October 5, 2016

Lit Alerts—October 2016

A publication of the Litigation Practice Group

In This Issue:




Employment Law: Second Circuit Holds Employers May Be Liable For Negligently Assisting A Low-Level Employee's Retaliation

Last month, the Second Circuit ruled in Vasquez v. Empress Ambulance Serv., Inc. that an employer can be liable for the retaliatory actions of a low-level employee with no decision-making capability if "the employer's own negligence gives effect to the employee's retaliatory animus and causes the victim to suffer an adverse employment decision." Reversing a decision by the Southern District of New York, the court ruled that Title VII retaliation claims may rely on the "cat's paw" theory initially fashioned in the Seventh Circuit, which holds that a non-supervisory employee's actions can be imputed to an employer if the employer negligently assists the retaliatory action.

The case involved unwanted romantic advances by one low-level employee on another. When the recipient complained, the employee making advances fabricated evidence portraying the complaining employee as the person making romantic advances. The complaining employee offered contradictory evidence when confronted with the fabricated evidence, but her supervisors refused to consider it and fired her. The Second Circuit's decision rested on its view that the employer was negligent when it relied upon the fabricated evidence without further investigation.

The court was careful not to rule that employers are liable for all illegal retaliations committed by low-level employees, only retaliations in which an employer's management negligently becomes the conduit for the retaliating employee's plan. With this case, the Second Circuit joins the Third, Fifth, Sixth, Seventh, and Eighth Circuits in allowing Title VII retaliation cases to proceed under the "cat's paw" theory.

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Intellectual Property: Creative Commons Organization Asks Court For Permission To Weigh In On Licensing Dispute

More than one billion works have been licensed pursuant to "creative commons" licenses, which permit the free use of copyrighted material subject to certain conditions. Recently, the organization responsible for the creation and stewardship of those licenses, Creative Commons Corporation, asked a federal district court for permission to file an amicus brief in a rare case testing the scope of those licenses, Great Minds v. Fedex Office and Print Services, Inc.

In the case, plaintiff Great Minds asserts that Fedex exceeded the scope of the license granted in educational materials Great Minds produces. Great Minds shares those materials with school districts pursuant to a Creative Commons license that expressly permits reproduction for "NonCommercial" purposes only. Some school districts exercising their reproduction right under this license hired Fedex to make copies of the licensed material. Great Minds asserts that Fedex itself violated its copyright interests in making the copies at the school district's direction, because Fedex is a commercial entity and generated revenue through its work for the school districts — therefore, Great Minds argues, Fedex used the materials for a commercial purpose in breach of the license.

In requesting permission to file its amicus brief, Creative Commons criticizes this theory, arguing that an entity engaged in a bona fide Noncommercial use is not required to refrain from seeking outside assistance, "including commercial entities acting solely at the licensee's direction, at every step in the reproduction or distribution process that culminates in sharing of the work for a NonCommercial end."

Fedex has filed a motion to dismiss in the case, which will likely be watched closely by users and beneficiaries of Creative Commons licenses. Whatever the result, the lawsuit represents a rare challenge to a license framework that has otherwise gone mostly untested.

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E-Discovery: Federal Court Provides Stark Reminder That Failure To Monitor Employees' Compliance With ESI Preservation Policies Can Cost Companies Millions In Sanctions

A recent federal court decision, GN Netcom, Inc. v. Plantronics, Inc., No. 12-1318-LPS, 2016 U.S. Dist. Lexis 93299 (D. Del. July 12, 2016), sent a stern warning that issuing a litigation hold upon notice of a claim or commencement of litigation may not satisfy electronically stored information (ESI) preservation rules.

In GN Netcom, upon commencement of the litigation, the defendant, Plantronics, Inc., implemented a litigation hold, conducted training sessions, and sent quarterly reminders to document custodians. However, in spite of these policies, a senior executive deleted relevant emails and asked his subordinates to do the same. Plantronics hired a forensic expert whose preliminary findings revealed that the executive had deleted tens of thousands of emails, several of which were likely discoverable. However, due to budgetary constraints, Plantronics did not further engage the forensic expert to finalize its analysis.

In considering GN Netcom, Inc.'s motion for sanctions, the court contemplated Federal Rule of Civil Procedure 37(e), which was most recently amended in December 2015 to specifically address the applicability of sanctions for spoliation of ESI. Plantronics argued that sanctions were inappropriate because the company initially took reasonable steps to preserve ESI, had no intent to deprive GN of discovery, and GN had not demonstrated prejudice. The court rejected these arguments. In light of all of the evidence presented "including Plantronics' repeated obfuscation and misrepresentations related to [the senior executive's] email deletion and its investigation of it, the [c]ourt [found] that Plantronics did act in bad faith, 'intend[ing] to impair the ability of the other side to effectively litigate its case.'"

The decision sends a strong message: if a company learns that an employee disregarded a litigation hold, the company is responsible for the employee's actions and must take necessary steps to remedy the situation. Effective monitoring of employees' compliance with litigation holds and appropriate follow-up is vital to avoid sanctions.

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