Lawsuits involving these games have ended up with the same result – dismissal – as courts have not been willing to overlook the strong protections offered by the First Amendment of our country’s constitution. We often think of the right to say what we want when the First Amendment comes up, and this protection also extends to creative works, a group that includes video games and other artistic endeavors that receive copyright protection.

Californians have been a part of this debate. In 2005, California passed a law banning the sale of violent video games to anyone under the age of 18. A group of video game and entertainment companies sued Governor Schwarzenegger to stop the law, and the case ended up making its way all the way to the Supreme Court, which delivered its ruling last summer 2011. California’s law, the Supreme Court ruled, was unconstitutional and violated the First Amendment.

The Entertainment Software Association calculated that taxpayers have now shelled out $2,158,916 towards repaying the video game industry for having to fight laws that end up being held unconstitutional. Has your company been involved in any of the First Amendment battles over laws you believe are unconstitutional?

Klein Trial Lawyers – Los Angeles business litigation attorneys

To bring someone new into a partnership, it is common for the partnership’s partners to have to vote the new person in and for the new person to contribute to the partnership at least as much as the original partners did; otherwise, the new partner has less on the line. Partners can agree to a unanimous vote or some lesser majority being required in order to bring someone into the partnership. Both sides – the partnership and the incoming partner – should be familiar with the partnership agreement before agreeing to the change.

Partnerships may want to bring someone on board gradually instead of immediately granting him or her the same status as the other original partners. For this reason, it can be a good idea to build certain contingencies into contracts for new partners like the following:

• Stake in the partnership increases after each year so that the new partner has to work a number of years to obtain general partner status
• A clause that makes the partnership offer revocable under certain conditions and up until a certain date
• Performance-based incentives that can tie into a better share of the partnership’s profits, for example

Are you involved in a partnership or similar business entity? What procedure do you use to bring a new partner on board?

Klein Trial Lawyers – Los Angeles business litigation lawyers

Supporters of MICRA had hoped that the law would reduce medical malpractice insurance premiums, whose soaring costs had become a financial burden on doctors. The evidence, though, suggests that the law had little effect. Premiums and healthcare services in California in general continued to grow even after MICRA’s passing in 1975.

What lessons can businesses take away from California’s experience with medical malpractice tort reform? Reform did not fix everything; as we mentioned, premiums and healthcare costs have continued to rise and only came under control when California started regulating insurance, but there has been one benefit. California and other states where similar tort reforms have been enacted have generally seen a decrease in lawsuits against physicians.

Reducing the incentive to bring frivolous lawsuits is one of the goals of tort reform. An often mentioned reform is switching to a system where the losing side has to pay all of the attorney’s fees and other costs. This is the so-called “loser pays” system, and California adopted it for its medical malpractice cases. The system could also be beneficial in business torts cases to cut down on frivolous lawsuits.

Do you or your company have any experience with these tort reform issues? What changes do you think would improve the situation?

Klein Trial Lawyers – Los Angeles business litigation lawyers

BMW Paint Case Leads to Multi-Million Dollar Verdict

In Alabama in the early 1990s, a doctor went to a car dealership to purchase a new BMW. He was surprised when he took it a detailing expert about a year later when he learned that his car was never exactly new. Apparently, acid rain had damaged the car while it was in transit from Germany to Alabama, and the manufacturer had repainted almost the entire car. The dealership never informed the doctor of the repainting, and the doctor brought a fraud suit against BMW and the dealership for the difference in value between a new car and the repainted one he received. A jury found in favor of the doctor and awarded him $4,000 for the diminished value. It went a step further, though, in also giving him $4 million in punitive damages for BMW’s actions.

These punitive damages (also called non-economic damages) are often the subject of tort reform caps. In fact, this case and several other in Alabama led the state to passing its own tort reform laws so as to cap punitive damages at three times compensatory damages, which, in this case, would have amounted to a $12,000 fine against BMW instead of $4 million.

Popcorn Butter Leads to $30 Million Verdict

A Chicago man worked at a plant that processed diacetyl, which is a butter flavoring from BASF Corporation that goes into popcorn. Doctors eventually diagnosed him with a lung disease called bronchiolitis obliterans, and he – along with several other employees at the plant – brought a lawsuit against several companies, including BASF.

These companies all now face multiple million dollar payouts, as juries have found against them and awarded substantial amounts. The Chicago man received a $32 million award in 2010, though the jurors took out 5 percent because they attributed some of the fault to him for continuing to work at the plant after he knew that he was having breathing problems. Other awards from related cases were for $20 million and $2.7 million; there were also two awards for $15 million. At the time there were no regulations on the butter flavoring. The companies are appealing the verdicts.

Has your company gone through a jury trial for a business tort?

Klein Trial Lawyers – Los Angeles business litigation lawyers

PhoneDog is a website that reviews mobile devices and mobile apps. Noah Kravitz worked for PhoneDog for four years, using his company’s Twitter account to accumulate a bevy of followers who enjoyed his perspective on mobile developments. Kravtiz left PhoneDog towards the end of 2010 and changed his Twitter handle from “@Phonedog_Noah” to “@NoahKravitz.” And with that simple handle change, Kravitz also took his 17,000+ followers with him and away from PhoneDog. PhoneDog sued Kravtiz in federal court in San Francisco and seeks $340,000 for the Twitter followers he took.

The case pits PhoneDog, which wants to protect its business clients, against Kravitz’s free speech interests, but it is far from clear cut. Some of the other facts and issues that make the decision difficult include:

• Kravtiz was already popular amongst mobile technology fans before he joined PhoneDog, so many of his @Phonedog_Noah followers were probably following him more so than PhoneDog
• Kravitz’s Twitter handle – at least during his time at PhoneDog – did have the company name in it, which is a sign that it is more business than personal
• Who were Kravitz’s followers during his time at PhoneDog? Was much of the Twitter traffic going to the PhoneDog website, in turn generating revenue for PhoneDog?
• During Kravitz’s time at PhoneDog, were his tweets mostly business-related or was there a mix of personal and business tweets?

One way that companies can deal with this problem is with something we discussed last week – better computer and technology use policies. If a company Twitter account is strictly for business-related tweets, a company can specify that and have its employees responsible for social media work sign an agreement that says as much.
Does your business use social media? What policies, if any, do you have your employees agree to?

Klein Trial Lawyers – Los Angeles business litigation attorneys

Most are familiar with the famous (or infamous, depending on how you look at it) 1994 case of the woman who suffered burns after a cup of hot coffee she purchased at a McDonald’s drive-through spilled in her lap. The jury verdict in the case outraged a lot of people, as the woman received $160,000 for medical damages and another $2.7 million in punitive damages. This hot coffee case was a catalyst for a political issue that remains important as we head into the 2012 presidential election – tort reform.

Torts are any sort of civil wrong. Business torts cover lawsuits when one side acts negligently, fraudulently misrepresents something, interferes with a company’s contract, interferes with a company’s business prospects, or engages in unfair competition. Tort reform targets the sort of awards that we saw in the hot coffee case by instituting caps on awards or by providing that the losing side in a lawsuit has to pay all costs. Tort reform advocates believe that these changes would eliminate frivolous lawsuits and keep unnecessary business costs down.

What Tort Reform Means for Businesses

As any business that has been involved in a lawsuit knows, defending lawsuits costs a lot – both in terms of money and the time and stress spent organizing a defense. Some estimates place the costs of torts in the US at more than $200 billion a year, and many of the lawsuits end up being dismissed for their frivolous nature. Even frivolous suits, however, still require companies to hire legal counsel and expend resources to defend against the allegations.

Tort reform could cut business costs in a couple ways. First, if we switched to a “loser pays” system where the losing side pays all costs, people would be less likely to sue if they had a weak case. Additionally, the costs that businesses face in defending numerous suits that end up in the defendant’s favor would be drastically reduced. Finally, if caps were put into place, jury awards that appear out of proportion with reality would be curtailed.

Has your company had to defend against a business tort? How would tort reform impact your business?

Klein Trial Lawyers – Los Angeles business litigation lawyers

While NAM opposed the rule as an overreach of the NLRB’s powers, the rule will be taking effect in 2012. The NLRB first pushed the implementation date to January 31, 2012, and then to the date it is currently at, April 30, 2012. The later dates are to give the federal court time to hear the legal challenges from NAM and to make a ruling.

The poster at the center of the debate is an 11 inch by 17 inch “Notice of Employee Rights.” The notice informs employees of their rights under the National Labor Relations Act, a federal law from FDR’s time that protects employees’ right to organize unions. The notice also provides information to employees about how to file unfair labor practice complaints against their employer. The actual notice is available for viewing on the NLRB’s website.

The posting requirements will apply to nearly all businesses. A few industries that are exempt include agricultural, railroad and airline employers. Also small businesses that do not have more than a slight effect on interstate commerce do not have to post the notice. Failing to post the notice can result in the NLRB investigating a business for unfair labor practices.

Is your business aware of the upcoming posting requirement? Has it determined what it can do to comply with the new rule?

Klein Trial Lawyers – Los Angeles business litigation attorneys

The PTO rejected 17 out of the 21 claims that Oracle had made in its patent application. Claims are one of the more important parts of a patent application, for they determine the scope of the protection that a company can receive. The claim is exactly what the invention does and how it does it; anything outside this claim does not receive protection, so companies need to be meticulous when phrasing their patent claims.

Google asked the PTO to reexamine Oracle’s patents after Oracle sued Google. This is a common practice in patent infringement lawsuits, and, in this case, the PTO determined that Oracle should never have received most of the patent claims in the first place. The process is not final yet, though, as Oracle still has several levels of appeal it could pursue in the next six months. Oracle is still claiming that Google owes it over $6 billion for using parts of Java in Android.

How does your company handle technology patents that others own? Do you avoid potential litigation altogether by working around patents or do you examine the validity of the patents?

Klein Trial Lawyers – Los Angeles business litigation attorneys

Contractors and sub-contractors should always take the time to spell out precise responsibilities, risks and costs amongst all of the parties involved in the construction contract. A few of the areas that businesses in construction projects often include in their contracts include:

• Who is responsible for testing for hazardous materials (for example, in older buildings, the presence of asbestos requires certified testing and removal)
• Which party is responsible for unexpected site conditions, which can add thousands of dollars of unforeseen costs to a project

To limit liability, businesses also need to adhere to state and federal laws and regulations by ensuring that they properly train and supervise their employees on work sites. During the course of the work day, employees should at all times be properly labeling, handling, storing and disposing of raw or dangerous materials.

Security at the work site is also an important concern. Those responsible for the site should make sure that none of the dangerous or raw materials pose any dangers to the public. They should ensure that the public’s access to the construction site is limited. Signs, fencing and other security measures are necessary to limit contractor’s and sub-contractors’ liability.

Do you work in construction and frequently deal with raw or dangerous materials? What precautions do you include in your contracts?

Klein Trial Lawyers – Los Angeles business litigation lawyers

A flood of these lawsuits over the past several years prompted California to make such changes in the law to make it more difficult to bring an ADA lawsuit, but the change only helps businesses avoid liability if they act beforehand. If they wait until they face a lawsuit, businesses face damages and having to reimburse the other side for its attorney costs.

Several of the more common grounds for ADA lawsuits include the following:

• Missing or incorrect signs
• Lack of pedestrian ramps or handrails
• Bathrooms not suitable for use by the handicapped
• Dangerous stairs
• Entrances and exits that are difficult for the disabled to use
• Inadequate handicapped parking

Have you had to make any adjustments to your building to ensure compliance with the ADA or state law?

Klein Trial Lawyers – Los Angeles business litigation attorneys