Roundup: 2nd, 5th, 8th and 11th Circuits

Starbucks' union-button rule isn't an unfair labor practice; CEO criminally convicted under Clean Water Act; Bank not responsible for e-retailer's losses from fraudulent orders; Sports artist's paintings don't violate university's trademarks

2nd Circuit
Connecticut, New York, Vermont

Starbucks’ union-button rule isn’t an unfair labor practice

The 2nd Circuit recently ruled in NLRB v. Starbucks that Starbucks Corp. baristas must limit the number of prounion accessories they wear.

From 2004 to 2007, the Industrial Workers of the World union embarked on a campaign to organize wage employees at four Manhattan Starbucks stores. The coffee retailer responded to the union activity with new policies prohibiting employees from, among other things, wearing more than one pro-union button at a time on their uniforms.

But the dress code didn’t please the National Labor Relations Board, which found that Starbucks’ one-button policy was an unfair labor practice under Section 7 of the National Labor Relations Act. Starbucks challenged the decision, and on May 10, the 2nd Circuit overturned the board’s ruling. The appeals court agreed with Starbucks that allowing workers to wear an unlimited number of pro-union buttons would turn them into “personal message boards” and would distract from Starbucks-issued pins promoting products and employee-reward programs.


5th Circuit
Louisiana, Mississippi, Texas

CEO criminally convicted under Clean Water Act

On May 15 in U.S. v. Pruett, the 5th Circuit joined the 9th and 10th Circuits in holding that simple negligence, as opposed to gross negligence, is the standard of criminal liability under the Clean Water Act (CWA).

As CEO of Louisiana Land & Water Co. and LWC Management Co. Inc., J. Jeffrey Pruett managed 28 wastewater- treatment facilities. In 2007, the Environmental Protection Agency discovered various CWA violations at Pruett’s facilities, of which he was aware. The government pursued a criminal prosecution against Pruett, and following a jury trial, fined him $310,000 and sentenced him to 33 months in prison.

Pruett appealed, contending that his negligence was simple as opposed to gross and didn’t merit a criminal conviction. Simple negligence is the failure to exercisethe care that a reasonably prudent person would exercise in the same situation, whereas gross negligence is a conscious disregard of legal duty and consequences.

On appeal, the 5th Circuit affirmed Pruett’s conviction. The court found that the CWA requires only proof of simple negligence for a criminal penalty to apply.


8th Circuit
Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, South Dakota

Bank not responsible for e-retailer’s losses from fraudulent orders

In E-Shops Corp. d/b/a Paintball Punks v. U.S. Bank National Association, the 8th Circuit affirmed the dismissal of an online retailer’s lawsuit that accused a bank of being responsible for the losses it experienced due to thousands of dollars in fraudulent orders.

Between August and December 2009, e-retailer Paintball Punks received nine fraudulent orders amounting to nearly $12,000 that customers placed with U.S. Bank credit cards. When the real cardholders disputed the charges, U.S. Bank initiated chargebacks that sent the $12,000 back to the cardholders’ U.S. Bank accounts.

Paintball Punks claimed that a data breach at U.S. Bank caused the fraudulent orders. The company filed suit against the bank and accused it of aiding and abetting fraudulent transactions, intentional interference with contractual relations, violations of Minnesota consumer protection laws and unjust enrichment.

A district court dismissed Paintball Punks’ claims in December 2010, and on May 18, the 8th Circuit affirmed the dismissal. The court found that Paintball Punks failed to show that U.S. Bank knew of, and assisted with, the fraudulent orders.


11th Circuit
Alabama, Florida, Georgia

Sports artist’s paintings don’t violate university’s trademarks

A unanimous three-judge panel for the 11th Circuit ruled June 11 in University of Alabama v. New Life Art Inc. that an artist’s paintings don’t infringe a university’s trademarks.

Daniel Moore has been painting University of Alabama football scenes since 1979. His artwork appears on paintings, prints, calendars, mugs and other novelties. In 2005, the university sued Moore, saying he needed permission to paint the school’s trademarks, including the football team’s crimson-and-white uniforms.

A district court in 2009 found that Moore’s free-speech rights protected his paintings and prints, but that the other items showcasing his artwork infringed the school’s trademarks.

On appeal, the 11th Circuit affirmed that Moore’s free-speech rights protected his paintings and prints, and it added his calendars to the umbrella of protection because Moore has sold thousands of dollars’ worth of calendars through the university’s store. The court reversed and remanded the part of the lower court’s ruling finding that the other items infringed the school’s trademarks, but it declined to place these items under the protection of free speech because if it did so, “a person could easily circumvent trademark law by drawing another’s trademark and then placing that drawing on various products with impunity.”

Ashley Post

Bio and more articles

Join the Conversation

Advertisement. Closing in 15 seconds.