October 31, 2014

EASL's FALL Meeting

"Caution: Children At Work," What You Need to Know about Child Employment in the Entertainment Industry

Thursday, November 13, 2014 | 4:00pm - 7:30pm with Reception to Follow
Loeb & Loeb LLP| 345 Park Avenue (between 51st & 52nd) | New York, NY 10154-1895

This program is accredited for up to 3.5 MCLE Credit Hours in Professional Practice.

Entertainment, Arts & Sports Law Section and Labor & Employment Law Section Member Rate: $50.00
NYSBA Member Rate: $90.00
Non-NYSBA Member Rate: $125.00

The glamour and privileges for children in the entertainment industry are historically accompanied by unsafe, inappropriate and abusive working conditions, a lack of proper educational instruction and supervision, and historically, a misappropriation of their earned funds. This fall program will present a panel of speakers, which is scheduled to include, Mark Knox, Esq. of the New York State Department of Labor, Alan Simon and Karin Farrell of On Location Education, Doreen Small, Esq., of Marquart and Small, Avram Morell of Pryor, Cashman LLP., Michael Maizner of Kauff, McGuire and Margolis and Diane Krausz, Esq. The discussion will cover the new regulations that apply to models as well as child performers, education requirements and licensing, general work laws and permits, and court approval procedures pursuant to Article 35.03 of the NYS Arts and Cultural Affairs Law in New York Courts. You will benefit from this program whether you are new to this area of practice or are an experienced attorney looking to compare your knowledge and techniques with those of the faculty members.

This program is co-sponsored by the Entertainment, Arts and Sports Law Section (http://www.nysba.org/Sections/Entertainment_Arts_Sports/Entertainment_Arts___Sports_Law_Section.html) and the Labor and Employment Law Section (http://www.nysba.org/LaborEmployment/) of the New York State Bar Association (http://www.nysba.org/membership/).

For questions about the program please contact Beth Gould: bgould@nysba.org

To register over the phone or to join NYSBA call our State Bar Service Center at 1-800-582-2452

October 29, 2014

Wage Discrimination in Minor League Baseball

By Daniel Oresajo

Baseball was once America's favorite pastime, so many wonder why baseball's popularity has faded. One possible answer is that little has changed since baseball's inception; even the once beloved nostalgia of baseball, still in its "purest form," seems outdated. While many players long for the days of playing for the love of the game, some players, such as minor league baseball (MiLB) players, do not make enough money to sustain playing solely for the love of the game.

Lucas Mann of Slate describes the minor leaguers' plight, writing, "[[m]inor leaguers are] paid just like they were paid half a century ago. They find off-season work to get them from September to March, just like major leaguers did before their salaries exploded." 

"Over the course of a five month season, the average MiLB player earns between $3,000 and $7,500, a salary well below the federal poverty level of $11,490. By comparison, the average fast food worker earns between $15,000 and $18,000 per year, which is two to three times greater than a minor league player's salary." 

As a result of this seemingly unjust scenario, three former MiLB players, Aaron Senne, Michael Liberto and Oliver Odle, have sued Major League Baseball (MLB), which governs the MiLB, MLB Commissioner Bud Selig, the Kansas City Royals, Miami Marlins, and the San Francisco Giants in a California district court for an alleged violation of antitrust laws, and in particular, wage and overtime laws. Through this action, the plaintiffs mean to "expand the lawsuit into a class action on behalf of thousands of former minor league players." Id.

The plaintiffs argue that the MLB violated the Fair Labor Standards Act (FLSA) and state laws guaranteeing citizens minimum wage and overtime pay. According to the United States Department of Labor,"[t]he FLSA establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments."  Moreover, "[c]overed nonexempt workers are entitled to a minimum wage of not less than $7.25 per hour effective July 24, 2009," as well as "[o]vertime pay at a rate not less than one and one-half times the regular rate of pay is required after 40 hours of work in a workweek." Id.

Players work between 60 and 70 hours per week, which includes playing six or seven games per week and participating in conditioning. Yet they earn meager wages. In addition, the players' wages do not cover participating in instructional leagues and extended spring training. Thus, "[t]he players believe that they, and other current and former minor leaguers, are owed back wages for uncompensated and under-compensated labor."  At first glance, it is difficult to dispute the plaintiffs' arguments. However, the MLB has a number of defenses at its disposal.

First, the MLB can argue that it possesses an FLSA exemption, which "does not require amusement and entertainment businesses operated on a seasonal basis (seven months or less) to pay its employees minimum wage or overtime pay."  As the span of a MiLB season is five months, which includes spring training (team mandated workouts), the MLB can argue that minor leaguers' status as seasonal employees precludes them from FLSA coverage. However, sports law expert Nathanial Grow states that "the decision will come down to which side of the argument the court favors: that baseball is a year-round business or that it is a seasonal operation that does most of its business during a baseball season." Id.

Second, baseball has historically been allowed an antitrust law exemption, which the MLB will contend might give it legal authorization to continue paying MiLB players such low wages. As distinguished sports attorney Michael McCann writes, "[t]he exemption allows baseball to unilaterally set salaries and working conditions for minor league players. Without this exemption, minor league players could theoretically sue under the Sherman Act, and argue that big league and minor league owners have conspired to unreasonably limit salaries."

A third argument that the MLB may present is that MiLB players cannot form a union. The lack of a union leaves no formal representative body to "advocate for higher player compensation and hold leverage through the power to strike."  Further, unless they have appeared on a MLB team's 40-man roster, MiLB players are also not members of the MLB Players' Association, which is another missing layer of protection.

Additionally, the MLB may argue that MiLB players voluntarily agreed to the terms of their employment by signing their contracts. MiLB players can't argue that they are disadvantaged in negotiations because they have the power to retain agents. In addition to their agents, the MLB Players Association negotiates on behalf of current and prospective MiLB players.

Finally, the "MLB plans to argue that the hours worked and salaries of players are not uniform and therefore should be considered by the court on an individual basis."  However, even if a court disregards this argument, and allows for a class action, "[t]he statute of limitations [for FLSA lawsuits] could limit the ability of minor leaguers who have been retired for several years from joining a class." 

The court has not yet determined whether the class action can go forward. Nevertheless, this case has the potential to significantly impact the MLB's and MiLB's future. If the MiLB players succeed in raising wages, will MLB teams find cheaper alternatives for training their prospects? Increasing MiLB players' salary and benefits could translate into higher ticket prices for fans, which could cause some MiLB teams to file for bankruptcy, taking away the very means by which these players earn a salary (small may it be) in the first place. Put simply, by succeeding, MiLB players could unintentionally end the system they are trying to fix. One thing is clear, America's once favorite pastime may never be the same.

October 28, 2014

Internet Streaming of Live Broadcast Television

By Rachele Morelli

In a recent decision, American Broadcasting Companies, Inc. v. Aereo, Inc., the Supreme Court of the United States granted to television broadcasters a sigh of relief under the Copyright Act of 1976. 573 U.S. __ (2014). The Supreme Court held Aereo, the internet-based broadcast television streaming service, infringed copyright holders' exclusive right to "perform" their works "publicly" within the meaning of the Transmit Clause of the 1976 Copyright Act. Id.

Prior to the 1976 amendment, the 1909 Copyright Act (the 1909 Act) granted copyright owners the right to publicly perform their works. Am. Broad. Cos. v. Aereo, Inc., 874 F. Supp. 2d 373 (S.D.N.Y. 2012). However, under the 1909 Act, to perform a copyrighted work publicly required a literal performance of the work. Id. The United States Supreme Court decided two cases under the 1909 Act that discussed cable television systems which received broadcast signals through antennas and then retransmitted those signals to its subscribers via coaxial cable. Id. Ultimately, the Court found that the defendants, the cable television systems, were not infringing the copyright holders' exclusive right to publicly perform, because the systems were not actually "performing" the copyrighted works through their transmittals. Id. Congress was extremely dissatisfied with the outcome of these cases and began efforts to amend the 1909 Act to account for the rapid advances in technology. Id.

In 1976, the Copyright Act (the 1976 Act) was amended with the intention of encompassing cable system providers within its scope. The 1976 Act provided that a copyright owner has the exclusive right to perform his/her copyrighted work publicly. See 17 U.S.C. §101; 17 U.S.C. §106(4). Further, the 1976 Act clarified that to "perform" an audiovisual work means "to show its images in any sequence or to make the sounds accompanying it audible." Id. Further, the addition of the Transmit Clause clarified that an entity performs a work "publicly" when it transmits or otherwise communicates a performance of the copyrighted work to the public. Id.

A significant case decided under the 1976 Act was "Cablevision". Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008). There, the court found that Cablevision's transmission of a recorded program to an individual customer through its remote server Digital Video Recorder (RS-DVR) system was not a public performance, but rather more similar to a private performance. Id. at 137-40. The court premised its holding on two major facts: 1) that the RS-DVR system created unique copies of every program, and 2) that the transmission of the recorded program to each specific customer was produced solely from that unique copy. Id. at 137. The court reasoned that each private performance created a one-to-one relationship, because each user made an individual copy that was viewable only by that user. Id. The court found that the RS-DVR's private performances did not violate any rights because the 1976 Act only protects the right to make a public performance of a copyrighted work. Id.

In light of the Cablevision holding and the explosion of innovative portable Internet enabled devices, numerous services have emerged that offer online streaming of live broadcast television. Most services have formulated their streaming in accordance with the Cablevision case rationale and have devised systems that attempt to create a one-to-one relationship with each user to ensure that the performances would remain "private" rather than "public." These novel progressive services have produced widespread implications for the future of all broadcast television.

Aereo, Inc. is a part of this group of services that allows users to stream live broadcast television from any Internet-enabled device without giving proper compensation to the owners of the copyrighted material it transmits. The television producers, marketers, distributors and broadcasters that own the copyrights in many of the programs Aereo streams sued Aereo for infringing on their right to "perform" their copyrighted works "publicly." Aereo, Inc., 134 S.Ct. 2498, 2503 (2014). The case was first decided in July 2012 by the District Court for the Southern District of New York (Aereo, Inc., 874 F. Supp. 2d at 373), and affirmed in April 2013 by the Second Circuit (WNET, THIRTEEN, Fox Television Stations, Inc. v. Aereo, Inc., 712 F.3d 676). Both lower courts declined to find infringement because they analogized Aereo's service to the RS-DVR in Cablevision. Aereo, Inc., 874 F. Supp. 2d at 382-96; Aereo, 712 F.3d at 684-95.

The Supreme Court granted certiorari and heard Aereo unsuccessfully argue that its streamed Internet transmissions were not made "publicly" under the 1976 Act. Aereo, Inc., 573 U.S. at __. Aereo attempted to persuade the Court that its streams were not "public," and similar to the RS-DVR in Cablevision, because Aereo's system generated separate copies of each program and the transmission to each individual subscriber was created solely from those unique copies. The Court relied heavily on Congress' regulatory objectives and refused to allow the "behind the scenes" technological differences to distinguish Aereo from an ordinary cable provider that does publicly perform. Overall, the Court ruled in a 6-3 decision that Aereo transmits a performance of the copyrighted works to the public within the meaning of the Transmit Clause of the 1976 Act. Id. As a result of the Supreme Court's decision, the case was remanded to the lower court and Aereo suspended its services on June 28, 2014.

In coming to its decision, the Supreme Court predominantly focused on the actual purpose of Aereo's service: To provide live broadcast television in the same manner as a cable provider while circumventing the statutory obligations that are inherent in being a cable provider. Today, there is still great debate as to whether the streaming of websites marks an infringement under the 1976 Act. Regardless of the Supreme Court's ruling, it is highly unlikely that any of the website streaming services, like Aereo, will completely cease to exist. This case and many others in history have proven that there are often consequences when one attempts to combat technology rather than embrace it. The next step to resolve this issue, which stems from our society's inevitable advances in technology, would be statutory reform.

The primary issue presented in this matter is whether these online streaming services should be considered "cable system providers" under the 1976 Act. If these services are indeed viewed as cable system providers, as the Supreme Court found, then the statute should be amended to indicate their inclusion. The 1976 Act allows cable system providers to retransmit copyrighted works from broadcast television stations in exchange for paying a compulsory license fee, which is then distributed accordingly to the copyright holders. Aereo, 712 F.3d at 685. The statutory decision to include these online streaming services under the umbrella of "cable system providers," thereby allowing them to pay the ordinary license fees associated with retransmitting, may be the solution to the technological challenges we are confronted with today.

A Beneficial Partnership

By Matthew Luchs

American sports have tried to cross the plane into the international market for years and have had some instances of positive results. For example, many international National Basketball Association (NBA) players, like Dallas Mavericks' Dirk Nowitzki, attribute the rise in international interest in NBA basketball to the 1992 United States Men's Olympic basketball team, also known as the "Dream Team." (http://projectspurs.com/2012-articles/ginobili-parker-influenced-by-92-dream-team.html). Since the "Dream Team," international interest in basketball has been at an all time high. Although the International Basketball Federation Basketball World Cup displayed that the USA is still the leading powerhouse in the basketball world, there are also a number of other countries that possess serious talent, such as Spain and France. The NBA has taken the next step toward continuing the success of their international programs, while increasing fan interest to an already strong international market. For example, on October 13th2, the NBA and China's Ministry of Education formed a joint partnership to implement basketball development curriculums throughout China. (http://probasketballtalk.nbcsports.com/2014/10/18/nba-announces-groundbreaking-partnership-to-implement-basketball-development-curriculum-in-chinese-schools/).

This agreement represents the first partnership that China's Ministry of Education has undertaken with an American professional sports league. (http://www.usatoday.com/story/sports/nba/2014/10/17/nba-china-education-basketball-training/17457813/). The NBA released a statement indicating that "[t]he groundbreaking partnership [will] focus on basketball participation in elementary, middle and high schools across China and... provide enhanced basketball training to at least 3 million students by 2017." (http://probasketballtalk.nbcsports.com/2014/10/18/nba-announces-groundbreaking-partnership-to-implement-basketball-development-curriculum-in-chinese-schools/). Although three million people, relative to China's 1.35 billion person population, would seem small, the nature of the program speaks to how large a step this is for relations between China and the NBA. (http://www.geoba.se/population.php?pc=world). The NBA will be sending a combination of NBA players, alumni legends and coaches to educate and inform Chinese coaches and physical education teachers on the experience they gained during their employment with the NBA. (http://probasketballtalk.nbcsports.com/2014/10/18/nba-announces-groundbreaking-partnership-to-implement-basketball-development-curriculum-in-chinese-schools/). In addition, the NBA has agreed to help the Ministry of Education with China's youth basketball leagues. (http://www.foxnews.com/sports/2014/10/17/nba-announces-partnership-to-expand-basketball-development-and-training-in/)

The partnership makes sense from a relationship perspective. The NBA has been involved with China "for decades," but the NBA's growth in popularity has occurred since the formation of NBA China. (http://www.nba.com/news/nba_china_080114.html). On January 14, 2008 the NBA "announced the formation of NBA China, which [was] a new entity that [would] conduct all of the leagues business in greater China." Id. The then-NBA Commissioner, David Stern, thought that "the opportunity for basketball and the NBA in China [was] simply extraordinary . . . ." Id. He believed that by "working with the General Administration of Sports and the Chinese Basketball Association," the NBA could continue to "emphasize, in both rural and urban Chinese communities, its contribution to fitness, healthy lifestyle and an appreciation of teamwork." Id. Basketball is now the most popular sport in China, with more than 300 million participants. (http://www.nba.com/2014/news/10/13/nba-china-anta-partnership/).

Although it appears that this new partnership with the Chinese Ministry of Education is solely in furtherance of the goal of healthy living set by David Stern, there may be other underlying motivations as well. On the same day that the deal with China's Ministry of Education was announced, the NBA revealed that ANTA Sports Products Limited (ANTA) would be "an Official Marketing and Merchandising Partner of NBA China...The announcement was made at a press conference in Beijing by NBA Commissioner Adam Silver and ANTA Sports Chairman and CEO Ding Shizhong . . . ." Id. This deal allows ATNA to launch a "complete line of ATNA and NBA co-branded league and team-identified footwear and accessories..." Id. They will be "available online and in over 2,000 ATNA stores around the country." Id. The NBA's current commissioner, Adam Silver, sees this as an opportunity to give Chinese fans a chance to connect with their favorite team via ATNA's products. Id.

In addition to the NBA's deal with ATNA, "[t]he NBA currently has relationships with a strong network of television and digital media outlets in China, including a partnership of more than 25 years with national broadcaster CCTV." (http://www.nba.com/2014/news/10/17/nba-ministry-of-education-in-china-join-to-push-basketball-fitness-in-chinese-schools/). The NBA hosts hundreds of touring basketball events for fans, conducts community enrichment programs, and maintains marketing partnerships with a combination of world-class Chinese-based corporations and U.S.-based multinationals. Id.

Some believe this may be step for the NBA to introduce an official Chinese team that would play in its American league. However, there are a number of complications with that proposition. How much time would teams need off to adjust to the time difference and the trip length from China to the United States? At what time would the games be shown to maximize viewership when there is a 12-hour time difference? What is clear, however, is that the NBA is years from making such a project a reality. Yet this partnership with ATNA and China's Ministry of Education will not only provide a great outlet for Chinese students interested in basketball, but will also continue to increase the NBA's international revenue.

October 24, 2014

Aereo Decision

Aereo has lost the argument in the Southern District that it should be considered as a cable company and allowed to operate under the compulsory license scheme following the Supreme Court's opinion that its transmissions were similar to that of a cable company. Judge Nathan found that: "The Supreme Court in Aereo III did not imply, much less hold, that simply because an entity performs publicly in much the same way as a CATV system, it is necessarily a cable system entitled to a ... compulsory license ... Stated simply, while all cable systems may perform publicly, not all entities that perform publicly are necessarily cable systems, and nothing in the Supreme Court's opinion indicates otherwise." The Judge also stated that: "The void left by Aereo III's silence on 111 is filled by on-point, binding Second Circuit precedent, which has already resolved the issue presented here." AereoSDNYDecisionreCompulsoryLicense.pdf

October 22, 2014

Eleventh Circuit Decision in Cambridge University Press v. Patton

By Barry Werbin

An important and generally well-reasoned 129-page fair use decision came down October 17th by the Eleventh Circuit, in a case involving teaching course books that was brought against officials of Georgia State University and the University System of Georgia. The alleged that the defendants infringed the plaintiff publishers' copyrights by permitting professors to make digital copies of excerpts of graduate-level scholarly and academic books available to graduate students for free (i.e., modern digital versions of paper "coursepacks" that normally contain licensed content). The Court reversed in part the District Court's 300+ page decision, which had found after a bench trial that only 5 of 74 works in issue infringed and that a fair use defense applied to 48 of the works overall (as for the balance, either copyright ownership was not established or the copying was deemed "de minimus"). Cambridge University Press v. Patton, Nos. 12-14676 & 12-15147 (11th Cir. Oct. 17, 2014) (gsu-decision.pdf).

The universities maintain systems for digital distribution of course materials to students. Materials selected by professors that are either owned by the school libraries or the professors are scanned and posted to the distribution system. Based on a 2009 university protocol, each professor was required to complete a checklist of fair use factors for every excerpt as part of an assessment as to whether the excerpt qualified as fair use. Access to the network was password protected and was permitted only for students of each class during the applicable semester. The plaintiffs alleged that numerous professors made thousands of excerpts of plaintiffs' articles available in their distribution systems without permission, and that the universities' administrations encouraged this activity.

On appeal, the Court faulted the District Court for giving all four Section 107 factors equal weight and for using a mathematical formulaic method for assessing each factor, referring to that court's approach as "overarching fair use methodology." Instead, fair use must be assessed as to each work. One of the more interesting discussions in the appellate opinion is that while the uses of the plaintiffs' works were not "transformative" (with the Court otherwise adopting "transformative use" as a key component of the first Section 107 factor) -- because they were verbatim copies of the originals converted to digital format and served the same intrinsic purposes as the originals -- the use was clearly for nonprofit educational purposes and not commercial exploitation, even if the universities avoided paying license fees and charged tuition, and the use furthered a public purpose since these were public universities. Thus, "the first factor favors a finding of fair use despite the nontransformative nature of the use."

The Court also distinguished several prior cases involving infringing copying of coursepack content by for-profit copy-shops, as those did not involve direct copying by teachers and universities themselves, noting that in those cases, the courts "expressly declined to conclude that the copying would fall outside the boundaries of fair use if conducted by professors, students, or academic institutions."

Nevertheless, the university policy used the plaintiffs' works for their intended market purpose and the publishers licensed much of their content for fees, such that the forth factor addressing potential market harm was more serious in this case. The district court also should not have ignored the creative and other aspects of the works individually, particularly where that court also erred by adopting a 10% mathematical benchmark for the amount of content used, regardless of the qualitative nature of the content, which also was reversible error. In terms of the policy underlying fair use, the Circuit Court emphasized that, "when determining whether Defendants' unpaid copying should be excused under the doctrine of fair use in this case, we are primarily concerned with the effect of Defendants' copying on Plaintiffs' incentive to publish, not on academic authors' incentive to write."

The District Court had also erred in its assessment of the second fair use factor -- the nature of the copyrighted work -- by finding fair use in every case. While the appeals court noted this factor was "of comparatively little weight in this case particularly because the works at issue are neither fictional nor unpublished, where the excerpts in question contained evaluative, analytical, or subjectively descriptive material that surpasses the bare facts, or derives from the author's own experiences or opinions, the District Court should have held that the second factor was neutral or even weighed against fair use where such material dominated."

In the end, the Court found that the trial court had abused its discretion in granting injunctive and declaratory relief and remanded. An award of legal fees to the defendants also was reversed. The Court also cited favorably to the Second Circuit's approach to fair use assessment in Cariou v. Prince. Note that unlike Cariou, however, the Eleventh Circuit did not make its own ultimate findings of fair use, but remanded the case to permit the District Court to make that decision on a work-by-work basis.

Legal Ethics Aside, Disgraced is a Hit!

By Lisa Fantino
Lisa Fantino is an award-winning journalist and solo practitioner who has just released her first novel, a political murder mystery, "Shrouded in Pompei" (http://authorlisafantino.com/) She has a general practice firm in Mamaroneck, New York, where she focuses on entertainment as well as general transactional and litigation matters. She can be found at http://www.LisaFantino.com.

There's a reason that a literary work earns a Pulitzer award, and Disgraced on Broadway is it (http://www.boneaubryanbrown.com/press/image/display/class/full/id/3134). Disgraced is probing, insightful, intelligent and funny, all while sitting on the cutting edge of rubbing almost everyone the wrong way.

Humanity can't help but destroy itself by allowing its differences to fester into violent confrontations toward supremacy. In the past, the differences which divided us were more isolated, geographically dispersed and somewhat easier to ignore. Yet all that has changed in the 21st century, and as the regional boundaries of culture, tradition, politics and religion have all but been erased in this virtual world, other boundaries have been created as outsiders try to assimilate to a new world order. Disgraced brings it all to the front, to the places we know exist but yet try to ignore, to the beliefs which are so ingrained in each of us that maybe, just maybe unity is not meant for humanity.

Disgraced is basically the story of how a lapsed Muslim attorney tries to fit into life in New York City post-911. He is on the litigation partner track, or so he believes, at a top law firm. However, his career path is potholed with deceit, bias and assumptions or misconceptions that make his character come face-to-face with his past in the present. It comes to a head during an explosive dinner party with one of his colleagues and her husband in the apartment he shares with his artist wife.

What is revealed during this wonderfully directed, tightly acted scene is the internal struggle we each possess between what we've learned, our culture, our heritage, and what we know to be morally correct. Lead character Amir Kapoor, brilliantly played by Hari Dhillon, is forced to cough up his ethical missteps bit by bit as the self-serving interests of each character come to the fore. His colleague, Jory, smartly portrayed by Karen Pittman, a black woman in a Jewish firm, struggles with the fact that she's been given a partner slot while the "ex-Muslim" Amir has worked for it harder and longer, highlighting that Muslims may be the new Blacks when it comes to racial profiling. She's now accepted and he's not.

For attorneys in the audience, the ethical violations in this scene are glaring. Amir seems to think that changing his clothing while denouncing his Muslim upbringing will distance himself from his roots. He admits to changing his name and getting a new social security number, but fails to disclose these things when applying to the Bar or his new firm. He truly believes that failure to disclose is not the same thing as lying. Yet such an ethical sidestep goes to the very heart of what we as professionals swear to uphold - the integrity and competence of the legal profession, which is the core principle of Canon I of the Code of Professional Conduct.

While EC 1-7 of the Code holds that attorneys should treat all with dignity and respect and refrain from bias, what does it say about a society where an American-born Muslim feels ashamed to identify his own heritage and a law firm feels the need to dismiss him for his political beliefs? We are human, and while we should avoid such prejudices in theory, our cultural roots are as much a part of our DNA as the color of our skin and eyes. As Amir proudly and defiantly states, "It's tribal...it's in the bones."

Pre-911, New York City was a metropolis where the stereotypes which plagued the culture were that blacks were violent gangstas, Latinos were thieves with blades, and Jews were liberal advocates for Israel. Post-911, those stereotypes still exist but have all but been obliterated by the overwhelming bias against Muslims, be they foreign or domestic born.

So, what do you get when you have a Jew, a WASP, a black woman and an ex-Muslim at a tiny dinner table? An explosion of talent as the hot button issues of religion, politics, sex and racial profiling are the catalyst for a night of great theater on Broadway.

How to Recoup Overpaid Wages from Employees

By Kristine Sova

Many employers logically assume that if they overpay an employee, they should be able to recoup that overpayment by simply adjusting an employee's future paychecks. While that's the case under the federal Fair Labor Standards Act (FLSA), it's not always the case under state law.

Many states have statutes or regulations that permit recoupment under certain conditions, while other states have statutes or regulations that flat out prohibit recoupment through paycheck deductions. In this post, we address New York State law for employers looking to recoup wage overpayments.

Recoupment Allowed Only Under Certain Circumstances

Under New York law, in order for an employer to recover an overpayment made to an employee by way of payroll deduction, the overpayment must be the result of a mathematical or clerical error. Further, the law permits employers to recoup such overpayments only under the following conditions:

•Employers may only recover overpayments made in the 8 weeks prior to the issuance of a Notice of Intent, described below, but may make deductions to recover overpayments for a period of 6 years from the date of the original overpayment.

•Employers are limited to one deduction per wage payment to recover an overpayment.

•If the overpayment is less than or equal to the net wages in the next wage payment, the entire amount may be deducted; otherwise, the overpayment deduction is limited to 12.5% of the employee's gross wages, so long as the deduction does not reduce the employee's wages below the New York State minimum wage (currently, $8.00/hour).

•Employers must provide affected employees with a Notice of Intent in order to commence making deductions to recoup the overpayment. If an employer will be recouping the entire overpayment in the next wage payment, the Notice must be provided at least 3 days before making the deduction. In all other cases, the Notice must be provided at least 3 weeks before the deductions may commence.

•The Notice of Intent must contain: (1) the amount overpaid in total; (2) the amount overpaid per pay period; (3) the total amount to be deducted; and (4) the date of each intended deduction together with the amount of each anticipated deduction. The notice must also inform the employee of his/her right to contest the overpayment, provide the date by which the employee must contest the overpayment, and include the procedure for the employee to contest the overpayment and/or terms of recovery.

Employers Must Establish a Specific Procedure for Challenging Any Planned Recoupment

New York Labor Law is specific as to what the procedure must entail. The procedure must:

•Provide an employee with one week from the date of receipt of the Notice of Intent to challenge the proposed deduction(s).

•Require an employer to respond to the employee within one week of receipt of the employee's response. The employer's response must address the issues raised by the employee and contain a clear statement indicating the employer's position regarding the overpayment (specifically, whether or not the employer agrees with the employee's position, together with a reason why the employer agrees or disagrees).

•Provide the employee written notice of the opportunity to meet with the employer within one week of receiving the employer's response to discuss any disagreements that may remain regarding the anticipated deductions.

•Require the employer to provide the employee with written notice of the employer's final determination regarding the deductions within one week of this meeting. In making a final determination, the employer must consider the agreed-upon wage rate paid to the employee and whether the overpayment appeared to the employee to be a new agreed-upon rate of pay. Further, when making a final determination regarding the amount of the deduction to be made per pay period and the date such deduction(s) will commence, the employer must also consider the issues raised in the employee's request regarding the amount of each deduction.

Where employees avail themselves of this procedure, employers must wait at least 3 weeks after issuing the final determination before commencing deductions.

The procedure is slightly different where the entire overpayment may be recouped in the next wage payment after the overpayment. In those cases, the employee must challenge the proposed deduction within 2 days of receipt of the Notice of Intent. Should the employee challenge the proposed deduction, the employer must postpone the deduction and fully follow procedures outlined above.

The same parameters apply to employers looking to recoup an overpayment, not from a future payroll deduction, but from a separate transaction. In other words, employers cannot circumvent the law's requirements by simply requiring an employee to pay the employer back by writing a check for the overpayment.

Employers who fail to follow the parameters outlined above create the presumption that the contested deduction was impermissible and in violation of the New York Labor Law.

October 9, 2014

Week in Review

By Martha Nimmer

NFL Tackles HGH

Three weeks after the National Football League (NFL, League) and its players agreed to a new drug testing policy, the League announced on its website that player testing for human growth hormone (HGH) would begin on Monday. In a letter to players that explained the new examination practice, the NFL Players Association president Eric Winston wrote, "[e]ach week of the season, five players on eight teams will be tested. No testing will occur on game days." Winston emphasized that players would have the right to challenge "any aspect of the science behind the H.G.H./isoforms test in an appeal of a positive test." This provision of the new testing policy comes after three years of negotiations between the NFL and the Players Association. Player appeals of positive HGH test results will be heard by third-party arbitrators selected by the players' union and the League.



Twitter has filed a lawsuit against the U.S. Department of Justice (DOJ), claiming violations of the First Amendment. Twitter says that DOJ restrictions on what Twitter may reveal regarding federal search requests impinge on free speech rights. According to The Hill, companies subject to a Foreign Intelligence Surveillance Act (FISA) order or national security letter may not "disclose the exact number of government demands about user information they receive as either Foreign Intelligence Surveillance Act (FISA) orders or national security letters." Currently, companies may only disclose the "broad number" of information requests they receive, in ranges of 1,000.

The popular social network emphasized in its complaint that it believes it has a right to tell the public what kind information the company releases to federal officials. "It's our belief that we are entitled under the First Amendment to respond to our users' concerns and to the statements of U.S. government officials by providing information about the scope of U.S. government surveillance -- including what types of legal process have not been received," wrote Ben Lee, the head of Twitter's legal department. "We should be free to do this in a meaningful way, rather than in broad, inexact ranges." An agreement reached in January between the DOJ and five major tech companies relaxed somewhat the restrictions on what those companies could say to the public. Twitter, however, is not satisfied: the company is "going even further in its call to detail exactly how many orders it receives -- including zero, if that is the case."

Civil liberties advocates have come out in support of Twitter's pushback against the federal government. "If these laws prohibit Twitter from disclosing basic information about government surveillance, then these laws violate the First Amendment," said American Civil Liberties Union deputy legal director Jameel Jaffer. "We hope that other technology companies will now follow Twitter's lead." As is to be expected, however, government officials caution that these secretive data collection programs are vital to the nation's fight against terrorism.

Given Twitter's deep pockets and Americans' growing uneasiness with the federal government's data dragnet, this battle over free speech and Internet privacy is far from over.


When How is a Four-Letter Word

Dov Seidman, author of How: Why How We Do Anything Means Everything, is "in the business of helping companies create more ethical cultures." Greek yogurt maker Chobani is also in the business of creating cultures, albeit of a different, dairy-based kind. Both Seidman and Chobani also have an interest in a simple, three-letter word: How.

Chobani, founded in 2005 by a Turkish immigrant, recently revised its marketing campaign and launched an ambitious new effort earlier this year that focuses on the quality of Chobani yogurt and the way it is produced. To highlight this process, the company uses the phrase "How Matters" in its marketing materials and packaging. Seidman also uses "How Matters" in some of the promotional materials for his book and management company. Chobani, Seidman claims, has stolen his "How."

Now, Seidman says he is fighting back and working to reclaim "How," suing the yogurt manufacturer and its advertising agency, Droga5. Seidman has even asked a federal court to order Chobani to halt its "How Matters" campaign, because it "represents an infringement on his trademark for the word how," writes The New York Times. In response to Seidman's lawsuit, Chobani and Droga5 have launched their own legal battle, denying that they had ever heard of Seidman or his company, and even petitioned the court for cancellation of Seidman's trademark for "How," calling it too broad. Chobani has also filed its own trademark application for the phrase "How Matters." Seidman, however, does not appear intimidated, commenting "this is not principally a legal fight. It's a moral fight -- it's a 'How' fight."

Let the trademark battle begin.


Tax Triumph for Artists

The U.S. Tax Court ruled last week that individuals who classify themselves on their tax returns as artists, but who make little or no money from the pursuit, can still identify themselves as artists for tax purposes. At first blush, this decision may not sound particularly significant, but in reality, "the heart of the case touches on a situation familiar to many thousands of artists . . . who earn a living as teachers or studio assistants or stagehands while pursuing creative careers that they hope will flourish and someday be able to pay the bills."

The case decided last week involved New York painter and printmaker Susan Crile, whom the IRS accused of underpaying taxes from 2004 to 2009. Some of Crile's works hang in the Met and the Guggenheim, and have focused on topics such as prisoner abuse at Abu Ghraib. According to court papers, Crile earned less than $700,000 from 1971 through 2013 from the sale of her works; "like many artists, she wrote off expenses from her work, like supplies, travel and meals, on her taxes." To supplement the income made from the sale of her art, she worked as a professor at Hunter College, where she began working part time in 1983 and became a tenured professor in 1994.

The IRS based its accusation against Crile on a number of factors. The agency argued that Crile could not rightly be classified as an artist because her work as a painter and printmaker was "an activity not engaged in for profit;" the IRS also argued that she "could not claim tax deductions in excess of the income she made from her art." Additionally, in a claim that The New York Times saw "alarmed many in the art world," the IRS stated that Crile's claim that she was both an artist and a college professor was "artificial," and that she "made art primarily to keep her job as a teacher." Essentially, attorneys for the IRS were arguing that, at least for tax purposes, Crile should be classified as a teacher, and that any "art-related expenses should have been filed not as business expenses but as unreimbursed employee expenses." Judge Albert G. Lauber was not convinced, however, writing that the artist had "met her burden of proving that in carrying on her activity as an artist, she had an actual and honest objective of making a profit" and thus should be considered a professional artist for purposes of the tax code.


October 8, 2014

Center for Art Law Case Updates

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

William Roger Dean v. James Cameron et al. (S.D.N.Y. Sept. 17, 2014) -- J. Furman granted a motion to dismiss a copyright suit brought by artist William Roger Dean, ruling in favor of Hollywood defendants. Plaintiff claimed that the defendants, through their work on the blockbuster 2009 feature film Avatar, infringed on his copyright to 14 of his original works. The court noted that within the meaning of copyright law, using "good eyes and common sense," and considering the work as a whole, no substantial similarity exists between Avatar and the protectable elements of Dean's copyrighted works.

U.S. v. Twenty-Nine Pre-Columbian and Colonial Artifacts From Peru (S.D.Fla., Sept. 11, 2014) -- Last September, defendant, Peruvian national Jean Combe Fritz, filed a motion to dismiss US government's forfeiture of cultural property claims on the grounds that i) the court lacked subject matter jurisdiction, ii) Fritz was denied due process, and iii) plaintiffs failed to state a cause of action. A year later, on September 11, 2014, J. Lenard of the United States District Court, Southern District of Florida, denied the motion noting that none of the three grounds were merited.

Franco Fasoli (A.K.A. "Jaz") v. Voltage Pictures, LLC, 1:14-cv-06206 (N.D.Il. 2014) -- Plaintiff visual artists "Jaz," "Ever," and "Other" filed a copyright infringement claim alleging that multiple identified and unidentified Hollywood defendants blatantly misappropriated the artist's collaborative mural, protected under Argentina's copyright law, by creating an "infringing work" on the set of the now released film The Zero Theorem, which was filmed in Romania in 2012. Plaintiffs seek relief in the form of a preliminary and permanent injunction, impoundment and disposition of infringing articles, an order of accounting of gains and profits, and monetary damages. Plaintiffs are represented by Foley & Lardner LLP.

Estate of James A. Elkins v. Commissioner of Internal Revenue (5th Cir., Sept. 15, 2014) -- The Estate of James A. Elkins brought legal action against the Commissioner of Internal Revenue after the IRS refused to allow any discount against the Decedent's fractional ownership interest in 64 pieces of art work which he co-owned with his three adult children. Three expert witnesses for the Estate testified that application of the "willing buyer/willing seller" test would produce prices for the Decedent's undivided interests that would be substantially lower than the fair market value of his pro-rata shares, and thus a buyer would expect a fractional-ownership discount which should be considered in assessing value for tax purposes. In 2013, the Tax Court agreed that some discount should apply, and proposed it to be 10%. On 15 September, 2014, the Fifth Circuit affirmed the finding that a discount should apply to the fractional ownership interests, but rejected the baseless 10% discount applied by the Tax Court in favor of the higher discount percentages provided by the Estate.

Marguerite Hoffman vs. L&M Arts, et. al, 3:10-CV-0953-D (N.D. Tex 2014) -- When Marguerite Hoffman quietly sold her Rothko she 'bargained for confidentiality' because the painting was promised to the Dallas Museum of Art. Shortly thereafter the painting turned up for a public auction and Hoffman sued the dealer and the subsequent buyer for not keeping her sale secret, per terms of the sales agreement. (http://frontburner.wpengine.netdna-cdn.com/wp-content/uploads/2014/09/Order-Dismissing-Claim-Against-DM-SC-With-Prejudice.pdf?utm_source=Center+for+Art+Law+General+List&utm_campaign=f2a104a2e9-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_022731d685-f2a104a2e9-346773625) On 4 September 2014, Texas district court dismissed Hoffman's claim against the buyer and ruled that she can only recover benefit-of-the bargain damages from the seller. https://casetext.com/case/hoffman-v-l-m-arts?utm_source=Center%20for%20Art%20Law%20General%20List&utm_campaign=f2a104a2e9-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_022731d685-f2a104a2e9-346773625

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.