Virginia Business Litigation Lawyer Blog

A Lincoln-Mercury dealer in the Virginia Beach area has settled a lawsuit filed earlier this year by a former employee who claimed that she was subjected to a campaign of sexual harassment by the dealership's general manager.

On March 4, 2011, Carla Mercado, who worked as a car saleswoman until she was fired in March 2009, sued Lynnhaven Lincoln-Mercury Inc. for sexual harassment, discrimination and retaliation, asserting that Juan Lewis, the general manager, repeatedly groped her and made unwanted sexual advances and suggestions. On October 21, 2011, U.S. District Judge Raymond A. Jackson denied Lynnhaven's motion for summary judgment and its partial motion to dismiss the complaint. Faced with having a jury decide the merits of Ms. Mercado's claims, the parties mutually decided to settle the case on the courthouse steps, the day the trial was scheduled to begin.

According to the complaint, Lewis repeatedly made remarks of a sexual nature to Mercado on the job and asked her to have oral sex with him. On one occasion, according to the complaint, he told her that the only way she would get a promotion is if she performed that sexual act on him. At one time, the complaint reads, he forcibly kissed her. These comments and actions, the complaint says, "were an integral part of Juan Lewis's custom, business practice, and course of dealing with certain women at Lincoln-Mercury, while fulfilling his role as General Manager at the dealership."

Then, the complaint alleges, when Mercado rebuffed Lewis's advances, he and other employees of the dealership "commenced a campaign of retaliatory action" against her, including increasing her Sunday hours, rejecting her "deals" for vehicles and diverting them to other salespeople, and refusing to engage her in conversation. Ultimately, according to the complaint, she was terminated in retaliation for failing to comply with Lewis's sexual demands.

Mercado sued for hostile work environment sexual harassment, quid pro quo discrimination, retaliation, intentional infliction of emotional distress, assault, battery, and wrongful termination in violation of public policy. She sought damages of up to $5 million.

The dealership responded that Mercado was actually fired for not coming to work on Sundays and that it has a policy of treating unexcused absences as equivalent to a resignation. It also responded that at no point did the harassment affect a "tangible employment action" and that it was not sufficiently severe or pervasive to satisfy the law's requirements.

Timelines, Inc., a small Chicago-based Internet company, has lost the first round of its legal efforts to obtain a court finding that Facebook infringed on its "Timelines" trademark when it announced its much-ballyhooed new feature, "Timeline."

On Sept. 22, 2011, Facebook announced the "Timeline" feature, which will allow users to store and share their life events in chronological order on the site. Timelines, Inc., quickly filed a trademark infringement suit against Facebook, noting that it already has a registered trademark for the term "Timelines." This mark refers, among other things, to a website that allows users to record and share events and contribute descriptions, photos, videos, geographic locations, and links related to events and people.

Arguing that there was a significant likelihood of confusion between its existing online product and the one just announced by Facebook, Timelines filed its lawsuit in order to avoid, in the words of the complaint, "being rolled over and quite possibly eliminated by the unlawful action of the world's largest and most powerful social media company."

Timelines sought a temporary restraining order against Facebook's use of the term "Timelines," but on September 30, 2011, U.S. District Judge Edmond E. Chang denied the request. "Even assuming that Timelines has some likelihood of success, based on the present state of the record,...that likelihood is modest, and the other factors warrant denying the motion," Judge Chang wrote. "One question on the likelihood of success is the strength of the Timelines mark."

The judge ruled that even though Timelines had indeed been granted a federal trademark, that trademark is likely a "descriptive" one, since it simply "describes the service provided by Timelines' website, that is the creation on a website of a timeline for an event." Such "descriptive" trademarks are generally considered weak and do not enjoy the same protection as arbitrary or "fanciful" trademarks. The judge noted that if Timelines were to succeed in the litigation, it "would have to show that the term 'Timelines' has acquired a secondary meaning to customers such that they uniquely associate the term with the Plaintiff. On the current record, it is not at all clear that Timelines can make that showing."

Timelines may still be able to prove infringement, however, by focusing on the similarity between Timelines' website and Facebook's Timeline service. Consumers may be confused if the two services have the same name and do essentially the same thing.

A Swedish law firm has failed in its effort to sue a director of a former client for "misrepresentation" in Virginia federal court after the court ruled the claim was barred by Virginia's two-year statute of limitations applicable to negligence claims. The law firm had conceded that it would be unable to maintain a cause of action for fraud under the laws of Virginia, and the court opted to analyze the viability of the claim as a negligence action.

The law firm, Andersson Gustafsson Advokatbyra KB, sued eSCRUB Systems, Inc., a Virginia company, and three people associated with the company, claiming that eSCRUB had failed to pay the firm's legal bills after it hired the law firm in 2007 to help it resolve a dispute. The law firm alleged that John Packard, a former director of eSCRUB, committed fraud in that he breached a "continuing obligation to notify Andersson of the risks of non-payment it ran in performing services for eSCRUB." The allegation was essentially that Packard was part of a scheme to induce the law firm to provide legal services to eSCRUB with the full knowledge that the company would never pay the firm's legal fees.

In Virginia, negligence claims carry a two-year statute of limitations. Virginia follows the general rule that the event that starts the limitations clock ticking is the negligent act itself. There is no "discovery exception" that starts the clock at a later date, such as the date the plaintiff actually discovers that the alleged negligence occurred or that he has been damaged. Statutes of limitation can expire before a potential plaintiff even learns of the grounds for a lawsuit.

The judge found that the alleged injury occurred in December 2007, when the law firm's invoices first came due and eSCRUB refused to pay. The law firm contended that the injury occurred even earlier, in November 2007, when the law firm first started working for eSCRUB. The judge said that an alternative date would be May 8, 2008, when the law firm terminated its services to eSCRUB. But any of those dates are more than two years before the lawsuit was filed on June 8, 2010, so the claim was deemed time-barred and the court entered summary judgment for the defendant.

United States District Judge John A. Gibney, Jr., sitting in Richmond, Virginia thought so little of the well-publicized shakedown tactics of the new wave of "copyright troll" lawyers--in this case practiced by Richmond lawyer Wayne O'Bryan--that he took it upon himself (without any Defendant asking for it) to issue a show-cause order against the lawyer demanding that he explain why his conduct should not be punished with Rule 11 sanctions.

The subject of the lawsuit at issue is Gangbang Virgins, a pornographic film allegedly downloaded by 85 unnamed "John Doe" defendants using popular peer-to-peer network BitTorrent. The Court initially granted the plaintiff permission to issue subpoenas to Internet Service Providers to learn the identities of the people behind the accused I.P. addresses. Later, however, Judge Gibney was apparently moved by some of the letters he received from the John Doe defendants. Several of the defendants, for example, notified the Court that the plaintiff made harassing telephone calls to them as soon as their identities were revealed, asking for a payment of $2,900 to end the litigation.

What the Court found particularly troubling was the lawyer's behavior after certain defendants filed motions challenging their inclusion in the case. Rather than proceed to argue the merits of the motions in court, he routinely dismissed them, apparently to ensure the Court did not actually rule on any of the motions so that he could continue to threaten others. That, the Court found, amounted to nothing more than a "shake down" and an abuse of the Court's resources.

"The plaintiffs have used the offices of the Court as a means to gain the Doe defendants' personal information and coerce payment from them," the judge wrote. "The plaintiffs seemingly have no interest in actually litigating the cases, but rather simply have used the Court and its subpoena powers to obtain sufficient information to shake down the John Does."

Accordingly, the judge issued an order asking the plaintiffs' lawyer to show cause why his behavior did not violate Rule 11 of the Federal Rules of Civil Procedure, which specifies that anyone filing a complaint in federal court certifies that the complaint "is not being presented for any improper purpose, such as to harass."

Judge Gibney also rejected the plaintiff's attempt to join 85 unrelated defendants to a single piece of litigation. Rule 20 of the Federal Rules of Civil Procedure permits a plaintiff to sue multiple defendants in a single proceeding if their behavior arises out of the same transaction, occurrence, or series of transactions or occurrences. Here, the only thing that the 85 had in common was that they all had allegedly downloaded the same movie using the same peer-to-peer network and the same protocol. Accordingly, Judge Gibney ordered that only the first defendant remain in this case, while all others be severed.

"The mere allegation that the defendants have used the same peer-to-peer network to copy and reproduce the Work - which occurred on different days and times over a span of three months - is insufficient to meet the standards of joinder set forth in Rule 20," the judge found.

The United States Supreme Court recently held that a foreign manufacturer that places a product into the stream of commerce in the United States does not automatically subject itself to jurisdiction in each of the states where the product might foreseeably end up. Relying on this decision, a Roanoke Circuit Court judge has dismissed a Japanese manufacturing company from a product-liability case brought against it in Virginia.

Janet May was employed by Progress Press in 2006 and was operating a stitching machine made by Osako & Co., a Japanese company. She alleged that she was injured because the machine had an improper conveyor belt. She sued Osako and others for negligence and breach of warranty.

Osako sold its products in the United States through Consolidated International Corp., its exclusive distributor, which was a company independent of Osako. Osako knew that its products would be sold in the United States generally and made some product changes for the U.S. market but did not take any actions to specifically target Virginia. Osako has no physical locations in the United States. On these facts, Osako moved to dismiss May's suit for lack of jurisdiction.

Judge Charles N. Dorsey of the Circuit Court granted the motion. He relied heavily on J. McIntyre Machinery v. Nicastro, a U.S. Supreme Court ruling that was decided June 27, 2011. In the Nicastro case, which was a product-liability case with very similar facts to this one, the Supreme Court reversed the New Jersey Supreme Court and found that New Jersey lacked jurisdiction over a British company that sold a piece of machinery in that state. The high court rejected the New Jersey court's theory that placing the product into the "stream of commerce" conferred jurisdiction on that state's courts.

May had relied heavily on the Nicastro case - before it was reversed. Indeed, she had contended that her case and that case were "so similar that this Court has no way to find differently than the New Jersey court," Judge Dorsey wrote. In view of the reversal in Nicastro, the judge concluded, he had no choice but to apply the U.S. Supreme Court's ruling and to find that Virginia courts lack jurisdiction over Osako.