In a July, 2011 decision in the Crab House of Douglaston, Inc. case U.S. District Judge Dennis R. Hurley partially granted and partially denied the defendants’ 12(b)(6) motions to dismiss the plaintiffs’ fourth amended complaint. The court had previously dismissed all claims under the Lanham Act with prejudice, and all claims under the RICO Act without prejudice and with leave to amend.

RICO states that “[i]t shall be unlawful to any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt.” The third amended complaint had alleged that defendants conducted ABC’s affairs, that defendants conducted the affairs of the  defined “Circulation Enterprise” (consisting of the news publications, ABC, as well as individual and unnamed defendants and third-party distributors), and that the individual defendants had conducted the affairs of the Newsday and Hoy enterprises specifically. Judge Hurley wrote that the amended complaint had not satisfied the requirements for a RICO claim in the context of the ABC enterprise, distinguishing between the defendants simply affecting the content of the final audit reports ABC published versus participating in or conducting the operation of the entity. Additionally, the Judge dismissed the allegations pertaining to the plaintiffs’ defined “Circulation Enterprise”, contributing to the RICO violations. Because the plaintiffs included ABC within their definition of the Circulation Enterprise, that claim was also dismissed. Judge Hurley dissected claims against the individual defendants independently, dismissing allegations against one and upholding the allegations against several others where the amended complaint had “set forth facts with sufficient particularity detailing the alleged fraudulent scheme and each of the defendant’s role in the scheme.”

Judge Hurley also upheld the plaintiffs’ RICO claims alleging mail fraud violations against several individual defendants, determining that the amended complaint had sufficient detail to conclude that defendants had caused the false mailings to occur. The RICO conspiracy claims did not survive, however. Plaintiffs’ motion to certify a class was recently filed, and is currently under a briefing schedule.

Holman Law had represented several dozen L.I. car dealers in the parallel Arnold Chevrolet, et al. v. Tribune Company, and Newsday, No. 04-3097 (DRH)(WDW). Holman Law’s clients had alleged that the L.I. newspaper Newsday had defrauded them by misrepresenting its circulation and thereby inflating the advertising rates it charged the automotive dealerships. Holman Law was able to settle this action in February, 2008 on terms satisfactory to the automotive dealers. The plaintiffs in settling the Arnold Chevrolet case waived their right to participate in the class action case.

Attorneys with the National Lawyers Guild had filed a petition in the Court seeking to prevent the eviction of protestors from Zuccotti Park after Brookfield Office Properties enforced a new set of rules expelling them from the space. Justice Lucy Billings issued the initial temporary restraining order allowing the protestors back into the Park and also preventing Brookfield and New York City from enforcing any rules that were made after the protests began. Once the City filed an opposition brief, the case was assigned to Justice Stallman.

During the subsequent hearing, the Court heard arguments from attorneys representing the Occupy Wall Street protestors and attorneys representing Brookfield and the City. The latter claimed Zuccotti Park is a privately owned public space, as it was created pursuant to an agreement under which Brookfield was required to maintain the park as a public amenity in exchange for receiving development rights for local properties. The attorneys highlighted the defendants’ obligations to the public to maintain the area in line with safety and health concerns. One attorney claimed Brookfield had received warnings from the New York City Fire Department regarding unsafe conditions in the park that required immediate attention.

Attorneys for the protestors disputed the claim that the park is not a public forum, labeling the space a “limited forum for speech” and the message behind the 24-hour occupation “symbolic speech.” They specified that Brookfield and the City could respond to specific safety concerns without banning tents and sleeping bags, as protestors had been cooperative with such measures in the past.

Justice Stallman ruled that same afternoon: “The movants have not demonstrated that they have a First Amendment right to remain in Zuccotti Park, along with their tents, structures, generators, and other installations to the exclusion of the owner’s reasonable rights and duties to maintain Zuccotti Park, or to the rights to public access of others who might wish to use the space safely”. Brookfield’s new rules were permissible to prevent it from being liable for violations of City law that prohibit such an occupation. The Justice found that even if the park could be considered a fully public space protected by the First Amendment, the protestors had not demonstrated that the new rules enacted by Brookfield (which were put in place after the demonstrations began) were not reasonable time place and manner restrictions as permitted under the First Amendment, citing U.S. Supreme Court precedents. Thus, the movants had not displayed how those new rules would infringe their Constitutional rights. Ultimately, the Manhattan Supreme Court judge ruled that the applicants had not shown a right to a temporary restraining order, which he ultimately found would restrict New York City and Brookfield’s ability to promote public health and safety.

Justice Stallman permitted the protestors to return to the Park, but without sleeping bags or tents. The City was granted time to serve a response to the protestors’ original petition challenging their eviction.

In 2010, the Defendant attempted to restrict Davis’s back pay damages, alleging the ex-employee could have pursued additional schooling for retraining as a computer machinist. In an August decision from U.S. Judge Siragusa in the Western District of New York Federal District Court, the Court held that employees, who are fired for discriminatory reasons, are required to pursue other employment but are not required to pursue retraining or alternative education. The judge cited a 1982 Supreme Court Case, Ford Motor Co. v. EEOC, to underline the point that “[a]lthough the unemployed or underemployed claimant need not go into another line of work, accept a demotion, or take a demeaning position, he forfeits his right to backpay if he refuses a job substantially equivalent to the one he was denied.” In this case, Davis had fulfilled his obligation, and did not need to pursue additional education to obtain a different position.

Consequently, Judge Siragusa granted the plaintiff’s motion to preclude expert testimony. The defense expert’s testimony was irrelevant to prove that the plaintiff failed to mitigate damages after his termination. The expert had merely declared that it would be in the plaintiff’s interest to obtain further training in order to receive gainful employment. Moreover, as the plaintiff was not compelled to find another line of work if substantially equivalent employment was unavailable, further training was not required. The court dismissed the defendant’s motion for summary judgment, as the motion was based primarily on the excluded expert report.

This decision establishes that an employee fired for a discriminatory cause is not required to pursue retraining or additional education. In fact, if the claimant pursues additional education in the place of seeking new employment, he normally has failed to mitigate his damages. The Court here found that Mr. Davis had fulfilled his obligation by seeking work with the skills he had at the time he was fired by his employer. If you feel that you are the victim of discriminatory practices, please contact our office to reach an attorney capable of handling the complex litigation process involved in protecting individuals from the harmful effects of employment discrimination.

GHS claimed the success of its business is dependent on its service and the development of personal relationships with customers. GHS had invested serious time and expense into developing those relationships with particular clients. The non-compete agreement detailed that employees would not directly or indirectly solicit any of GHS’s accounts for a period of two years after termination of employment from GHS. The Court utilized a three-prong test in its consideration of the reasonableness of the employment agreement. For the non-compete clause to be reasonable, the test required the non-compete agreement to (1) be no greater than is required for the legitimate interest of the employer, (2) not impose undue hardship on the employee and (3) not be injurious to the public.

The court enforced the non-compete clause, finding GHS’s interest in protecting goodwill to be a legitimate foundation to enforce the agreement, regardless of whether the defendants misused confidential information. GHS had displayed a protectable interest, and so had a valid claim for damages against Smith. The Court also found that when an agreement is between professionals, the courts have “given greater weight to the interests of the employer in restricting competition within a confined geographical area.”  Depending on the facts of your case, an attorney may be able to help you seek money damages or specific performance of a contract term. In some cases, you may also be able to recover reasonable costs and attorney’s fees associated with a breach of contract lawsuit. Contact Holman Law today to speak with an experienced attorney and to understand your rights.

In the January decision by the Eastern District Court of Virginia, Tysinger Motor Company, Inc. v. Chrysler Group LLC, a former Dodge dealership was denied the review of an arbitration award that granted their area franchise to another dealership. In 2009 the dealership lost its Dodge franchise as did hundreds of other Chrysler dealers as a consequence of the financial crisis that almost destroyed the U.S. automotive industry. Through the Consolidated Appropriations Act of 2010, Section 747, Congress permitted the rejected Chrysler franchisees to pursue an appeal of their rejection before an American Arbitration Association arbitrator. The arbitrator was required by Section 747 to use seven specified factors to determine whether the rejected dealership should be restored to the dealership network.  

In this case, the arbitrator determined that Tysinger Motor Company should not be restored to New Chrysler’s dealership network, and subsequently the franchise was awarded to another Chrysler Jeep dealer. Plaintiff sought to vacate the arbitration award pursuant to the Federal Arbitration Act (“FAA”), contesting the testimony of Chrysler’s expert witnesses and asserting that the award violated their due process rights. The Court found that Tysinger because that arbitration was conducted under a distinct and short-lived statute that governed the franchise issue, and not under the FAA, it did not have the authority to review the arbitration decision.

In addition Tysinger requested the Court to stay the ruling of the arbitrator pending the outcome of the case. Tysinger claimed that the arbitrator had a financial interest in the success of Chrysler Jeep dealer that was awarded Tysinger’s Dodge franchise in the arbitration. The Court utilized four factors to determine whether the arbitrator had displayed partiality in his ruling, including the directness of the relationship between the arbitrator and the dealer, and the extent of the arbitrator’s personal interest in the outcome of the proceeding. The Court determined that the relationship between the arbitrator and the dealer, a non-party to the arbitration, was indirect at best, and that he had no relationship with the actual party in the arbitration, New Chrysler. Additionally, the Eastern District of Virginia Court found the outcome of the arbitration would not affect the arbitrator’s financial interest in the dealership.  Denying Tysinger’s motion to stay, the Court found that Tysinger could not definitively demonstrate the “evident partiality” of the arbitrator to conclude that a reasonable person could assume inappropriate motives.

The Court, in interpreting the contract language and various Supreme Court decisions, determined that “the ability of a class to arbitrate a dispute where the parties contest whether the agreement to arbitrate is silent or ambiguous on the issue is a procedural question that is for the arbitrator to decide.” Because the agreement between the Plaintiffs and Home Savings did not explicitly discuss the issue of pursuing class arbitration, the matter was deferred to the arbiter. The Court can resolve disputes regarding the scope, validity or enforceability of the arbitration provisions- overall, issues of “arbitrability”. The Court ruled here that the issue of whether the language of the agreement allows for class action is procedural, and so the arbitrator is the appropriate person to resolve the disputed matter.

The EDNY Court granted in part and denied in part Home Savings of America’s motion to compel arbitration. District Judge Bianco concluded that the parties involved must arbitrate the dispute, but found the arbitrator would decide whether or not the arbitration should proceed on a class or individual basis. Ultimately, the Court stayed the action pending the resolution of the arbitration proceeding. If you find yourself in an employment dispute, please contact Holman Law to speak with an experienced attorney and to understand your rights.

  

U.S. District Judge Robert P. Patterson Jr. determined that ethical violations by Unilab Corp.’s former general counsel disqualified the group from the suit, particularly under statute DR 5-108, which forbids a lawyer who has represented a client in a matter from later representing another person with materially adverse interests in a substantially related matter. Bibi claimed that his actions were protected by an ethics rule exception that allows for such disclosures when a lawyer learns of a client’s attempt to commit a crime. The FLPA creator also claimed he had sufficient reason to believe that Unilab was continuing to violate the anti-kickback statute at the time the law suit was filed in 2005. Additionally, Bibi argued that he did not technically serve as counsel for a party in this litigation, as he was acting as a relator for the government in the qui tam suit.    The Court disagreed with Bibi’s interpretation of the law and ruled that the extent of Bibi’s disclosures, which dated back to 1996 and involved multiple parties such as plaintiffs in a separate qui tam action against Unilab, went far beyond the scope of information necessary to prevent any alleged crime. The Court ultimately found Bibi’s disclosures to be direct violations of New York’s Code of Professional Responsibility.

Judge Patterson decided that the False Claim Act’s aim to encourage whistleblowers did not trump state ethics rules governing attorneys’ confidential relationships with their clients, and subsequently disqualified all three FLPA partners and dismissed the complaint. Judge Patterson also clearly qualified that his ruling did not bar the United States Government from intervening and pursuing an action against the same defendants. While the Court found Bibi was not permitted to bring a suit against his former client, anyone with knowledge of fraud against the government may bring a whistleblower claim. By filing under the False Claims Act, the whistleblower is entitled to recover damages. Contact an experienced whistleblower attorney at Holman Law to protect your rights and ensure that you are fairly compensated for bringing the claim to the attention of the government.

The Court analyzed the components of a factually false claim, which supplied an incorrect description of goods or services provided or a request for reimbursement for goods or services never provided. Additionally, a violation of the False Claims Act requires the defendant to have  “knowingly” committed the fraud, an allegation the Court found to be missing from the Plaintiff’s Complaint against BIMC.  The FCA, held the Southern District, is meant only to punish and reduce intentional misconduct, not “honest mistakes”. The Court found that there was no regulation that set forth procedures for billing methods upon the consolidation of teaching and non-teaching hospitals. No statute prohibited BIMC’s methods, which instead reflected the high level of uncertainty that comes with the implementation of Medicare billing practices.  Finally, the Court reviewed a statement verified by BIMC and submitted to Medicare, which stated the following: “I further certify that I am familiar with the laws and regulations regarding the provision of health care services, and that the services identified in this cost report were provided in compliance with such laws and regulations.” The Southern District found that this certification was not sufficient to establish liability under Colucci’s false certification theory because it was not a precondition of payment and did not confirm compliance with a specified statute or regulation.

Ultimately, the S.D.N.Y.  Federal District Court granted the Defendant’s Motion to Dismiss, declaring BIMC was not acting fraudulently in its billing practices, but was merely maximizing its Medicare reimbursements in accordance with Medicare statutes and regulations. While the reach of the False Claims Act is interpreted differently in various courts, the Southern District here limited its applicability by emphasizing the “knowing” aspect of the provision. If you have information about fraud against the United States government or bribery of foreign officials by U.S. companies in order to obtain a competitive business advantage, you may be entitled under the False Claims Act or the Foreign Corrupt Practices Act to a substantial reward in exchange for providing such information to the federal government as a whistleblower. Anyone who believes they have such information is invited to contact Holman Law for guidance on pursuing the correct channels in reporting such fraud in order to receive the largest reward to which you are entitled and to ensure that your employer recognizes your protections as a whistleblower.