The Business Law Brief sm (October, 2002)

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  1. Is Cheating a Federal Offense?
    Two Federal District Court Judges have rendered conflicting rulings on whether the federal mail fraud statute can be used to prosecute people who cheat on standardized tests. Approximately 60 people from various Mideastern nations are alleged to have paid imposters to take English proficiency exams for them through the Educational Testing Service. At issue is whether whether the Educational Testing Service's interest in maintaining the integrity of its exams meets the statutory definition of a "property interest" under the law. See the article at law.com.
  2. WTC Attack is One Event for Insurance Purposes; Appeal Anticipated.
    A New York District Court has interpreted the language of insurance binders issued by three insurance companies to mean that the terrorist attack on the World Trade Center should be construed as a single event, rather than as two separate events - one attack on each tower. If the ruling stands, the leaseholder of the twin towers, Silverstein Properties, would recover $3.6 billion, instead of $7.1 billion for the loss of the two buildings. In what has become an increasingly complicated case, twenty-two insurers are fighting the World Trade Center leaseholder. Story at law.com Case not posted.
  3. Employer Can Refuse to Hire Worker Who Won't Sign Mandatory Arbitration Agreement.
    Reasoning that the US Supreme Court decision in Circuit City vs. Adams, previously reported, overturned its previous ruling to the contrary, the 9th Circuit Court of Appeals has ruled that an employer may refuse to hire an applicant who won't sign an arbitratin agreement, giving up his right to sue for employment discrimination. EEOC vs. Luce, Forward, Hamilton & Scripps, No. 00-57222 (September 3, 2002). Story at law.com
  4. Clickwrap Agreements I: Internet Users Not Bound by "Hidden" License Agreement Located on Page 2 of Online Agreement: Second Circuit.
    A mandatory arbitration provision in a license agreement was held unenforceable because the provision was "buried" on the second page of a free software download program, the 2d Circuit Court of Appeals has found, ruling against Netscape Communications and its parent company, America Online,Inc. Users complained that after they downloaded the free software plug-in program called "SmartDownload Communicator," personal information about them and other programs they had downloaded was sent to Netscape. Story at law.com Case has not yet been posted, but will be found at Second Circuit Court of Appeals, Reported Decisions. Search for Specht vs. Netscape, # 01-7860, (October 1, 2002).
  5. Clickwrap Agreements II: Forum Selection Clause Valid Tho Located on Page 13 of Online Agreement: DC Circuit.
    The District of Columbia Court of Appeals has upheld the validity of a forum selection clause found in a clickwrap agreement. Defendant Verizon Communications moved to dismiss the claim filed by several of its broadband subscribers who sought class action status, because the clickwrap agreement required that any disputes be heard in Virginia, which does not allow class action lawsuits. The DC Circuit found the clause enforceable, even though the clause was found "in the final section of the main text of the agreement, which, when printed out, totals 13 pages...." Bruce G. Forrest v. Verizon Communications Inc., No. 01-CV-1101.
  6. Clickwrap Agreements III: Arbitration Clause Denies Users of Remedy. PayPal's mandatory arbitration provision requiring costly commercial arbitration for the recovery of relatively small amounts, its refusal to permit class resolution of claims, and its requirement that all arbitration take place in California, led a Federal District Judge in Northern California to conclude that the requirements deprived users of PayPal's services of any meaningful adjudication of their claims. In addition, the Court was troubled by PayPal's reservation of the right to amend its clickwrap agreement at any time, even after a customer had purportedly agreed to its terms, and its skimpy evidence that an online "clickwrap" agreement had really been agreed to in the first place. Comb, et al vs. PayPal, Inc., and Resnick vs. PayPal, Inc., Case Number C-02-1227 JF (PVT) and C-02-2777 JF (PVT). See article at ipcenter.bna.com See also our February, 2002 issue, item 5.
  7. Email is Evidence; Email is Forever.
    Office workers in the US sent over 7 trillion email messages during year 2000. The ease and informality of email communication leads people to say things in an email that they would never say a business letter or memo, and that fact has had devastating results. But "we are all slowly waking up to the realization that nothing we say in e-mail is private, anything is potentially admissible as evidence, and deleting e-mail doesn't necessarily destroy it." See this informative article at law.com for examples of how email has been used as damaging evidence. See item 10 in our December, 2000 issue about how to make those email trails disappear, and check out www.disappearing.com
  8. VP of Corporation Liable for Federal Employment Taxes, Even Though Less Culpable Than Others.
    Even though a jury found him not liable, the Vice-President of an employing corporation, who was also a significant shareholder, was held personally responsible by the court for unpaid federal employment taxes in excess of $1 million, despite the fact that others in the company caused the deficit without his knowledge. Thosteston vs. USA, No. 01-14520 (September 11, 2002).
  9. Legal Guides for Businesses.
    Small business owners and managers may want to check out the new Findlaw for Business channel at biz.findlaw.com Findlaw's announcement reports that the service "provides dozens of easy-to-read legal guides to common legal issues for businesses."
  10. Uncle Sam Wants Your Spam.
    In response to requests from consumer groups, the Federal Trade Commission (FTC) again requests that consumers send their unwanted spam to the FTC's unwanted commercial email address at uce@ftc.gov Go ahead. You'll feel better.

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