CURRENT MONTH (February 2019)
NLRB Reinstates Independent Contractor Standard
By Meagan Bainbridge, Weintraub, Tobin, Chediak, Coleman, Grodin Law Corporation
As expected, the National Labor Relations Board (NLRB) recently reinstated the traditional common-law agency test for determining independent contractor status for certain classes of works. In SuperShuttle Inc. DFW, Inc., the NLRB determined a group of franchisee drivers for SuperShuttle DFW were independent contractors. In doing so, the NLRB was swayed by entrepreneurial opportunity provided to the drivers, including through their ability to control their work conditions and hours, their entitlement to all fares and tips earned, their ownership of the tools used for their work, and their ability to set their own hours and working conditions. This decision overrules the NLRB’s 2014 Decision, FedEx Home Delivery, 361 NLRB No. 65, which had modified the NLRB’s independent contractor test to limit the emphasis placed on the extent of the entrepreneurial opportunity provided by a particular position. The SuperShuttle decision expands the definition of the independent contractor test under the National Labor Relations Act (NLRA), and continues the NLRB’s recent trend of employer-friendly decisions.
Intellectual Property Law
US Supreme Court Hears Oral Arguments for Multiple IP Cases
The Supreme Court of the United States heard oral arguments for intellectual property cases late in February, 2019. The two cases were Return Mail Inc. v. United States Postal Service, argued on February 19, and Mission Product Holdings Inc. v. Tempnology, LLC, argued on February 20. Return Mail is concerned with whether the government has standing to challenge patents in Patent Trial and Appeal Board (PTAB) proceedings. This case will determine whether the government is considered a “person” (instead of personhood being reserved for private entities) under the Leahy-Smith America Invents Act, which would then allow the government to file patent review proceedings with PTAB. Mission Product Holdings is concerned with trademark licenses following the trademark licensor’s bankruptcy. SCOTUS’s decision in this case will determine whether rejection of a license in bankruptcy terminates the licensee’s right to use the trademark or whether such rejection amounts to a breach by the licensor, thereby allowing the licensee to continue using the trademark.
Antitrust; Business Litigation
Ninth Circuit Court of Appeals Reinstates $44 Million Trial Award in Monopolization Case Alleging Exclusionary Conduct
On February 8, 2019, the Ninth Circuit issued an unpublished opinion in Trendsettah USA, Inc. v. Swisher International, Inc., No. 16-56823 (9th Cir. 2019), restoring a cigarillo company’s $44 million award (based on the trebling of $14.8 million in damages) by vacating the trial court's orders granting a new trial and then entering summary judgment for the defendant on the plaintiff’s monopolization claim. Plaintiff Trendsettah alleged that after its Splitarillos brand started to cut into the market share of Swisher’s competing brand, Swisher—which had been contracted to manufacture the plaintiff’s cigarillos—refused to fulfill Trendsettah’s orders and engaged in other exclusionary conduct designed to starve Trendsettah out of business. The opinion notes that the trial court properly considered Ninth Circuit precedent holding that “there is only a duty not to refrain from dealing where the only conceivable rationale or purpose is ‘to sacrifice short-term benefits in order to obtain higher profits in the long run from the exclusion of competition,’” but failed to draw all reasonable inferences in favor of the nonmoving party, instead citing evidence introduced by the defendant as proof that it had legitimate business reasons for its conduct. “But in rendering its verdict, the jury clearly had rejected this evidence,” and accordingly, the Ninth Circuit vacated the summary judgment ruling.
Newly Merged College Sports Marketing Firm Enters Consent Decree with U.S Antitrust Division
On February 14, 2019, the U.S. Department of Justice announced a settlement with Learfield IMG College to resolve a Department lawsuit alleging that it engaged in unlawful agreements not to compete for multimedia rights contracts for university athletic programs. The proposed settlement prohibits agreements not to bid, or to submit joint bids, between Learfield IMG College and any of its competitors in multimedia rights management. The proposed settlement also requires Learfield IMG College to adopt rigorous antitrust compliance and reporting measures to prevent similar anticompetitive conduct in the future.
The FTC Follows Executive into Bankruptcy to Recover Judgment
By Nora Udell, Hudson Cook, LLP
On February 1, 2019, the FTC issued a press release highlighting a December 2018 Bankruptcy Court Order that held that the CEO of BlueHippo, a computer financing company, could not discharge in bankruptcy a $13.4 million contempt judgment. In 2009, the FTC had alleged in a motion for contempt against BlueHippo that the Company violated a 2008 Consent Order by failing to clearly disclose “major strings” attached to its refund policy. The Bankruptcy court found that the CEO was “at the helm of and guided BlueHippo in its every action in connection with [the refund policy] fraud” underlying the contempt judgment. As a result, the Bankruptcy court held that the $13.4 million contempt judgment was non-dischargeable as a debt “obtained by . . . false pretenses, a false representation, or actual fraud” under 11 U.S.C. § 523(a)(2)(A). In its press release, the FTC commented: “(1) It’s unwise for companies and corporate officers to assume that bankruptcy will necessarily shield them from the financial consequences of their illegal conduct toward consumers; and (2) If it’s necessary to follow a defendant to Bankruptcy Court to protect consumers’ interests, the FTC has an experienced team ready to go there.”