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Insurance Recovery Best Practices After a Natural Disaster: Checklist for Policyholders

Gather all applicable insurance policies.

  • Often a single loss can trigger coverage under multiple insurance policies.
  • Examine each loss through the prism of each policy to determine the potential for coverage.

Review each applicable insurance policy’s terms and conditions, including:

  • Notice requirements. Insurance policies typically require prompt notice of a loss or notice within a specified time period. 
  • Proof of Loss requirements. A Proof of Loss form is typically furnished by an insurance company and must be completed by an insured and submitted within the time limits set forth in the policy. The form requires the insured to set forth the amounts being claimed under the policy, among other things. Some policies require the submission of this information automatically (even if a Proof of Loss form is not furnished by the insurance company).
  • Coverages, Limits, Sub-limits, and Deductibles. Commercial property policies typically provide coverage for property damage to buildings and contents/business personal property, Business Income loss, Extra Expense, among other things. To the extent possible, losses should be categorized within these coverage “buckets” when they are submitted to the insurance company. Consider consulting professionals, including a forensic accountant to assist you in quantifying and categorizing losses.

Provide prompt notice.

  • It is an obligation, and it triggers the insurer’s duty to investigate and pay or deny.
  • Failure to provide timely notice could result in the forfeiture of insurance. 

Appoint a “Clerk of the Claim” to maintain a chronological record of all events pertinent to the claim (a “Claim Log”), including:

  • the date notice was provided;
  • the date and description of all mitigation efforts;
  • the date and description of all communications and events pertinent to the loss; (such as communications with insurance company adjusters), inspection dates and details (who inspected, what they inspected, when, and for how long); 
  • any admissions made by insurance company representatives.

Document the loss through photographs, documents and witness interviews. 

Mitigate. Insurance policies typically require the insured to protect property from further damage.

Seek assistance when needed. An insurance recovery attorney can help you navigate the claim process from the outset, so you can maximize recovery under your insurance policies. For more information on the contents of this alert, please contact Lee Epstein, Meghan Moore or any member of our Insurance Recovery Practice Group.

Click here for a printable one-page PDF version of this checklist

Insurance Recovery Best Practices After a Natural Disaster

Ten Tips for Avoiding Litigation: Tip #5 – Treat Your Employees Fairly and Consistently

Business teamwork and global finance blue background

The lifeblood of every business – big, small or in-between – is its employees, aptly called its human resources or human capital. A company can have the most innovative product or service idea in the world, along with a recognized market and an excellent strategy for capitalizing on it, but, without the right people to implement the idea and the right managers to train, supervise, and motivate that staff, the idea is likely to fail. That is why your employees are your most valuable resource. At the same time, however, employees are also frequent sources of litigation for businesses, including claims for wrongful discharge, discrimination, harassment, hostile work environment, failure to accommodate a disability, wage and hour violations, failure to properly pay overtime, breach of non-compete agreements, and theft of company trade secrets, to name just a few.

Employees are much more challenging to manage than any other resource your company uses to conduct its business. Your inventory, for example, is, for the most part, fungible. If one source dries up or becomes prohibitively expensive, chances are you will be able to find a replacement source. Similarly, your equipment is generally easily repairable or replaceable if something breaks. Not so with your employees. They require training, motivation, and incentives. They take sick days, personal days, and holidays. They go on vacation, care for sick or disabled family members, and sometimes they do not get along or work well with each other. And they sue their employers with increasing frequency.

In addition, studies show that the replacement of just one key employee can cost your business hundreds of thousands of dollars. Think about the down time and lost productivity associated with the departure of the former employee, internal and external recruitment costs to find a replacement, costs of training and orienting the new employee, and the down time and lost productivity involved in getting the new employee up to speed. These are just a few of the costs associated with losing an employee.

In short, you have invested a huge amount of your company’s resources in your employees. Doesn’t it make sense that you should protect that investment by implementing policies to keep your employees productive, motivated, safe, healthy a relatively happy? Here are some things you can try to help accomplish that goal.

First, always treat your employees respectfully, honestly, and fairly. This suggestion might sound obvious, and it is, but it is also frequently forgotten or ignored in the normal stress of the business world. It might also sound inconsequential, but it might just be the key to reducing claims against the company by its employees. Every employee wants to feel like his or her work is valued and essential for the success of the business. Finding ways to recognize and honor all your employees’ contributions will pay significant dividends. Even simple gestures will reap rewards in areas like better employee morale and increased productivity among your staff.

Second, don’t BS your employees. They know what is going on in the world and how outside events affect the company. They also know far more than you think about changes the company is considering, especially changes that could affect them negatively. Silence and secrecy may be necessary, but outright lying to employees is never a good idea. It is guaranteed to produce a cynical, untrusting, and equally secretive staff.

Third, have clear, well-defined company policies to let employees know what behavior you expect from them, what behavior you will not be tolerate, and the consequences of engaging in that behavior. These policies should be memorialized in a written employee manual or, even better, easily accessible to employees on the company website. You should hire an experienced employment lawyer, who is knowledgeable about the current state of constantly changing employment laws in your jurisdiction, to draft your employee manual. The manual should also contain procedures for addressing problems when they arise, and for reporting violations. Whom do you call when X happens? To whom do you report violations of Y policy?

Fourth and finally, once you have those company policies in place, enforce them as consistently as possible. One of the most difficult management tasks is balancing the goal of fairness and consistency versus the desire to be flexible and treat people as individuals rather than as interchangeable parts. Rigid, unthinking, and blind adherence to rules can not only damage employee morale by stifling creativity and employee innovation, but also lead to unsatisfactory and inappropriate results. On the other hand, any perception by your employees that you are showing inconsistency or, even worse, favoritism in your enforcement of certain policies can lead to divisiveness and be equally damaging to employee morale. Inconsistently enforced rules are, in some ways, worse than no rules at all.

The safest, but perhaps most difficult path to follow, is to treat rules as sacrosanct except in unusual and rare cases that require special empathy and flexibility. If you conclude that a large number of your employee could qualify for the same exception if they were to ask for it, then you should either deny the request for an exception or consider scrapping the rule. Before making any exception to a policy or rule, consider the potential consequences down the road. What will you do the next time someone else asks for the same exception, particularly if that person is someone you do not particularly like? Reward your best employees with raises, promotions, stock options, and the like, not with exceptions to company policies. The former will motivate your good employees to try to be better; the latter will make them cynical about following company rules.

There are other ways to enhance and retain your human resources, such as training your managers to know and follow the applicable federal, state, and local employment laws,  and minimizing the use and severity of non-competition agreements. I will cover these topics in future installments of this blog, so stay tuned!

Click here for Tip #1: Always Have a Strong Written Agreement to Govern Your Business
Click here for Tip #2: Avoid Doing Business with Members of your Family
Click here for Tip #3: Check Your Insurance Coverage Frequently to be Sure it Protects Your Business from Exposure and Risk
Click here for Tip #4: Every Significant Business Transaction Should Be Documented

Phil Kirchner of Flaster Greenberg
Philip Kirchner is a member of Flaster Greenberg’s Litigation Department headquartered in Cherry Hill, NJ. He concentrates his practice on resolving business disputes, including complex litigation of all types of business issues in both the federal and state courts of New Jersey and Pennsylvania. He can be reached at 856.661.2268 or phil.kirchner@flastergreenberg.com.

 

 

Tips On Protecting Your Virtual Meetings To Avoid A Cyber Security Breach

Computer Hacker

Virtual Meetings, and their Unintended Vulnerabilities

Advanced technology and the availability of online video and teleconferencing software has certainly helped ease the transition to working remotely for many businesses, schools, health care providers, and even the Courts. However, these virtual meeting platforms, while increasingly popular and essential especially during the COVID-19 pandemic, are not always completely secure.

Over the past few days, you may have seen the term “Zoom-Bombing” circulating around the news. This term refers to nefarious actors, or trolls, on the web hijacking Zoom and other virtual meetings to display a variety of disruptive, and often disturbing, behavior. This computer hacking creates serious privacy concerns as it exposes confidential and sensitive material, such as medical information, financial data, trade secrets, and other proprietary information, to these intruders and other third parties.

Protect Your Meetings from Uninvited Guests

We suggest taking the following steps to help keep your virtual meetings closed to intruders:

  • Create a random or randomly-generated meeting number for each meeting. Zoom, and other virtual meeting platforms such as GoToMeeting or Skype for Business, allow for a standing meeting number but reports have indicated that such standing meeting numbers are being sold on the dark web. In at least one instance, stolen account information such as email addresses, passwords, meeting identifications, type of account, host keys, and names were actively being sold or posted to the dark web. In other instances, sensitive information from virtual meetings was discoverable through a search engine on the open web. Even a United States healthcare provider, seven educational institutions, and one small business were targeted in such virtual meeting cyberattacks.
  • Ensure that each meeting is password-protected. For example, Zoom can automatically create a password and does with each new meeting. In the alternative, when creating the invitation, the meeting creator can assign a password in the invitation. The password will then be included in the meeting invitation that is sent out to the attendees.
  • Lock virtual meetings once they’re in session. Some virtual platforms allow for meeting creators to lock their meetings once they’re in session. To prevent unexpected attendees from joining a current session, lock your meeting or enable a virtual waiting room. You’ll be notified when an attendee attempts to join and can easily connect all waiting attendees to the meeting by unlocking.

These precautions should help keep your virtual meetings free from any unwanted “Zoom-Bombers.”

Further Guidance

To further address these emerging privacy concerns, on April 8th, Senator Edward Markey, whose priorities include telecommunications, technology, and privacy policy, urged the Federal Trade Commission to publish industry cybersecurity guidelines for online conference providers for protecting consumers’ privacy.

If you have any questions, please feel free to reach out to Donna Urban, Krishna Jani, or any member of Flaster Greenberg’s Telecommunications or Privacy & Data Security Groups.  

Donna T. Urban is a member of Flaster Greenberg’s Commercial Litigation and Environmental Law Departments concentrating her practice in telecommunications law, environmental regulation and litigation, and privacy and data security. She is a seasoned litigator, and for more than 20 years has successfully represented business clients in contract disputes, regulatory matters, and complex negotiations. She can be reached at donna.urban@flastergreenberg.com or 856.661.2285.

Krishna A. Jani is a member of Flaster Greenberg’s Litigation Department focusing her practice on complex commercial litigation. She is also a member of the firm’s cybersecurity and data privacy law practice groups. She can be reached at 215.279.9907 or krishna.jani@flastergreenberg.com.

To serve as a central repository of information and contributions from Flaster Greenberg attorneys on legal developments during the COVID-19 crisis, we have launched a COVID-19 Resource Page on our website.  Feel free to check back frequently for Flaster Greenberg’s ongoing analyses of important legal updates that may affect you or your business. 

 

 

Ten Tips for Avoiding Litigation: Tip #4: Every Significant Business Transaction Should be Documented

Checklist document in laptop and working desk vector. Cartoon computer with checkmarks document or to do list with checkboxes, concept of survey. Online quiz or done test, feedback or workplace table

There is a nostalgic notion among traditional businesspersons that the best deals are sealed by a hand-shake (or an elbow in this COVID-19 world in which we live), and you don’t need fancy lawyers and contracts to be successful in the business world. That approach to reaching agreements seems to work well in John Wayne and Clint Eastwood movies, but it can lead to problems in the real world. Robert Frost famously said: “Good fences make good neighbors.” In the business world, good contracts make good deals.

So why should you insist on – and pay the expense of creating – written contracts to memorialize your significant agreements? Consider the myriad of psychological research studies, which show that memories fade with age and the passage of time and that, even under the best of circumstances, we tend to remember what we want to remember. The corollary to that rule is that different people will tend to remember different things, depending upon their varying interests. Next consider that, according to the natural order of the world, otherwise known as “Murphy’s Law,” if something can go wrong, chances are it will go wrong. Finally, consider what will happen when you and the other party to the deal have differing recollections about the terms of the deal but nothing in writing to confirm either party’s position.

For example, suppose you understood that your customer was going to pay shipping costs for the goods it purchased from your company. Your customer, to the contrary, is certain that shipping costs were included in the price it paid for the goods. Similarly, what if our customer thinks it is entitled to receive a 2% price discount if it pays your invoice within 20 business days of receipt. You recall discussion of a discount but swear the terms you agreed to required payment of the invoice within 10 days and a resultant 1% discount.

How will you resolve such disputes without a definitive written agreement that includes provisions for shipping, payment and price terms? To paraphrase Yogi Berra: If you don’t know where you are going, how will you know when you get there? More to the point, if you don’t have a contract, how will you know what the deal is?

Faced with such a disagreement about the terms of the deal, you will either negotiate a new deal to resolve the disputed issues, stop doing business with the other party, or end up in court. If you end up in court, without a written contract, it will be your word against your adversary’s. Unfortunately, that kind of litigation, which depends upon either a jury or judge deciding whose testimony is more credible – a so-called “credibility contest” — is one of the most expensive and unpredictable kinds of contract disputes to resolve. Moreover, even if you are fortunate to prevail in the litigation, you will most likely be responsible for your own attorney’s fees and costs, which could be enormous. Under the so-called “American Rule,” which is followed, with rare exception, by every state and federal court in this country, each side bears its own costs of litigation, regardless who wins. One exception to the American Rule occurs when the contract that is the subject of the litigation contains a “loser pays” provision. But, of course, without a written contract containing such a provision, you will be out of luck and will probably have to bear your own litigation costs.

One additional reason to insist upon a written contract to memorialize significant transactions is the good will it will buy you with your most valuable customers. The truth is that wasteful and unnecessary litigation is just as expensive, time consuming, and distracting for your customer as it is for you. Your adversary will be forced to eat its own attorney’s fees and litigation costs, just as you are, if the dispute ends up in litigation. Therefore, both parties will benefit from a well-drafted contract that resolves disagreements without the need to resort to litigation.

Finally, not every deal requires a full blown contract with all the bells and whistles, but even in those circumstances, there should be some written confirmation of the agreement. In many cases, a simple purchase order with pre-printed standard terms and conditions, sent by one party and accepted by the other, will suffice. Some simple deals will only require a confirming email or two back and forth to provide a record of the principal terms of the deal. With the convenience of electronic communications these days, there is no good excuse for not documenting every deal in writing!

Click here for Tip #1: Always Have a Strong Written Agreement to Govern Your Business
Click here for Tip #2: Avoid Doing Business with Members of your Family
Click here for Tip #3: Check Your Insurance Coverage Frequently to be Sure it Protects Your Business from Exposure and Risk

Phil Kirchner of Flaster Greenberg
Philip Kirchner is a member of Flaster Greenberg’s Litigation Department headquartered in Cherry Hill, NJ. He concentrates his practice on resolving business disputes, including complex litigation of all types of business issues in both the federal and state courts of New Jersey and Pennsylvania. He can be reached at 856.661.2268 or phil.kirchner@flastergreenberg.com.

 

What to Do When COVID-19 Impacts Your Alimony or Child Support

Word FAMILY LAW composed of wooden letters.

With the COVID-19 pandemic rattling our work, home, social, and personal lives at a rapidly-evolving pace, many families are dealing with unprecedented financial insecurity and uncertainty. This can be even more intimidating and confusing for divorced and separated families, where oftentimes there are court-ordered or contracted legal obligations that are challenged in the wake of these tumultuous financial times.

As a recipient of financial contributions incident to a divorce or dissolution, it can be daunting to worry about whether your ex-spouse or ex-partner will be able to continue to meet those obligations. Those obligations include things such as alimony, child support, or other monetary contributions to your family, such as payment towards college tuition or health insurance premiums. Unquestionably, folks rely upon those contributions in order to meet their needs and the needs of their family so it is understandable to want assurance that those contributions continue.

At the same time, an individual who is legally obligated to pay money to an ex-spouse or ex-partner may be experiencing a decline in their discretionary income as a direct result of the COVID-19 crisis. In both New Jersey and Pennsylvania, the governments have shut down or deeply curtailed almost all non-essential business practices, sidelining a large segment of the working class, through no fault of their own. Many individuals have taken pay cuts, are working reduced hours, have been forced to use PTO or sick time, or, in the worst case scenarios, have stopped working altogether, without pay. If this occurs, it can render it challenging, if not impossible, to satisfy all expenses in full and on time, including expenses like alimony or child support. Many folks find themselves faced with the difficult decision of choosing which bills to pay out of a limited supply of cash: Do I pay my mortgage in full, and slash my child support? Do I pay for health insurance, and skip my alimony? Should I stop paying anything to my ex until this is over? Can I just socially-distance myself entirely and hope this all goes away on its own?

These questions are valid, and there are equally compelling arguments on both sides as to how these issues should be addressed. Folks relying on the support of an ex-partner want (and need) to be paid, and folks obligated to provide support to an ex simply might not have the funds available.

If you find yourself on either side of this equation, it is important to address the situation early on before it spirals out of control. While rushing to initiate litigation might seem premature or perhaps not cost-effective, nonetheless you also don’t want to ignore the situation or engage in self-help mechanisms that do more harm than good. Below are some options for dealing with financial complications or disputes with your ex-spouse or ex-partner brought about by the COVID-19 crisis.

One good place to start is by opening the lines of communication with your ex-spouse or ex-partner. Transparency and honesty will go a long way towards understanding the situation from both sides. If you and your ex are able to reach an interim agreement about continued (but perhaps reduced) financial support on a short-term basis, you should contact an attorney who can codify that agreement into an appropriate legal document. This enables you and your ex to amicably reach an agreement without court intervention, which saves you both time and money, while also ensuring that your agreement is legally-enforceable should problems arise in the future.

If you and your ex-spouse or ex-partner are not in regular contact, have an acrimonious relationship, or simply cannot agree on a resolution, then it might be time to consult with an attorney. Your attorney can suggest interim financial arrangements that can be presented to your ex in the hopes of reaching an agreement. Sometimes all it takes is a little nudge from an attorney to compel both sides to put in the effort to achieve a resolution to emergent situations. If this is successful, then the agreement would be summarized in a legal document and made binding.

If all else fails and you and your ex-spouse or ex-partner cannot reach an agreement even with the assistance of attorneys, it might be necessary to seek court intervention. Despite the COVID-19 pandemic, most courts are attempting to operate as close to “normal” as possible, seeking to ensure that folks still have access to the judicial process as needed. The family courts are equipped to receive filings electronically and to schedule court appearances via telephone and video conferences.

In both New Jersey and Pennsylvania, there are laws that permit an individual to petition for a modification to their alimony or child support if that person’s financial circumstances have changed. A loss of income or cash flow due to COVID-19 could be viewed as a substantial, involuntary, and unforeseen change that would justify the court evaluating the situation to determine whether to provide appropriate relief. As the COVID-19 situation is unique as far as its widespread financial impact on New Jersey and Pennsylvania families, there is little precedential guidance to help us understand how the courts might respond to petitions regarding alimony and child support issues. However, below are some possible outcomes that might result from such litigation:

  1. The court could grant a temporary reduction to an obligor’s alimony and child support payments, with a mandatory re-evaluation to take place in 1-2 months, at which time the support figures could be increased back to their original amounts.
  2. The court could keep the alimony and child support at the same rate, but could suspend enforcement and collection efforts. Any deficiencies in payments would continue to accrue as “arrears” and the obligor would be required to pay back those arrears at a later date. Essentially, this would enable the obligor to pay less towards their obligations during the financial crisis while ensuring that the recipient of support is ultimately made whole at some point in the future.
  3. The court could look to alternative financial resources for both parties, examining each party’s respective access to alternate sources of cash. This could include exploration of lines of credit, loans against retirement assets, trust distributions, advances on inheritances, or relief to one or both parties under the Federal CARES Act. While every family’s situation will be unique, it is hoped that the courts will explore every option for getting folks through these tough times.

These are scary situations that are facing many people throughout our community right now, and it is completely understandable to worry about keeping your family financially secure while you also manage your family’s physical and emotional well-being, as well as your own. If you find that your legal rights or obligations pursuant to a divorce or dissolution have been negatively impacted by COVID-19, you should consult with an attorney today. Through diligence, advocacy, and creativity, it is possible to develop a plan that can help you and your family navigate these uncertain times with an emphasis on positive and fair results.

Know that you are not alone.

gambone_angie
As a shareholder and member of the firm’s Family Law Department, Angie Gambone concentrates her practice in the areas of complex family law, divorce and custody matters. She also focuses her practice on adoption, family formation and the family law needs of nontraditional and LGBT families. Angie can be reached at angie.gambone@flastergreenberg.com or 856.382.2217.

 

 

To serve as a central repository of information and contributions from Flaster Greenberg attorneys on legal developments during the COVID-19 crisis, we have launched a COVID-19 Resource Page on our website.  Feel free to check back frequently for Flaster Greenberg’s ongoing analyses of important legal updates that may affect you or your business. 

 

 

 

 

 

Tip for Avoiding Costly Business Litigation: Always Have a Strong Written Agreement to Govern Your Business

Tips for avoiding litigation

As a career commercial litigation attorney, I have been asked by several people why I would write a column advising business people on how to avoid needing my services. That’s a good question for which I do not have a good answer, other than to say I believe, in our ever-more complex commercial world, there will be plenty of commercial litigation to keep me busy. At the same time, I hope my clients will benefit from using an ounce of prevention to avoid paying a pound for a cure involving litigation.

Litigation is expensive, time-consuming, a distraction from running a successful business, and unpredictable. It is NEVER a good thing for a business to be involved in litigation; it generally means you owe someone money or someone owes you money. Either way, you are not happy, but you will be even less happy if you end up in litigation, regardless whether you are the plaintiff or defendant.

I plan to post one litigation avoidance tip per week for the next several weeks. I hope you find these tips helpful, and if you have questions or want to discuss any of them with me, I am happy to oblige. So, here is my first tip for avoiding litigation:

Tip #1: Always Have a Strong Written Agreement to Govern Your Business.

No matter what type of business you have, be it a pizza parlor or a high tech company, and regardless how your business is organized, as a corporation, partnership, LLC, or whatever, you should start your business with a well-drafted operating agreement. This is the document that governs all the important decisions and activities in the life of your business, such as ownership structure, voting rights, management responsibilities, resolution of disputes between owners, death or disability of an owner, adding new members, transfers of ownership interests, and, ultimately, dissolution of the business. For example, the death of one of the owners of the company need not automatically lead to the death of the business. A well-drafted agreement will spell out exactly how the deceased owner’s interest in the company will be distributed and valued and how the company will be managed going forward. Without such an agreement, however, an owner’s death could lead to a power struggle among the remaining owners, expensive litigation, and, eventually, dissolution of the company.

Business operating agreements are generally ignored until there is a significant event in the life of the business. When such an event occurs, however, you will be happy you have one. For example, many businesses with multiple owners reach a stage in their development where the owners develop different visions for the future of the business and how the business should be managed. They might disagree about whether to expand the company into a new line of business, take on additional debt, hire a new employee, or any number of other critical business decisions. Without a strong agreement that specifies how such disputes are to be resolved, the company could find itself in a stalemate position, requiring resort to a court to break the deadlock. The cost of a court battle alone (payment of attorney’s fees and costs of suit, plus the expenses associated with the possible appointment of a receiver to run the business while the owners and the court sort things out) is reason enough to avoid litigation. The other detriments inherent in business litigation, such as the business opportunities the company is unable to pursue, and the time spent by the business’s owners and key employees on the litigation that should be devoted to the business, reinforce the conclusion that litigation is not a desirable outcome. Finally, the litigation might very well produce a result that neither of the owners wants.

In short, every business should avoid litigation if possible, and one of the best ways to do that is to have a well-drafted, comprehensive operating agreement. Be sure to entrust this most important task in the life of your business to an experienced and able business attorney who has drafted many agreements of this kind.

Stay tuned for more tips in the coming weeks!

Phil Kirchner of Flaster Greenberg
Philip Kirchner is a member of Flaster Greenberg’s Litigation Department headquartered in Cherry Hill, NJ. He concentrates his practice on resolving business disputes, including complex litigation of all types of business issues in both the federal and state courts of New Jersey and Pennsylvania. He can be reached at 856.661.2268 or phil.kirchner@flastergreenberg.com.

 

 

Trends in Arbitration Agreements

Trends in arbitration agreementsThe New Jersey Supreme Court in late November 2019 heard oral argument in Flanzman v. Jenny Craig, Inc., 456 N.J. Super. 613 (App. Div. 2018), cert. granted, 237 N.J. 310 (2019), in which the Appellate Division boldly refused to enforce arbitration agreements that fail to identify a specific “arbitral forum.” At least one Justice hinted during the argument that Flanzman may have taken Atalese v. U.S. Legal Services Group, L.P., 219 N.J. 430, 447 (2014) – the Supreme Court’s landmark decision requiring arbitration agreements to waive unambiguously the parties’ “time-honored right to sue” in court – to an unintended extreme.

Atalese focused on the need for arbitration provisions to reflect, through unequivocal language, the parties’ understanding of the rights they give up by agreeing to arbitration. Id. at 443-45. Flanzman, by contrast, held they must also demonstrate they understand the process that will replace those rights. According to the Appellate Division, only a mutual assent to a specific “arbitral forum” – which it defined as the “mechanism” or “setting” for arbitration – reflects “a meeting of the minds about what rights the parties gave up and what rights they received.” 456 N.J. Super. at 624. Justice Patterson, noting this foundational gap in Flanzman’s premise, remarked, “Atalese is about what you’re giving up.”

In fact, Flanzman rested not so much on Atalese as on the Appellate Division’s decision in Kleine v. Emeritus at Emerson, 445 N.J. Super. 545 (App. Div. 2016). In Kleine, the arbitration clause named the AAA, but when the suit arose the AAA no longer arbitrated claims of that type. The appellate court, finding no mutually agreed-on forum should the AAA prove unavailable, held the clause unenforceable for lack of mutual assent; it then proceeded to ground its holding in Atalese: “As Atalese instructs, the party . . . must be able to understand – from clear and unambiguous language – both the rights that have been waived and the rights that have taken their place.” Id. at 552-53. But Atalese spoke only of the waived rights; it said nothing about an understanding of the rights that will take their place.

As for how to adequately show the parties’ mutual understanding, Flanzman stressed the need to identify an arbitral forum. According to Flanzman, different sets of arbitral rules – for example, those of the AAA and JAMS – can mean different substantive and procedural rights for the parties. Flanzman, 456 N.J. Super. at 626-27. But the significance of that identification was not obvious to the Court. “How will knowing the name of the arbitrator assist your client in knowing the rules of the game?” Justice Albin asked. Flanzman itself conceded that parties, instead of actually naming a forum, may agree to decide later on a forum when the need arises, or to each select an arbitrator who would, in turn, select a third. Id. at 629. However, the court did not explain how such a broad provision would inform the parties of their rights in the arbitral process. Nor did it say how much detail an arbitration clause must contain, insisting only that parties “generally address in some fashion what rights replace those that have been waived.” Id. at 626. “The question is, what is essential?” Justice LaVecchia asked. In reply, respondent’s counsel tried to direct the Court’s focus towards Flanzman’s larger point: “How can you waive your right to a jury trial if you have absolutely zero information?”

The Justices’ comments and questions may have shown a reluctance to broaden Atalese, itself a bold decision that stopped just short of enforcing arbitration agreements more narrowly than other contracts, which the Federal Arbitration Act forbids. Interestingly, in a 2019 unpublished decision, the Appellate Division declined an opportunity to limit Atalese to consumer and employment agreements. The court explained that Atalese’s central concern – that waiver of the right to judicial resolution must be clear and unambiguous – applies to sophisticated parties, too. See Itzhakov v. Segal, No. A-2619-17T4, 2019 N.J. Super. Unpub. LEXIS 1829, *10 (App. Div. Aug. 28, 2019). That decision was in keeping with Atalese, which continues to control New Jersey courts’ enforcement of arbitration agreements. Nonetheless, the Court may well decide, under the Federal Arbitration Act and established principles of contract law, that it has gone far enough in requiring greater specificity in arbitration provisions.

Daniel Epstein Litigation Attorney
Questions? Let Daniel know.

Daniel C. Epstein is a member of Flaster Greenberg’s Litigation Department, where he represents corporate and individual clients in all aspects of litigation.

What the %@#&? Supreme Court Strikes Down Ban on Immoral or Scandalous Trademarks

istock-136562318-trademark.jpg

The Supreme Court struck down the Lanham Act’s prohibition on registering “immoral or scandalous” trademarks in its recent decision in Iancu v. Brunetti. Erik Brunetti is an artist who created a clothing line that uses the trademark FUCT. When he sought to register the mark, the U.S. Patent and Trademark Office (“USPTO”) denied his application, citing the Lanham Act’s prohibition on registering trademarks that contain immoral or scandalous matter. It is not hard to imagine that the mark would bring to mind perhaps the most famous four-letter curse word in American culture. Brunetti appealed and argued that the prohibition violates the First Amendment.

The Supreme Court agreed with Brunetti and held that the Lanham Act’s prohibition on registering immoral or scandalous trademarks is unconstitutional because it discriminates on the basis of viewpoint. By way of example, the Court pointed out how the USPTO registered the mark “D.A.R.E. TO RESIST DRUGS AND VIOLENCE” but refused to register “BONG HITS 4 JESUS” because it “suggests that people should engage in an illegal activity [in connection with worship]” and since “Christians would be morally outraged by a statement that connects Jesus Christ with illegal drug use.”

The Supreme Court’s rationale follows the same line of thinking from its decision in Matal v. Tam, two years ago, when the Court held that the ban on registering marks that “disparage” any person living or dead was unconstitutional. In that case, the Court also held that if a trademark registration bar is viewpoint-based, then it is unconstitutional under the First Amendment.

Does this mean that American consumers are likely to see an influx of brand names containing lewd, sexually explicit, and profane slogans? Not necessarily. While the Lanham Act’s prohibition had prevented the registration of immoral or scandalous marks, there is nothing that previously prevented individuals or businesses from using immoral or scandalous marks in commerce and enforcing the mark against potential infringers. Registration simply provides trademark owners with additional, valuable benefits such as the legal presumption of national ownership of a trademark. In other words, the landscape for offensive marks being used in the marketplace is unlikely to change too much, but owners will have an easier time protecting and enforcing these types of marks.

Questions? Let Eric know.

Eric ClendeningEric Clendening is a member of Flaster Greenberg’s Intellectual Property and Litigation Departments. He focuses his practice on intellectual property litigation and commercial litigation, including contract disputes, employment litigation, and other commercial disputes. He also advises clients on protecting and enforcing intellectual property rights online, including the resolution of domain name disputes and matters concerning e-commerce, online speech and conduct, and related intellectual property issues involving trademarks and copyrights.

It’s Her Party, But Can Miley Cyrus Write What She Wants? Miley Cyrus Sued for Copyright Infringement Over 2013 Hit We Can’t Stop

Miley Cyrus topped the 2013 charts with hit song ‘We Can’t Stop,” which begins with the lines “It’s our party we can do what we want, It’s our party we can say what we want, It’s our party we can love who we want” but a new lawsuit, filed on March 14, 2018 in the United States District Court for the Southern District of New York, suggests that while it may be her party, the song may not contain her lyrics.  Jamaican artist Michael May, who performs under the stage name Flourgon, has asserted that Ms. Cyrus, and her co-writers, producers and distributors infringed on a line from his 1988 song “We Run Things.” In particular, May’s song contains the lyric “We run things. Things no run we.”  May claims that Cyrus’ lyric “We run things. Things don’t run we.” infringes on May’s earlier lyric.

May asserts in his lawsuit that Cyrus’ song owes its “chart-topping popularity and its highly-lucrative success” to May’s lyrics and that “the entire theme of ‘We Can’t Stop’ would be hollow in sound and impact.”  May further also cited a 2015 interview by co-writer Theron Thomas, where he indicated that his music is influence of Caribbean culture as proof that the lyrics were copied.  May is seeking to enjoin Cyrus from selling, distributing and performing “We Can’t Stop,” as well as monetary damages.  While the complaint does not specify the exact amount sought, his attorney told CNNMoney that $300 million would be “reasonable compensation.”   What a mench.

What is Copyright Infringement?

For those of you unfamiliar, a copyright arises from the creation of an original work that is fixed in a tangible medium of expression, described as “when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.”  While the mere creation of the composition is enough to establish a copyright, registration affords the author/publisher additional protections. The courts often look to whether the composition contains a minimal spark of creativity. The spark can be in the chord progression, rhythm, melody or lyrics. In order to establish the infringement, a comparison of the songs must be done, often by an expert, and a judge or jury must then determine if such an infringement, or unauthorized borrowing or use of the same chord progression, rhythm, melody or lyrics, has occurred. Since such proof is often subjective to the fact finder, most cases are resolved prior to a final determination in Court.

Prior Precedent 

Copyright disputes between musicians, writers and publishers have been part of the music landscape for decades. In 1971, former Beatle George Harrison had a number 1 single on his hands with ‘My Sweet Lord.’ Yet, while that single was still in heavy rotation, Harrison was hit with a lawsuit by publisher Bright Tunes Music, which held the rights to the Chiffons’ 1963 hit ‘He’s So Fine,’ written by Ronnie Mack. Harrison tried unsuccessfully to settle the matter and, ultimately, lost at trial, having to pay Bright Tunes damages in the amount of $1,599,987! As only a former Beatle could, Harrison did, however, turn the experience of tortuous litigation into another hit called ‘This Song.’

More recently, Robin Thicke, Pharrell Williams and Clifford Harris, Jr. were found to have infringed on the work of Marvin Gaye, in particular the song ‘Got To Give It Up.’ Thicke, Williams and Harris pre-emptively filed suit against the Gaye family and Bridgeport Music, in an attempt to have the court determine Thicke and company had not infringed on Gaye’s work. The suit backfired, with the Court finding that Thicke and company infringed on Gaye’s work and awarding $5.3 million in damages.  Thicke and company have appealed to the United States Court of Appeals for the 9th Circuit where they argued that there can be no infringement for a “groove,” which it sought to differentiate from a lyric, rhythm, etc.  No decision has been reached by the 9th Circuit as of yet, but Thicke, Williams and Harris have a tough road ahead to overturn the lower court’s verdict.  On the other hand, Taylor Swift prevailed in a California copyright dispute earlier this year with facts similar to those in the Cyrus action.  The plaintiffs in that action alleged that Swift’s lyrics in the hit “Shake it Off” infringed on the lyrics to their song  “Playas Gon’ Play.”  Swift’s lyrics included the phrase “[T]he players gonna play, play, play, play, play and the haters gonna hate, hate, hate, hate, hate.” which plaintiff compared to its earlier lyrics  “Playas, they gonna play / And haters, they gonna hate.”   The presiding judge summarily dismissed the complaint against Swift stating “The allegedly infringed lyrics are short phrases that lack the modicum of originality and creativity required for copyright protection.”

As recently as this past January, Lana Del Rey tweeted that Radiohead was bringing a lawsuit against her claiming that her song, “Get Free” infringed on Radiohead’s hit 90s song, “Creep.” To date, no such lawsuit has actually been filed, although Radiohead’s lawyers have admitted to being in discussions with Del Rey’s representatives where they requested that the band be credited on Del Rey’s song.

Does May Have a Case?

After reviewing the lyrics and listening to both songs, May has a significant uphill battle in his copyright dispute, if the New York court follows the precedent of the California Court.  As with the Swift case, this dispute involves only a seven-word line in a more substantial composition.  While the lyrics are very similar, with six out of the seven words being identical, the Court will likely find the allegedly infringing lyrics in Cyrus’ song are merely short phrases that lack the modicum of originality and creativity required for copyright protection.”

While the outcome will likely favor Cyrus, if the Court were to rule in May’s favor, a $300 million award is very unlikely.  Copyright infringement damages fall into three main categories…actual damages, profits and punitive damages. Damages are governed by 17 U.S.C. § 504(b), which provides that “The copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages. In establishing the infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.”  In addition, the Court may impose punitive damages, in an amount in excess of the actual damages and profits.  Without proof that Cyrus’ song caused him to lose money and opportunity, May, if victorious, would likely only receive Cyrus’ profits, which would likely be exponentially less than the $300 million suggested by May’s counsel.

Questions? Let Jeff know.

Jeff Cohen is a member of Flaster Greenberg’s Litigation, Intellectual Property, Corporate and Real Estate Practice Groups. He has been a trial attorney for more than 23 years, counseling and representing a diverse range of clients in matters related to commercial contracts, shareholder and partnership agreements, trademarks, copyrights, patents, including Hatch-Waxman, insurance coverage, franchise disputes and commercial construction.

Lana Del Rey May Have Creeped too Close to Radiohead’s Melody, Copyright Infringement Suit Nears

A tweet sent by Lana Del Rey earlier this week (likely to the chagrin of her attorneys) informed her 8.3 million followers that Radiohead is claiming that the song ‘Get Free’, off her recent album ‘Lust for Life’, infringed on Radiohead’s 1993 hit song ‘Creep.’ The 90’s band is seeking 100% of the profits related to the publishing of the song, which Del Rey is credited with co-writing along with songwriters and record producers, Kieran Menzies and Rick Nowels.

Fast forward to a few hours after the tweet was sent when Del Rey then repeated this sentiment at a subsequent concert in Denver, CO, where she referred to the song as her “personal manifesto.”  As an aside, it was a questionable move for Del Rey to go so public with this dispute, let alone state terms of settlement offers, as settlement negotiations are often confidential…unless where published in the manners Del Rey has done, and could taint the available jury pool. Check out a clip of Del Rey addressing the crowd here.

Does Radiohead have a case?

I’ve never been much of a gambler, but after listening to both songs I would say that Radiohead has a strong case in this copyright dispute. For those of you unfamiliar, a copyright arises from the creation of an original work that is fixed in a tangible medium of expression, described as “when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.”  While the mere creation of the composition is enough to establish a copyright, registration affords the author/publisher additional protections. The courts often look to whether the composition contains a minimal spark of creativity. The spark can be in the chord progression, rhythm, melody or lyrics. In order to establish the infringement, a comparison of the songs must be done, often by an expert, and a judge or jury must then determine if such an infringement, or unauthorized borrowing or use of the same chord progression, rhythm, melody or lyrics, has occurred. Since such proof is often subjective to the fact finder, most cases are resolved prior to a final determination in Court.

In fact, the very song Radiohead is now claiming Del Rey has infringed upon, was itself the subject of a claim of infringement by Albert Hammond and Mike Hazlewood, regarding the 1972 song ‘The Air That I Breathe,’ sung by The Hollies. As a result of that claim, Hammond and Hazlewood received co-writing credits and a percentage of the royalties of Radiohead’s ‘Creep.’ While one might ask whether Hammond and Hazlewood should really be making the claim against Del Rey, it is too soon to tell whether it is the very same chord progression, rhythm, melody or lyrics involved in the Del Rey-Radiohead dispute as the Radiohead-Hollies dispute, as every song is made up of many different such elements. Time will tell whether Radiohead’s lawsuit will go anywhere, although my money would be on Radiohead winning, if it went to trial. However, odds are that there will be a similar result to the Radiohead-Hollies out of court settlement, with Radiohead sharing writing credits and royalties.

You Be The Judge: Take a listen to both songs here:

Prior Precedent 

Copyright disputes between musicians, writers and publishers have been part of the music landscape for decades. In 1971, former Beatle George Harrison had a number 1 single on his hands with ‘My Sweet Lord.’ Yet, while that single was still in heavy rotation, Harrison was hit with a lawsuit by publisher Bright Tunes Music, which held the rights to the Chiffons’ 1963 hit ‘He’s So Fine,’ written by Ronnie Mack. Harrison tried unsuccessfully to settle the matter and, ultimately, lost at trial, having to pay Bright Tunes damages in the amount of $1,599,987! As only a former Beatle could, Harrison did, however, turn the experience of tortuous litigation into another hit called ‘This Song.’

More recently, Robin Thicke, Pharrell Williams and Clifford Harris, Jr. were found to have infringed on the work of Marvin Gaye, in particular the song ‘Got To Give It Up.’ Interestingly, it was Thicke, Williams and Harris who pre-emptively filed suit against the Gaye family and Bridgeport Music, in an attempt to have the court determine Thicke and company had not infringed on Gaye’s work. The suit backfired, with a finding that Thicke and company had infringed on Gaye’s work and awarded $5.3 million in damages.  Thicke and company have appealed to the United States Court of Appeals for the 9th Circuit.  At oral argument, Thicke and company argued that there can be no infringement for a “groove,” which it sought to differentiate from a lyric, rhythm, etc.  No decision has been reached by the 9th Circuit as of yet, but Thicke, Williams and Harris have a tough road ahead to overturn the lower court’s verdict.

Questions? Let Jeff know.

 

Jeff Cohen is a member of Flaster Greenberg’s Litigation, Intellectual Property, Corporate and Real Estate Practice Groups. He has been a trial attorney for more than 23 years, counseling and representing a diverse range of clients in matters related to commercial contracts, shareholder and partnership agreements, trademarks, copyrights, patents, including Hatch-Waxman, insurance coverage, franchise disputes and commercial construction.

 

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