Articles Posted in Business Disputes

A plaintiff’s attorney in New York recently challenged a federal court’s authority to order him to pay a $10,000 fine as a sanction for misconduct under the Federal Rules of Civil Procedure in a copyright infringement case. Southern District of New York Judge Denise Cote imposed the monetary sanction on attorney Richard L. pursuant to Rule 11 of the Federal Rules and the court’s inherent authority to manage its own affairs (Paul Steeger v. JMS Cleaning Services, LLC).

The alleged conduct for which Richard was sanctioned included failure to serve notice to the defense of a pretrial hearing as required by court order, which the judge accused Richard of having done on three other occasions in the southern district, and also failing to respond to the defendant’s settlement offer.

Shortly after the defendant complained of Richard’s conduct to the court, the parties reached a voluntary settlement in the case. As a result of the complaint, the judge issued Richard an order to show cause why he should not be sanctioned.

At issue in Richard’s motion for consideration was what the court is allowed to do under its inherent power and under Rule 11, which requires that no monetary sanction or order may be imposed against a party or its counsel after the litigants have reached a voluntary settlement.

Judge Cote noted, however, that she received the defendant’s complaints about Richard’s misconduct and issued the order prior to the case’s formal dismissal or settlement. Instead, Richard had notified the court only that the parties had reached a settlement “in principle.” The case was not dismissed pursuant to the settlement until four weeks later.

The judge accused Richard of a pattern of omissions and misrepresentations in the case and failing to adhere to standards expected of officers of the court. Continue reading ›

Most people associate Fuji and Xerox with an office setting involving photocopying and printing. If you go to their website at: https://www.fujixerox.com They advertise smart work innovation that liberates from Restraints with an open professional expertise.  These are work aspects that most professionals want to aspire to be a part of and probably one of the reasons why they have taken off in the US market.

Fuji Xerox Co., Ltd., is a joint venture partnership between Fujifilm Holdings and Xerox, both being document related services.  Operating out of Tokyo, it was set to be one of the most powerful alliances held between the Japanese and Americans. Continue reading ›

The sports industry is one of inflated prices. From tickets to merchandise, rabid fans are often willing to pay outrageous prices for the illusion of a connection to their favorite player and this includes the selling of equipment that was allegedly worn by star players during games. The question of whether it can be proven that a specific piece of equipment was worn during a game or not was up for debate in a recent lawsuit against Eli Manning, the Giants, two equipment managers for the NFL team, and Steiner Sports, a company that sells helmets and jerseys worn by players during games.

The lawsuit was filed by Eric Inselberg, Michael Jakab, and Sean Godown, who purchased two helmets that were supposed to have been worn by Manning during games, but the three men allege that is not actually the case. Inselberg, who filed the lawsuit in 2014, claimed photographic experts used a technique known as “photo matching” to determine if the helmets he, Jakab and Godown had bought had actually been used in NFL football games. According to the lawsuit, these experts allegedly failed to find any evidence that either helmet had, in fact, been worn during any game.

Manning and the Giants argued that photo matching isn’t reliable because helmets are routinely reconditioned after, and even during seasons. They claim photo matching fails to take this into consideration and the evidence that a particular helmet was worn during games is to be found on the inside of the helmet, rather than the outside. Continue reading ›

DiTommaso Lubin’s predecessor firm litigated a case that is now before the Illinois Supreme Court on Respondent’s appeal of 750 ILCS § 5/513 (“Section 513”) being declared unconstitutional.

When an Illinois Statute is declared by a court to be unconstitutional it can be directly appealed to the Illinois Supreme Court and it does not have to go through to the Appellate Court first. Illinois Supreme Court Rule 302(a)(1).

The Respondent in the underlying case, where Section 513 was declared by the circuit court to be unconstitutional filed a direct appeal to the Illinois Supreme Court to decide if Section 513 is unconstitutional.

DiTommaso Lubin was retained by our client in the circuit court case to defend him in the appeal before the Illinois Supreme Court.

The circuit court’s ruling that Section 513 is unconstitutional was only applicable to the facts of the case. Our client’s fundamental right of raising his child and his decision to guide his daughter to a more appropriate college through the tightening of his pocket-book strings was obstructed by Section 513.

Section 513 creates two separate classes of persons, those married with children and those unmarried, widowed, or divorced with children. This is a violation of the Fourteenth Amendment of the United States Constitution. The Fourteenth Amendment guarantees equal protection to all United States citizens regardless of their classification by the government. Continue reading ›

When small companies compete against larger, more established companies working in the same space, they often rely on their unique selling points to set them apart from their competition and establish their own niche in the marketplace. But succeeding with that tactic becomes much more difficult if your competition starts using your own tactics against you.

According to a recent lawsuit against Ray Borg, the UFC flyweight allegedly stole trade secrets and took them to a competitor, broke his contract with a gym and a management company without warning, and committed fraud, among other things.

The lawsuit was filed by Wild Bunch Management, which is run by Tim Vaughn, who’s a team member of the gym, Fit NHB. According to the complaint, Borg was working out at Fit NHB and had a three-year contract with Wild Bunch in which the management company would arrange fights for Borg, as well as train and promote the fighter and manage the business side of his fighting career. For his end of the deal, Borg was allegedly supposed to pay Wild Bunch 20% of everything he earned in the cage up to $10,000, plus 10% of any bonuses of $10,000 or more. The contract also allegedly included a non-compete clause in which Borg agreed not to teach martial arts within 50 miles of Fit NHB for the first year after his contract with Wild Bunch had been terminated.

Wild Bunch had allegedly negotiated Borg’s five-fight contract with UFC when Borg allegedly broke off all ties with both the gym and the management company after just the first fight and without any warning. After that point, Borg allegedly switched to Jackson Wink MMA in Albuquerque, a direct competitor of Wild Bunch that’s located across town. Continue reading ›

The past few years of Shari Redstone’s life sound like something taken directly from a soap opera after her aging father, Sumner Redstone, fell ill and required a full-time nurse to take care of him.

You probably know Sumner Redstone as the media mogul who ran the National Amusements theater chain (which owns CBS) for more than half a century. When he got sick, Shari kicked his long-time girlfriend out of his mansion, moved in herself, and took control of her father’s media company. Sumner’s girlfriend is suing Shari for having kicked her out and allegedly turned Sumner against her.

But now Shari Redstone has a bigger problem on her hands. Leslie Moonves, the CBS chief executive, has led a sort of a coup against her with other CBS directors. Moonves and the board of directors are suing Redstone for allegedly acting in her own best interests, even when it allegedly went in direct opposition to the best interests of the company’s shareholders. As a result, they are seeking to dilute Redstone’s voting rights as the majority shareholder of CBS and to strip her of much of her control over the media company.

Since Redstone has the power to fire anyone from the board of directors, why would they do all this at the risk of their own jobs? Continue reading ›

Janitors can be seen as caretakers of a building; custodians. Their role can be either undermined or seen as part of what makes the world go around. They have also hit headlines recently when it comes to the push to have their pay raised. Their recognition has made its way into the realm of Contract Law and that trend is continuing. Janitor tests ended up setting the standard in non-compete cases and situations.

The Janitor Test and Non-Compete Agreements 

A non-compete agreement is a contract between an employee and an employer in which the employee agrees not to enter into competition with the employer during or after employment. These legal contracts prevent employees from entering into markets or professions considered to be in direct competition with the employer. Restricting covenants have had their application in the utilization of a concept that some courts and litigants refer to as the “janitor analogy” or the “janitor test,” when questioning the breadth and scope of a non-compete provision. The test has evolved over the years, which shows us that janitors and the test will stay.

The first case we can look at is Reading & Language Learning Center v. Sturgill (2016). That case arguably had an overbroad, unenforceable agreement because the agreement did not clearly define the capacity in which scope of services could be provided. The speech therapist could even be prohibited from services other than the function in which that person worked previously, including but not limited to, selling furniture, providing cleaning services or plan school functions.

This line of reasoning was also applied in Distributor Service, Inc. v. Stevenson (2014). The Court stated, “[t]he bottom line is that the plain language of the Non-Compete Provision would prohibit Mr. Stevenson from being an ‘employee’ of any entity who engages in ‘Competitive Business Activity,’ whether he is in sales, works as a janitor, or maintains the second employer’s lawn. Thus, it is overbroad and unenforceable.”

When scope was limited, a “janitor analogy” did not go far because the scope of services was limited to areas in which that person had worked previously. The confidential information could, therefore, be used.

The more recent case of Medix Staffing Solutions, Inc. v. Dumbrauf (2018) had “janitor clauses”. It just goes to show that their use is another example of why these sorts of clauses can prove costly to employers. Courts will even be reluctant to want to modify them. On its face, the clause excluded an employee from taking any position with another company that engages in the same business, without regard to whether that position is similar to the prior position held. Accordingly, it was argued that the covenant was “too restrictive” and that the “covenant bars him from taking positions with those companies extend beyond roles that were similar to those he previously held to any position whatsoever at other companies in the industry.” The argument extended so far as to say that he couldn’t even work as a janitor for another company. The question of the justification of broader restrictions vs. legitimate business interests was the main crux of in which way the court was likely to lean. Continue reading ›

Anyone who thought the story of Stormy Daniels’s alleged affair with Donald Trump would blow over quickly should think again. Not only is Daniels not going anywhere, but she’s drawing other people into the scandal, including Keith Davidson, her former attorney.

Davidson represented Daniels in the negotiations between her and Trump for the non-disclosure agreement she signed regarding the affair she and Trump allegedly had in 2006. Under the terms of the non-disclosure agreement, Daniels was to keep quiet about the affair in exchange for $130,000.

Daniels kept her end of the deal for the first five years. Then, in 2011 she tried to sell the story of the affair to a magazine, which had agreed to pay her $15,000 for the story. But Trump’s attorney, Michael Cohen, allegedly threatened to sue the magazine, which backed out and never paid Daniels for the story.

Daniels said she was also threatened by a man in a parking lot while she was with her daughter, who was an infant at the time. The man allegedly told Daniels to leave Trump alone, saying it would be “a shame” if anything were to happen to her.

Although that kept Daniels quiet for the next five years, she has since come out and spoken publicly about the affair she allegedly had with Trump all those years ago.

At first, Daniels merely hinted at the possibility of an affair and refused to explicitly confirm or deny its existence. She received lots of media attention and was invited to be on various talk shows, but she consistently cited her non-disclosure agreement as the reason she could not directly talk about the alleged affair. It wasn’t until a few months ago that Daniels started talking more openly about the affair and its aftermath, claiming the non-disclosure agreement was invalid because Trump never actually signed it. Continue reading ›

There are some things that doctors can also not be immune to: conflict in the workplace.  There is a growing recognition that professional behaviors and manners should not only extend to the patient.  Rather, they should encompass doctor to doctor relationships, as well as others that work with them.

Having a safe and less conflict in a workplace promotes better professional life quality overall.  This is because conflict creates opportunities to have less understanding amongst peers and undermines communication skills.  Toxic workplace environments become stressful, negative, increase anxiety and give rise to professional burnout.  This, in turn, affects the level of professional care delivered to patients and increases factors for the delivery of medical care with greater liability when it comes to malpractice suits.  Better understandings lead to fewer misunderstandings.

Rather than fearing or avoiding conflict (as is often the case), it can be seen in some cases as a positive opportunity to better understand other points of view, to grow as an individual, and to improve communication and interactions within an organization.

Sources of conflict arise from expectations that were not set clearly, lack of resources, competition for goals, values or resources. For those reasons, identification of sources of conflict early on should be a goal of achieving a workplace culture that fosters respect and effective workplace engagement for all workers collectively.

Tips for managing conflict can include the setting the standards of expectation via an effective employee handbook.  It must also be in compliance with state and federal laws and is always best if run past an attorney prior to implementation.  Having an attorney to mediate disputes is always handy as well.

Avoiding conflict means issues fester and can place issues on a lower scale of measure.  Time gets delayed and suits can follow. Continue reading ›

There are so many changes that are made in accounting, auditing, tax and consulting standards that the overlooking of how disputes are solved is a very real possibility.  This is why users and providers of these services should be familiar with the benefits and disadvantages of the various different Alternative Dispute Resolution (ADR) Services.  We will, therefore, suggest that ADR clauses be used in the engagement of services contracts.

CPAs have to consider the wording of any ADR clause approved by a professional liability insurer and legal counsel. These days, most professional liability insurers advocate for the use of non-binding forms of dispute resolution and some may even require this in order to reap the benefits of insurance.

The most common ADR methods available are mediation and arbitration. These are also governed by the AAA’s Accounting and Related Services Arbitration Rules and Mediation Procedures. The process is fair and impartial. To ensure that the ADR clause does not affect a CPA’s independence, the wording must be drafted carefully and in line with the   AICPA Code of Professional Conduct  Rule in Section 1.228.  This gives a generic guide on the use of dispute resolution forums and liability limitation clauses. The inclusion of such clauses does not absolve liability of being unable to meet professional standards.  CPA’s may also need to be required to report a judgment in excess of $25,000 whether granted in court or arbitration.  This amount varies from jurisdiction to jurisdiction.  For that reason, knowledge of the rules is important.

Negotiation

The first step in the settlement of a dispute must always include negotiation.  Parties must make an effort to resolve in the best and least expensive way possible.  Sometimes, ego can come into play and undermine the process.  However, if parties are able to manage their emotions, it will be the most economic outcome, utilizing less time and money.  Negotiations can never take place in bad faith.  If so, involve an attorney that can carefully oversee and draft the proper terms.  They can also intervene on your behalf.  Continue reading ›

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