5 litigation stories bound to make waves

The litigation stories we feel will set trends for the rest of the year and beyond

Just as no person is an island, no news story is an isolated incident. Most are indicative of broader movements with the potential to give insight into impending trends, threads woven into the fabric of history stretching both backwards and forwards in time…whoa.

Okay, that might be a little heady for a five page slideshow, but the point is that there were a few stories over the course of the last few that we think are signs of larger legal machinations.

If you think we’ve overstated the importance of one of these or have your own additions, please sound off in the comments. We’d like to take a trends-pulse on an ongoing basis and your thoughts are a great barometer of whether or not we’re doing so successfully.

Story: Court rules NCAA violates antitrust law in ban on paying players for likenesses

On August 8, U.S. District Judge Claudia Wilken ruled that the National Collegiate Athletic Association’s (NCAA) ban on paying players for their likenesses is in violation of U.S. antitrust law. In doing so, Judge Wilken issued an injunction that prohibits college sports’ governing body from imposing rules that ban schools from offering players “a limited share of the revenues generated from the use of their names, images, and likenesses.”

While the ceiling of that shared revenue is likely to be capped by most schools at the “cost of admission,” the verbiage could potentially open the door for direct payment to student athletes, a move that NCAA President Mark Emmert recently called “the end of college sports as we know it.”

Trend:

The move could be an indication of a potential trend towards recognizing college athletes as employees of an institution rather than attendees. Related to this is a March National Labor Relations Board decision that allowed Northwestern University scholarship football players to unionize because the amount of time and effort they put into their athletic performance was determined to be the equivalent of full time work. While paying college athletes may have been unthinkable only a decade ago, rulings like these could open up a whole new arena for wage disputes and labor law.

 

Story: High-frequency trading securities suits 

According to the 2014 midyear assessment released by Cornerstone Research and Stanford Law School, one of the 78 securities class action lawsuits filed in the first half of 2014 concerns high-frequency trading. While most of the filed securities class action suits target individuals, this particular lawsuit is unique in that exchanges, brokerages and trading firms are listed as defendants.

While a single suit in 78 is not a particularly large number, its context within a year of slowing shareholder suits could herald a new trend.

Trend:

The success of Michael Lewis' book “Flash Boys” has increased public and shareholder awareness of HFT. This, coupled with scrutiny from regulatory agencies like the Securities and Exchange Commission, could increase the number of securities class actions related to high-speed trading over the course of the net few months. Its totally possile that the number of such suits will increase. Granted more than one would be an uptick…

Story: SpaceX under scrutiny for recent layoffs

In early August, two former SpaceX technicians filed suit against the company, saying that it did not follow state law when it laid off between 200-400 workers. Under California’s Worker Adjustment and Retraining Notification Law (WARN), companies must give employees notice of an impending layoff so they have an opportunity to seek employment elsewhere.

Other well-known Californian tech companies have also been the subject of labor and employment probes. LinkedIn announced that it would pay $6 million in unpaid overtime to sales staff members in California, Illinois and New York. Adobe Systems, Intel, Google and Apple also recently settled a three-year-old class action lawsuit with 64,000 employees for allegedly conspiring to suppress worker pay.

Trend:

Though they’ve been a source of huge economic gains at both a state and national level, increasingly the labor practices of Silicon Valley’s finest have been under the gun from regulators. And with recent reports from Apple, Yahoo, Google and LinkedIn indicating that the of employees of those tech companies are predominantly white and predominantly male, we expect even more scrutiny of the hiring, firing and diversity promotion policies at these companies. Fortunately, some are trying to get out in front of such scrutiny.

Story: Hold Security identifies the largest recorded cache of stolen data

Hold Security’s August 5 announcement indicated that as many as a 1.2 billion unique credentials may have been compromised by a group of Russian hackers over the past year. This is the largest data compromise ever recorded.

Hold’s research shows that the compromised data was the work of a single Russian hacking organization, and that it is currently in possession of the world’s largest cache of stolen data. According to the release accompanying the finding, Hold says the gang, has, “amassed over 4.5 billion records, mostly consisting of stolen credentials.” 1.2 billion of these credentials appeared to be unique.

While the gang eventually moved to more aggressive hacking tactics, originally its collection of credentials started with the purchase of databases from other hacking organizations.

Trend:

While hacking organizations are typically thought of as individual groups, the proliferation of black markets for the personal information is a vector larger organization may not have addressed previously. With the availability of private information up for sale, companies need to address the risks associated not only with groups that have actively stolen information from them, but also additional groups that gain in the infor second hand, potentially cherry picking information for targeted attacks. We expect, as do most experts, that the proliferation of these marketplaces will continue to impact organizations. 

 

Story: NLRB designates McDonald’s as ‘joint-employer’ in labor lawsuits

Following allegations that the franchises of parent company McDonalds USA LLC violated the rights of employees to protest employment conditions, the National Labor Relations Board (NLRB) has ruled that McDonald’s, USA, LLC is a joint employer and bears some responsibility for those complaints.  

The ruling will allow some cases to be brought directly against McDonalds proper. In the 43 cases that have been cleared, employees argued that because of the requirements, rules and operating procedures that McDonald’s, USA, LLC imposes on each of franchises, the parent company is intrinsically tied to each of the locations and bears some of the responsibility for the treatment of its workers. The NLRB agreed.

 

Trend:

The move could have wide-ranging implications on the potential unionization of fast food workers, and other similar roles. Previously parent companies had argued that because individual employees were the paid and overseen by franchises, contractors and temp agencies, that they could not be held accountable for suits related to their labor rights. The move continued what some argue is a pro-union trend for the NLRB, but could potentially start a push for higher worker wages. Alternatively, the some argue that the increased liability and cost associated could drive the fast food franchise to a heavier reliance on automated services.

 

Managing Editor

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Chris DiMarco

Chris DiMarco, Managing Editor of InsideCounsel magazine, has a background in multimedia production with previous involvement in projects in which he developed and created content for...

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