Appeals (Raggi, Sack and Katzmann).

Prior to the union election in November 2015, Dawn's owner said he would shut down the company if they voted in favor of a union. Following the election, the owner said, "Straight across the board, we're done." He also stopped giving any of the employees any work. Then, in January 2016, the owner started up the company again and said he had "found out who the terrorists were." The Second Circuit says the NLRB was able to find that "terrorists" means pro-union employees.

An employer can avoid liability in a case like this if it closes the business permanently and lawfully. But the Circuit defers to the NLRB's findings that the business was not permanently closed down, as the owner handled some trucking assignments for Dawn and tried to re-hire certain employees. While management the NLRB had no basis to find the company unlawfully made offers of reinstatement to certain employees conditions upon their rejection of the union, the evidence shows that in a text message, the owner offered reinstatement on one condition: "no union rates no benefits." 

Thursday, September 27, 2018

Second Circuit interprets the "outside salesman" exception under the FLSA

The Fair Labor Standards Act entitles you to overtime unless you fall within one the statute's many exceptions. The plaintiffs here fall within the "outside salesman" exception and therefore cannot get any overtime.

The case is Flood v. Just Energy, issued on September 19, which along with Flood gave us two FLSA rulings on the same day in favor of employers, sort of a double-whammy for the American worker, at least the ones living in the Second Circuit.

Plaintiffs engaged in door-to-door solicitation to persuade customers to buy Just Energy's electricity or natural gas. Being a salesman is hard enough when you have the door slammed in your face by irate homeowners who are eating dinner or watching TV when someone is trying to sweet-talk you into buying a service that you do not want or already have. The salesmen here worked more than 40 hours a week dealing with the fickle American consumer only to discover they were not getting paid overtime. So then went to court. The court also says no. As it happens, courts around the country are divided on whether Just Energy's salespersons are entitled to overtime. The Second Circuit says they are not.

Under the regulations, an outside salesman is someone whose primary duty is "making sales" or obtaining orders or contracts for services or the use of facilities, and who is customarily and regularly engaged away from the employer's place of business in performing these primary duties.

Plaintiff Flood falls within the exception. He was "making sales" by going door-to-door selling Just Energy's products, and he got paid only when he was able to talk someone into signing the contract. Flood argues that he was not "making sales" because defendant had discretion to reject the contracts he secured from customers. That's an interesting argument, but the Court of Appeals (Kearse, Livingston and Meyer [D.J.]) says, "we do not agree that the outside salesmen exemption requires a showing that a selling employee has an unconditional authority to bind the buyer or his employer to complete the sale." Authority for this proposition lies with the Supreme Court's ruling in Christopher v. SmithKline (2012), which "declined to interpret the 'making sales' requirement to mandate a showing that an employee has fully consummated a sales transaction or the transfer of title to property." The Court in Christopher also counseled against the use of technicalities to defeat the outside salesmen exception.

At the end of the ruling, the Second Circuit also agrees with the district court's collateral estoppel ruling, which said that plaintiff could not benefit from a contrary district court ruling against Just Energy in Ohio. That case, Hurt v. Just Energy, was similar to this one, but there is no offensive collateral estoppel for Flood because the Hurt case only addressed the "making sales" prong of the outside salesman exception and not the "obtaining orders or contracts for services" element. Also, Just Energy has not yet had a chance to appeal the Hurt ruling, which also cuts against Flood in the collateral estoppel equation.

Wednesday, September 26, 2018

Limousine service does not have to pay overtime under the FLSA

The Fair Labor Standards Act requires employers to pay their employees one-and-a-half times their rate of pay if they work overtime. But the FLSA also has numerous exceptions. From time to time, the Second Circuit takes on another statutory exception. This time around, it's the taxicab exception. The Court rules that a chauffeured car service did not have to pay overtime because it qualifies as "an employer engaged in the business of operating taxicabs."

The case is Munoz-Gonzalez v. DLC Limousine Service, Inc., decided on September 19. The Second Circuit has never interpreted the taxicab exception before, so it starts with the language of the statute in determining its scope. What is a "taxicab" under the FLSA? The statute does not define it, so the Court looks to the dictionary, Webster's New International Dictionary, the unabridged second edition from 1934, issued around the time of the FLSA. (Which makes me wonder if labor lawyers should invest in the same dictionaries the courts use in interpreting statutes). That dictionary says a taxicab is “[a] passenger‐carrying vehicle, usually a motor vehicle designed to seat five or seven persons, with or without a taximeter, maintained for hire on public thoroughfares or at public stations or stands, but not operated on a schedule.”

More broadly, the FLSA exempts employees throughout the transportation industry, which was already regulated by other statutes.

Here is the problem for plaintiffs (and other employees who want their overtime). While "our Circuit has traditionally construed FLSA exemptions narrowly and against the employers asserting them," that framework changed in 2018, when the Supreme Court issued Encino Motorcars v. Navarro, which rejected that method of statutory interpretation for the first time by a 5-4 vote. So by this point in the ruling, you know the plaintiffs are going to lose this case, and they do. As the Second Circuit (Livingston, Chin and Failla [D.J.]) writes:

we conclude that there is no genuine dispute that DLC’s drivers qualify for the taxicab exemption. First, DLC’s fleet consists of chauffeured passenger vehicles, including town cars, SUVs, and luxury vans. Second, DLC’s cars are available for hire by individual members of the general public. Third, DLC’s cars take passengers wherever they want to go and “do not cover fixed routes or adhere to fixed schedules” or fixed termini. Accordingly, DLC’s drivers qualify for the taxicab exemption.
The Encino effect is trickling down to the lower federal courts, requiring judges to reevaluate how they interpret the FLSA and its exceptions. The taxicab exception under the FLSA is the victim of that framework, but it will not be the last.