The Virginia Business Litigation Blog

June 13, 2009

Virginia Lottery Must Be Accessible to People with Disabilities

Both the Americans with Disabilities Act (ADA) and the Virginians with Disabilities Act (VDA) prohibit stage agencies and public entities from discriminating against people with disabilities, or denying to them the benefits of their services, programs, or activities. On June 4, 2009, Virginia’s highest court held that the Virginia Lottery, a state agency established to generate revenue to be used for public purposes, must comply with these laws and ensure that disabled persons are not excluded from participation in the lottery.

At issue was whether the lottery operation constitutes a “program, service, or activity” within the meaning of the ADA and VDA. A group of disabled plaintiffs, all of whom use wheelchairs, sued the Lottery in Richmond, claiming that several retail outlets lacked accessible parking spaces, ramps, and paths of travel for disabled persons. The Lottery argued that it was exempt from the ADA and VDA because it did not offer a program, service, or activity within the meaning of those statutes. While the Circuit Court agreed with that argument, the Supreme Court reversed, finding that the Virginia Lottery does operate a “program, service, or activity” and therefore must conduct its operations in compliance with the ADA and the VDA.

The tricky part is determining how, exactly, accessibility is to be achieved. The only party responsible for complying with the ADA with respect to a particular challenged government program is the party with control over that program. (See Bacon v. City of Richmond, 475 F.3d 633 (4th Cir. 2007)).

June 6, 2009

Loudoun County Judge Rejects Bright-Line Test for Work Product Protection

by Lee E. Berlik

In a case brought by two ousted golf-club members against the Benchmark Management Company, the management company behind Lansdowne Golf Club in Leesburg, Virginia, Judge James H. Chamblin ruled that a “case by case” test for determining applicability of the work-product doctrine is preferable to the “bright-line rule” several other Virginia courts have followed.

At issue was whether 23 internal Lansdowne documents concerning an alleged assault on the premises were prepared “in anticipation of litigation” within the meaning of Virginia Supreme Court Rule 4:1(b)(3), which provides that a litigant may not compel an opponent to produce copies of documents prepared in anticipated of litigation except under certain limited circumstances. After reviewing the documents privately, Judge Chamblin found that the documents were prepared in anticipation of litigation and that, because there was no argument by counsel that any exception applied, the documents were protected from discovery by the work-product doctrine.

There has not been a consensus among Virginia circuit courts with respect to determining when litigation is “anticipated.” Some courts apply a bright-line test that applies work-product protection to a document the moment an attorney becomes involved. Other courts decide the issue on a case-by-case basis, examining the particular facts and circumstances of each case and determining whether litigation was reasonably foreseeable, regardless of whether an attorney has been retained. Judge Chamblin favored the case-by-case approach “because things can be done in anticipation of litigation before an attorney becomes involved.”

June 3, 2009

EchoStar and DISH Network Held in Contempt for Violating Injunction

by Lee E. Berlik

TiVo won its patent infringement case against EchoStar, DISH, and affiliated companies back in 2006, obtaining a ruling that EchoStar’s digital video recorder (“DVR”) violated certain claims of U.S. Patent No. 6,233,389, owned by TiVo, and obtaining an injunction against future patent violations. In response to the ruling, EchoStar developed a supposed “workaround.” On June 2nd, 2009, the court held that the workaround did not cure the infringement. The court held them in contempt of court for violating the injunction and again ordered them to stop using TiVo’s technology.

EchoStar, the company behind the DISH Network satellite television service, designs digital video recorders that it provides to customers who subscribe to its satellite T.V. service. TiVo’s ‘389 Patent relates to a similar system that allows for simultaneous storage and playback of television signals from sources such as cable and satellite providers.

At the conclusion of the 2006 trial, the jury found that EchoStar’s DVR receivers infringed nine claims of the ‘389 Patent, either literally or under the doctrine of equivalents. After the verdict, EchoStar and its engineers went to work redesigning their DVR machines to avoid infringing the ‘389 Patent. Two years later, TiVo moved to hold EchoStar in contempt, arguing that the redesigned DVR’s continued to infringe TiVo’s patent.

May 26, 2009

Newegg Sues Kohl’s for Infringing Use of Slogan

by Lee E. Berlik

“Once You Know, You Newegg.” That is the slogan and registered trademark of Newegg, a popular online retailer of consumer electronics and high-tech products. Department-store chain Kohl’s recently began using a similar tagline: “The More You Know, the More You Kohl’s.” On May 14th, Newegg filed a trademark-infringement lawsuit in California seeking to enjoin further use of the similar slogan.

A combination of words used in commerce as a slogan is protectable as a trademark if used to identify and distinguish the source of products or services. Use of a registered slogan by others can be prohibited if there is a likelihood of confusion among the consuming public. Newegg’s action essentially claims that Newegg has a property interest in the “Once You Know, You Newegg” slogan, which it built up at great expense, and that the slogan has become associated in the minds of consumers with “an unsurpassed shopping experience, rapid delivery, and stellar customer service.” According to the lawsuit, Kohl’s, having full knowledge of Newegg’s trademarks and intending to siphon off some of the goodwill associated therewith, began using a deceptively similar slogan in a manner likely to cause direct financial harm to Newegg.

As with most trademark and unfair competition cases, the big question is going to be whether Newegg can prove a likelihood of confusion. Among the more questionable allegations of the lawsuit are those claiming that Kohl’s “attempted to increase traffic to their website by diverting users looking for Newegg’s website” and that confused Newegg customers “visit Kohl’s website believing it to be Newegg’s website.” As suggested by the trademarked slogan itself, Newegg believes its customers are intelligent and savvy — that is why they shop at Newegg. Are these the same people who are going to wind up at Kohl’s website when looking for Newegg, and who are going believe, once they have landed at Kohl’s site, that they have indeed found Newegg? What kind of customer wouldn’t include the term “Newegg” in an online search for Newegg?

May 19, 2009

Reverse Discrimination by Hispanic Supermarket Prompts Settlement

by Lee E. Berlik

In a lawsuit brought last year by the Equal Employment Opportunity Commission against Compare Foods in North Carolina, the EEOC claimed the supermarket fired a white, non-Hispanic meat cutter due to its preference for employing Latino workers. Compare Foods has now agreed to settle the action, which alleges national-origin and race discrimination, for $30,000 as well as by agreeing to take certain preventative measures such as distributing a written anti-discrimination policy, providing its employees with Title VII anti-discrimination training, and informing its existing employees of the lawsuit and settlement.

According to the allegations of the Complaint, Compare Foods fired Robert Bruce not because of his job performance, but because of his race (white) and national origin (non-Hispanic), and replaced him with a Hispanic worker.

Title VII of the Civil Rights Act of 1964 prohibits harassment of employees on the basis of race or national origin where the conduct is sufficiently severe or pervasive to create a “hostile work environment,” or where the harassing conduct results in a tangible change in an employee’s employment status or benefits (such as getting fired). The law protects not just minorities but members of all races.

May 18, 2009

D.C. Circuit Upholds Redskins Trademark Victory

by Lee E. Berlik

Back in 1992, a group of Native American activists challenged the validity of the Washington Redskins trademarks on the ground the trademarks were impermissibly disparaging towards their ethnic group. After scoring early victories before the Patent and Trademark Office and the Trademark Trial and Appeal Board (TTAB), resulting in a temporary cancellation of the marks (which deprived Pro Football of the ability to go after infringers), the U.S. District Court for the District of Columbia sided with the Washington Redskins about six years ago. The rationale had nothing to do with whether the term “Redskins” is disparaging to Native Americans, but with the equitable defense of “laches.” The Court of Appeals reversed that ruling due to a faulty application of that defense, but the District Court again ruled in favor of Pro Football (the owner of the Redskins trademarks) last year. The matter was again appealed. This time, however, the Court of Appeals affirmed the District Court, solidifying the Redskins’ victory and the validity of the marks.

“Laches” is a doctrine which, like a statute of limitations, serves as a defense to legal proceedings when the plaintiff has waited too long before bringing the claim. It applies where there is (1) lack of diligence by the party against whom the defense is asserted; and (2) prejudice (i.e., harm) to the party asserting the defense.

The first time the question was presented to the District Court, it applied the laches defense because the TTAB proceeding was not brought until 25 years after the marks were first registered. The Court of Appeals reversed that ruling because the defense is intended to apply where there has been unjustified delay by a particular person. One of the plaintiffs was only a year old when the Redskins trademark was first registered. So on remand, the District Court focused only on whether that particular individual, Mateo Romero, delayed in asserting his rights, beginning the analysis with the date of his eighteenth birthday (the legal age of majority). From that perspective, the alleged delay was not 25 years but less than 8.

May 13, 2009

Injunctions in Virginia

by Lee E. Berlik

Filing a lawsuit against another company or individual in Virginia is not always about money. Sometimes, it is necessary to get a court order compelling the defendant to take some desired action (like perform a contractual obligation to purchase real estate) or restraining the defendant from acting in a manner that would harm your business (like sharing trade secrets with a competitor). The injunction remedy does not award money damages to the injured party, but protects property and other rights from irreparable injury by prohibiting or commanding acts that would (or are likely to) result in such injuries.

When time is of the essence, Virginia courts will allow a plaintiff to move for a temporary, preliminary injunction to restrain or compel the conduct at issue at the outset of a case, pending further investigation and trial. The purpose of a preliminary injunction is to preserve the relative positions of the parties (i.e., the “status quo”) either while the suit is pending or for some shorter period of time determined by the court. In certain emergency situations, it may be possible to obtain an injunction at a hearing of which the defendant is not notified. This is sometimes necessary when there is a legitimate fear that the defendant would take the feared action (or inaction) upon learning of the lawsuit or motion.

An injunction is considered an “extraordinary” remedy and is generally more difficult to obtain than an award of money damages. Of the different types of injunctions available, the form that compels another party to perform an act (as opposed to merely preserving the status quo and prohibiting certain actions) is considered the most extraordinary and is the most difficult to obtain in court.

May 6, 2009

Older Employees Claim Age Discrimination by 3M

by Lee E. Berlik

Like it or not, if you are 40 years old or older, your employer or coworkers may consider you downright geriatric and mistakenly assume that you are no longer able to perform the requirements of your position as well as a younger person. When you turn 40, you officially join the ranks of “old people” against whom discrimination is prohibited by law. The Age Discrimination in Employment Act of 1967 (ADEA) protects employees and job applicants aged 40 and older from discrimination in employment. The ADEA makes it unlawful for employers with 20 or more employees to discriminate on the basis of age with respect to any term, condition, or privilege of employment. This includes hiring, termination, promotions, salary, benefits, job assignments, and training.

According to a new class-action lawsuit filed in federal court in California against 3M Company, 3M engaged in a pattern of discrimination against employees older than 46 by giving them negative performance reviews, inferior training, lower pay, and fewer opportunities for promotion. The suit claims 3M discriminates against older workers throughout the entire United States, effectively shutting them out of top management positions. The Plaintiffs estimate over 2000 workers have been the victims of 3M’s discriminatory employment practices.

The crux of the allegations apears to be that 3M singled out younger workers for inclusion in their intentsive “Six Sigma” management training program, virtually assuring that 3M leadership would be comprised entirely of younger workers. The suit also claims that workers were asked to sign releases upon departing the company that contained misrepresentations of their legal rights. The plaintiffs are asking the court to declare the releases unenforceable as a matter of law.

May 3, 2009

Trademark Dispute Breaks Up Relationship Between Marriage Marketers

by Lee E. Berlik

Maryland-based Marriage Savers, Inc., a non-profit marriage counseling service and operator of www.marriagesavers.com, has filed a trademark action in the Eastern District of Virginia against Lovepath International, Inc., another marriage counseling organization, which allegedly has been conducting business using the confusingly similar domain name marriagesaver.com. As of this writing, www.marriagesaver.com has been taken down.

According to the complaint, Marriage Savers owns the federally registered trademark “MARRIAGE SAVERS” and has used the mark since the early 1990’s in connection with a wide variety of products and services, including writing printed materials and publications in the field of marriage, conducting workshops and seminars to community leaders, and offering counseling to couples.

Lovepath, according to the suit, also offers seminars, books, and online resources geared to marriage counseling and markets them using the name “Marriage Saver.” Marriage Savers contends that Joe Beam, Lovepath’s founder and president, is not only familiar with Marriage Savers and its trademarks but has actually been a speaker at its conferences.

April 28, 2009

Herndon Company Unable to Obtain Preliminary Injunction Against Breach of Non-Compete

by Lee E. Berlik

Herndon-based Deltek, Inc., surely thought it would have little trouble enjoining its former employees from forming a competing company in direct violation of their employment contracts. After all, the defendants admitted that they were competing with their former employer in a manner that would fall under the noncompete provisions of their respective employment agreements. However, in a written opinion issued on April 20, 2009, by Judge Trenga of the United States District Court for the Eastern District of Virginia (Alexandria Division), the court denied the requested injunctive relief.

Uncontested evidence demonstrated that three former Deltek employees, a Managing Director, Consulting Manager, and Services Coordinator, all of whom had access to information considered by Deltek to be confidential, proprietary, and trade secret information, left Deltek and joined Iuvo Systems, Inc., in Chantilly, Virginia. Iuvo’s business involves providing consulting and application management services relating to Deltek’s proprietary accounting and financial software. All three employees had signed noncompetition and nondisclosure agreements with Deltek.

The relevant noncompete language provided that the employees could not, for a period of two years after the termination of their employment, “directly or indirectly be engaged as an employee or consultant of any firm or corporation engaged in a business which is in competition with [Deltek].” The agreements also prohibited the use or disclosure of “Confidential Information” or “Confidential or Proprietary Information” both during and after employment.

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