The Rise Of “Twitigation?”

The blog for the Virginia Lawyers Weekly compiled a recent spate of lawsuits resulting from posts on the popular Twitter website.  Many of these lawsuits predictably concern allegations of libel, although employers need to consider how employee and manager/executive tweets can create problems in the workplace, affecting discrimination/harassment claims, the dissemination of proprietary information and trade secrets, and other problems.  The rise of online social media, as we have discussed previously here, may provide a fertile ground for lawsuits in 2010 and beyond, and employers should be quick to adopt policies to address these issues before issues arise.

GCPC’s Bid Protest Weekly For January 5, 2010

This week’s edition of the Bid Protest Weekly, available here, features a bid protest that was sustained when the protesting contractor lost a bid for a small business set-aside despite submitting a bid that was 18% lower than the winning proposal.  Despite the requirement that it accept the “best value” proposal, the Army Corps. of Engineers gave the contract to the more expensive bidder on the basis that their technical expertise was substantially greater, and thus worth the extra cost.  The protesting contractor challenged those findings, and the General Accounting Office sustained the protest, finding that the award was not sufficiently supported with a rational explanation for why the technical superiority was entitled to a price premium.

The 2010 Green Bag Almanac And Reader

Those of you who were interested in our coverage of The Green Bag’s Almanac of Useful and Entertaining Tidbits for Lawyers for the Year to Come (2009) and Reader of Exemplary Legal Writing from the Year Just Passed (2008) will certainly enjoy hearing about the new 2010 edition that is hot off the press. 

Often the Courts hale brevity as the foundation of compelling legal writing, and nowhere is this more clear than in the two-sentence concurrence of former Justice David Souter in United States v. Navajo Nation, 129 S. Ct. 1547 (2009), that won inclusion in the Almanac.  That case was a follow-up to a 2003 case that the Navajo Nation also lost.  The concurrence, which was joined by Justice John Paul Stevens, in full:

I am not through regretting that my position in United States v. Navajo Nation, 537 U.S. 488, 514-521, 123 S.Ct. 1079, 155 L.Ed.2d 60 (2003) (dissenting opinion), did not carry the day. But it did not, and I agree that the precedent of that case calls for the result reached here.

Hat tip to the Blog of the Legal Times.

New Circuit Court Opinion: Virginia Preliminary Injunctions Now Subject To Winter Test

The order in Strong Foundation Youth Initiative, LLC v. Robert Ashford, Jr., is very brief, a mere three pages, with barely any facts concerning the case itself.  What makes the decision by Judge Margaret P. Spencer out of the Circuit Court for the City of Richmond worth reporting about is the fact that the judge considers whether to maintain a previously ordered preliminary injunction under the standard set forth by the U.S. Supreme Court in Winter v. Natural Resources Defense Council, Inc., 129 S. Ct. 365 (2008), and subsequently adopted by the U.S. Court of Appeals for the Fourth Circuit in The Real Truth About Obama, Inc. v. FEC.  As we speculated before, it was not clear whether Virginia courts would abandon the more permissive Blackwelder test for preliminary injunctions in favor of the Winter test, although such a development was likely.  This decision may be the first written one by a Virginia state circuit court explicitly adopting the Winter test.

What Does The New Year Hold For Virginia Businesses?

For most, 2009 was a year to forget.  The economic crunch was tough on businesses in this area, although Virginia has fared better than many other states.  According to an article in today’s Washington Post, things are looking up for 2010: “Federal spending, the engine that drives the region, should fuel a slow but robust recovery that will materialize sooner here than in most other parts of the country, local economists say.  Stephen S. Fuller, director of the Center for Regional Analysis at George Mason University, forecast that the region’s economy will grow 2.8 percent in 2010 and 4.0 percent in 2011.  That would surpass projections for the U.S. economy to grow 2.2 percent in 2010 and 2.8 percent in 2011.”  Not all is positive, however; unemployment may get worse before it gets better, and commercial real estate may hit new highs in vacancy rates.

GCPC’s Bid Protest Weekly For December 29, 2009

The Bid Protest Weekly, published by GCPC, allows the Government Contract community to stay on top of the latest developments involving bid protests by providing weekly summaries of recent bid protest decisions, highlighting key areas of law, agencies, and analyses of the protest process in general.  GCPC’s Government Contracts Group has over fifty years of combined government contract law experience (both as in-house and outside legal counsel), helping clients solve their government contract problems relating to the award or performance of a federal government contract, including bid protests, contract claims, small business concerns, and teaming and subcontractor relations. 

The latest edition of the Bid Protest Weekly is here.

New Opinion: Gripe Site Immune From Suit

As we have discussed on this blog before, businesses are still grappling with how to deal with online “gripe sites” that allow consumers to vent frustrations about products and services, often anonymously.  The Communications Decency Act has been a primary impediment to legal recourse against such sites by affording immunity to interactive service providers for information created and developed by third parties.  And such sites have generally refused requests to release any information about their anonymous contributors. 

In Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., the aggrieved business tried to get around the CDA’s immunity for ISPs by simply accusing the ISP — Consumeraffairs.com in this case — of “soliciting the complaint, steering the complaint into a specific category designed to attract attention by consumer class action lawyers, contacting the consumer to ask questions about the complaint and to help her draft or revise her complaint, and promising the consumer that she could obtain some financial recovery by joining a class action lawsuit.”  In doing all of these things, Nemet Chevrolet hoped to portray the ISP as the actual content provider, and thus not be entitled to immunity.  Nemet Chevrolet also alleged that the ISP fabricated certain complaints on the basis that Nemet could not identify the customers making the complaint based on the information available on the site, thus again pulling the ISP out of the realm of immunity by accusing it of directly providing the offending content.

The district court decided that Nemet’s allegations were not enough to show a cause of action against the gripe site, and granted Consumeraffairs.com’s motion to dismiss.  Yesterday, the U.S. Court of Appeals for the Fourth Circuit affirmed that decision, holding that such conclusory allegations, without more facts regarding what content the gripe site provided, failed to rise to a cause of action that could survive a motion to dismiss under Ashcroft v. Iqbal.  Judge G. Steven Agee, for himself and Judge Robert B. King, also held that the allegations supporting the “fabricated” posts were also mere speculation, and dismissed those claims as well.  Judge James P. Jones dissented on the “fabricated” posts, arguing that Nemet did make out a cognizable claim against the ISP, saying, “It cannot be the rule that the existence of any other plausible explanation that points away from liability bars the claim.  Otherwise, there would be few cases that could make it past the pleading stage.”

The Nemet case is another indication that, given the state of the CDA and the heightened pleading standards mandated under Twombly and Iqbal, businesses are fighting a losing battle trying to litigate against gripe sites.  We offered some alternative ideas here.

VLW’s Most Important Opinions Of 2009

Virginia Lawyers Weekly features its list of the most important Virginia opinions of the past year.  The opinions are helpfully broken down by topic, so that business lawyers do not have to sift through divorce cases to find nuggets of law pertaining to employment, contracts, and commercial law.

New Rule: Government Contractors Must Post Information On Employee NLRA Rights

Signaling a shift in how the Obama Administration intends to address labor issues, earlier this month the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council have issued a new rule pursuant to Executive Order 13496 that directly rescinded Executive Order 13201 by former-President Bush.  Under the previous Order, government contractors were required to post a notice reminding workers of their rights regarding union dues and fees, and that workers could not be compelled to join a union or maintain union membership to keep their jobs.  The new Order requires that contractors post a notice that informs workers of their rights under the National Labor Relations Act, which ”encourages collective bargaining, allowing workers to freely associate, self-organize, and designate representatives of their own choosing for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection.”

Information about the new rule is here.  Some exceptions to the notice posting requirement include collective bargaining agreements, federal contracts below the simplified acquisition threshold of $100,000, and contracts issued by agencies or departments that the Secretary of Labor chooses to exempt.  The new poster from the Department of Labor is expected to be available in mid-2010.

Many Military Contractors May No Longer Use Arbitration Clauses For Employment Disputes

The National Law Journal reports that tucked into the 2009-10 spending bill for the Department of Defense, signed last weekend by President Obama, is a provision that prohibits prime contractors for the military from forcing employees to agree to arbitration clauses in their employment contracts.  The article states: “Under §8116 of the bill, no money can go to a defense contractor unless the contractor agrees not to enter into or enforce any employment contract ‘that requires, as a condition of employment, that the employee or independent contractor agree to resolve through arbitration any claim under title VII of the Civil Rights Act of 1964,’ or many tort claims.”  The article adds: “In six months, the restrictions will apply also to subcontractors.  Contracts and subcontracts under $1 million are exempt from the provision.  The defense secretary or his deputy may also grant a waiver if doing so is ‘necessary to avoid harm to national security interests of the United States,’ though the waiver will become public.”

AT&T Socked With Wage And Hour Class Action Suits

An article in The American Lawyer details new class-action lawsuits filed against AT&T for alleged wage-and-hour violations, in which AT&T allegedly classified thousands of employees as “first-level managers,” and accordingly classified them as exempt employees under federal wage laws who could not earn overtime, even though those employees did not have any actual managerial authority.

Although we do not speculate on the probability of success in that case, employers need to make sure they are not cutting any corners in abiding by federal and state wage laws, like the Fair Labor Standards Act.  Trying to classify non-exempt employees as exempt employees, classifying employees as independent contractors, and so on are common things that employers have done to try to cut payroll and overhead costs in this tough economy.  But these actions only get the employer in trouble down the road.  Employers should contact Jessica M. Kelty before trying to get too creative in evading these regulations, to make sure that additional liability (and future lawsuits and class-actions) is not on the horizon.

U.S. Supreme Court To Determine Privacy Of Employee Text Messages

We have been discussing (perhaps ad nauseum) the recent court trends regarding whether employee emails sent from employer computers were entitled to privacy protection.  Well, now the big dog, the U.S. Supreme Court, has decided to wade into the fray.  Yesterday, the Court agreed to hear City of Ontario v. Quon, where California police officers challenged their city’s ability to read texts those officers sent on their city-issued pagers that were intended for work use only.  This case is in the context of the Fourth Amendment, however, in that the texts turned out to be fodder for criminal actions against the officers, and the officers are now seeking to use the exclusionary rule to keep those texts out. 

This is somewhat different from the attorney-client privilege the previous cases addressed, since courts are much happier to enforce that privilege than they are to let criminals off the hook on a technicality.  Some think that the Court may rethink the general expectation of privacy that employees have argued for in the past.  There is some interesting analysis on why the Court may have chosen to take the case over at the Volokh Conspiracy.

Another Court Blocks Employer — This Time The Government — From Access To Private Emails Sent While At Work

As we have discussed previously, courts appear to be more willing to prevent an employer from accessing an employee’s private emails to the employee’s attorney even when the employee is sending the email on the employer’s computer, and during work hours.  The U.S. District Court for the District of Columbia has recently followed suit, only this time the employer is the U.S. Government, and a third party is trying to get the emails.  A new article in the National Law Journal describes the effort of a former federal prosecutor, who maintains he was fired for being a whistleblower, to obtain emails sent by a current federal prosecutor, Jonathan Tukel, to Tukel’s attorney while at work.  The former prosecutor argued that there was no reasonable expectation of privacy in the emails since they were sent through a government computer during work hours.  One would also presume that the U.S. government, as touchy about security as it is, would have a tight leash on the private use of government computers.  However, Chief Judge Royce Lamberth denied access to the emails.  “The DOJ maintains a policy that does not ban personal use of the company email. Although the DOJ does have access to personal emails sent through this account, Mr. Tukel was unaware that they would be regularly accessing and saving emails sent from his account. Because his expectations were reasonable, Mr. Tukel’s private emails will remain protected by the attorney-client privilege,” the judge ruled.

The opinion does leave open the possibility that an employer (or third party) could gain access to attorney-client emails if the employer’s policy is absolutely rigid in saying that under no circumstances may the employee use the employer’s computer(s) for personal communications.  But given the realities of the workplace these days, it would seem that such a policy would be difficult to enforce.

John Fraser Joins GCPC

General Counsel, P.C. is honored and pleased to announce that John Fraser has joined the firm as “Of Counsel.”  John will lead General Counsel, P.C.’s Litigation Practice Group.

John Fraser is a business litigation and investigations executive with over 25 years of investigative and litigation experience.

John directed and conducted litigation for ten years for a Fortune 500 corporation, and for five years was a Regional Executive for Kroll Associates, at the time the largest business intelligence and business investigations company in the United States.  In these roles, John has litigated and investigated complex contractual disputes, financial frauds, procurement frauds, intellectual property disputes, gray market goods investigations, patent frauds, international trade disputes, international frauds, and numerous internal corporate investigations.

John began his professional career in 1981, spending five years at the D.C. employment and labor law firm of Morgan, Lewis & Bockius.  At his request, John was assigned by the firm to fast-paced litigation matters for an upstart company called MCI.   In early 1986, MCI recruited John to join its aggressive litigation effort.

From 1986-1996, John was Assistant General Counsel for MCI Communications Corporation.  John conducted and managed litigation for this emerging business giant, including disputes with AT&T and Sprint, as well as internal issues related to the rapid, almost uncontrolled, growth of MCI.  John was responsible for cultivating MCI’s image as the fiercest litigator in the telecommunications industry, and for devising management tools and reporting mechanisms to promote litigation quality and cost controls in advertising, antitrust, commercial, class-action, customer, market access, government contracts, employment, and general litigation.  John left MCI before the WorldCom takeover, having earned a reputation for fierce and successful litigation.

After leaving Kroll Associates, from 2001-2009, John has managed a small private law practice in Northern Virginia, focusing on litigation for large and small companies, while also serving two periods of service as in-house counsel for litigation support and professional service firms.   He has now joined General Counsel, P.C. to permit the continuation and expansion of his business litigation practice.

John holds honors law degrees from Washington & Lee University, which awarded him a J.D. in 1980, and the University of Virginia, which awarded him an LL.M. in 1997.  He clerked for D.C. Circuit Judge Roger Robb from 1980-1981, and is admitted to the bars of the Supreme Court of Virginia, the D.C. Court of Appeals, and the United States Supreme Court.

John can be contacted at 703-226-1870 or jfraser@generalcounsellaw.com.

Obama Administration Seeks To Funnel Stimulus Funds To Small Businesses

An article in today’s Washington Post describes a plan by the White House to create a new entity out of the Troubled Assets Relief Program “that would give banks access to federal funds without restrictions, including limits on executive pay, as long as the money was used to support loans to small businesses,” or would modify TARP itself to encourage more lending to small businesses.  Given that small businesses provide the majority of jobs in America, efforts to encourage banks to lend more money to those businesses is becoming a top priority as the unemployment rate tops ten percent.

Even Yoga Teachers May Require Licenses In Virginia

The most recent edition of Virginia Lawyers Weekly has an article about a lawsuit filed by three yoga instructors seeking to prevent Virginia from being able to force those who teach yoga to have to be licensed in order to teach.  The State Council of Higher Education for Virginia’s position is that all vocational instruction is required by law to be regulated, so accordingly the Council had plans, starting 2010, to require all yoga instructors to pay a $2,500 application fee for a license, plus $500 each year to renew the license, and require adherence to standards issued by the Arlington-based Yoga Alliance.  The yoga instructors, members of a vocation not generally known for its profitability, argue that Virginia should not be serving as the gatekeeper to yoga, much less bilking money out of the programs.

Many small business owners are unaware that Virginia requires licensing for a wide variety of vocations.  Businesses should check out the Virginia Department of Professional and Occupational Regulation to get current on the requirements.  In particular, many contractors who began their business as nothing more than a truck, their tools, and their hands, are typically surprised to learn that they need a Class A, B, or C contractor’s license to so much as fix a windowsill in Virginia.  Failure to do so can result in criminal penalties as well as headaches on the civil side if your customer refuses to pay you.  Contact James N. Markels to learn more.

Will The U.S. Supreme Court Uphold The Public Company Accounting Oversight Board?

A big part of the Sarbanes-Oxley Act was its creation of the Public Company Accounting Oversight Board that would help regulate accounting companies in the wake of Enron and WorldCom.  The Board is part of the Executive Branch, subject to oversight from the Securities and Exchanges Commission.  The SEC appoints the five-member Board (while the President appoints the SEC), and Board members are subject to removal only “for cause,” and not for policy positions.  But all Executive branch entities must be subject to the President’s power, so the question becomes whether the Board’s subjugation to the SEC is enough to make it constitutionally beholden to presidential authority.  Yesterday, the U.S. Supreme Court heard argument in Free Enterprise Fund v. Public Company Accounting Oversight Board, in which the petitioners argued that the Board was unconstitutional because the President lacked sufficient power and authority over the Board. 

Interestingly, Court-watchers seemed to be of two minds on how argument went.  Tony Mauro of the National Law Journal thought the Court would likely uphold the Board, while Lyle Denniston of SCOTUSBlog saw some significant concessions made by defenders of the Board, such as the fact that the President could not directly remove any Board member, but would have to ask the SEC, pretty-please, to do it.  Justice Antonin Scalia then said that he himself could do as much, thus implying that the President had no more authority than a Justice over the Board. 

Whether the Board survives constitutional challenge will lie in whether the Court views the question as between how much influence the SEC has over the Board, or how much influence the President has over the Board.  Those Justices that see the SEC as a suitable proxy for the President will likely uphold the Board, while those Justices that demand direct presidential oversight will likely vote to strike it down.  From Denniston’s view of oral argument, it seems as though the Court eventually started asking questions from the latter view, and that bodes well for the petitioner.

Economic Stimulus Has Been Good For Northern Virginia

This article in today’s The Washington Post finds that the D.C. metropolitan area, including Northern Virginia, has disproportionately benefited from the $787 billion stimulus package passed by Congress, as federal contractors snap up new opportunities.  The article estimates that roughly $562 million in contracts originating from the stimulus landed directly in Northern Virginia so far.  The metro area’s unemployment rate is only 6.2 percent, compared to the national average of 10.2 percent, with Virginia at 6.6 percent overall.  The upshot?  If you want a customer that has money to spend, contract with the federal government.

Is The Billable Hour On The Wane?

This article from Law.com’s Corporate Counsel states, “Companies are successfully pushing their outside counsel to abandon the billable hour,” citing a survey of corporate counsel in which 39 percent reported paying “more money this year under alternative fee arrangements than they did in 2008.”  The article goes on to conclude “that the legal profession is finally moving away from the billable hour — for good.”

But as Mark Twain might say, reports of the billable hour’s death appear greatly exaggerated.  While alternative fee arrangements may be gaining in popularity, they are still a drop in the bucket next to the billable hour.  As the article notes, 69 percent of those in-house counsel attorneys surveyed “said that 10 percent or less of their total spending on outside counsel was done off the clock in 2009,” with only 6 percent reporting that “more than half of their spending on law firms was done under alternative fee arrangements.”

New Opinion: Texas Law Allowing Attorney’s Fees Applies Even When Court Finds That Texas Law Otherwise Does Not Apply

Some state laws include provisions allowing a prevailing party to also recover attorney’s fees.  For example, § 70.301 of the Texas Property Code allows a “person who stores, fuels, repairs, or performs maintenance work on an aircraft has a lien on the aircraft” for the sums contracted for.  Then, § 70.306 allows a prevailing party under § 70.301 to recover attorney’s fees incurred.  But what if a court finds that Texas law doesn’t apply?  In Westwind Acquisition Co. LLC, et al. v. Universal Weather and Aviation, Inc., the U.S. District Court for the Eastern District of Virginia held that § 70.301 did not apply, but § 70.306 did, in an interesting bit of reasoning that should put claimants on notice.

Universal issued credit cards to a company that performed aircraft maintenance and management on two planes owned by Westwind.  The maintenance company went bankrupt, leaving Universal with a lot of unpaid credit card bills.  Universal sought to put liens on the planes through § 70.301, on the theory that some of the fueling and maintenance occurred in Texas.  Westwind filed a declaratory judgment action in EDVA seeking to release the liens.  Judge T. S. Ellis, III held that § 70.301 did not apply because the vast majority of the refueling and maintenance occurred outside of Texas, and because Universal did not actually perform the fuelling and maintenance — it only provided the credit to pay for these things. 

But then Westwind asked for its attorney’s fees under § 70.306.  “At first glance, it seems rather audacious to request fees under a statute whose applicability plaintiffs have just successfully attacked,” Judge Ellis noted.  However, the Court noted that § 70.306 grants attorney’s fees to a prevailing party “in a suit brought under this subchapter,” which includes § 70.301, regardless of where the suit is brought.  And since Universal tried to assert § 70.301 and lost, that meant Westwind was a prevailing party and thus entitled to attorney’s fees under § 70.306.

The upshot of this is to remind litigants that any time you try to invoke rights under a chapter of state law, any attorney’s fees provision in that chapter will likely still apply even if the original state law is found to be inapplicable.  Attorney’s fees provisions can be two-edged swords in that regard.