Los Angeles Business Litigation Blog : Los Angeles Business Litigation Lawyer & Attorney : Daniel Reisman Law Firm : California Civil Litigation & Contracts

• Mozilla officially released Firefox 3.5 today. One of its touted new features is Private Browsing mode (also known as "porn mode").

While private browsing may be useful for protecting sensitive information from some prying eyes, it's important to note that private browsing only means that Firefox won't save browsing history and cookies on one's local machine. In other words, you can now search for that perfect anniversary gift for your spouse online without the fear that he or she will be able to figure out what you were doing just by launching Firefox. However, your activity is still just as easy to track from another computer. (So, if any member of your household knows how to use a packet-sniffer, she'll still be able to see just how much porn you're watching how many gifts you're thinking about purchasing.)

• Turning piracy into profit for content owners:

Piracy watchdog Nexicon has found the ultimate way to turn piracy into profit for the fresh copyright holders added to their clientele. They offer alleged file-sharers the chance to settle for $10 per downloaded song or an equal amount for a pirated movie. If you decide not to settle, they promise to bankrupt you in court.

(via TorrentFreak).

There's nothing wrong with content owners tracking the digital distribution of their work. And, there isn't necessarily anything morally, ethically, or legally wrong with pursuing infringers. However, Nexicon and its affiliates such as the Video Protection Alliance ("VPA") (which happens to deal exclusively with adult content) have crossed the line.

The article at TorrentFreak points the reader's attention to the FAQ on the VPA's website. While all of the questions and answers are obviously aimed to scare the recipient of a settlement letter into using the credit card processing system conveniently provided by the VPA to quickly settle the matter, there are two that are particular causes for concern. They are as follows:

• How do I obtain a Liability Release & Settlement Receipt? Your Liability Release & Settlement Receipt will be automatically provided on screen and via email at the end of the settlement payment process.

• Do I need a lawyer? As with any legal proceeding, the guidance and representation of a lawyer can be very important. It is likely that the cost incurred to retain a lawyer will exceed the settlement amount offered. The decision to hire a lawyer is entirely up to you.

Regarding the first question, the problem is that it doesn't provide any detail as to what a "Liability Release & Settlement Receipt" actually is. As far I as I know, there is no standard legal definition of a "Liability Release & Settlement Receipt." Nor would it be in the VPA's interest if there were a standard definition. While a "Liability Release & Settlement Receipt" could theoretically contain an actual settlement agreement and release from liability, there is nothing in the language used on the website to indicate that it actually does. Even if the receipt does contain language releasing the settlor from liability, it may be very narrowly drafted. And, of course, one doesn't actually get to see the "Liability Release & Settlement Receipt" until after payment is tendered.

Regarding the second question, it essentially advises the reader not to seek the independent advice of a lawyer, and simultaneously attempts to avoid advising the reader not to seek the independent advice of a lawyer. In my opinion, it is plainly unethical. In general, if a lawyer is going to advise an individual to take any sort of action that is in the lawyer's interest, but adverse to the individual's interest, the lawyer should encourage the individual to seek independent counsel. Although the VPA is neither a lawyer nor a law firm, to the extent that it offers legal advice, I see no reason as to why it shouldn't be bound by similar ethical standards. After all, the VPA's website isn't solely providing educational information, and it isn't just advertising--it's negotiating settlements.

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It's no secret that more and more employers are doing a quick Google search for a job applicant’s name as part of their background checks, but the City of Bozeman is taking it one step further.

In an article published yesterday afternoon, Montana's News Station reports that applying for a city job now requires turning over some fairly sensitive information. Specifically, the background check form for city jobs requires applicants to

list any and all, current personal or business websites, web pages or memberships on any Internet-based chat rooms, social clubs or forums, to include, but not limited to: Facebook, Google, Yahoo, YouTube.com, MySpace, etc.,...There are then three lines where applicants can list the Web sites, their user names and log-in information and their passwords.

When the station asked Bozeman City Attorney Greg Sullivan about the new policy he stated,

So, we have positions ranging from fire and police, which require people of high integrity for those positions, all the way down to the lifeguards and the folks that work in city hall here. So we do those types of investigations to make sure the people that we hire have the highest moral character and are a good fit for the City...

In other words, in order to apply to become a lifeguard employed by the City of Bozeman, I can never have any expectation of privacy online. At any given time, some random city employee can use my login credentials to chat on AOL using my name. Perhaps the form should include authorization for the City to enable one-click purchasing on Amazon.com using my account in order to expedite the hiring process.

Although thorough background checks are mandated for certain types of jobs in both the public and private sectors, requiring all job-seekers, no matter the position, to disclose sensitive login information on an application that may be seen by dozens of people raises major concerns regarding discrimination, privacy, and the safety of data stored on remote servers.

[Update (6/19/09): According to this article in the Bozeman Daily Chronicle, the City's policy caused enough of a stir on the internet to prompt the ACLU to look into the matter. Consequently, "City Attorney Greg Sullivan said in light of concerns being expressed by the public, officials are looking at ways to alter the policy so that they might view an applicant’s online information without asking for log-in codes."]

[Update (6/21/09): According to cnet, Bozeman stopped asking for passwords as of midday on Friday.]

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An elderly woman is suing Sacha Baron Cohen and NBC in Los Angeles County Superior Court for injuries she suffered, which left her permanently disabled, due to an incident at a bingo tournament where Cohen was filming for his upcoming movie “Bruno.” The lawsuit seeks unspecified damages of more than $25,000.

Gossip blog Gawker’s take on the matter:

We would hope that if this lady genuinely suffered brain bleeding that left her in a wheelchair that she's asking for much more than $25,000 in damages, but why she waited two years to file the suit is anyone's guess—-Some would say probably because it's all a bunch of BS.

Fellow legal blogger Maxwell Kennerly's explanation:

[A] suit that "seeks unspecified damages of more than $25,000" could be worth millions or billions of dollars. That allegation is nothing more than a legal term inserted in the complaint by the plaintiff's lawyer to let the clerk know that the case should be assigned to the full-fledged civil trial court and not the small claims court.

(via Litigation and Trial).

Generally, Kennerly is right. Specifically, in most types of Unlimited Jurisdiction cases, the amount in controversy must exceed $25,000 (see the mandatory Civil Case Cover Sheet). And, while a plaintiff is usually required to state the amount of damages he or she is seeking in a civil case in the complaint under section 425.10(a)(2) of the California Code of Civil Procedure (“CCP”), in personal injury cases, CCP § 425.10(b) specifically prohibits the plaintiff from stating the amount of the damages in the complaint.

Instead, the plaintiff must serve the defendant with a “separate statement of damages” that is not filed with the court. See CCP § 425.11. The reasoning behind the rule is that it protects defendants from adverse publicity resulting from exaggerated monetary demands since the separate statement of damages is not public record.

Of course, given that Sacha Baron Cohen essentially built his career by making an ass of himself in public and on film (frequently with hilarious results), I doubt he’s worried about the adverse publicity. Nevertheless, and despite the irony, even plaintiffs suing those who thrive on bad publicity are bound by the rule.

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In Kearns v. Ford Motor Co., No. 07-55835, 2009 WL 1578535 (9th Cir. June 8, 2009), the Ninth Circuit held that Federal Rule of Civil Procedure ("FRCP") 9(b) applies to causes of action under California's unfair competition laws brought in federal court. FRCP 9(b) requires that

when fraud is alleged, "a party must state with particularity the circumstances constituting fraud . . . ." [FRCP] 9(b). Where fraud is not an essential element of a claim, only those allegations of a complaint which aver fraud are subject to Rule 9(b)'s heightened pleading standard. Id. at *2.

Kearns brought a class action against Ford alleging that Ford Motor Company and its licensed dealerships conspired to mislead customers into paying more for "Certified Pre-owned Vehicles," which weren't actually any better than equivalent non-certified used cars.

According to Kearns, Ford misled its customers by making false statements regarding the overall safety and road-worthiness of Ford-certified pre-owned vehicles when compared to regular used cars. As a result of Ford's false statements, consumers were led to believe that the certified pre-owned vehicles were guaranteed safer than non-certified used cars when, in fact, they were not.

Kearns argued that Ford never maintained much oversight over the certification process. Thus, the certified pre-owned cars were really no safer than average used cars, and the average price difference between a certified pre-owned car and a regular used car was somewhere around $1,080.

Kearns further argued that Ford's behavior with regard to the certified pre-owned vehicles constituted violations of California's Consumer Legal Remedies Act, and California's Unfair Competiton Law. However, the district court dismissed the case because Kearns' complaint failed to state his claims with the requisite heightened particularity.

The Ninth Circuit affirmed the district court's decision, holding that since essentially all of Kearn's claims were grounded in fraud, his pleadings had to meet the "heightened particularity" requirement as articulated in FRCP 9(b). Kearns' claims that he relied on false or misleading television advertisements, and other misleading sales materials were too unspecific to satisfy FRCP 9(b). As the Ninth Circuit states,

[n]owhere...does Kearns specify what the television advertisements or other sales material specifically stated. Nor did Kearns specify when he was exposed to them or which ones he found material. Kearns also failed to specify which sales material he relied upon in making his decision to buy a [certified pre-owned] vehicle. Id. at *4.

• What's the Point of the "Heightened Particularity" Standard for Fraud Claims?

Fraud claims are unique as they are basically excepted from the relatively loose federal notice pleading standard because of how potentially damaging they may be to the defendant's reputation. As the Ninth Circuit explains,

[FRCP] 9(b) serves three purposes: (1) to provide defendants with adequate notice to allow them to defend the charge and deter plaintiffs from the filing of complaints "as a pretext for the discovery of unknown wrongs"; (2) to protect those whose reputation would be harmed as a result of being subject to fraud charges; and (3) to "prohibit [ ] plaintiff[s] from unilaterally imposing upon the court, the parties and society enormous social and economic costs absent some factual basis." In re Stac Elecs. Sec. Litig., 89 F.3d 1399, 1405 (9th Cir. 1996) (quoting Semegen v. Weidner, 780 F.3d 727, 731 (9th Cir. 1985)). Id. at *3.

In short, the heightened standard is supposed to deter serious accusations of fraud and conspiracy that lack a real basis in fact; however, I've never been quite convinced that it actually serves that purpose. Rather, it seems that it serves to deter accusations of fraud and conspiracy that lack a basis in specific facts known to the plaintiff when filing a claim. But, isn't formal discovery at least in part designed to give the parties access to evidence that independent investigation and other methods of informal discovery might otherwise fail to uncover?

I also find it odd that of the three purposes behind FRCP 9(b), as stated by the courts, not one of them specifically mentions that a successful fraud claim can lead to large punitive damages awards. What other "enormous social and economic costs" could the Ninth Circuit be referring to?

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