January 31, 2015

Week in Review

By Chris Helsel

Former UNC Student-Athletes Claim Lack of Meaningful Education; Seek Class Certification

Two former University of North Carolina (UNC) student-athletes, women's basketball player Rashanda McCants and football player Devon Ramsey, have filed a lawsuit against their alma mater. The suit, which seeks class certification, contends that UNC, like many other institutions, breached its contractual obligations with student-athletes by failing to provide "academically sound classes with legitimate educational instruction."

The claim also names the National Collegiate Athletic Association (NCAA), accusing the governing body of negligence, because: "Although the NCAA's rules prohibit academic fraud, the NCAA knew of dozens of instances of academic fraud in its member schools' athletic programs over the last century, and it nevertheless refused to implement adequate monitoring systems to detect and prevent these occurrences at its member institutions." The plaintiffs also assert that the NCAA failed to warn student-athletes about "the risk of cognitive harm from academically unsound classes" and breached its legal duties of honesty and loyalty by failing "to protect the education and educational opportunities of student-athletes (including the provision of academically sound classes)." The NCAA is expected to counter with evidence that it has recently initiated investigations into claims of academic fraud at 20 schools.

The student-athletes are represented by noted class action plaintiffs' attorney Michael Hausfeld, who also spearheaded Ed O'Bannon's antitrust suit against the NCAA. The UNC suit seeks unspecified damages, as well as the creation of an independent commission that would audit collegiate programs to ensure that student-athletes receive an adequate education and are not the victims of academic fraud. The audits would especially focus on minority athletes, who the plaintiffs contend often receive an inferior education.

Specifically, Ms. McCants and Mr. Ramsey allege that UNC acted negligently and in breach of its basic contractual duties by steering student-athletes to so-called "paper courses" - classes that never met in person and only required that a student submit a single term paper. An internal investigation conducted last year and led by former FBI director Kenneth Wainstein revealed that often someone other than the student wrote the paper, which was usually then graded by a department administrator rather than a faculty member.

The plaintiffs allege that the UNC athletic department devised a "shadow curriculum", which steered student-athletes "toward programs and courses that lacked rigor so as to free up as much time as possible for athletic commitments while ensuring continued academic eligibility under NCAA rules (through inflated grades)." They point to the Wainstein investigation report, which revealed that UNC academic counselors directed athletes to take paper courses. Mr. Wainstein labeled the paper course system a "scheme" that resulted in "artificially high grades."

This is the second similar case against the school in recent months. In November 2014, former UNC football player Michael McAdoo filed a federal claim in the Western District of North Carolina asserting that the school forced him to take paper courses in Afro American Studies, rather than studying criminal justice, as he had intended when he enrolled.

In 2012, the NCAA sanctioned UNC for academic fraud related to its football team, and now has launched yet another investigation into the university.

Ms. McCants' brother Rashad, who was also a star basketball player at UNC, has similarly claimed that he and other "premier players" never wrote papers in college and were steered by academic advisors to take paper courses. "When it was time to turn in our papers for our 'paper classes,' we would get a call from our tutors, we would all pack up in one big car, or pack up in two cars, and ride over to the tutor's house, pick up our papers and go about our business," he told ESPN in June.

In 1991, an Iowa court dismissed former Drake University basketball player Terrell Jackson's breach of contract claim against the school. Mr. Jackson had argued that Drake basketball coaches had breached his scholarship "contract" by insisting that he skip classes to make time for basketball and let others write papers for him.

The current case should also make other colleges - and their athletic programs - nervous. If the suit survives a motion to dismiss by the defendants, pretrial discovery will force UNC and other institutions (provided class cert. is granted and other schools' student-athletes added) to share potentially embarrassing academic information. This may encourage defendant institutions to push for a settlement, which would allow the case to compel serious change within collegiate sports even without the plaintiffs officially "winning" on the merits.

Interestingly, because UNC and the NCAA are now co-defendants, the latter now faces a serious conflict with regard to its investigation of the school. Critics will certainly point out that the NCAA has strong incentives not to find any fault on UNC's part - for if it does, that evidence can possibly be used against the NCAA itself at trial.

This fascinating case could produce a watershed moment for the future of American college sports. Paired with O'Bannon, the case will attempt to demonstrate the extent to which the sacred ideal of the "student-athlete" has become a farce.


Tom Petty and Jeff Lynne to Share Writing Credit on Sam Smith's "Stay With Me" - But Not Any Potential Grammys

Without knowing it, two old rockers have penned yet another hit single.

Last year, British singer Sam Smith released his debut album entitled In the Lonely Hour, which included the hit single, "Stay With Me." The song, which has been nominated for song of the year at next month's Grammy Awards, caught the attention of Rock and Roll Hall of Famer Tom Petty's representatives, who noted that it sounded quite familiar. The publishers of Mr. Petty's 1989 hit "I Won't Back Down" then reached out to the "Stay With Me" publishers, alleging that the songs were sufficiently similar to garner a writing credit for Mr. Petty and Jeff Lynne, the former ELO frontman who co-wrote the 1989 ditty.

Mr. Smith and his writing partners, James Napier and William Phillips, agreed that the songs sounded similar, but maintained that they had never heard the Petty song prior to writing "Stay With Me." Nevertheless, the writing team quickly agreed to share writing credit on the song with Mr. Petty and Mr. Lynne.

The Recording Academy announced this week that despite gaining writing credit, Mr. Petty and Mr. Lynne would not be added to the Grammy nominations list for their contributions to the song. "Since Lynne and Petty did not do any new writing for this work, we are considering their original work to have been interpolated by Napier, Phillips and Smith for 'Stay With Me,'" The Recording Academy's vice president of awards said in a statement.

Yesterday, Mr. Petty released a statement insisting that he harbored no hard feelings towards Mr. Smith, and never had any intention to sue the young singer. "All my years of songwriting have shown me these things can happen. Most times you catch it before it gets out the studio door but in this case it got by," he said. "I wish Sam all the best for his ongoing career."

Last year, Mr. Smith's "Stay With Me" sold 3.5 million tracks and hit #2 on Billboard's Hot 100 chart. In 1989, Mr. Petty's "I Won't Back Down" only reached #12 on Billboard. Mr. Petty shouldn't feel too bad, though - his latest album, Hypnotic Eye, peaked at #1 last year and is nominated for best rock album at the Grammys.


Court Awards Sly Stone $5 Million in Unpaid Royalties

This week, a Los Angeles Superior Court jury found that Sylvester Stewart - better known as Sly Stone - had not been fully paid for songwriting royalties. The singer/songwriter, who fronted the legendary funk/soul group Sly and the Family Stone, has struggled financially in recent years, allegedly living in a van in South Los Angeles in 2011.

The complaint alleged that millions of dollars earned by Mr. Stewart were improperly rolled into accounts held by his former manager, Jerry Goldstein. It further alleged that Mr. Goldstein (who wrote "My Boyfriend's Back" for the Angels) and attorney Glenn Stone "without the permission of Sly Stone, have received, borrowed, and continue to receive millions of dollars in royalties or derived from royalties."

The jury determined that Goldstein, Glenn Stone and Even St. Productions owed Mr. Stewart $5 million in royalties in damages.

The defendants argued that Even St. had advanced Mr. Stewart "millions of dollars" to make a record, "and he never made it." They have indicated that they plan to appeal.

The singer's attorney, Nicholas Hornberger, acknowledged that his client would most likely not collect on the award until appeals are exhausted, but declared that the ruling represented a watershed victory for musicians. He called the decision "good news for music, good news for composers and others who earn their livelihood in this business ... it sends a loud and clear message. This is a really great ruling for people who create things."


Nike Sued Over Air Jordan "Jumpman" Logo

Photographer Jacobus Rentmeester has sued Nike for copyright infringement regarding the company's alleged improper use of his photograph in creating the famous Air Jordan "Jumpman" logo.

The federal suit, filed in Oregon federal court, contends that Mr. Rentmeester snapped the photo of Mr. Jordan in 1984 for an issue of Life Magazine. He claims that he created the iconic pose, which was inspired by a ballet technique known as 'grand jete.' He points out that the pose is "not reflective of Mr. Jordan's natural jump or dunking style," and that Mr. Jordan acknowledged that the pose derived from a ballet move in a 1997 interview.

Mr. Rentmeester also alleges that he, not Life Magazine, has retained ownership of photo, although he admits that it was only registered with the U.S. Patent and Trademark Office for the first time just last month.

Mr. Rentmeester claims that back in 1984, following the photograph's appearance in Life, Nike paid him $150 for temporary use of his slides. The company then used the slides to recreate the photograph with Mr. Jordan in his Chicago Bulls uniform with the Chicago skyline in the background. The following year, after threatening to sue the company, Mr. Rentmeester granted Nike the use of the logo based on his photograph for two years in North America, for which he was paid $15,000. Nike has used the logo continuously ever since, and trademarked various versions of the logo in 1989, 1992 and 1998.

Now, 28 years following the expiration of the two-year contract between Nike and Mr. Rentmeester, the photographer seeks to collect past profits associated with Jordan brand, as well as to halt current sales and plans for the brand's future. The Jordan brand generated $3.2 billion in retail sales in 2014 alone.

The statute of limitations on federal copyright claims is three years. However, the U.S. Supreme Court held in May 2014 that the statute of limitations on copyright claims is tolled for as long as the infringement continues. Therefore, because Nike continues to manufacture and advertise new Air Jordan brand merchandise using the Jumpman logo every year, Mr. Rentmeester's claim is not time-barred.


Yankees Consider Denying Alex Rodriguez's Contractual Bonuses Due to Admitted Steroid Use

In the history of Major League Baseball (MLB), only four players have hit more home runs than Alex Rodriguez. Mr. Rodriguez, who was suspended for the entire 2014 season due to his involvement with the Biogenesis steroid scandal, is currently under contract with the New York Yankees (Yankees, club). That contract contains a clause calling for a $6 million "milestone" bonus every time Mr. Rodriguez climbs the all-time home run list. Next in his sights is legendary center fielder Willie Mays and his 660 career home runs - Mr. Rodriguez currently sits at 654. Another 60 home runs will tie him with Babe Ruth.

The Yankees, however, are reportedly prepared to dispute the milestone payments. The club believes that Mr. Rodriguez's current employment contract, under which he is owed $61 million over the next three seasons, is a separate agreement from the marketing deal containing the milestone clauses. The milestone clauses are invalid, they argue, because that deal was signed under false pretenses. At the time it was signed in 2007, Rodriguez had never admitted to using steroids (he now has twice, in 2009 and again last year). The club contends that the bonus clause was intended as a marketing agreement tied to a "legitimate" home run chase, and that Mr. Rodriguez's steroid admissions have negated any marketing value tied to his home run-hitting exploits, thereby invalidating the milestone bonus clause.

The players' union, the Major League Baseball Players Association (MLBPA, union), has vowed to support Mr. Rodriguez if the Yankees attempt to deny him the bonus payments if and when he reaches the next milestone. In the case of any other player, this would be obvious. In Mr. Rodriguez's case, however, the union's declaration of support is noteworthy; just last year, he sued the MLBPA, alleging that it did not do enough to support him during his battle with then-MLB Commissioner Bud Selig regarding the Biogenesis scandal.

Nevertheless, the union has pledged to support its embattled member, regardless of their history. "He is still a member and that's how he will be considered," a source close to the MLBPA told the New York Post this week. "In this case and in any other." The union believes that Mr. Rodriguez has already been punished for his past discretions (through his suspension), and that to deny him the bonus payment(s) would constitute overkill.

"The union would challenge any breach of contract with the union," said the source. "A player can't be punished again for something he's already been punished for."


Law Firm Establishes Project to Fight "Revenge Porn"

A large national law firm, K&L Gates, has established a new initiative dedicated to representing victims of nonconsensual pornography (i.e. "revenge porn"). The new clinic, called the Cyber Civil Rights Legal Project (CCRLP), was founded by K&L Gates partner David A. Bateman and litigation associate Elisa D'Amico. According to the firm's website, the CCRLP "highlights and utilizes the firm's elite cyber security and cyber forensics practices, allowing volunteers to deliver quality pro bono services to victims across the globe."

The project is believed to be the first of its kind at a major U.S. law firm. To date, approximately 50 attorneys at the firm have volunteered their time, and the CCRLP is working with about 100 revenge porn victims.

One relatively new strategy to combat the posting of revenge porn is the use of federal copyright law. Under this approach, a victim's lawyer first demands that a website take down the offending images or videos of victims that were taken by the victims themselves (i.e. "selfies"), or else face lawsuits under copyright law. Typically, the sites (at least those based in the U.S.) comply, in order to avoid further legal entanglement.

However, if the website does not comply, and the victim wishes to go forward with the suit, he or she must first register the photos or videos to be protected with the U.S. Copyright Office. This can be an uncomfortable scenario for many victims, for obvious reasons.

Other approaches to combatting revenge porn have also proven successful in some cases. In Texas last year, for instance, a jury ordered a woman's ex-boyfriend to pay her $500,000 for posting an explicit video of her online without her permission, on emotional distress grounds.

Finally, state criminal laws are beginning to address the issue as well. In the past year alone, 12 states have enacted laws criminalizing nonconsensual pornography. Additionally, the Federal Trade Commission reached a settlement this week with a porn site operator, requiring him to cease sharing and posting nude videos and photographs of people without their permission.


January 30, 2015

Center for Art Law Case Update

The following case selection first appeared in this week's Center for Art Law newsletter:

Phillips v. Macy's, Inc., 1:2015cv10059 (1st Cir. MA, Jan. 9, 2015) -- Award winning sculptor, David Phillips, originally from Flint, MI, brought a copyright infringement claim against Macy's for reproducing one of his iconic Frog's that decorate the Frog Pond in Boston on the Commons.

Aquino et al v. Zephyr Real Estate LLC, 5:15-cv-00060-NC (N.D. Cal., 6 Jan. 2015) - Amidst mounting tensions over soaring prices and gentrification in San Francisco, eight mural artists filed a complaint against the city's largest independent real estate firm alleging copyright infringement by reproducing their work in a 2013 promotional calendar which advertised "luxury homes."

Cindy Garcia v. Google, Inc., et al., (9th Cir., Nov. 13, 2014) - J. Thomas presiding, a panel of non-recused judges voted in favor of rehearing the 9th Circuit case that previously held that actress and plaintiff Cindy Lee Garcia had a "copyright interest" in her performance in the film "Innocence of Muslims" which gives her the right to have the video taken offline.

Polvent v. Global Fine Arts, Inc., 14-21569-CIV-MORENO (S.D. Fla., 18 Sept. 2014) - J. Federico A. Moreno granted a motion to compel arbitration filed by Defendant, American art dealer Global Fine Arts, Inc. in its copyright dispute with Plaintiff, French artist Jacqueline Polvent. The court ruled in favor of arbitration even though the licensing agreement between the parties, which stipulated for a compulsory arbitration in case of a legal dispute, had expired in 2013, an auto-renew provision provided for a successive and consecutive five-year period unless terminated in writing one-year prior to expiration.

Caraballo, et al. v. The Art Students League of New York, 650522/14 (N.Y.S.2d, July 2014) - Three months after refusing to block the Art Students League of New York's $31.8 million transfer of air rights over its historic West 57th Street building, Manhattan Supreme Court Justice granted summary judgment to the league and its board, finding the 249 petitioner members of the league, who argued that a majority of the league's membership did not approve the transaction and an improper voting process, had raised no triable issue of fact. The judge ruled that the petitioners failed to produce any new evidence to rebut the board's argument that it acted in good faith and with reasonable exercise of its business judgment when it voted to confer the air rights to a real estate development company in 2005.

The Center for Art Law strives to create a coherent community for all those interested in law and the arts. Positioned as a centralized resource for art and cultural heritage law, it serves as a portal to connect artists and students, academics and legal practitioners, collectors and dealers, government officials and others in the field. In addition to the weekly newsletter (http://cardozo.us2.list-manage.com/subscribe?u=78692bfa901c588ea1fe5e801&id=022731d685), the Center for Art Law subscribers receive updates about art and law-related topics through its popular art law blog (http://itsartlaw.com/blog/)and calendar of events (http://itsartlaw.com/events/). The Center for Art Law welcomes inquiries and announcements from firms, universities and student organizations about recent publications, pending cases, upcoming events, current research and job and externship opportunities. To contact the Center for Art Law, visit our website at: www.itsartlaw.com or write to itsartlaw@gmail.com.

January 28, 2015

In Wake of Aereo, California District Court Finds DISH Networks' New Technologies Do Not, For the Most Part, Violate the Copyright Act

By Barry Werbin and Bryan Meltzer, Herrick, Feinstein LLP

As technological advancements change the way we watch television programming, media networks and broadcasters continue to struggle with new legal issues relating to those technologies. Following the Supreme Court's recent rejection of Aereo's business model in American Broadcasting Company, Inc. v. Aereo, Inc., 134 S.Ct. 2498 (2014) (finding its online streaming of unlicensed over-the-airways television programming to subscribers constituted a public performance in violation of the Copyright Act), Central District of California Judge Dolly M. Gee recently held in Fox Broadcasting Co. v. Dish Network LLC, No. 12-4529 (C.D. Cal. Jan. 20, 2015 [unsealed]) that DISH Network LLC's ("DISH") new technologies did not, for the most part, violate the Copyright Act, but did, for the most part, breach DISH's 2002 Retransmission Consent Agreement with Fox Broadcasting Co. ("Fox") ("RTC Agreement").

Fox claimed that five of DISH's technological innovations and/or practices violated the Copyright Act and the parties' agreements. In particular, Fox took issue with the following DISH products: (1) DISH Anywhere using Sling technology ("DISH Anywhere"), which enables DISH subscribers to access live and recorded programming remotely on their computers and mobile devices; (2) PrimeTime Anytime ("PTAT"), which enables subscribers to record all prime time programming shown on the four major networks; (3) AutoHop, which is a feature of PTAT that enables subscribers to automatically skip commercials while watching recorded shows; (4) Quality Assurance ("QA") copies, which are DISH's internal recordings of shows used to test AutoHop prior to its delivery to subscribers; and (5) Hopper Transfers, which allows subscribers to transfer copies of DVR recordings to their mobile devices for later viewing.

In a heavily redacted decision dated January 12, 2015, Judge Gee rejected the vast majority of Fox's copyright claims because she found that, unlike in Aereo, where Aereo itself publicly performed the copyrighted broadcast content by initiating the transmission of copyrighted works, DISH's products simply facilitated its consumer subscribers' ability to transfer and/or copy programming that they already lawfully possessed and for which DISH held a license for similar initial retransmission of the programming to its users via satellite. For instance, Judge Gee held that DISH Anywhere, PTAT and Hopper Transfers did not directly infringe on Fox's copyrights since it was the subscriber, and not DISH, who engaged in the volitional conduct required for a copyright claim (i.e., the copying or transferring of the copyrighted material).

Although Judge Gee found that DISH's subscribers engaged in volitional conduct, she also held that their conduct did not actually infringe on Fox's copyrights, and therefore, DISH was not liable for secondary infringement. In particular, the court found that the subscribers' use of DISH Anywhere to transmit rightfully possessed programming to their own computers and devices did not constitute a "public" performance (i.e., a transmission to a large number of members of the pubic who are unknown to each other) as required for an infringement under the Copyright Act (in contrast to Aereo, where the Supreme Court found that Aereo was engaged in a public performance).

Judge Gee also found that the subscribers' use of PTAT and Hopper Transfers constituted fair use under Section 107 of the Copyright Act because, although a secondary market for Fox's programming exists (through outlets such as Hulu, Netflix, etc.), the potential harm to Fox was too speculative to cause an infringement. Moreover, Judge Gee stated that Hopper Transfers by its very nature constitutes fair use because it simply permits "non-commercial time-and place-shifting of recordings already validly possessed by subscribers, which is paradigmatic fair use under existing law." Harking back to the Supreme Court's seminal decision in Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984), because she found that the subscribers were not liable for infringement, Judge Gee held that DISH was not liable for inducing or encouraging any infringement.

In addition, Judge Gee also held that Auto Hop (i) did not infringe on Fox's copyrights because it did not copy or distribute the material but instead simply skipped commercials, and (ii) did not violate the Copyright Act's compulsory licensing framework for secondary transmission of network stations by satellite providers because by simply skipping commercials, it did not "change, delete, or add anything to the commercials at issue."

While coming close, DISH did not, however, pitch a perfect game with respect to Fox's copyright claims. Indeed, Judge Gee held that DISH's QA copies infringed on Fox's copyrights because DISH simply copied the copyrighted material for a commercial use, which here was found not to be a fair use. In fact, the court noted that a secondary market for the copies existed and Fox could have negotiated with DISH over the right to make such copies available.

Moreover, as successful as DISH was with Fox's primary copyright claims, it was arguably just as unsuccessful with Fox's contract claims. Indeed, Judge Gee found that a number of DISH's products breached the RTC Agreement.

First, Judge Gee agreed with Fox that DISH Anywhere breached the "no copying" provision of the RTC Agreement, which prohibited the copying of content other than for in-home use. Judge Gee rejected DISH's argument that the in-home exception was intended to include "private, non-commercial use" (like with mobile devices) because she found that if DISH wanted to incorporate future technologies, it should have bargained for such language.

Second, Judge Gee similarly found that the QA copies clearly breached the "no copying" provision of the RTC Agreement. While DISH argued that its vendor did the copying, Judge Gee found that DISH's authorization of such copying constituted a breach.

Finally, the court held that Hopper Transfers violated the same "no copying" provision because DISH authorized its subscribers to copy Fox's copyrighted programs to their devices by providing them with both the means and permission to make such copies.

On the other hand, Judge Gee found that PTAT did not breach the "no distribution" provision of the RTC Agreement because it did not deliver the programming to more than one person, and instead just recorded specific programming to which the subscribers already had access. In addition, DISH Anywhere did not violate the "other technologies" provision of the parties' 2010 Letter Agreement, which amended the RTC Agreement, because, under the plain terms of the Agreement, the subscriber and not DISH retransmitted the copyrighted programming. DISH's facilitation of such transmissions did not breach the agreement.

In sum, Judge Gee found that companies like DISH can innovate in ways that do not violate the Copyright Act. Those companies, however, must make sure that their own contracts do not prohibit them from making such advancements. To that end, as Judge Gee recommended, companies should bargain for contractual language that accounts for "future technologies not then contemplated." Either way, though, the decision will likely be more popular with the innovators than the copyright owners.

The long-running DISH court battle and Judge Gee's latest decision provide a window into the future of TV. While networks can legally innovate new ways to deliver programming to their customers, they and their distribution partners will need to draft future agreements affording themselves the flexibility to keep up with technological advancements.

January 27, 2015

Alliance of Artists and Recording Companies Continues to Pursue Class Action Suit Against Car Companies for Unpaid Music Royalties

By Brittany Pont

What is the Alliance of Artists and Recording Companies (AARC)?

AARC is a nonprofit organization that collects and distributes both hometaping/private copy and rental/lending royalties generated from the Audio Home Recording Act of 1992 (AHRA). Founded in 1993, AARC is the sole administrator of this type of royalty in the United States, and while it initially just administered domestic royalties, its mandate was later expanded to administer foreign royalties as well. http://wp.aarcroyalties.com/what-is-aarc/

What is the AHRA?

Prior to 1992, private copying of music was illegal, but the music industry had no recourse for the monetary loss it suffered due to its widespread practice. To balance the right to use and own a device with the ability to record or copy audio material and the music industry's loss of revenue due to such technology, the AHRA added Chapter 10, "Digital Audio Recording Devices and Media", to title 17 of the United States Copyright Law. The Act defines a "digital audio recording device" (DARD) as a "machine or device ...the digital recording function of which is designed or marketed for the primary purpose of, and that is capable of, making a digital audio copied recording for private us." Royalties are generated by "the sales of blank CDs and personal audio devices, media centers, satellite radio devices, and car audio systems that have recording capabilities." The royalty compensates featured recording artists and recording copyright owners for the loss of record sales due to the public's use of the aforementioned technology.


The Lawsuit

On July 25, 2014, AARC filed a class action lawsuit for unpaid music royalties against automobile companies Ford and General Motors, as well as electronic manufacturers Denso and Clarion. On November 14, 2014 AARC expanded the suit by filing another complaint against Chrysler and two Mitsubishi Electric companies. The issue at hand is whether devices included in vehicles manufactured by these companies, such as the Ford "Jukebox" and the GM "Hard Drive Device", fall under the definition of a DARD and are subject to the requirements of the AHRA, which includes paying a royalty fee to the Register of Copyrights. AARC claims that these devices fit the definition of a DARD and are subject to the requirements of the AHRA, but since the companies have failed to identify them as such they have not adhered to the requirements of the AHRA and paid the mandatory royalty fees. The defendants argue that while these devices may have copying and recording capabilities, that is neither their primary purpose, nor are they marketed as recording and/or copying devices. Both of these items are requirements for a DARD under the AHRA.

If the court finds that these devices do not qualify as DARDs, their implantation can continue without adherence to the AHRA. If it is found that these devices are DARDs, AARC is seeking various forms of relief, including actual damages for unpaid royalties equivalent to the amount of royalties and a half, plus statutory damages of $2,5000 per DARD "manufactured, imported or distributed by any Defendant" all during the three years prior to the filing of this lawsuit.

In a statement made by the Executive Director of AARC, Linda R Bocchi, Esq., during AARC's latest update of the lawsuit, the organization remains firm in its support of the AHRA and its application to the disputed devices in this case. In reference to the defendants, Ms. Bocchi states that "AARC will not stand by while they refuse to hold up their end of the deal." Unable to reach a settlement, the litigation remains ongoing.



January 23, 2015

Week in Review

By Chris Helsel

Congressional Hearings Address Net Neutrality

Two hearings this Wednesday, one in the House and one in the Senate, addressed a Republican proposal outlining the GOP's version of net neutrality. The Federal Communications Commission (FCC, the Commission) is set to rule in late February on how it will regulate Internet providers. The Commission is expected to propose rules that treat the Internet like a public utility, granting equal access to all users and preventing providers from slowing any particular sites.

The Republicans, however, consider the FCC plan to be too strict and outdated - a GOP Representative recently described it as "the nuclear option." Instead, they argue that new legislation, not rigid FCC mandates, should determine how Internet access is regulated. This position is supported by cable providers and some wireless companies.

Proponents of the FCC plan counter that the GOP proposal contains major loopholes and is "a march to folly." The Obama administration has publicly supported the treatment of wireless and wired broadband service as a public utility, as called for under the FCC plan. This position is supported by online retailers, such as Amazon, and consumer groups.

While the two plans seem to be in stark contrast, the Senate hearing did offer a glimmer of hope that a compromise could be reached. At the hearing, Senator John Thune (R - SD), Chairman of the Senate Committee on Commerce, Science and Transportation, said that he wanted to ensure that Americans had "unfettered access" to websites, and that the Republican proposal was not a final product, but rather an attempt to "find common ground and forge a permanent solution."

Observers expect that President Obama will veto any bill that does not have wide partisan support. Further, regardless of which plan is ultimately adopted, expect prolonged litigation. CTIA- The Wireless Association, which backs the GOP legislation proposal, has pledged to bring suit if the FCC were to act on its own, as the President wants it to. On the other side, the National Hispanic Media Coalition, which favors the FCC's taking action, has vowed to challenge the Republican proposal in court if it were to become law.


NFLPA Files Grievance Against NFL Over New Conduct Policy

The National Football League Players Association (NFLPA, Union) has filed a grievance against the National Football League (NFL, League), challenging the League's unilateral enactment of its new personal conduct policy.

The new policy, which was unanimously approved by NFL team owners on December 10th, came in the wake of numerous player arrests and criticism over the League's handling of those incidents. Specifically, Ray Rice, Greg Hardy and Ray McDonald faced accusations of domestic abuse, and Adrian Peterson missed the entire season following an arrest for child abuse.

The new policy contains a number of additional safeguards designed to ensure compliance with NFL conduct standards, as well as implements stricter discipline for certain violations. Specifically, it allows for the use of independent investigations into disciplinary matters, implements an element of leave with pay during investigations of alleged violent crimes, and allows the commissioner to appoint a panel of independent experts to participate in deciding an appeal.

The Union maintains that the policy is in violation of the 2011 Collective Bargaining Agreement (CBA), and seeks a cease and desist order to enjoin its implementation. The Union emphasizes that "the NFL adopted the new Policy without the consent, and over the objections, of the NFLPA."

In response, the NFL released a statement this morning: "The league's revised conduct policy was the product of a tremendous amount of analysis and work and is based on input from a broad and diverse group of experts within and outside of football, including current players, former players, and the NFL Players Association. We and the public firmly believe that all NFL personnel should be held accountable to a stronger, more effective conduct policy. Clearly, the union does not share that belief."


New England Patriots Suspected of Intentionally Deflating Footballs to Improve Quarterback's Grip

During halftime of last weekend's American Football Conference (AFC) Championship Game, NFL officials determined that 11 of the 12 footballs used by the New England Patriots (Patriots) in the first half were inflated two pounds per square inch below the level required by NFL rules (in the NFL, each team provides its own balls to be used while its offense is on the field). League rules require that balls be inflated to between 12.5 and 13.5 pounds per square inch.

The rule exists because under-inflated footballs can provide a competitive advantage, as a softer ball provides a quarterback with a better grip - especially on cold days, such as last weekend's affair in Foxboro, Massachusetts. As demonstrated by its fierce opposition to New Jersey's efforts to legalize sports betting, the NFL is staunchly determined to protect the integrity of the game, and takes allegations of "cheating" very seriously.

In 2007, for example, the Patriots were discovered to have secretly videotaped New York Jets practices in order to decode the team's defensive signals. The NFL fined the Patriots $250,000, stripped the club of its 2008 first-round draft pick and fined head coach Bill Belichick $500,000.

Regarding the current under-inflation controversy - dubbed "Deflate-gate" by pundits - both Mr. Belichick and Patriots quarterback Tom Brady have denied any knowledge. Mr. Belichick told gathered reporters yesterday, "I had no knowledge whatsoever of this situation ... I have no explanation." Soon after Mr. Belichick left the podium, Mr. Brady told reporters, "I don't know what happened. I have no explanation for it ... I didn't alter the balls in any way."

To the contrary, former Dallas Cowboys quarterback and NFL Hall of Famer Troy Aikman, who now serves as a broadcaster for FOX, believes that the quarterback must have been behind it. "It's obvious that Tom Brady had something to do with this," Aikman said earlier this week. "For the balls to be deflated, that doesn't happen unless the quarterback wants that to happen, I can assure you of that."

Similarly, in an interview with the New York Post, former Heisman Trophy winner and NFL quarterback Matt Leinart described the process by which quarterbacks and team equipment managers manicure game balls prior to kickoff:

"You go through the whole bag and you literally handpick them and say, 'This one is good, this one's too hard, put a little bit of air in that one, take a little bit out ... It's a full 20-minute process to make sure on Sunday you have the exact football you want to be throwing. Quarterbacks are very, very picky about how they want their ball and that goes on everywhere."

Mr. Leinart pointed out that in his experience, the process is confined strictly to the quarterback and the equipment manager, and he therefore believes that Mr. Belichick had no part in the decision to under-inflate the balls. "I listened to Bill Belichick and I believed every word he said," he said. "Not once did a head coach ever have any input in that."

In 2011, Mr. Brady acknowledged in a radio interview that he does in fact prefer to use underinflated footballs. "When (Patriots tight end Rob Gronkowski) scores ... he spikes the ball and he deflates the ball. I love that, because I like the deflated ball."

NFL game balls are checked prior to games by the referee, and once approved they are stored in a bag on the sideline until an official calls for a new ball to enter the game. While on the sideline the footballs are not specifically guarded or watched in any way. NFL rules forbid the alteration of game balls post-inspection, and any person found tampering with the balls could face a $25,000 fine and potentially more discipline, according to ESPN.

The NFL has confirmed that the balls were, in fact, approved by the referee prior to Sunday's game. It remains unclear whether the Patriots' under-inflated balls were improperly approved by the referee or secretly deflated by club employees after inspection. The NFL investigation is ongoing, and the League office has not commented on what discipline, if any, the Patriots and/or Mr. Belichick may face.

The NFL announced today that its investigation began Sunday night, immediately after the game, and that it had conducted nearly 40 interviews to this point. However, the League has not yet interviewed any players.


Female Soccer Players Drop Sex Discrimination Lawsuit Regarding Artificial Playing Surfaces at 2015 World Cup - But Call it an Overall Victory

Following the announcement that some of the 2015 Women's World Cup games would be played on artificial surfaces (rather than natural grass), 84 women soccer players from 13 countries brought suit against the Canadian Soccer Association at the Ontario Human Rights Tribunal. The suit alleged that artificial surfaces increase the risk of injury, and that the women's tournament should be played on similar surfaces to the men's. No men's World Cup game has ever been played on anything but grass.

FIFA, soccer's world governing body, maintained throughout that Canada was the best choice to host the 2015 Cup, and stressed that the organization shared the players' "desire and enthusiasm" to ensure the "best possible conditions to perform well."

The players involved in the suit, which include USA star Abby Wambach, believe that the suit, although ultimately dropped, had "lessoned the chance that such wrongdoing will occur in the future." They note that the "deplorable" artificial turf in British Columbia, where the final will be played, will be replaced, and that FIFA has agreed to host the 2019 Women's World Cup on all natural grass fields.

Ms. Wambach believes that the suit will have a positive lasting impact on women's sports as a whole. "I am hopeful that the players' willingness to contest the unequal playing fields - and the tremendous public support we received during the effort - marks the start of even greater activism to ensure fair treatment when it comes to women's sports," she said.


Israeli Man Arrested For Hacking into Artists' Computers and Stealing Unreleased Music

Last month, Madonna and her team were stunned to discover that the singer's personal computer had been hacked when nearly 30 new, unreleased (in some cases unfinished) songs surfaced online. She quickly hired a Tel Aviv-based firm that specializes in intellectual property theft and commercial leaks, which tracked the theft back to a 39-year-old man in Israel. The firm then conducted "undercover activity" and "surveillance" for a few weeks before turning the information over to the police.

This week, the Israeli police, working alongside the F.B.I., arrested the man. The police released a statement on Wednesday, confirming the arrest and detailing the suspect's criminal activity. According to the police statement, the man hacked the personal computers of numerous international artists, stole unreleased musical tracks, and sold them online.

This case highlights the ever-increasing issue of intellectual property theft online, and the subsequent leaking of that data. Major recent leaks have included the North Korean Sony hacking saga and the release of stolen nude photos of celebrities, among others.

In response to the leak of her music, Madonna decided to fast forward the release of her new album, "Rebel Heart," which had not yet been announced. Within days, six songs from the album were released for sale on iTunes, with the remainder of the album to arrive on March 10th.

Similarly, Icelandic singer-songwriter Björk suffered on online hack recently as well. Her new album, which had been announced just four days prior, leaked online in full last week. Although it was not due for release until March, she and her record label to decided to release the album online immediately.

Previously, artists would attempt to shut down leaks by employing so-called "web sheriffs" who stopped blogs from sharing the links. Given the vast expanse of the Internet, and the varying IP protection laws of different countries hosting the offending sites, such efforts were typically largely unsuccessful. Now, thankfully, the availability of an immediate official digital release allows artists to somewhat mitigate the damage caused by a hacker's theft of their material.


January 21, 2015

Ninth Circuit Affirms for Costco in Omega Case

By Barry Werbin

The final chapter has closed for Omega in its long-running battle against Costco over genuine imported "grey market" Omega watches that bore a tiny globe design on the rear. On Jan. 20, 2015, the Ninth Circuit affirmed the California District Court's finding of no copyright liability after the Supreme Court split 4-4 in 2010 over Costco's first sale doctrine defense. The 4-4 split had left in place the Ninth Circuit's prior 2008 decision holding that the first sale doctrine only applied to goods lawfully made and first sold in the U.S., not abroad. This left open Costco's rarely granted defense of copyright misuse, which was remanded. The District Court then found in favor of Costco on the misuse defense and awarded Costco legal fees, and Omega appealed. In the interim, in 2013 the Supreme Court decided the Kirtsaeng case, which made it clear that the first sale doctrine also applied to goods lawfully manufactured and first sold abroad.

The Ninth Circuit has now affirmed the District Court and its award of attorneys' fees to Costco based on the first sale doctrine under Kirtsaeng, although the District Court had granted Costco summary judgment on its copyright misuse defense. A concurring opinion would have instead affirmed the copyright misuse finding, which apparently was the only issue formally briefed by the parties. Decision here: Omega v. Costco 9th Cir. 2014.pdf.

January 20, 2015

EASL Pro Bono Clinic - Sunday, February 22nd

On Sunday, February 22nd, the EASL and IP Sections will be co-sponsoring a Pro Bono Clinic at Dance/NYC's 2015 Symposium (https://www.dancenyc.nyc/dancenyc-events/2015/02/DanceNYC-Symposium-2015/) . The Clinic will take place between 10:00 a.m. and 1:00 p.m. at Gibney Dance Center (280 Broadway, entrance at 53A Chambers St, NY, NY).

If you are a licensed attorney and would like to volunteer for one or more of the 30 minute time slots, please email Elissa Hecker at eheckeresq@eheckeresq.com and specify your contact information (name, firm/company, phone number and email address), which time slot(s), area(s) of expertise, and whether you are an EASL and/or IP Section member. We are looking for volunteers with experience in the following general areas:

· 501(c)(3) vs. LLC/Corp structure issues, choice of entity for incorporation- for- vs. not- for-profit (please specify if
you have not-for-profit incorporation experience)
· Basics of corporate setup (i.e. filing in the state, agent for service of process, EIN no., insurance, etc.)
· Agreements in general, including collaboration and ownership, performer, film crew, independent contractor language, etc.
· Copyright questions for choreographic works, protection of choreography
· Licensing - music, choreographic works, and other intellectual property clearances, live performance vs. recorded rights
· Business related, general contract questions
· Development of a website, use of social media
· Fair Use issues
· General entertainment
· Intellectual Property (copyright and trademarks)

If you do not have pro bono liability insurance, you may be covered under EASL and IP's policy for this Clinic. Please notify Elissa Hecker at eheckeresq@eheckeresq.com if you need such coverage.

Thank you,

Elissa D. Hecker and Kathy Kim
EASL Pro Bono Steering Committee

January 19, 2015

Don't forget to register for the EASL Meeting at NYSBA's Annual Meeting before the general registration fee goes up!

Tuesday, January 27, 2015
1:00 pm - 5:30 pm

4.0 TOTAL CREDITS in Areas of Professional Practice. This program will NOT qualify for credit for newly-admitted attorneys because it is not a basic practical skills program.

Topics will be:
1. The TMZ Effect: The Legal Issues and Consequences for the Sports and Entertainment Industry Arising Out of the Unexpected Release of Purported Private Information to the Public. In light of the recent scandals exposed on TMZ, we will examine the instantaneous repercussions for athletes and celebrities, and how legal representatives advise their clients when personal matters jeopardize their professional careers and opportunities.

2. Athletes, Attorneys and the NFL (New-Fangled Licensing): Sports Licensing In Light of Recent Decisions, New Channels of Commerce, and Emerging Technologies. An in-depth moderated panel discussion by leading practitioners in the sports licensing field, focusing on the impact to the drafting of licensing contracts among athletes, clubs, leagues and licensees. This panel will explore the application of several new developments in the law and business practice that have affected the drafting and enforcement sports licensing contracts, in particular the NFL a few days before the Super Bowl.

View Full Program Agenda www.nysba.org/WorkArea/DownloadAsset.aspx?id=53968>">www.nysba.org/WorkArea/DownloadAsset.aspx?id=53968>

Following the MCLE program join Section Member's for a great 3 hour reception at Bill's Bar and Burger, 16 West 51st Street at 5th Ave. Menu is listed below:

Passed Hors d'oeuvres (Seared Ahi Tuna, Lobster Rolls, Seared Filet Mignon, Beets with Goat Cheese, Mini Caprese Sandwiches)
Sliders (Beef, Veggie and Crab)
Taco Station
Salad and Sides
A great array of Desserts (Mini Shakes, Seven Layer Bars, Brownie Bites, and Lemon Bars)

Plus Beer, Wine, Soft Drinks, Coffee and Tea!

Register Online">www.mmsend75.com/link.cfm?r=552512068&sid=62496382&m=8401437&u=NYSBA&j=24813164&s=http://www.nysba.org/store/events/registration.aspx?event=AM2015>">www.mmsend75.com/link.cfm?r=552512068&sid=62496382&m=8401437&u=NYSBA&j=24813164&s=http://www.nysba.org/store/events/registration.aspx?event=AM2015>

January 17, 2015

Week in Review

By Chris Helsel

First Amendment Battle Over Vanity License Plates Produces Unlikely Bedfellows

In December, the U.S. Supreme Court granted certiorari on the state of Texas' appeal to overturn a Fifth Circuit decision allowing for the issuance a specialty license plate honoring Confederate veterans of the Civil War. The proposed vanity plate, which would feature the Confederate Battle Flag, is sought by a group called the Sons of Confederate Veterans (SCV).

The plate was initially rejected by the Motor Vehicle Board of Texas (Board), and the Western District of Texas upheld the Board's decision after the SCV brought suit. The basis for the Board's denial, as well as the district court's decision to uphold, was the ubiquitous association of the Confederate flag with racism, slavery and hate groups.

On appeal, the Fifth Circuit was tasked with interpreting the constitutionality of the Board's decree that it may deny any privately-proposed license plate design if it "may be offensive to any member of the public." Specifically at issue was whether the license plate program constituted public or private speech and, if private, whether the denial was permissible content-based regulation or impermissible viewpoint discrimination.

The Fifth Circuit agreed with the district court that, although vanity license plates are issued by the state and a portion of the proceeds from their sale reaches state coffers, the specialty license program constituted a private forum because a reasonable spectator would not believe the government was speaking to him or her.

However, it disagreed with the lower court regarding whether the Board's denial was based on content or viewpoint. The district court had deemed the denial to be content-based and reasonable under the circumstances, and therefore not in violation of the First Amendment. The Fifth Circuit, however, concluded that the Board's denial was in fact viewpoint discrimination, and that a public agency may not shield the public from minority views that might be offensive to some. "The government may not selectively ... shield the public from some kinds of speech on the ground that they are more offensive than others," wrote Judge Edward C. Prado. As the Board's standard - "may be offensive to any member of the public" - lacked sufficient clarity and gave unbridled discretion to the Board, the Fifth Circuit reversed.

The Fifth Circuit also criticized the lower court for "credit(ing) the view that the Confederate flag is an inflammatory symbol of hate and oppression" while discriminating against the SCV's view that "the Confederate flag is a symbol of sacrifice, independence and Southern heritage."

In granting cert in the Texas case, the Supreme Court also held in abeyance another similar case involving vanity plates in North Carolina. In that case, pro-choice advocates brought suit seeking to overturn the state legislature's denial of an abortion-rights specialty license plate, after it previously approved a "Choose Life" plate.

The Eastern District of North Carolina struck down the state's approval of plates representing only one of two opposing viewpoints as unconstitutional, and the Fourth Circuit affirmed. According to the court, "Issuing a 'Choose Life' specialty license plate while refusing to issue a pro-choice specialty plate constitutes blatant viewpoint discrimination squarely at odds with the First Amendment. Apparently, North Carolina wishes to celebrate only some interests of some of its citizens -- namely, those with which it agrees. This it may not do."

Other circuits have come out differently on the issue. The Sixth Circuit, for instance, upheld Tennessee's anti-abortion license plates as a form of government speech. The Seventh Circuit, on the other hand, decided to bar specialty plates on either side of the issue.

Interestingly, the Texas and North Carolina cases have created unlikely allies in the debate regarding government regulation of freedom of expression. For perhaps the first time ever, liberal pro-choice advocates are ideologically aligned with descendants of Confederate veterans. Despite their obvious differences, in this case, both groups argue that the government cannot regulate private speech on the basis of its viewpoint.


With Private Museums, Collectors Can Have Their Art and Eat it Too

A recent surge in the value of art, and the resulting trend toward art as an investment, have given rise to a vast increase in the amount of private museums in the United States. Observers worry, however, that these museums and foundations serve primarily as tax shields, and provide little to no public benefit.

According to Bard University curatorial studies executive director Tom Eccles, in the past 10 to 15 years, art has become "an equal asset class to stocks, boats, houses and jewelry, and people don't want to give their assets away." As a result, collectors have increasingly begun to establish their own tax-exempt foundations or museums. Traditionally, a philanthropic collector might donate a piece to an established museum or foundation. This would fully relinquish the collector's power over the piece and reward the collector with a tax deduction.

However, the prospect of establishing a private museum, and then "donating" art to it, allows a collector to enjoy the accompanying tax benefits while still maintaining control over the art. While the art ceases to be the collector's private property, he or she can control it through a foundation and be eligible for annual tax write-offs. Further, the nonprofit foundation can write off the cost of conserving, caring for and insuring the art, and nonprofits' art purchases are exempt from state and local tax laws.

What's more, many of these private museums are housed in buildings adjacent to the homes of the collectors and are only open to the public on a very limited basis. This has raised suspicion among some in the art and tax-collecting communities that some collectors are more interested in tax-avoidance than in sharing their art with the public.

While private museums are certainly legal, the I.R.S. requires that a tax-exempt nonprofit be both educational and accessible to the public. Some private museums, such as the Brant Foundation Art Study Center in Greenwich, CT, toe the line on this issue. The Brant Center, for instance, is completely unmarked, with no street signs, and allows visits by appointment only. It is located down the street from its creator's estate.

Robert Storr, dean of the Yale School of Art, echoes the sentiments of many: "If there's to be public forgiveness for taxes there should be a clear public benefit, and it should not be entirely at the discretion of the person running the museum or foundation."

I.R.S. guidelines about what private museums must do to qualify for tax-exempt status are unfortunately vague, though experts agree that public access and educational benefit are crucial. I.R.S. memoranda indicate that public access alone is not sufficient, and that the foundations must have adequate signage and/or advertise. Marcus Owens, an attorney and former director of the I.R.S.'s Exempt Organizations Division, said the agency also considers the physical location of a museum in order to determine whether the art is still primarily for the benefit of the owner, rather than the public. In the 1980s, one bold collector claimed tax-exempt status for sculptures near his backyard pool and said they were open for public viewing. His charitable designation was revoked in 1987.

However, critics contend that the I.R.S. rules are not strong enough. Tax experts note that private foundations can qualify for tax-exempt status without letting in a single visitor, if they lend out works, give grants or make their collections available to researchers.


Martin Luther King's Children Squabble Over Ownership of Their Father's Belongings

Martin Luther King Jr.'s two sons, Martin Luther King III and Dexter Scott King, sued their sister, Rev. Bernice King, to reclaim the late civil rights leader's "traveling" Bible and 1964 Nobel Peace Prize. The two sons, who control Mr. King's estate, seek to sell the items to a private buyer to raise money for the estate. The complaint alleges that Rev. King "secreted and sequestered" her brothers in violation of a 1995 agreement that granted the estate ownership of their father's entire property. The brothers maintain that all three of the surviving siblings (another sister, Yolanda, died in 2007), as the original heirs of their father, assigned all of their rights and inheritance to the estate corporation.

Rev. King maintains that the items are "sacred," and should never be sold to any person. The King Bible was one of two used to swear in President Barack Obama during his second inauguration in 2013. The Nobel Prize is expected to fetch between $5 and $10 million on the open market.

Last Tuesday, Fulton County (GA) Superior Court Judge Robert McBurney neglected to issue a decision on the matter, and the case was scheduled to go to trial on February 16th.

The current dispute marks the fifth known lawsuit between the siblings since their mother, Coretta Scott King, died in 2006. In 2013, the two brothers sued their sister, who serves as CEO of the Martin Luther King Jr. Center for Nonviolent Social Change (Center), alleging that the Center had been negligent in its handling of King memorabilia. In 2008, Bernice and Martin III sued Dexter, who serves as CEO of the estate, accusing him of acting improperly as head of the estate.


New York Times Reporter Wins Seven Year Fight Not to Reveal Sources

Two-time Pulitzer Prize winner James Risen has emerged victorious in his quest to avoid testifying at the trial of former C.I.A. officer Jeffrey Sterling. Mr. Sterling is charged with providing Mr. Risen details of a botched operation intended to disrupt Iran's nuclear program - details which Mr. Risen allegedly used in describing the operation in his 2006 book, State of War.

The Justice Department first subpoenaed Mr. Risen to testify in 2008, during the Bush Administration. Mr. Risen, who faced imprisonment, steadfastly refused to reveal his confidential sources, and ultimately took his fight to the U.S. Supreme Court. The Court declined to hear his appeal in June 2014, but Attorney General Eric Holder ultimately decided prosecutors would not force the New York Times reporter to reveal his sources.

The ongoing saga has provoked significant backlash in the journalism community, and recently Mr. Holder announced that he would not seek to jail reporters for protecting their sources. He also rewrote the guidelines under which reporters could be subpoenaed.

Last week, Mr. Risen took the stand in the Eastern District of Virginia and proclaimed once again that he would not reveal his sources. Under orders from Mr. Holder, prosecutors did not press him on the issue or demand answers, as that could have exposed Mr. Risen to contempt charges. From the stand, Mr. Risen posed questions to both the prosecutor and Mr. Sterling's attorney. "It doesn't work that way. You can't ask questions," said Judge Leonie M. Brinkema. "That's the reporter in you."

According to attorney Joel Kurtzberg, who represents Mr. Risen, "The significance of this goes beyond Jim Risen. It affects journalists everywhere. Journalists need to be able to uphold that confidentiality in order to do their jobs."


Political Group Asks Ethics Panel to Investigate NJ Governor's Relationship with Dallas Cowboys Owner Jerry Jones

During both of the Dallas Cowboys' National Football League (NFL) playoff games this season, New Jersey Governor Chris Christie was prominently shown on national television celebrating in the owner's box alongside Cowboys' owner Jerry Jones. Governor Christie's office has acknowledged that the governor's tickets and travel to the games were paid for by Mr. Jones, but insists that the trips did not run afoul of any ethical obligations.

New Jersey ethics rules subject public officials to "a zero tolerance policy for acceptance of gifts ... that are in any way related to [an officeholder's] official duties." Mr. Christie himself has cited these same ethics rules in barring other state officials from getting special access to tickets to events at state-owned arenas.

In this case, Mr. Christie argues that the gifts were legal, under an executive order signed by a previous governor that allows governors to "accept gifts, favors, services, gratuities, meals, lodging or travel expenses from ... personal friends that are paid for with personal funds." Mr. Christie contends that Mr. Jones is his personal friend, and extended the offer knowing that Mr. Christie is a lifelong fan of the Cowboys.

However, as many news reports have pointed out in recent days, the Christie administration has given millions of dollars worth of tax subsidies to the NFL, and the NFL does significant business in the state of New Jersey. The Dallas Cowboys are, clearly, an NFL club, and therefore profit from the subsidies granted by the state.

Further, according to 2013 Port Authority of New York and New Jersey press release, Mr. Christie encouraged the Port Authority to award a concessions contract for 1 World Trade Center (the Freedom Tower) to a company co-owned by Mr. Jones. The press release specifically indicated that the Port Authority did in fact grant the contract to the company, Legends, following a call from Mr. Christie and New York Governor Andrew Cuomo.

Mr. Christie has since denied that he knew Mr. Jones at the time the contract was awarded. "When he got the contract, I knew nothing about it. I didn't know him," said the governor. However, in a television interview last month, Mr. Christie said that he became friends with Mr. Jones "over the last five years."

In the wake of these allegations, the American Democracy Fund, which supports Democratic political candidates and conducts opposition research on Republicans, has asked two state ethics panels and U.S. Attorney for New Jersey Paul Fishman to investigate whether the governor's relationship with Mr. Jones violated state ethics rules. Mr. Christie, a Republican, says any concern over their relationship is "just craziness."


San Francisco 49ers Sued for Age Discrimination

Two former employees of the San Francisco 49ers (49ers, Club, Team) have brought suit in the Northern District of California against the club and its CEO, Jed York, alleging age discrimination. The plaintiffs, Anthony Lozano and Keith Yanugi, claim that they were two of many senior managers let go in 2011 and 2012 as Mr. York attempted to brand his Club as the technology startup of the NFL.

The complaint alleges that when asked why the Team wanted to bring in young tech workers from Silicon Valley, Mr. York replied "Because they made a lot of money, they did a lot of cool things before they turned 40 years old, and they didn't want to play golf six days a week." The two plaintiffs both worked for the Club for over 20 years and achieved stellar performance reviews throughout their careers, according to the complaint. Further, Mr. Lozano claims that he was awarded employee of the month in 2010, one year prior to his dismissal.

Mr. Lozano, who served as the Club's Facilities Manager, was told he was let go because the Team was "going in a different direction." Mr. Yanagi, who served as Director of Video Operations, was allegedly fired for undisclosed "performance" reasons.

The plaintiffs allege that the Club violated several federal regulations regarding firing workers over age 40, including the termination of a group of older employees without proper notification and the gathering of statistical data that, they say, would demonstrate "a pattern and practice of age discrimination." Mr. Lozano and Mr. Yanugi seek punitive damages for age discrimination, wrongful termination, fraud and concealment and intentional infliction of emotional distress.


Emerging Singer-Songwriter Accused of Inappropriate Correspondences with Underage Fans

Singer-songwriter Jake Mcelfresh, who performs as Front Porch Step, has been accused of engaging in inappropriate text message and social media relationships with numerous underage female fans. In some cases, these relationships allegedly included the mutual exchange of sexually explicit pictures. He recently announced the suspension of his spring concert tour, which includes the annual punk music festival Vans Warped Tour, at which he was scheduled to perform as a headliner.

His accusers assert that their interactions with Mr. Mcelfresh began on Twitter and transitioned into phone calls and text messages. In Ohio, where Mr. Mcelfresh is based, criminal law forbids the possession of sexual photographs of minors, as well as the encouragement of a minor to be photographed nude. Additionally, under federal law receiving or possessing sexually explicit images of a minor is a potential felony. As of this writing, criminal charges have not yet been filed.

Mr. Mcelfresh, 23, is considered a rising star in the punk-emo music scene. His first album was released in 2013 and reached No. 12 on the Billboard Heatseekers chart for emerging artists. On New Year's Eve, as his accusers' stories began to surface, he tweeted, "I'm so sorry this happened."


January 15, 2015

Discretionary Bonuses: What Are They, and Why Should You Care?

By Kristine A. Sova

The federal Fair Labor Standards Act defines a "discretionary bonus" as a sum paid by an employer in recognition of an employee's services during a given period of time (for example, a calendar year) if:

the very fact that the bonus payment is to be made and the amount of the bonus payment are at the sole discretion of the employer at or near the end of the period; and
the bonus payment is not issued according to any contract, agreement or promise that causes the employee to expect the bonus.
Put more simply, a discretionary bonus is typically one that an employee would have no reason to expect to receive from an employer.

Consider the following examples:

If an employer announces to employees in January that it intends to pay them a bonus in June, the employer has abandoned its discretion regarding the fact of payment by promising a bonus to its employees, and such a bonus is non-discretionary.
If an employer promises to sales employees that they will receive a monthly bonus computed on the basis of allocating five dollars for each item sold whenever, in the employer's discretion, the financial condition of the company warrants such payments, the employer has not abandoned discretion with regard to the fact of payment, but has abandoned its discretion with regard to the amount of the bonus. Such a bonus is also non-discretionary.
The difference between discretionary and non-discretionary bonuses matters because non-discretionary bonuses must usually be included in any overtime pay that may be owed to a non-exempt employee. This is the rule under federal law and under New York law, and it may be the rule in other jurisdictions as well.

The overtime calculation is a relatively simple calculation if the bonus covers only one weekly pay period. However, under many bonus plans, the bonus covers a period of time longer than a workweek. In the latter scenario, the bonus must be apportioned back over the workweeks of the period during which it may be said to have been earned, and an employee must receive additional compensation for each workweek that he/she worked overtime.

Where it is impossible to allocate the bonus among workweeks of the period in proportion to the amount of the bonus actually earned each week, some other reasonable and equitable method of allocation must be used. If you are uncertain of what that method should be, or how to calculate overtime payments in general, you should consult an employment lawyer knowledgeable about the wage-and-hour laws where you conduct business.