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Weekly Issues in the News

By Geisa Balla

Federal Trade Commission

On August 23rd the Federal Trade Commission ("FTC") won a $478 million judgment against the marketers of a series of get-rich-quick real estate infomercials. The FTC filed the lawsuit in June 2009 against the marketers of the three "systems" for making money quick, including "John Beck's Free & Clear Real Estate System," which promised to teach consumers how to buy homes for pennies on the dollar during government sales. The FTC claimed that those behind the system made false and unsubstantiated claims about how much money consumers could make, and nearly all those who bought the products at $39.95 actually lost money. U.S. District Judge Jacqueline Nguyen in Los Angeles also imposed a lifetime ban from infomercial production and telemarketing against three defendants. An attorney for two of the defendants, Douglas Gravink and Gary Hewitt, stated that they would likely appeal the order to the extent it imposes a lifetime ban. Jeffrey Klurfeld, director of the western region of the FTC, said in a statement: "This huge judgment serves notice to anyone thinking of using phony get-rich-quick schemes to defraud customers."


Lance Armstrong

U.S. District Judge Sam Sparks has dismissed Lance Armstrong's lawsuit against the U.S. Anti-Doping Agency ("USADA"). Armstrong's suit attempted to block a probe into whether Armstrong cheated by using performance-enhancing drugs. The Court dismissed the initial complaint in July 2012, calling the lawsuit a "lengthy and bitter polemic." Armstrong filed an amended complaint, which was dismissed on August 20, 2012 without prejudice. USADA chief executive Travis Tygart said in a statement that the agency was pleased with the ruling, and that the agency had "protected the rights of athletes for over a decade." The USADA formally charged Armstrong in June 2012 with doping and taking part in a conspiracy with members of his championship teams. In a letter to Armstrong which was published in the Washington Post, the agency said that it had blood samples from 2009 and 2010 that are "fully consistent" with doping.
Following the dismissal of his lawsuit, Armstrong announced on August 23rd that he would no longer fight the doping charges. USADA responded immediately, stating that it would strip Armstrong of his seven Tour de France titles. USADA did in fact erase his titles on Friday, August 24th, and issued a lifetime ban for Armstrong.




CBS has dropped its lawsuit against ABC over the alleged copying of its long-running reality TV series "Big Brother." CBS initially filed its suit against ABC in May in the U.S. District Court, Central District of California. The lawsuit claimed that ABC copied several elements of "Big Brother" when it created "Glass House." "Glass House" also employed 19 former producers and staff of "Big Brother." In the week ending Aug. 12th, "The Glass House" ranked 87th among broadcast TV shows by number of viewers, with an audience of 1.59 million, according to Nielsen. In a statement CBS said "Viewers have spoken and delivered the ultimate form of justice against 'The Glass House."" CBS voluntarily dismissed the case, and it will arbitrate its contract and trade secrets claims against former "Big Brother" producers accused of violating confidentiality agreements.



Imane Boudlal, a former Disneyland restaurant employee, filed a lawsuit against Walt Disney Co. on August 13th, alleging that she was fired because she wanted to wear a Muslim head scarf at work. The former employee worked as a hostess at the Storytellers Café inside Disney's Grand California Hotel & Spa at Disneyland in Anaheim, California. She alleges that two years into the job she asked permission to wear a hijab while at work. She said she offered to wear a scarf that matched the colors of her uniform or featured a Disney logo. She alleges that her managers denied her request, saying it would violate the company's policy for how employees "look" while on the job. Boudlal said she was given the choice of working in a back area, away from customers, or wearing a fedora-style hat on top of her head scarf. When Boudlal refused, she was fired, the lawsuit states. Boudlal also claims she was subject to anti-Arab and anti-Muslim slurs, including being called "terrorist" and "camel" by co-workers and supervisors. "Disneyland calls itself the happiest place on earth, but I faced harassment as soon as I started working there," Boudlal said in a statement released by the American Civil Liberties Union of Southern California. "It only got worse when I decided to wear a hijab." Disney claims it offered Boudlal several options for a costume that would accommodate her religious beliefs, as well as four different jobs where she could wear her own hijab. "Walt Disney Parks and Resorts has a history of accommodating religious requests from cast members of all faiths," Disneyland Resort spokeswoman Suzi Brown said in a statement. "Unfortunately, (Boudlal) has rejected all of our efforts and has since refused to come to work," Brown said. Boudlal is seeking punitive damages and an order that Disney may not prohibit employees from wearing hijabs.



The National Football League ("NFL") filed a lawsuit in Los Angeles Superior Court on August 15th against nearly three dozen insurance companies, seeking to force them to defend it against mounting brain injury claims by former players and their families. The suit names virtually every insurer in the country, as all the firms provided coverage for the NFL at some point between 1960 and the date of the lawsuit. The NFL claimed that it was a defendant in 143 bodily or personal injury lawsuits, and its insurers were obligated to defend the NFL under its general liability policies. "As a direct and proximate result of said insurers' breach of their contractual duty to defend the NFL and NFL Properties in and against the injury lawsuits, Plaintiffs have suffered damages in attorneys' fees and other costs incurred to defend against those suits," the NFL alleges in its complaint, adding that it was entitled to at least $5 million in damages.

The following week, on August 22nd, several subsidiaries of Travelers Companies Inc. filed suit against the NFL in New York Supreme Court, seeking to avoid paying to defend the NFL against the brain injury claims by former players and their families. Travelers claims that it is not required to pay any of the defense costs of the NFL. According to the Travelers lawsuit, the company provided liability coverage for NFL Properties, the NFL's merchandising arm, but not the NFL, and should not be required to pay for a joint defense. The insurer points out that a "master complaint" filed jointly by some 2,000 former players in June alleges 14 counts against the NFL, but only two against NFL Properties. "Last week, the NFL filed a comprehensive lawsuit in California against 32 insurers to ensure an orderly and comprehensive determination of its insurance rights and its carriers' obligations," NFL spokesman Greg Aiello said. "This new filing by Travelers does not alter our objectives."



Christian Laboutin

Customs agents in Los Angeles seized 20,457 pairs of fake Christian Laboutin shoes shipped from China. The counterfeit "red sole" shoes could have brought $18 million if they had reached consumers. The Director of Field Operations for U.S. Customs and Border Protection in Los Angeles stated that "CBP maintains an aggressive and proactive posture on intercepting shipments containing counterfeit and pirated items." Five shipments were seized at the Los Angeles/Long Beach seaport on July 27th and August 14th, the Customs and Border Police release said. "Often available on illegitimate websites and underground outlets, counterfeit high fashion commodities multiply the illegal profits of smugglers and traffickers...The public is misguided into believing they are buying an original product at a significant discount."


Lululemon v. Calvin Klein

Lululemon Athletica Inc., the Canadian producer of athletic apparel, filed a design patent infringement lawsuit against Calvin Klein and manufacturer G-III Apparel Group Ltd. on August 13th in the United States District Court, District of Delaware. Lululemon alleges that some of Calvin Klein's "Performance" pants infringe on Lululemon's "Astro Pant" patent. Lululemon has three design patents that cover the Astro style: one of the actual waistband, the other two for two specific styles of the pant. To succeed Lululemon would have to show that Calvin Klein's pants look like its patented pants. Calvin Klein could strike back with a "prior art" argument, claiming that other made similar pants before Lululemon. Calvin Klein has already removed both styles of pants named in the suit from its website.


Geisa Balla is an attorney practicing in New York, NY. She can be reached at geisa.balla@gmail.com.

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