The Virginia Business Litigation Blog

April 28, 2009

Herndon Company Unable to Obtain Preliminary Injunction Against Breach of Non-Compete

Herndon-based Deltek, Inc., surely thought it would have little trouble enjoining its former employees from forming a competing company in direct violation of their employment contracts. After all, the defendants admitted that they were competing with their former employer in a manner that would fall under the noncompete provisions of their respective employment agreements. However, in a written opinion issued on April 20, 2009, by Judge Trenga of the United States District Court for the Eastern District of Virginia (Alexandria Division), the court denied the requested injunctive relief.

Uncontested evidence demonstrated that three former Deltek employees, a Managing Director, Consulting Manager, and Services Coordinator, all of whom had access to information considered by Deltek to be confidential, proprietary, and trade secret information, left Deltek and joined Iuvo Systems, Inc., in Chantilly, Virginia. Iuvo’s business involves providing consulting and application management services relating to Deltek’s proprietary accounting and financial software. All three employees had signed noncompetition and nondisclosure agreements with Deltek.

The relevant noncompete language provided that the employees could not, for a period of two years after the termination of their employment, “directly or indirectly be engaged as an employee or consultant of any firm or corporation engaged in a business which is in competition with [Deltek].” The agreements also prohibited the use or disclosure of “Confidential Information” or “Confidential or Proprietary Information” both during and after employment.

April 20, 2009

Your Rights as a Disabled Employee

by Lee E. Berlik

Qualified individuals with disabilities are entitled to an equal opportunity to benefit from the full range of employment-related opportunities available to others. The Americans with Disabilities Act (ADA) prohibits discrimination in the workplace (as well as in government and other contexts) on the basis of disability. It applies to employers with 15 or more employees and covers recruitment, hiring, promotions, training, pay, social activities, and other privileges of employment. The ADA also restricts the questions that can be asked about an applicant’s disability before a job offer is made, and it requires that employers make reasonable accommodations to the known physical or mental limitations of otherwise qualified individuals with disabilities, unless doing so would result in undue hardship.

To be protected by the ADA, one must qualify as having a “disability” (or as having a close relationship with a disabled person) as that term is defined in the Act. Under the ADA, a disabled person is: (1) one having a physical or mental impairment that substantially limits one or more major life activities, (2) a person who has a history or record of such an impairment, or (3) a person who is perceived by others as having such an impairment. See 42 U.S.C. § 12102(2). The ADA does not specifically list or identify all possible impairments that would be considered disabilities.

April 18, 2009

Discrimination Against Hispanics By Nordstrom Leads to Settlement

by Lee E. Berlik

Days before the case was scheduled to go to trial, national department store chain Nordstrom, Inc., opted to settle the Title VII lawsuit brought against it by the United States Equal Employment Opportunity Commission in which the EEOC alleged Nordstrom violated Title VII of the Civil Rights Act of 1964 by subjecting Hispanic and black employees to racial and ethnic slurs. While Nordstrom did not admit wrongdoing, it nevertheless agreed to a Consent Decree requiring it to pay $292,500 to 10 former employees, to distribute its anti-harassment policy to all employees in the two Florida stores at issue, and to take other steps to prevent future acts of unlawful discrimination.

According to the lawsuit, an alterations department manager complained that she “hate[d] Hispanics,” and that Hispanics were “lazy” and “ignorant.” She made similar derogatory remarks about African Americans, such as “I don’t like blacks” and “you’re black, you stink.” When the employees complained about the treatment, the manager retaliated by making more racially offensive comments, unfairly berating employees and citing them for alleged performance problems.

The settlement also requires Nordstrom to post a notice regarding the lawsuit and settlement in a conspicuous location at its two stores, written in multiple languages. Included in the notice is a statement that “Appropriate corrective action, up to and including termination, based upon the circumstances involved, shall be taken against any employee (including management personnel) found the have violated the Nordstrom policy prohibiting discrimination.”

April 16, 2009

Fairfax County Jury Awards $3.2 Million to Injured Shopper

by Lee E. Berlik

As reported in the Washington Post, a jury trial in Fairfax County, Virginia, resulted in an award of $3.2 million in damages to a 36-year-old Arlington resident who was injured while shopping at IKEA’s Potomac Mills store. On July 28, 2006, as the shopper stopped near the store’s exit to inspect the bargain bin, a display of countertops weighing over 350 pounds came crashing down on her, crushing her pelvis.

Personal injury lawsuits based on theories of premises liability do not typically involve damages awards involving millions of dollars, especially in the conservative jurisdiction of Fairfax County, Virginia. In 2008, for example, only 15 jury verdicts across the entire Commonwealth of Virginia were for one million dollars or more. In this particular case, however, the jury was moved by the fact that the shopper was an athlete who frequently traveled to China, Europe, and across the United States to pursue hiking, biking, and climbing activities. Since the accident, she can only walk about three blocks before the pain becomes unbearable. In other words, IKEA’s negligence resulted in effectively terminating her athletic pursuits and the joy she derived therefrom. The jury decided to compensate her for this pain and suffering.

Business that invite customers to shop at their retail stores need to take precautions to ensure the safety of their shoppers. An injured patron will generally have grounds to sue the business if the patron is injured by falling merchandise and the patron did not cause the objects to fall. This would be true regardless of whether the business owner is guilty of active negligence or simply allowed a known dangerous condition to exist on the premises without taking steps to protect the store’s customers.

April 14, 2009

Trademark Litigation Between Coke and Pepsi Enters Another Round

by Lee E. Berlik

On Monday, the company that owns Gatorade (a Pepsi subsidiary) filed suit against Coca-Cola and Energy Brands, accusing them of false advertising and other unfair competition in connection with its two-week advertising campaign for Coke’s Powerade ION4 sports drink.

In the advertising campaign, Powerade (which continues to be marketed as “the complete sports drink“) was claimed to be superior to Gatorade (identified, by comparison, as an “incomplete” sports drink) due to Powerade’s inclusion of trace amounts of two electrolytes, calcium and magnesium. According to the lawsuit, no evidence exists to suggest that the addition of these two minerals–especially in such tiny quantities–provides any nutritional or physiological benefits. Pepsi says Coke isn’t playing fair when it displays a photo of a Gatorade bottle lopped in half alongside the slogan, “Don’t settle for an incomplete sports drink.” In legal terms, it claims Coke is guilty of “false advertising, trademark dilution, deceptive acts and practices, injury to business reputation and unfair competition.”

The Lanham Act, on which all of Pepsi’s claims are based in various forms, prohibits misleading advertisements. Specifically, Section 43(a) of the Lanham Act, found at 15 U.S.C.A. § 1125, makes a defendant liable for false advertising where all of the following conditions are met: (1) the defendant made a misrepresentation in commercial advertising or promotion concerning goods, services, or commercial activities; (2) the misrepresentation actually deceived or tended to deceive its recipients; (3) the misrepresentation was likely to influence purchasing decisions; (4) the misrepresentation injured or was likely to injure the plaintiff; and (5) the misrepresentation was made in commerce.

April 11, 2009

D.C. Sues Computer Leasing Companies for Fraud Scheme

by Lee E. Berlik

D.C. has brought an action in D.C. Superior Court against several computer-leasing companies, charging them with deceiving numerous church congregations into paying hundreds of thousands of dollars for unneeded or broken computer equipment.

In the lawsuit, filed last Wednesday, the city claims that United Leasing Associates of America, Television Broadcasting Online, and others hatched a plan to offer “free” computer equipment to hundreds of area church congregations, but then trick them into signing papers binding them to long-term lease payments of $50,000 or more. The equipment, marketed by the defendants as “information kiosks” designed to help congregations communicate with members of the community and post job listings, consisted of ordinary desktop computers disguised in mahogany casing. Those congregations who refused to pay the exorbitant monthly fees suffered harm to their credit rating.

Businesses need to conduct their operations in good faith and deal fairly with their customers. An action for fraud and deceit arises when a defendant makes (1) a false representation (2) in reference to material fact, (3) made with knowledge of its falsity, (4) with the intent to deceive, which (5) causes the subject of the fraud to take action in reliance upon the representation. See Atraqchi v. GUMC Unified Billing Servs., 788 A.2d 559, 563 (D.C. 2002). Stated more simply, you commit fraud if you lie to someone for the purpose of tricking them into doing something, and the person falls for it. Virginia has similar laws prohibiting fraudulent business transactions.

April 8, 2009

Virginia Court Gives Cybersquatter “The Maximum”

by Lee E. Berlik

Apparently there are still some people who think they are being clever by registering domain names confusingly similar to trademarks or domains used by existing companies, hoping to capitalize on the confusion. And what better target than Citibank, a giant company with an easily misspelled name! Judge Hilton of the Eastern District of Virginia, who is well versed in intellectual property issues, decided to teach a lesson to such a schemer in the case of Citigroup, Inc. v. Shui, Civil Action No. 08-0727, on February 24, 2009.

The Defendant, Chen Bao Shui, thought it would be a good idea to register CITYBANK.ORG and use it to market financial services. When visitors would go to his site, they would see links to, among other things, “Citibank Student” and “Citibank Visa.” Clicking on such an option would not take the visitor to Citigroup, of course, but to another citybank.org page or to a third-party vendor who would pay the Defendant for each click-through. In other words, the Defendant’s plan was to earn money by confusing customers into believing they were dealing with Citigroup when they were dealing with an unrelated, unaffiliated entity.

This is exactly the sort of activity prohibited by the Anticybersquatting Consumer Protection Act, found at 15 U.S.C. 1125(d) (the “ACPA”). A violation of the ACPA exists where (1) a defendant has a “bad-faith intent” to profit from using the domain name; and (2) the domain name at issue is identical or confusingly similar to the plaintiff’s distinctive or famous trademark.

April 4, 2009

Google’s Lucrative Adwords Program May Violate Trademark Rights

by Lee E. Berlik

Trademark owners take note: whether or not you participate in Google’s Adwords program to advertise your business, your competitors may be using your trademark as a keyword in promoting their competing business. Google not only allows this potentially infringing practice, it encourages it! The company actively and openly sells competitors’ trademarks to advertisers seeking to divert potential customers to the advertisers’ websites.

It remains to be seen, however, how long the courts will permit this practice to continue. On April 3, 2009, a federal appeals court sitting in New York decided to allow a case to go forward in which a computer-repair company called Rescuecom sued Google for trademark infringement. The case is Rescuecom Corp. v. Google, Inc., Case No. 06-4881 (2d Cir.).

The complaint involves two of Google’s programs used in Internet advertising: AdWords and Keyword Suggestion Tool. With AdWords, advertisers purchase keywords relevant to their business. When a purchased keyword is used in a Google search, the advertiser’s ad and link appear on the search results page, either in the right margin or in a horizontal band immediately above the relevance-based (i.e., non-sponsored) search results. The Keyword Suggestion Tool recommends keywords to advertisers. Among its recommendations might be the trademark owned by the advertiser’s competitor.

April 2, 2009

What Is Harassment?

by Lee E. Berlik

So you want to sue your boss for harassment. For years, you have put up with his antics, but now you’ve had enough. He has humiliated you in front of your co-workers, berated you for trivial things, and insulted you. Basically, he is a jerk. But do you have grounds for a lawsuit? Has your boss “harassed” you within the meaning of Title VII of the Civil Rights Act of 1964?

Federal anti-discrimination statutes do not prohibit all harassing behavior. They do not guarantee that your boss will be “nice” to you. They do, however, offer powerful protection against unwelcome verbal or physical conduct based on race, color, religion, sex, gender identification, national origin, age (if you are 40 or older), disability (mental or physical), sexual orientation (depending on the circumstances and jurisdiction), and retaliation against an employee who complains of discrimination, participates in an investigation, or voices opposition to discriminatory practices.

Continue reading

March 28, 2009

What Is A Trademark?

by Lee E. Berlik

A trademark is a type of intellectual property that generally consists of a distinctive sign or indicator used to identify the originating source of the products associated with the trademark, so that consumers can distinguish the trademark owner’s products from those originating from other sources. Section 45 of the Trademark Act defines the term “trademark” as “any word, name, symbol, or device, or any combination thereof-

(1) used by a person, or

(2) which a person has a bona fide intention to use in commerce and applies to register on the principal register…,

The VirginiaBusiness Litigation Blog