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workers holding placardsFederal law protects the right of workers to organize for the purpose of collective bargaining with their employers, more commonly known as unionizing. The National Labor Relations Act (NLRA) outlines these rights and prohibits employers from interfering with employees engaging in protected activities. The National Labor Relations Board (NLRB) investigates alleged violations of workers’ rights and, in some cases, pursues legal claims on behalf of aggrieved workers. Throughout 2017, employees of Tesla, a Northern California technology company that designs, manufactures, and sells electric cars, have been involved in efforts to form a union. Multiple workers filed complaints with the NLRB. In August, the NLRB consolidated five of these California employment cases into a single complaint, which alleges various acts of coercion and restraint against employees involved in union organizing. Tesla, Inc. and Sanchez, et al., Nos. 32-CA-197020, 197058, 197091, 197197, 200530, cons. complaint (NLRB Reg. 32, Aug, 31, 2017).

The NLRA provides broad protections for employees’ “right to self-organization,” which includes “form[ing], join[ing], or assist[ing] labor organizations.” 29 U.S.C. § 157. It also protects employees’ “right to refrain from any or all of such activities” if they choose. Id. The statute prohibits “unfair labor practices,” including any “interfere[nce] with, restrain[t], or coerc[ion of] employees” in relation to their rights. Id. at § 158(a)(1). Unions are subject to similar prohibitions against coercing or restraining employees, such as in situations regarding their right not to participate in protected activities.

A recurring dispute with regard to unions involves the question of whether employees who do not wish to join a union may still be required to pay fees to unions that represent them. Some states allow employees to opt out of union membership through “right to work” laws. California is not a “right to work” state. Opponents of right to work laws note that collective bargaining agreements usually apply to all employees, regardless of whether they are dues-paying members of the union. Supporters tend to argue that employees should have the choice of whether to join and pay fees to a union.

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San Pablo BayReal property owners can grant rights to others to use portions of their property for certain purposes, commonly known as easements. In certain situations, however, a California real estate owner might unwittingly allow others to acquire rights to the use of their property. The California Legislature has set strict limits on the circumstances in which this might occur. Earlier this year, the California Supreme Court rejected a claim that the repeated use of someone else’s private property created an easement for the plaintiffs.

An easement is a limited interest in real property with no right of possession. It involves permission to use another person’s property for a specific purpose. A public utility easement, for example, gives a city government permission to use a portion of a parcel of land for utility lines, as well as the right to access the property to perform maintenance or repairs.

Easements are usually affirmatively granted by the property owners, but they can also be created as a matter of necessity. If one parcel of land is inaccessible from the road, except by crossing another person’s property, the owner of the otherwise inaccessible land could claim an easement across the neighboring property. The principle of adverse possession, by which someone can claim title to someone else’s property by openly possessing that property for a minimum period of time, could also support an easement claim in some circumstances. A person who routinely crosses another person’s property could claim an easement based on a lengthy period of continuous use. This is the type of situation California has tried to restrict, which the court addressed in Scher.

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ambiguityCongress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) in 2010. The statute amended existing statutes like the Securities Exchange Act of 1934, and it referenced other major financial reform laws like the Sarbanes-Oxley Act of 2002. Dodd-Frank requires businesses to make a wide variety of disclosures about their financial activities, and it offers incentives to company insiders, or “whistleblowers,” to report violations. It penalizes employers that retaliate against whistleblowers. The Ninth Circuit Court of Appeals recently ruled in favor of a whistleblower in a retaliation claim that is relevant to future California employment cases. Somers v. Digital Realty Trust, Inc., 850 F.3d 1045 (9th Cir. 2017). The case depended on Dodd-Frank’s ambiguous use of the word “whistleblower.” The ruling conflicts with at least one other appellate court’s interpretation of the statute. As a result, the U.S. Supreme Court has agreed to hear the case in November 2017.

Dodd-Frank’s language regarding whistleblower retaliation is ambiguous. It prohibits employers from retaliating against whistleblowers who make reports to the Securities and Exchange Commission (SEC) as required by Dodd-Frank or other statutes, including but not limited to Sarbanes-Oxley. 15 U.S.C. § 78u-6(h)(1)(A). This would seem to include reports to other agencies besides the SEC, as well as internal reports to company management. The ambiguity is due to the word “whistleblower,” which is defined in an earlier subsection specifically as anyone “who provide[s] information relating to a violation of the securities laws to the [SEC].” Id. at § 78u-6(a)(6). The statute does not make it clear whether the anti-retaliation provision refers to the statute’s narrow definition of a whistleblower or uses a broader plain-language meaning.

The SEC’s regulation implementing the anti-retaliation provision, first promulgated in 2011, appears similarly ambiguous by repeating much of the language of the statute. 17 C.F.R. § 240.12F-2. The agency clarified, however, that it did not interpret “whistleblower” broadly to “include[] individuals who report to persons or governmental authorities other than the [SEC].” 76 Fed. Reg. 34299, 34304 (Jun. 13, 2011); see also 80 Fed. Reg. 47829 (Aug. 10, 2015). In court disputes over the ambiguity in the statute, how the court will rule depends on whether it follows the Chevron doctrine, which holds that courts should give deference to agency interpretations of statutes. See Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837 (1984).

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Computer technology and the internet have created countless opportunities for both businesses and consumers. As more and more commercial activity moves online, however, the risks to the integrity of a company’s digital records grow greater. Cybersecurity breaches threaten not only the company’s assets but also stored customer information. Consumer information is often the target of hackers because it may enable further fraudulent activities like identity theft. Companies that collect and store personal information have a duty under California law to protect that information and to notify consumers in the event of a breach. Penalties for noncompliance may include civil liability to consumers and state or federal regulatory actions. Northern California business owners that deal with digital consumer information should make cybersecurity a critical part of their business operations.

hackingCalifornia’s Breach Notification Law (BNL) defines “personal information” as any information that “is capable of being associated with a particular individual,” such as a name, address, date of birth, and social security number or other identification number. Cal. Civ. Code § 1798.80(e). Businesses must “implement and maintain reasonable security procedures and practices” to safeguard customers’ personal information from cybersecurity breaches. Id. at § 1798.81.5(b).

If a breach occurs, the BNL requires businesses to notify individuals who were affected by the breach “in the most expedient time possible and without unreasonable delay.” Id. at § 1798.82(a). If a business intentionally shares customer information, such as for marketing purposes, California’s “Shine the Light” (STL) law requires it to make certain disclosures to customers in advance and to disclose, upon a customer’s request, which information was shared and with whom. Id. at § 1798.83.

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CerealsBusinesses rely on name and product recognition to develop customer loyalty and stand out in the marketplace. Products and services introduced into the market may have distinctive names, logos, or designs—known as trademarks or service marks—that help consumers identify them. Trademark law allows businesses to protect the value of these marks, such as by prohibiting their use by others. The extent of trademark protection is a matter of perpetual dispute. A truly distinctive name, such as Coca-Cola or Pepsi, is undoubtedly entitled to trademark protection, as are easily recognizable logos. When a particular color is intrinsically connected to a product design, it could be eligible for trademark registration, but the burden of proof is heavy. A cereal maker recently sought trademark protection for the color yellow, as used in its product packaging, but its application was denied. The Trademark Trial and Appeals Board (TTAB) affirmed this denial. In re General Mills IP Holdings II, LLC, Ser. No. 86757390, opinion (TTAB, Aug. 22, 2017).

The federal Lanham Act defines a trademark in part as “any word, name, symbol, or device, or any combination thereof” that a person uses “to identify and distinguish his or her goods.” 15 U.S.C. § 1127. A design, symbol, or name can be eligible for trademark registration under § 2(f) of the Lanham Act if it “has become distinctive of the applicant’s goods in commerce.” Id. at § 1052(f). The applicant can demonstrate this by showing “substantially exclusive and continuous use” of the mark for at least five years prior to the application date. Id.

Businesses have trademarked colors on multiple occasions. The trademark claim typically involves a distinct color used in a particular way. Five years ago, a federal appellate court held that a fashion designer could obtain trademark protection for a particular shade of red that it used on the soles of its shoes. Christian Louboutin v. Yves Saint Laurent America, 696 F. 3d 206 (2d Cir. 2012). Other recognizable color-based trademarks include the brown delivery vans used by United Parcel Service, the pink insulation produced by Owens-Corning, and the green and yellow color scheme used in the equipment manufactured by John Deere.

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San FranciscoAny business that takes on employees also takes on responsibilities to those employees. In addition to standards regarding wages and hours of work, employers must make reasonable efforts to maintain a workplace that is free from unlawful discrimination and harassment. Throughout California, workplace harassment remains a serious problem. The technology industry of Silicon Valley and San Francisco has received attention for multiple recent accounts of sexual harassment and other forms of gender-based discrimination. A lawsuit filed earlier this year asserts several causes of action under California employment anti-discrimination statutes, including harassment and hostile work environment. Scott v. Upload, Inc., et al., No. CGC-17-558730, complaint (Cal. Super. Ct., San Francisco Cty., May 8, 2017).

Title VII of the federal Civil Rights Act of 1964 prohibits employment discrimination on the basis of “race, color, religion, sex, or national origin.” 42 U.S.C. § 2000e-2(a). Many state laws and city ordinances go further. California’s Fair Employment and Housing Act (FEHA), for example, addresses discrimination based on sexual orientation, gender identity and expression, and more. Cal. Gov’t Code § 12940(a). Under both federal and state laws, sexual harassment is considered a type of unlawful sex discrimination. The FEHA expressly provides that both harassment and failure to prevent harassment violate its anti-discrimination provisions. Id. at § 12940(j).

The plaintiff in Scott states in her complaint that she began working for the defendant in May 2016. The defendant is a San Francisco-based business that “focuse[s] on the virtual and augmented reality industry.” Scott, complaint at 1. The plaintiff’s position was “Director of Digital and Social Media.” Id. at 3. She describes the “atmosphere and work environment” of the defendant as “marked by rampant sexual behavior and focus.” Id. at 4. Male employees and managers, including two individuals identified by the plaintiff as founders of the company, allegedly spoke openly about “sexual exploits” and made overtly sexual comments about women in the office, often right in front of them. Id. Work-related emails, the plaintiff claims, were similarly explicit.

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calendarThe California Labor Code states that employers must provide at least one day off per week, but the “day-of-rest statute” does not provide an unambiguous statement of employees’ rights and employers’ obligations. A federal lawsuit alleging violations of this statute raised multiple questions of interpretation. In 2015, the Ninth Circuit Court of Appeals sent three certified questions to the California Supreme Court, seeking to clarify several provisions. Mendoza v. Nordstrom, Inc. (“Mendoza I”), 778 F.3d 834 (9th Cir. 2015). The California Supreme Court ruled on the questions earlier this year, hopefully providing more clarity for both employers and employees. Mendoza v. Nordstrom, Inc. (“Mendoza II”), No. S224611, slip op. (Cal., May 8, 2017).

The day-of-rest statute, unlike many laws, is not wordy. The fact that a statute does not stretch on for many pages, however, does not imply that it is easy to understand or interpret. This statute provides that anyone “employed in any occupation of labor” has the right “to one day’s rest…in seven.” Cal. Lab. Code § 551. It further states that an “employer of labor” cannot “cause his employees to work more than six days in seven.” Id. at § 552. These provisions do not apply, however, when an employee works no more than 30 hours in a week, or no more than six hours in a day. Id. at § 556. The three sentences that comprise these three code sections raise multiple questions of interpretation.

The plaintiffs in the underlying lawsuit allege that the defendant scheduled them to work for more than six consecutive days, in periods of seven to 11 consecutive days. They claimed that this violated California’s day-of-rest statute. They appealed to the Ninth Circuit after the district court dismissed their claims.

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Balance iconIn order for a plaintiff to maintain a lawsuit, they must demonstrate that the court in which they filed suit has jurisdiction over the case. Our legal system identifies two types of jurisdiction. Subject matter jurisdiction means that a court has jurisdiction over the cause of action asserted in the lawsuit. For example, a county-level court in California probably lacks jurisdiction over a claim based entirely on federal law. Personal jurisdiction involves the court’s jurisdiction over the defendants themselves. The U.S. Supreme Court recently considered whether a state court in California had personal jurisdiction over a corporation located outside California in a California business lawsuit involving alleged incidents occurring outside this state. The Supreme Court ruled that this exceeded the state court’s authority. Bristol-Myers Squibb Co. v. Super. Ct. of Cal., 582 US ___ (2017).

The Supreme Court’s landmark ruling on personal jurisdiction is International Shoe v. Washington, 326 U.S. 310 (1945). This case held that a court cannot exercise personal jurisdiction over a corporation based in another state, unless the corporation has “minimum contacts” with the state where the court is located. Id. at 316. Since then, courts have further identified two types of personal jurisdiction. “General jurisdiction” is based on where an individual lives or where a company is domiciled, and it can allow a court to hear almost any case against a defendant. “Specific jurisdiction” is based on a defendant’s connection to the particular state, or “forum.”

When multiple courts could have jurisdiction over a defendant or a particular claim, plaintiffs may seek out the court that they believe will treat them most favorably, based on a range of factors like distinct procedural rules or a more amenable local jury pool. This practice is often known as “forum shopping.” Several recent decisions from the Supreme Court have limited some rather expansive views of personal jurisdiction in cases involving corporations with national or international presences. One case held that a California federal court lacked jurisdiction over a German corporation in a lawsuit involving alleged acts in Argentina. Daimler AG v. Bauman, 571 U.S. ___ (2014). These decisions have had the effect of reducing forum shopping in lawsuits against major corporations.

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fingerprintBusinesses that employ multiple people may be subject to employment statutes at multiple levels of jurisdiction, from city ordinances to state and federal statutes. Employers may not discriminate against employees or job applicants on the basis of multiple factors. In many jurisdictions around the country, this includes limitations on how employers may inquire about and consider criminal history during the hiring process. While employers may be reticent about hiring someone with a criminal record, California law seeks to ensure that past mistakes do not unreasonably burden people who need a job. California businesses and business owners should be aware of recent amendments to the state regulation that addresses access to and use of criminal history during the hiring process.

Laws that restrict employer inquiries about criminal history are sometimes known as “Ban the Box” (BTB) laws. They generally prohibit employers from asking about criminal history at the beginning of the job application process. Some application forms include a box that applicants must check “yes” or “no,” indicating whether they have ever been arrested or convicted of a crime. BTB laws often prohibit employers from asking about or considering criminal history—the aforementioned “box”—until an applicant has cleared the first hurdles of the process.

Some employers may see any criminal history as cause for automatic rejection of that applicant, and there are a number of valid business reasons for this view. For job applicants, however, this sort of practice makes it more difficult—and sometimes nearly impossible—for someone to find a job. This can have negative effects on society as a whole, since people with criminal records might be more likely to return to crime if no one will offer them a job. BTB laws try to ensure that criminal history only affects job applicants when the past crime directly relates to the job.

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Rocky LandscapeTrademark registration allows businesses to protect some very valuable assets—the names, logos, and related designs that clearly identify them to the public. The U.S. Patent and Trademark Office (USPTO) oversees trademark registration in accordance with the federal Lanham Act, which prohibits the registration of marks under certain circumstances. Section 2(a) of the Lanham Act, known as the Disparagement Clause, bars the USPTO from registering any mark that “may disparage…persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.” 15 U.S.C. § 1052(a). The statute does not define “disparage,” and this vagueness is part of what led the U.S. Supreme Court to strike down the Disparagement Clause as a violation of the First Amendment right to free speech. Matal v. Tam, 582 US ___ (2017).

Both the USPTO and the Trademark Trial and Appeal Board (TTAB) acknowledge that “disparagement” is a highly subjective concept that must be evaluated on a case-by-case basis. The TTAB has identified two factors that can help identify material that might be barred by the Disparagement Clause. First, would a reasonable person, considering the context of the mark, interpret it as “refer[ring] to an identifiable” person or group of people? Second, would a “substantial composite” of that group of people view the mark as disparaging? See Harjo v. Pro-Football, Inc., 50 U.S.P.Q.2d 1705 (TTAB 1999); see also 284 F.Supp.2d 96 (D.D.C. 2003), 415 F.3d 44 (D.C. Cir. 2005).

The Harjo case referenced above involved a professional football team with a name believed by many to be disparaging to Native Americans. The proposed trademark at issue in Matal is generally known as a disparaging term for people of Asian descent. The plaintiff in that case is a member of a band who uses the word as its name and who sought to register it as a trademark. The band members, all of whom are of Asian descent, stated that they wanted to “drain [the word’s] denigrating force as a derogatory term for Asian persons.” The USPTO rejected the application under § 2(a). The plaintiff appealed, claiming in part that the Disparagement Clause is an unconstitutional content- or viewpoint-based restriction on speech.

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