Lawyer Up: Volkswagen Hires Kirkland & Ellis

Last week, we reported on the Volkswagen emissions scandal and what we expected would be an onslaught of lawsuits.  So far there have been more 200 federal lawsuits filed in the United States, in addition to investigations from the Environmental Protection Agency and the Department of Justice.  In response to the scandal, Volkswagen has called in the heavy hitters at Kirkland Ellis to lead its defense. Sure, this Volkswagen case will be a procedural and logistical nightmare given its sheer size and scope.  And we know the EPA and DOJ will be looking for their pound of flesh. But at the end of the day, it’s a bunch of customers that are miffed that their car isn’t as green as advertised.  Nobody died. The California coast is not covered in sludge. Some have estimated that Volkswagen may be on the hook for as much as $80 billion. We’d guess it gets out from under this thing for less than $30 billion. Of course, that is not counting the estimated $33 billion dollars in market value Volkswagen has already lost due its stock price plummeting after the scandal broke. Oh, well.

Volkswagen In The News

Everyone knows the old adage from the sports world: “If you ain’t cheatin’, you ain’t tryin.”  Well, it appears that Volkswagen (VW) has been trying really, really hard when it comes to meeting vehicle emissions standards. Recently, it was revealed that VW was cheating on emissions tests for its “clean diesel” vehicles to make their emissions appear much lower than they actually were. VW has admitted that internal investigations have revealed that the “problem” may effect nearly 11 million VW vehicles world wide.

The issues stems from software on VW’s line of clean diesel vehicles that were apparently intentionally programmed to provide artificially low emissions numbers when connected to emissions testing devices. According to the EPA, VW programmed the engine management software in some diesel cars to activate emissions controls only when being tested. Those same cars would allegedly emit up to 40 times the allowed amount of nitrogen oxide when on the road.

The company is already under investigation by the EPA and the Department of Justice as well as government agencies in Germany, France, Italy, and South Korea. As if the potential for fines and criminal charges is not bad enough, civil lawsuits by consumers are already coming.  Stay tuned.  It should be a wild ride.

More Monkey Business: Lawsuit Over Monkey’s Property Rights in Selfie

We recently reported on a New York case where the judge begrudgingly held that monkeys are not people in the eyes of the law. As you might imagine, PETA disagrees, and it has filed a lawsuit on behalf of a monkey named Naruto from Indonesia. The lawsuit, filed in federal court in California, alleges that Naruto has property rights in a selfie that he took of himself in 2011, which subsequently went viral. We’d post a copy of the photo, but we certainly don’t want Naruto suing us.

One of the defendants in the case is the owner of the camera that Naruto used to take the camera selfie. The lawsuit alleges that he has improperly reproduced and distributed the photo for which Naruto owns the copyright. According to the complaint:

While the claim of authorship by species other than homo sapiens may be novel, “authorship” under the Copyright Act, 17 U.S.C. § 101 et seq. , is sufficiently broad so as to permit the protections of the law to extend to any original work, including those created by Naruto. Naruto should be afforded the protection of a claim of ownership, and the right to recover damages and other relief for copyright infringement, as asserted on his be half by the Next Friends.
You may be asking what relief Naruto seeks as compensation. Bananas? Apples? Nope, according to PETA, what Naruto wants and needs is money. But, of course, Naruto is not a greedy monkey, so he doesn’t want the money for himself. The complaint requests that the disgorgement of profits from the prior sales and proceeds from future sales be given PETA to do with as it the pleases.
Attorneys, in light of these events, you’d best prepare your clients to enforce their property rights. You know the fox that was chased off that old abandoned farmland in order to clear the way for a McMansion neighborhood? Squatter’s rights. That bird with a nest in the tree that was cut down? Real property damage. The whale whose song was recorded underwater without permission? Copyright infringement. Here we go . . . .

Food Exec Gets 28 Years Jailtime In Salmonella Case

Last year, we reported on the criminal case against a food industry executive who was convicted of crimes related to a 2009 salmonella outbreak that sickened hundreds and may have contributed to the death of nine people. Nearly a year later, he’s finally been sentenced, and it is a really stiff one. Very recently, Stewart Parnell, former head of the Peanut Corporation of America, was sentenced to 28 years in prison for his crimes.

By way of refresher, last September, Parnell was convicted of 71 criminal counts, including conspiracy, obstruction, and introduction of adulterated food. The charges stemmed from Parnell’s alleged decision to knowingly distribute salmonella tainted peanut butter for sale to customers. Federal investigators uncovered years worth of emails and other records showing food confirmed by the company’s lab tests to contain salmonella was shipped to customers. Other batches of food were never tested but nevertheless shipped with labels that falsely indicated that they had been tested for salmonella.

The 28 year sentence handed down by a federal judge in Georgia is a no doubt a tough one and may effectively amount to a life sentence for the 61 year old Parnell. It is the biggest sentence ever handed down in a food safety case, but it is much less than the maximum of 803 years that he was facing. However, as The Wall Street Journal has pointed out, the recent sentences in similar food safety case were much much lighter to say the least:

…last April sentenced the owner of a large egg producer and his son to three months in prison for their involvement in a 2010 salmonella outbreak that sickened thousands of people and led to a nationwide recall. A Colorado judge sentenced two brothers to five years’ probation after the pair pleaded guilty to misdemeanor charges following a 2011 listeria outbreak linked to their farm’s cantaloupes that resulted in 33 deaths.

Nevertheless, even if Parnell did have any malicious intent, his actions seem to have been egregious and still caused a lot of harm. As such, the sentence seems appropriate. If nothing else, this case will likely demand the attention of food industry executives across the country.

Tech Giants’ Anti-Poaching Suit Settlement Finally Approved.

It looks like the anti-poaching saga for Apple, Google, Intel, and Adobe is finally over. We previously reported on a proposed settlement of the case and the court’s rejection of that settlement. By way of refresher, the Plaintiffs in the class action lawsuit alleged that the four Silicon Valley companies agreed to not poach each others’ employees which, in effect, formed an anti-competitive cabal that kept software engineers’ wages down.  After rejecting a prior proposed settlement of $325 million, the court has now approved a $415 million settlement.

The settlement covers more than 60,000 workers in the class. The net effect is that the settlement will provide payouts of approximately $5,000 per plaintiff. Not an insignificant amount of money, but certainly not a windfall for the types of employees whose wages were allegedly suppressed. However, it’s not as though no one received a windfall. The settlement provides for approximately $40 million in fees to the plaintiffs’ attorneys. Lest you think $40 million in attorneys’ fees is unreasonable, this number was down from the $81 million in fees originally requested. Apparently, the court had the good sense to cut fees in half.

It looks like Adobe was the only company to comment on the settlement, telling

Adobe firmly believes that our recruiting policies have in no way diminished competition for talent in the marketplace. Adobe strongly denies that it violated any laws or engaged in any wrongdoing. Nevertheless, we elected to settle this matter in order to avoid the uncertainties, cost and distraction of litigation. We are pleased to have the matter resolved.

How about that?

“Palcohol” Facing Buzzkill from State Legislatures

We’ve got good news and bad news for those of you who are sick and tired of toting around a flask. The good news first: powdered alcohol has won approval from federal regulators and is very close to hitting the market. Basically, it’s freeze-dried or dehydrated alcohol that can either be consumed by itself or mixed with water to produce a drink. The product is being marketed by one company as “Palcohol.” The bad news? More than 20 states have already acted to ban it, either temporarily or outright. On Friday, New York became the latest.

In March, Palcohol received the green light from the Alcohol and Tobacco Tax and Trade Bureau. This was the last regulatory step on the federal level before the product could be sold in stores. However, the states can also regulate alcohol sales in their borders. Many have done exactly that.

Based on purported concerns about safety and underage drinking, many states have already banned the product. New York Governor Andrew Cuomo claims that powdered alcohol can easily lead to dangerous levels of intoxication if it is ingested in its powdered form or mixed incorrectly. Cuomo said in statement:

This dangerous product is a public health disaster waiting to happen. I am proud to sign this legislation that will keep powdered alcohol off the shelves and out of the wrong hands.

Palcohol is working hard to reverse these bans and claims that the so-called safety concerns are a false pretense.  On its website, Placohol states “this isn’t about powdered alcohol being a public safety threat. It’s about the liquor companies protecting their market share and profits.” Mark Philips, Palcohol’s creator, claims, “Palcohol is not some super concentrated version of alcohol. It’s simply one shot of alcohol in powdered form.”

We’ll be keeping an eye on this issue for you.

No Monkey Business . . . Court Rules Chimps Don’t Have Human Rights

A New York Judge recently heard a case brought by an activist claiming that chimpanzees should be afforded the same legal rights as humans. Although Judge Barbara Jaffe ruled that they don’t possess any such rights, the opinion was a strange one, and it seems that she was initially inclined to grant them such rights but felt constrained by some pesky legal precedent to the contrary.

The case involved two research chimpanzees named Hercules and Leo. Lawyers for the Nonhuman Rights Project alleged that the chimps were entitled to rights that the legal system has previously recognized as applying only to humans. The lawyers asked for a writ of habeas corpus authorizing the transfer of the animals from captivity at a state university to an animal sanctuary in Florida. They argued that “because chimpanzees possess fundamental attributes of personhood in that they are demonstrably autonomous, self-aware, and self-determining and otherwise are very much like humans, ‘justice demands’ that they be granted fundamental rights of liberty and equality afforded to humans.”

Such a grant of rights would have marked a first for a court in the United States. Ultimately, the judge concluded that she was bound by an earlier ruling by a New York appellate court that held that chimps are not entitled to legal person status because of their inability to take on duties or responsibilities. However, Judge Jaffe suggested that the legal system was evolving on the issue just as it did in the debate over gay marriage.  In so doing, she cited a handful of cases granting narrowly expanded rights to animals and stated that this was ultimately question of public policy.

Slingbox Sued For Slinging Ads To Customers

If there’s anything this particular author hates, it’s advertisements. They are everywhere these days . . . from Taxi Cabs to Subway Turnstiles, you just can’t escape them. It’s gotten so crazy that we’ve even seen a local DUI defense law firm place ads on an “over 21″ wrist band needed to buy beer at a minor league hockey game. As annoying as the ads may be, it’s just part of modern life. Or is it? Some customers of Slingbox who have been bombarded with new adds aren’t taking it lying down and have filed a class action lawsuit against the Sling Media. If you don’t recall, Sling Media is the maker of the Slingbox, which takes customers’ home TV signal that comes from a cable box and “slings” it to a phone, tablet, or computer anywhere in the world. In a nutshell, it’s like being able to take your home TV and remote with you anywhere in the world. Slingbox is a slick device, but it comes with a hefty price tag north of $200.

According to the lawsuit, in March of this year, Slingbox devices started embedding advertising in media streamed to their mobile devices. So, now, Slingbox customers are forced to watch the embedded ads from Slingbox in addition to whatever ads are being shown through their cable provider. The plaintiffs allege that they never consented to this additional advertising. They claim that Sling Media failed to disclose that the use of the product would be contingent upon and subject to this advertising. According to the complaint, “Slingbox has perpetuated a massive ‘bait and switch’ upon thousands of unsuspecting consumers, each of whom spent as much as $300 or more for these products, but who now need to watch the defendant’s ads to use their devices as promised.”

Of course, the plaintiffs are seeking class action certification in California district court. They have alleged that the ads are misleading and violate business California consumer protection laws and constitute unfair competition or deceptive business practices. As you might expect, the Plaintiffs are not just seeking an injunction to stop the ads. They also seek restitution and disgorgement of all profits garnered from the allegedly unfair or misleading business practices. We’ll keep an eye on this one.

Amazon Faces Trademark Lawsuit Over Search Results

Protecting customers who are somehow able to shop online but are unable to read. That seems to be the goal of a recent Ninth Circuit ruling in a trademark case filed against Amazon.  In a case between MTM and Amazon, the court ruled that Amazon is misleading consumers by providing search results that don’t explicitly state that the product you searched for is not carried. It’s like if I visited a sporting goods store and asked a clerk to see the Nike tennis shirts. If the store didn’t carry Nike shirts and the clerk simply pointed you to the tennis goods section, would the clerk’s actions reasonably mislead me into believing that every shirt in the tennis section is a Nike shirt?  Of course not.

The Amazon trademark case is essentially the scenario described above. Amazon doesn’t carry MTM watches. Customers that search for “MTM Special Ops” on are simply provided with a list of watches from from other brands. While the search results do not explicitly state that Amazon does not carry MTM watches, the search results do clearly state the brand names of the watches being sold.   Nevertheless, MTM argued that Amazon’s search results constituted trademark infringement.

Initially, a district court granted summary judgment to Amazon, holding that Amazon’s actions did not create a likelihood of confusion for customers. However, the Ninth Circuit Court of Appeals reversed and ordered the case to proceed to trial. The reversal is based up a trademark doctrine called “initial interest confusion.” The court’s opinion, summarized the doctrine as:

Initial interest confusion occurs not where a customer is confused about the source of a product at the time of purchase, but earlier in the shopping process, if “customer confusion… creates initial interest in a competitor’s product.” Even if that confusion is dispelled before an actual sale occurs, initial interest confusion still constitutes trademark infringement because it “impermissibly capitalizes on the goodwill associated with a mark and is therefore actionable trademark infringement.”

This whole doctrine is silly. This issue could cover a whole range of traditional sales methods, including product placement. Is a store not allowed to put Nike and Adidas shirts on the same rack? What about placing generic items on the shelves next to brand names?

The dissenting judge pointed out how curious the majority’s ruling is with respect to Amazon:

Because Amazon’s search results page clearly labels the name and manufacturer of each product offered for sale and even includes photographs of the items, no reasonably prudent consumer accustomed to shopping online would likely be confused as to the source of the products….The search results page makes clear to anyone who can read English that Amazon only carries the brands of watches that are clearly and explicitly listed on the web page. The search results page is unambiguous.

We’ll just have to wait see what a jury has to say about this whole thing.  We suspect a reasonable jury would tell MTM to take a hike.

Standby for Lawsuits: Handheld Flamethrower Hits Open Market…

Coming soon to a courtroom near you . . . handheld flamethrowers. With an Internet connection and just $899, you can arm yourself with your very own handheld flamethrower. A Michigan company has launched the XM42 Flamethrower, which it bills as “the world’s first commercially available handheld flamethrower.” This future darling of products liability plaintiffs’ attorneys was made possible by crowdfunding (a.k.a. other idiots on the Internet). The manufacturer raised more than $150,000 in one month to fund the production.

According to the company, “as of now, flamethrowers are a fun toy for responsible adults and are useful for practical purposes.” The practical purposes? The company claims that flamethrowers are handy for insect control, weed removal, and other reasons, too. So the product is a snow shovel, fly swatter, and bottle of round-up all in one fun package.

We could say whole bunch of things about this product, but watching this baby in action is only way to do it justice. Click here to see it in action.