Archive for the 'Business Law' Category

Department of Labor Changes the Requirements for Internships

The realities of today’s job market have left many of us spending some time in the workforce as unpaid  interns. This can be an incredible opportunity to learn the intricacies of a profession, gain resume experience that is essentially necessary to be hired in an entry-level position in much of today’s economy, and develop a network within your industry.

Often, these internships can be the prequel to a more permanent position at the same place of work. Yet, we all know somebody with an internship horror story–you are basically working for free and sometimes you don’t end up feeling like you’ve got out what you put in.

The Reality of Internships in the Workplace

The truth is not all internships are legitimate, sometimes an employer is simply taking advantage. Sometimes an employer truly believes they’ve properly classified somebody as an intern and is blindsided by a lawsuit over misclassification, often resulting in costly fines, required backpay and liquidated damages. Employers are obviously required to pay employees, internships are a classification creating an exception to this issue. In other words, interns don’t count as employees under the law. This means misclassification is a very serious issue.

Determining when you are properly classified or classifying an employee as an unpaid intern has always been a bit of a challenge. There are rules that change from state to state as to the requirements to treating somebody as an unpaid intern versus as an employee. However, since 2010, the federal approach through the Department of Labor’s (DoL) approach to the topic under the Federal Labor Standards Act (FLSA) has been the same–a rigorous six-factor test.

In order to be an intern under this test all six factors need to be met–the internship must be similar to the training in an educational environment, the experience must be designed for the benefit of the intern, the intern doesn’t displace employees and works under close supervision, the employer shouldn’t draw immediate advantage from the intern (they may actually be inconvenienced), the internship doesn’t automatically translate to a job, and both parties need to go into the relationship knowing the intern isn’t getting paid.

All these elements needed to be fulfilled under this test, however the primary focus was on the “immediate benefit” section. This is a bit vague, one of the main problems with the test, but it means that if the employer is gaining a business benefit from the intern they should be treated as an employee.

internshipsThis is very strict standard, but it was put in place to make sure the intern wasn’t getting taken advantage of. Without the right provisions in place, it’s easy to imagine a situation where an unpaid intern is basically an unpaid janitor or secretary.

Are the Rules for Internships Too Strict or Too Relaxed?

Despite the importance of these rules, the rigidity of the federal standard has seen quite a bit of criticism since they were originally adopted. They’ve been rejected as a standard by several courts, most recently the 9th Circuit, and challenged by quite a few companies. The rules have been blamed being so unclear or so unyielding as to scare employers from hiring interns or running internship programs in the first place.

Just a few weeks ago, the DoL took steps to change these rules to be more in line with the looser standards often adopted by the courts. In fact, the test they have adopted is quite close to the standards adopted by the 9th Circuit–known in legal communities as the “primary beneficiary” test.

This means it’s easier to hire an intern, something useful to businesses and those seeking internships. However, it will also leave these interns more vulnerable to abuse. Let’s look at the new rules and how they will affect your business or your potential internships.

What are the New Internship Standards?

The new standards are much more flexible on internship classifications than the previous six-factor “immediate benefit” test. The DoL has described the test as focusing on the economic realities of the job market and how internships work. But like many things in law, this is no simple test. It is a seven-factor doozy.

Despite being seven factors as opposed to six, the test is still less restrictive because no one factor can be determinative one way or another. Instead of the previous tests requirements that each box be checked, the new test looks to the whole situation and uses each factor to inform an overall determination based on the considerations of each element. The elements of the test, and the way to ensure you stay in line with them, are as follows:

  1. The extent to which the intern and the employer have an agreement that the intern isn’t getting paid.  Any promise of payment or any other sort of compensation, express or implied, suggests the intern is an employee—and vice versa. This means it’s incredibly important that a signed agreement is in place that makes it clear that there are no monetary incentives associated with the internship. It’s also worth noting that money isn’t the only thing that can act as compensation, an employer needs to be clear that there aren’t any rewards associated with the internship other than experience and training.
  2. The extent to which the internship provides training that would be given an educational environment, including the clinical and other hands-on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit. For example, if you have an internship through your school with a follow-up journal or something of the sort that weighs in favor of you being an intern.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar. This one is straight forward, don’t make your intern skip school to attend his internship unless it’s necessary.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning. This one is also simple, if you’ve had an intern for a particularly long time they aren’t learning much new unless you constantly change their duties. An intern who comes in each day and handles the same duties for a long enough period looks suspiciously like an unpaid employee.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern. If the intern is doing the same thing as your employees, the more the intern is replacing the role of a paid hire as opposed to learning the trade the worse it looks for an employer.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job after the internship. This goes hand in hand with the first factor, as an employer make sure there’s a clear written agreement in place that the internship is not a guarantee of later employment.

The final determination from all these factors, determining whether any given intern was properly classified, rests on who is the primary beneficiary of the arrangement based on these factors. As the name of the test suggests, if the intern is receiving at least something more than 50% of the benefit of the relationship then they are properly classified. This allows a lot more benefit for an employer out of an internship relationship, or a lot less benefit for the intern depending on your point of view.

What Do These New Rules Mean for Employers and Interns?

These rules are close to the previous six factor test, at a minimum they look at many similar issues. However, it looks more to the totality of the circumstances as each issue is at most a factor weighing for or against proper classification as an intern.

This means the situation may be slightly more confusing, or at least less cut and dried, when it comes to classification. Regardless, the test will make it less likely for employers to get in trouble for misclassifying interns.

As discussed above, a clear written agreement should be signed by both parties before an employer brings on an intern. Such an agreement should include as much of the language from these seven factors as possible. Making it clear there is no compensation for the internship, monetary of otherwise, is crucial.

Other documentation associated with program, such as advertising internship positions, should also adopt language like the seven-factor test. The stated goal of the change is to be more flexible in allowing internships. However, it is still important to be as clear as possible in every related to your internship program to avoid costly court battles.

If you’re interested in getting an internship, it’s important to make sure that it’s on the up and up. While the new rules have the potential to create more available internships, they also open the doors to easier abuse of the system. Make sure your internship is on the up and up, preferably through an established a reputable organization.

It’s also worth noting that there are some exemptions to the usual internship rules. The FLSA does not apply the rules to those who volunteer for humanitarian services such as non-profit banks, volunteers for religious, charitable, civic, or other similar non-profit organization.

Similarly, volunteers for state or local governments are exempted. A volunteer is not an intern. What’s more, there is an established rule that for-profit companies cannot make use of volunteer labor.

Regardless of your position, would-be intern or employer, the new rules bring the federal position in line with the bulk of case law on the issue. This will make the issue more consistent across the nation. This will make it easier to offer internship programs. This by itself is a benefit for everybody. From here, it’s just important to make sure that the many interns across the company are properly protected.

Jonathan Lurie is a Founding Partner of The Law Offices of Lurie and Ferri (Contact Info). He primarily handles business law, employment law, and intellectual property issues, but works with all types of civil matters. He is a Vice-Chair of the Sports and Entertainment Interest Group of the California Intellectual Property Section and has won awards for his knowledge of intellectual property, start-up business issues, and California civil procedure. 

Google Should Rethink Its Stance on Gender, Race, and Politics

According to the latest statistics, 70% of Google’s staff is male and 61% of the company is white. Additionally, 75% of Google’s leadership are men and a mere 5% of the company is black or Hispanic (not counting mix race). With these statistics, allegations of sexism and racism towards white men are hard to believe.

However, the lawsuit filed by James Damore and David Gudeman contain some disturbing details. For instance, many employees expressed a desire to terminate coworkers who disagreed with them, some even joking that they should rehire them so that they could fire them twice.

What are the Details of the Case?

Certain Google managers keep “block lists” of employees they didn’t want to interact with. Message boards and emails exhibited in the lawsuit show that Google Managers would add employees to the lists partly based on political views. Since Google gives raises, bonuses, and promotions through peer reviews, these block lists would significantly impair an employee’s career path. More importantly, it gives employees the ability to recommend bonuses based on promotion of certain speech against other employees. One peer review praised another employee for “speaking up for googley values and promoting [diversity and inclusion] in the wretched hive of scum and villainy that is [Damore’s Memo].” It’s troubling and legally questionable whether this kind of contempt should be rewarded and therefore encouraged by a professionally traded company.

The most alarming complaint was a message by an employee who said that “40 something white men” were incapable of innovating even if they took credit for innovations. Although the message was clearly sexist, racist, and ageist, Google’s Human Resources Department allegedly refused to take action. The Google employee who had complained about the message asked whether HR would take action if the message had been about women instead of “40 something white men.” The lawsuit claims that HR did not respond to the comparison.

googleGudeman’s Actions are Something to Keep in Mind

It should be noted that Gudeman’s own words and behavior contributed to some of the hostility towards him. Gudeman wrote about the need for men to protect themselves against bias by women to “protect himself from a system that is highly biased against him.” This conclusion would be highly controversial given data and current stories in the media right now, but Gudeman had a right to believe what he wanted. He went further though, and complained that his co-workers efforts to debate with him were akin to “slave owners would have written for their slaves to help them understand how to interact with their masters.” Obviously, a white man working at a global company making significant amounts of money comparing himself to a slave would anger a lot of people.

Gudeman also took issue with co-workers on other issues. When a Muslim co-worker said she was afraid that the next administration would target Muslims, Gudeman responded by saying: “In the administration of the most pro-Muslim president in history you were targeted just for being a Muslim? Why didn’t you file a civil rights suit? The Justice Department would take your side if it really happened.” Gudeman is ignorant about the Obama administration, since the Justice Department did target mosques during President Obama’s tenure. Gudeman is entitled to believe what he wants to believe, but wantonly dismissing a co-worker’s concerns is “a dick move.”

Aside: The lawsuit names Alex Jones as an influential conservative personality who was blacklisted from visiting Google premises (page 37, Line 150). Alex Jones is a conspiracy theorist who alleges that 9/11 was a government conspiracy and that the Sandy Hook School Shooting was a hoax. If men like Alex Jones are “influential” conservatives, the hostility towards conservatives is understandable.

Separating Racial Bias from Political Bias

Easily the most legally actionable offense is the comment about “40 something white men” stealing innovations from others. The comment was by a Google employee on an internet forum commonly used by Google employees and viewed by Google employees. The comment mentions race (“white”), sex (“men”), and age (“40”). The complaint alleges that Google did nothing even though the comment was clearly hostile towards three different protected classes. If these kinds of comments were frequent and Google turned a blind eye, or worse, encouraged them, Google is liable under the Civil Rights Act for promoting a hostile work environment.

The Civil Rights Act covers all instances of race or sex based discrimination. It is entirely possible for a white person or for a man to be the victim of reverse discrimination. The Age Discrimination in Employment Act prohibits discrimination based on age, particularly if the plaintiff is 40 years or older. Google must stop illegal discrimination in its company or face injunctions and substantial fines.

If a person or movement is being a jerk, the hostility should be aimed at that person or movement. The person’s race or sex should not be targeted as well. This principle was applicable after the terrorist attacks on 9/11; Al Qaeda, its allies, and members are the specific bad guys, not Muslims in general. The same holds true for vile movements like white supremacy and neo-Nazis in these specific times, not white men in general.

Separating Political Discussion from Being a Jerk

The issue at large today is that the current Presidential Administration has abandoned professionalism. A President calling trade partners “sh*tholes,” paying porn stars for their silence, sexually harassing women while the wife is pregnant, supporting an alleged pedophile for Senate, suggesting an IQ measuring contest with his own Secretary of State, publicly trashing his own Attorney General for recusing himself as required by law, alleging a primary opponent’s father was involved with the JFK assassination, and comparing the size of his nuclear button with the leader of a hostile foreign power is not normal. These kinds of speech and actions should not be political, but because they are coming from the head of a political party, have been made political.

The party rank and file has absorbed some of these behavioral patterns, but they make others upset and resentful. A co-worker that is scared of discriminating actions by the federal government would feel oppressed by a co-worker that dismisses her fears. Calling them “snowflakes” will not resolve the problem.

Similarly, a white co-worker surrounded by co-workers who are outspoken and opposed to “white privilege” might also feel oppressed. In essence, a company that leans liberal is a hostile work environment for a conservative and a conservative leaning company would be a hostile work environment for a liberal. Ironically, this is only an issue in states like California, which prohibit political activity or affiliation discrimination.

The question becomes, how should a private company like Google manage resentment of politicized internet trolls with federal and state discrimination laws? First, there sometimes are actionable lawsuits by those whom we politically disagree with. The Civil Rights Act prohibits discrimination based on race, not just non-white people. Comments that generalize white people and/or men should be scrutinized, not ignored or praised.

Second, Google should streamline and narrow the focus of its peer review system. Peer reviews can be valuable, since they encourage recognition of the contributions of others. However, they should be focused on the work that the company does, not activities outside the company’s work.

Third, Google should actually try to engage with some of the dissenting opinions. Although some of them are completely ignorant and insensitive, those are opportunities for education, not dismissal. Gudeman didn’t know that the Obama Administration was accused by the ACLU of profiling Muslims. Damore saw data that women often don’t negotiate with their employers for higher pay, but he attributed this to biological differences rather than social upbringing. Damore and Gudeman’s views are not advocating genocide; they can and should be debated with.

Is Google Liable For Discrimination?

Google’s defense to the hostile work environment claim is that Damore and Gudeman were creating a hostile work environment for their co-workers. As a private company, Google has no obligation to maintain free speech or to avoid viewpoint discrimination. The tricky part is that California prohibits political affiliation discrimination. Google would have to show that it didn’t discriminate against   Damore and Gudeman based on their political views, but that they were constantly arguing and fighting with their co-workers.

Damore and Gudeman are unlikely to prevail on political discrimination as Google can argue they were terminated for non-political reasons. However, comments that generalize white men could lead to consequences if similar comments are found.

CA Legalizes Recreational Marijuana as Laws Change Across the Country

With new year upon us many a law enacted over the last year will all be taking effect at once. Among all this newly effected legislation, marijuana laws have taken an enormous role. The legalization of marijuana has been a rolling stone steadily gaining momentum over the last several years–both for medical and recreational use–and this year has been no exception.

As the ball dropped in New York we also saw quite a few criminal restrictions on marijuana drop across the nation. Perhaps nowhere more so than in California where they took the enormous step of becoming the sixth state in the U.S. to permit the sale of marijuana at licensed stores. Obviously, it isn’t just that simple, not only is marijuana still Federally illegal and in the sights of Attorney General Jeff Session’s Department of Justice, the laws require quite a few provisions which are important to understand in the light of such a huge shift in the legal landscape. Let’s look at the new California law–as well as upcoming potential changes in other states–and see how these laws apply to you and your business considering state law and the federal government’s take on the issue.

The Basics of California’s New Law

At its simplest level, California’s new position on marijuana is nearly identical to its position on alcohol. As of around a week ago if you go into a licensed shop and you’re 21 years of age or older you can buy marijuana so long as you have a driver’s license or ID card with you–either a California license or another state license works. You don’t need a medical marijuana license anymore but, as we’ll discuss later, it’s a bit too early to be throwing away your medical marijuana licenses.

Although you can buy marijuana now, that doesn’t mean you’re free to go light up in front of a cop. In fact, it’s still California state law that it is illegal to smoke marijuana in a public place. This applies everywhere, even if you could legally smoke a cigarette at that place. The penalty for this is not particularly extreme, a $100-$250 fine, but it is still a crime and something to keep in mind. It is perfectly legal to consume marijuana in your home or another person’s private property.

In terms of the businesses selling marijuana, while there are some who are already set up with a license as some California cities are considering opening marijuana lounges along the lines of a hookah lounge, it’s not going to be as easy as simply sending an application to the Secretary of State and setting up the next day.

Even after a business entity is set up, sellers will need to register with the California Department of Tax and Fee Administration and seek a license from one of three entities–the Bureau of Cannabis Control out of the Department of Consumer Affairs, the CalCannabis Cultivation Licensing Program through the California Department of Food and Agriculture, and the Manufactured Cannabis Safety Branch through the California Department of Public Health.

marijuanaRight now, you can expect all these places to extremely backed up with requests for licenses. Even once a business has a license, they need to be permitted with the city or county they plan to do business in–a matter that is complicated by the fact that many California cities are not currently allowing recreational dispensaries whatsoever.

At this point, mostly the same medical marijuana dispensaries that were already there. This being said, the cities that do allow recreational marijuana sales have generally already allowed these medical dispensaries to immediately move to recreational sales. It is also worth noting that California has now made the move of allowing cannabis trademarks, something that previously was a no-go.

Growing Marijuana Plants in Your Home

Growing your own marijuana in California is a bit of an odd issue as it’s primarily an issue that changes quite a bit from city to city and county to county. In theory, it has been legal for any 21 or older Californian to grow up to six plants per household since November of 2016. The only real proviso to this is that they must be kept out of sight of the public. The reality of the situation varies enormously based on local governments–some being incredible permissive and some much more restrictive. A few common local restrictions are permitting requirements, often expensive and difficult to obtain, and requirements that the plants are grown completely indoors.

Marijuana and Driving, Driving While High

First and foremost, don’t smoke marijuana and drive. It’s illegal and it’s irresponsible. However, to address the exact law on the issue, California now treats marijuana almost the same as alcohol you keep in your car. Just like you can’t have an accessible open container of alcohol in your car, you can’t keep an accessible open container of marijuana or any accessible means of consuming marijuana in your car.

As already mentioned, driving while impaired is absolutely a crime. However, it does raise some interesting legal issues. As it is, it is quite difficult for authorities to establish and measure current cannabis impairment. If an officer believes you are impaired, they will likely arrest you and–as it stands–if a blood test shows you have marijuana in your system a charge can be brought for driving while impaired.

A blood test is not a very reliable test of current impairment as it can show positive results from anything from 4 to 12 hours or–in the case of more regular users–several days. You can see the issue here, does a blood test really show whether you were currently impaired when you were pulled over?

What’s more, the usual tests for detecting impairment applied by law enforcement officers are not tuned to detecting marijuana impairment. In Massachusetts, the Massachusetts Supreme Judicial Court has already ruled that the field sobriety tests generally used by police officers as part of traffic stop cannot be evidence of driving under the influence of marijuana. This is likely an issue that will develop in the California courts over the next year or two, but is unresolved for now.

How Will Marijuana Impact Employment?

California, as is the trend across the nation, still allows employers to test employees for marijuana and fire, refuse to hire, or take other detrimental employment action against that employee or would-be employee based on the results. In fact, with some federal agencies this testing is required–not a surprise given marijuana’s federally illegal status.

However, it is a bit of an odd position given how close California’s treatment of marijuana is to alcohol at this point. It would be quite odd for an employer to act against an employee for drinking alcohol off duty if it didn’t affect that employee at work.

This treatment is a nationwide standard at this point. Not so long ago, the Massachusetts Superior Court dealt with this issue and took it even further by saying that an employer could take action against an employee prescribed marijuana as a medical treatment for Crohn’s disease and is under no obligation whatsoever to make the usual accommodations for a disability when it comes to marijuana.

Jeff Sessions Will Be Cracking Down

As marijuana legalization ramps up across the country, Attorney Jeff Sessions has left no question as to his position on it. Describing marijuana as equivalent to heroin and at one point controversially stating that he thought the KKK were ok people until he learned they smoked marijuana. Suffice it to say, he is not a fan.

This has manifested previously manifested itself in his Department of Justice taking the position that they will prosecute and seek the greatest possible sentences on all violations of federal marijuana possession laws–a policy opposite to the Obama administration’s approach of not prosecuting when an action was legal under state law.

Congress has not been entirely cooperative with his plan, giving the DOJ no money whatsoever to prosecute medical marijuana. However, this does not include potential prosecution over recreational use and, just last week, Sessions has announced that he will give federal prosecutors total discretion as to what to do when state and federal law contradicts on marijuana.

Jeff Sessions stance has drawn criticism from both Republicans and Democrats in the Senate. However, it is unlikely to change and will present something of a minefield as these types of laws move forward. Federal prosecutors seem unlikely to come down on individuals, but businesses selling recreational marijuana might be a different story.

Full Legalization is Spreading

If Sessions’ position is creating a minefield now, the next year of legislation is looking like it only be making the situation more complicated. At this point polls show that over 60% of U.S. citizens support full legalization for adults and the states are taking notice and moving to take advantage of the taxes to be earned on marijuana.

In the coming year Vermont, New Jersey, Maine Michigan, Delaware, Rhode Island, Connecticut, Ohio are all looking to legalize recreational marijuana in some form or another. Oklahoma, Kentucky, South Dakota, Utah, and Missouri voters will decide on medical marijuana. On July 1st of this year, Massachusetts makes the move hosting retail recreational marijuana brick and mortars. Marijuana is on the move in the U.S., make sure you know the law on the issue for where you live.

Apple: Class Action Lawsuits Begin to Crop Up Over “Batterygate”

Tech giant apple has been in hot water over the couple weeks after the revelations of the dramatically named “Batterygate.” “Batterygate” is a term that has been used quite a bit recently to refer to Apple’s admission that, a little over a year ago, they released software updates which slowed down the processing speed of their iPhone 6, iPhone 6 Plus, iPhone 6S, iPhone 6S Plus, and iPhone SE models. In a more recent update, they did the same to the iPhone 7 and iPhone 7 Plus. These changes were made with no notice to public or mention in update notes and caused substantial slowdown for the devices. This admission has fed the belief that Apple intentionally slows down older phone models in order to push sales of their newer models–the iPhone 8 varieties and the new iPhone X.

Apple, however, has stated this is not the case and released an explanation. Apple says that the lithium-ion batteries in these models were becoming less capable of supplying the current energy demands of phones in cold conditions, at low charge, or even as they simply get older. This can cause phones to suddenly shut down, not hold a charge, or damage internal components. Apple says they intend to roll out similar slowdowns to more recent models as necessary.

This is a somewhat reasonable explanation, it does fix an issue caused by an older battery. However, it doesn’t explain why Apple didn’t inform their users about the issue. It also doesn’t explain why they didn’t tell users the slowdown issue and the issue behind releasing the slowdown updates could be solved by purchasing a new battery for just under $80–instead issuing replacement phones and pushing purchases on more recent models.

appleThese questions may have innocent answers. However, they’ve already given rise to at least two class action lawsuits over the issue. The first is a lawsuit including plaintiffs from Illinois, Ohio, Indiana, and North Carolina alleging fraud and deceptive business practices and the second is a lawsuit out of California accusing Apple of interfering with the use of a phone and breach of an implied contract. These lawsuits both revolve around Apple’s failure to tell its customers about the slowdown and allowing them to purchase expensive replacement phones instead of giving them the facts of the situation. Let’s take a look at them both, the law involved, and their chances.

Consumers are Suing Apple for Fraud

The fraud class action accuses Apple of intentionally concealing and obscuring why older phones were being slowed down as part of a scheme to sell more new phones. The lawsuit has some kinks to work out of it, it lists the non-existent iPhone 7s as one of the affected devices, but it does make some interesting allegations. They argue that the true purpose behind the slowdowns was to fraudulently induce customers to purchase more phones or else Apple would have told people that the phones were being slowed down and the issue could be fixed with a cheap–relative to purchasing a new iPhone–alternative by simply buying a new battery. This led to the plaintiffs in the lawsuit buying new phones when they otherwise would not have. The allegations here include fraudulent omission and deceptive practices both under the statutes of the plaintiffs’ home states and common law

Intentionally suppressing or omitting a fact, with the intent that others rely on that omission in making a purchase, is a fraudulent or deceptive business practice under both common law and under most state’s statutes on the issue. For example, if a used car salesman knows the car you’re about to buy has electrical issues which will expensive fix and make you not buy the car, but decides not to tell you this would generally be fraudulent omission. It is important, however, that the issue would actually make you not purchase the car. It is only an issue under the law if the fraudulent omission or statement actually impacts your decision whether or not to take an action.

Deceptive trade practices have a number of definitions depending on where you live. However, in general it makes it illegal to engage in behavior likely to deceive the public. This covers quite a broad swath of situations, from fraud to false advertising to misrepresentation and omission of material facts. Material facts are facts which, as we just discussed, impact the opinion of the public. There does not always have to be an actual person deceived to support this sort of claim, just be likely to deceive the public.

The class action’s case is based on the fact that Apple failed to tell the public that about the reasons behind, solutions to and very existence of the slowdown iOS updates as part of scheme of fraudulent omission and misrepresentation in order to persuade people to buy cell phones. They have a fairly good case that there was an omission here that changed whether or not somebody would have bought a phone. If the plaintiffs here had known about the possibility of just buying a new battery, they likely would not have bought a phone. However, fraud is a tricky case to plead and pursue. It usually needs more facts in the initial complaint than other claims would, something this case is a bit light on. They’ll also have trouble establishing that the intent behind the concealment of these facts was to push sales when Apple has a fairly reasonable argument to the contrary that it was just to preserve the life of these older phones.

Details of the California Class Action

The second lawsuit that has been brought to bear against Apple takes a different tact, alleging breach of implied contract and trespass to chattels. These claims essentially come down to an two arguments. First, there is an implied agreement when you purchase a phone that Apple won’t later take away some of the phone’s functionality. Second, by slowing down the phones Apple illegally interfered with the customers use and enjoyment of their property. This reduced the value and function of their phones, sometimes making them require a replacement or overpay to fix an issue Apple knew how to fix and knew couldn’t be fixed by what was paid for.

The first of these arguments, implied contract, is a particularly tricky one to win in the courts. If you sign a contract which has the requirements elements to be valid or reach an oral contract in a situation where it is valid you have an express contract. The vast majority of contracts out there are express contracts. However, in the absence of this, the courts sometimes (very rarely) find the existence of an implied contract as a matter of equity and fairness. They can be found based on a prior history of similar agreements, when somebody accepts something of value knowing payment would normally be expected, or in other situations where fairness would require a court to imply a contract to avoid the unjust enrichment of a party.

They come in two forms, implied in fact and implied in law. Implied in fact contracts are a contract implied from the conduct of the parties. For instance, if you ask for a certain number of apples from an apple supplier with no discussion of price and they send it the current price at the time you asked for them could be implied into the contract if the courts wanted. An implied in law contract, on the other hand, is a contract implied purely to avoid unfairness. For instance, if a painter came to the wrong house by accident and the owner said nothing and let him proceed to paint the house, the courts could make the owner pay for the paint job through an implied in law contract.

The argument here is essentially that by purchasing an iPhone, Apple and the plaintiffs entered an implied in fact contract that Apple would not intentionally interfere with the functionality of the phones they bought. There’s potentially something to this argument. However, the complaint is very thin on facts as to why this should be the case. There is obviously a common sense aspect that when you buy something, you expect the person you buy it from not to sabotage it. However, there needs to be more than just common sense here. This is especially true because the Apple terms and conditions, the agreements you click through prior to allowing an update, all will come into play for an argument that consumers know the functionality of their phones can change over time with updates. The argument is an uphill battle for sure, at the very least it will depend a great deal on how the judge on the case feels about the fairness of the issue.

The trespass to chattels, on the other hand, is much more straight forward. Trespass to chattels is a civil cause of action which alleges that somebody intentionally interfered with the use or enjoyment of your property without consent.  This is distinguished from the more serious claim of conversion in that conversion involves the full deprivation of another’s right to use or possess personal property. Think of it as the difference between taking your sandwich and eating it and taking your sandwich and burning the bread. In the conversion situation the sandwich is gone entirely, in the trespass to chattels situation you sandwich is made less appealing without your consent.

The argument here is that the plaintiffs never consented to having their phones slowed down. In fact, they weren’t consulted or even informed of the slowdown. The slowdown also certainly reduces the value and usefulness of these phones.  Apple did so intentionally, by their own admission they intend to continue to do so with other phones in the future. This is a claim with some merit, although damages will be fairly limited with such a claim. What’s more, it will face some challenges in terms of consent. Once again, the Apple terms and conditions likely permit them to make essentially any changes they like to your phone’s operating system. You also choose to update your iOS. The terms of these agreements will likely factor quite a bit into the success of these trespass to chattels claims. This being said, there’s a flip side to this argument in that Apple never revealed the slowdowns. This makes it nearly impossible to consent to the trespass unless the situation is covered in Apple terms and conditions.

Joining the Class Actions

These class action lawsuits are in very early stages and face a serious uphill battle. Their claims have some issues to them and they will have to survive the substantial legal resources of Apple. They will almost certainly face motions to dismiss and for summary judgment. They will need to get their class certified and more. However, there is at least some merit to their claims. The fact that Apple concealed these slowdowns for so long puts the situation in a particularly suspicious light when presented to the courts. What’s more, the sheer number of people affected will almost certainly number in the hundreds of thousands or millions in both cases. If you own or owned one of the iPhones affected and may have a claim similar to those in one of these class actions they are currently looking for people to add to the class. It may be worth your time to reach out to the attorneys involved.

How Much Trouble Is Amtrak In?

Amtrak Cascades Train 501 crashed at DuPont, Washington State, on December 18, 2017. This was the first run on the Point Defiance Bypass, a new rail route close to Tacoma, Washington. The new bypass route was intended to shorten travel time by separating passenger and freight traffic. Instead, the derailment resulted in several hours delay, as well as three fatalities and a hundred injuries.

The public transit derailed as it approached a bridge near Interstate 5. The lead cars crushed a number of automobiles as it hit the freeway. The data recorder onboard showed that the train was traveling 78 miles per hour when the accident occurred, almost 50 miles faster than the posted 30 mile speed limit. Witness reports also claim that engineers had voiced concern that the train was going too fast and that they should hit the brakes. Six seconds later, the train jumped the tracks and entered the Interstate Highway.

Conductors and engineers usually train on the new route to familiarize themselves with its landmarks and speed limits. Although Amtrak had conducted some of those exercises on the new Point Defiance Bypass route, a number of Amtrak workers had expressed concern about the sufficiency of the drills prior to the accident. The training exercises had reportedly been quite flawed: engineers were largely kept in a single car in the back during the training, some of the trial runs were conducted after midnight when visibility was low, and that supervisors were unavailable or unwilling to answer questions about safety concerns. Amtrak claims that its training exceeds federal standards, but would not comment further until state and federal investigations were concluded.

amtrakWhat Kind of Legal Claims Could Amtrak Face?

In an accident of this magnitude, with three fatalities and a hundred injuries, Amtrak would face significant lawsuits regarding their conduct and the conduct of their employees. Six victims of the crash have already retained a law firm to represent them:

Amtrak’s Negligence and Its Responsibility to Passengers

Although the investigation is ongoing, the initial reports indicate that its employees and supervisors were negligent in some capacity. As owners and couriers, Amtrak owes a duty to its passengers to keep them safe. Going 50 miles over the speed limit and conducting training sessions that were inadequate is a clear breach of that duty.

Amtrak might argue that its familiarize exercises were well over those mandated by federal law, but going that far over the speed limit is a clear indication that someone had failed at their job. A reasonable person could foresee that going 50 miles over the speed limit when making a turn onto a bridge would result in an accident. But for that violation of the law, those three passengers would still be alive, and everyone injured onboard the train would be fine.

Amtrak’s Negligence and Its Responsibility to Highway Drivers

The drivers who were injured on the highway would also have standing to sue Amtrak and its employees. The biggest difference is that Amtrak does not have a special duty to those drivers. The passengers are Amtrak’s guests and the passengers pay Amtrak to transport them safely to their destination. Amtrak has no such special responsibility to those on the freeway.

On the other hand, Amtrak does owe a general duty to the public. As a public service and as an operator of dangerous machinery (a train fell on the freeway!!), Amtrak has a responsibility to the public in general to operate carefully. If a truck carrying gasoline ran off a bridge and fell onto the cars below, the truck company would be liable for any damage the truck caused. There’s no reason that Amtrak should not have the same duty to the public at large.

Is There a Damage Cap?

However, even if the victims prevailed at trial, their damages and recovery would be limited to $295 million. The 1997 Amtrak Recovery and Reform Act originally limited damages to $200 million. The cap was raised in 2015 to its current amount. The damage cap will lead to a race to the courthouse to ensure that a victim can get his or her share.

The latest crash at the end of this year will likely renew debates on whether damage caps are necessary. Amtrak is partially funded by state and federal governments, but operates as a for-profit corporation. State actors are often shielded from liability so that the state can operate without political harassment. Private corporations have no such shield though. Giving certain companies such protections is a type of crony capitalism that politicians on both sides of the aisle have railed against.

In cases like this, such damage caps are devastating. $295 million cannot make up for three wrongful deaths and hundreds of injuries. This doesn’t even count the money required to remove the train from the highway and the property damage done to all the automobiles below. The 1997 Amtrak Recovery and Reform Act might be useful to stop certain frivolous lawsuits such as hot coffee spills. In train derailments like this though, such damage caps are an injustice to the victims both on the train and on the freeway.