In an Opinion and Order dated December 16, 1999, this Court awarded Plaintiff Hyperlaw $ 813,724.25 in attorneys' fees. See Matthew Bender & Co. v. West Publ'g Co., 1999 U.S. Dist. LEXIS 19387, No. 94 Civ. 589, 1999 WL 1211836 (S.D.N.Y. Dec. 16, 1999). In a decision dated January 23, 2001, the Second Circuit, on the basis of its analysis of this Court's opinion, found that this Court's reasoning did not support that award. See Matthew Bender & Co. v. West Publ'g Co., 240 F.3d 116 (2d Cir. 2001) ("Hyperlaw III"). n1 The Circuit Court noted, however, that certain comments in this Court's opinion suggested that there might be other grounds that could justify the award. The Circuit Court, therefore, remanded the case for "clarification [*2] as to whether the District Court relied on instances of bad faith conduct not specifically identified in its opinion." Id. at 127.
n1 In keeping with the Second Circuit's practice in this litigation, see Matthew Bender & Co. v. West Publ'g Co., 158 F.3d 674 (2d Cir. 1998) ("Hyperlaw I"); Matthew Bender & Co. v. West Publ'g Co., 158 F.3d 693 (2d Cir. 1998) ("Hyperlaw II"), the remand decision will be referred to as "Hyperlaw III."
Accordingly, Hyperlaw has renewed its application for an award in the full amount of its attorneys' fees, pointing to certain specific instances of bad faith conduct by Defendant West. West disputes Hyperlaw's contention that the cited conduct amounted to bad faith and argues that, in any event, Hyperlaw has failed to comply with the Circuit Court's direction that it identify the precise costs attributable to that bad faith conduct. See 240 F.3d at 126.
This Court's ability to resolve the fee issue in these remand proceedings [*3] in a manner consistent with the intent of the Circuit Court is complicated by the fact that to some extent, the Second Circuit's holding that this Court's reasoning did not justify an award of attorneys' fees appears to have resulted from a misunderstanding of that reasoning, which no doubt resulted from a less-than-clear articulation of that reasoning in my opinion. As a result, this Court's opinion awarding fees and the Circuit Court's opinion vacating that award resemble ships passing in the night, leaving this Court in serious doubt as to the proper result on remand.
Because more than $ 800,000 is at issue, it is unlikely that this Court's determination will be accepted as final by the parties, and therefore it seems appropriate to more fully explain the reasons for the original award and to accept the Circuit Court's invitation to identify "instances of bad faith conduct not specifically identified in [my original] opinion." I will then address the more limited question of whether the specific bad faith acts cited by Hyperlaw justify an award of fees "solely on the basis of [that] bad faith conduct."
At the outset, it seems appropriate to attempt to clarify those portions [*4] of my prior opinion which appear to have mislead the Circuit Court concerning the basis of my decision.
Hyperlaw's action vindicated the public interest in wide dissemination of federal judicial opinions.
The Circuit Court differed with this statement because in its view, "judicial opinions are decidedly not creative works." Hyperlaw III, 240 F.3d at 124 n.8. While devotees of Cardozo, Hand, Friendly, Weinfeld and others might disagree with that statement, see generally The Law as Literature (Ephraim London ed., 1960), that is not the question that I was addressing.
Accepting that judicial opinions are not themselves creative works under the Copyright Act, and that the Act was not passed for the purpose of encouraging judges to write opinions, they do form the basic material out of which innumerable copyrighted articles, books, treatises and, in rarer instances, novels, plays, and movies are created. Even more importantly, the general availability of judicial opinions is essential to the proper functioning of our [*5] judicial system and to the dissemination of information about the development of the law to the public.
As such, judicial opinions are a highly sought-after commodity in the legal, literary, and news markets. Hyperlaw's action in this case served the public good because West was maintaining a monopoly over the market for several thousand judicial opinions based on a tenuous copyright claim. West was not the author of an original work seeking only to prevent another from making fair use of a portion of a work it had authored. West was attempting to use the fact that it had made inconsequential modifications to judicial opinions to maintain a monopoly in the publication of those opinions. Thus, rather than invoking the Copyright Act as a shield to protect legitimate creative work, West used it as a sword to perpetuate a monopoly over important government works.
The policies served by the Copyright Act are more complex, more measured, than simply maximizing the number of meritorious suits for copyright infringement.
"The limited scope of the copyright holder's statutory monopoly . . . reflects a balance of competing claims upon the public interest: Creative work is to be encouraged and rewarded, but private motivation must ultimately serve the cause of promoting broad public availability of literature, music, and the other arts.
The immediate effect of our copyright law is to secure a fair return for an 'author's' creative labor. But the ultimate aim is, by this incentive, to stimulate artistic creativity for the general public good."
510 U.S. 517, 526, 114 S. Ct. 1023, 1029, 127 L. Ed. 2d 455 (1994).
While this Court was clearly in error in stating that West's conduct "violated" Section 403 of the Copyright Act, it is correct to say that Hyperlaw's action fostered the public access to government documents that Congress was attempting to promote in adopting Section 403. It is also correct that Congress would consider the notice used by West to be misleading. See Notes of Committee on the Judiciary, H.R. Rep. No. 94-1476, at 145-46 (1976), reprinted in 1976 U.S.C.C.A.N. 5659 (" [*7] To make the notice meaningful rather than misleading, section 403 . . . requires that, when the copies or phonorecords consist 'preponderantly of one or more works of the United States Government,' the copyright notice (if any) identify those parts of the work in which copyright is claimed." (emphasis added)).
In any event, this Court did not award Hyperlaw its attorneys' fees in order to punish West for a violation of Section 403; it awarded the fees because West engaged in bad faith conduct in an attempt to maintain a monopoly in the lucrative market for judicial opinions when it knew that there was little likelihood that it would prevail if the issue was presented to a court.
This Court is persuaded that West did not act in good faith both before and during the course of this litigation. The Circuit Court noted in its opinion that "unfortunately . . . the District Court did not make a clear finding on [the issue of good faith]." Hyperlaw III, 240 F.3d at 122. The Circuit Court went on to state, however, that "West's arguments at trial were objectively reasonable," noting that there was prior authority supporting West's position and that its arguments [*8] were accepted by Judge Sweet in his dissents from the affirmance of this Court's rulings against West. Id.
In assessing whether West acted in good faith both before and during this litigation, it should be noted that the Circuit Court's focus on this issue was much narrower than that which lead me to conclude that West did not act in good faith. The Circuit Court focused on the narrow issue of whether West believed its arguments "were objectively reasonable." This Court recognizes that West had non-frivolous arguments that it could urge in support of its copyright claims.
However, if one asks "Did West have a good faith belief that it would prevail on its copyright claims?", the answer is "No." This Court's substantial experience with West's tactics in this litigation, including false statements, belated concessions, delaying tactics, and strained attempts to avoid a judicial resolution of the copyright claims, leads to the firm conclusion that West knew that if the cases was finally adjudicated, its monopoly over judicial opinions would be terminated. West, therefore, decided to do everything in its power to avoid such an adjudication, or, at a minimum, delay the adjudication [*9] as long as possible and thereby extend its monopoly.
A question may exist as to whether the misuse of a valid copyright in order to maintain a monopoly is a defense to a copyright infringement action. See generally Basic Books, Inc. v. Kinko's Graphics Corp., 758 F. Supp. 1522, 1537-38 (S.D.N.Y. 1991). However, permitting a party to utilize a meritless claim of copyright infringement to monopolize the market for judicial opinions would "seriously impair the policy of the copyright law that seeks to preserve free public access to ideas." Torah Soft Ltd. v. Drosnin, 136 F. Supp. 2d 276, 291 (S.D.N.Y. 2001).
n2 The one relevant district court case decided after Feist was not decided until after this action was commenced. See Oasis Publ'g Co. v. West Publ'g Co., 924 F. Supp. 918, 922-25 (D. Minn. 1996).
Thus, at least from the time that the Supreme Court decided Feist in 1991, West knew that there was substantial reason to question the continuing validity of the cases upholding its copyright claim for star pagination and that the Supreme Court's holding that there was no copyright protection for "sweat of the brow" activity created serious doubt as to its claims to a copyright in its alleged "enhancements" to judicial opinions.
Knowing that its copyright claims were marginal at best, West engaged in a concerted course of action in an attempt to prevent a judicial determination [*11] of its claim. West did not merely refuse to detail for potential competitors the "enhancements" it allegedly made to judicial opinions, it threatened them with litigation if they went forward with their competing products. This tactic was used on Matthew Bender, Hyperlaw, and at least two other potential competitors. That these threats were not made in good faith is evidenced by the fact that when those competitors proceeded to develop their products undeterred by West's threats, West did not bring the threatened lawsuits but instead did everything it could to prevent an adjudication of the copyright issues, including falsely denying that threats had been made.
Before turning to specific examples of such conduct, it is important to note the economics of the market that West was attempting to monopolize. As noted above, this is not a case in which an author was attempting to protect its copyright in a single original work or a single compilation, where the cost of producing the allegedly infringing work would not be considered a deterrent to a potential competitor. Here, West was claiming copyright protection in thousands of judicial opinions that were to be incorporated into CD-Rom [*12] collections. The cost of producing these collections was very substantial. Thus, when West threatened its potential competitors with litigation if they chose to go forward with their competing products, it knew that the mere threat of litigation would place the competitors in such a difficult position that they may well have chosen not to develop their products at all. If the competitors could not obtain an early judicial resolution of the copyright claims, they ran the risk of spending hundreds of thousands of dollars to produce a product that a court might find to infringe West's copyright. Even after West learned that Hyperlaw and Matthew Bender would not be inhibited by its threats, West knew that the longer it delayed a judicial resolution of its copyright claims, the longer it could maintain its monopoly. Moreover, by making this litigation as expensive as possible for its adversaries, West sought to deter other competitors who were more risk-averse than Hyperlaw from entering the market. Thus, the tactics that West employed against Hyperlaw and Matthew Bender must be viewed against this larger canvas.
n3 West may have had a good faith belief that it had a non-frivolous argument that Hyperlaw's product was not advanced far enough to render the issues justiciable.
n4 Due to this Court's reluctance to brand someone as a perjurer on the basis of the preponderance-of-the-evidence standard that applies in civil litigation, the court did not make the specific finding that West's officer knowingly testified falsely. However, the Court's opinion took note of his inconsistent statements and the Court accepted the testimony of Hyperlaw's witness, Mr. Sugarman, and rejected that of West's executive.
Similar evidence of West's bad faith is found in its almost identical conduct in relation to Matthew Bender. When representatives of West met with representatives of Matthew Bender to discuss a product that Matthew Bender planned to offer to the public, West threatened them with litigation. But once again, when Matthew Bender commenced a declaratory judgment action, West denied that it had threatened suit and moved to dismiss on the ground that Matthew Bender had no legitimate fear of being sued by West. While the Court did not have to hold a hearing on this issue because the Uncontested facts established that Matthew Bender had a legitimate apprehension of suit, there were factual disputes that were not resolved in which West's version of the events at issue was dramatically different from those of the Bender witnesses, whose testimony concerning West's threats was similar to that of Mr. Sugarman of Hyperlaw.
In addition to threatening suit and then denying those threats, West attempted to avoid judicial resolution of its copyright claims by first threatening suit and then, when a declaratory judgment action was filed, making a belated concession that it would not sue with respect [*15] to the particular product at issue. West would then move to dismiss on the ground that its concession rendered the action moot. See Matthew Bender & Co. v. West Publ'g Co., 1996 U.S. Dist. LEXIS 5871, No. 94 Civ. 0589, 1996 WL 223917 (S.D.N.Y. May 2, 1996).
West also tried to avoid judicial resolution of its copyright claims by making last-minute concessions that a use of a particular feature constituted fair use, and then moving to dismiss the claim as moot. In Hyperlaw I, the Circuit Court noted that "immediately prior to trial," West made this type of "last-minute concession" with respect to Hyperlaw's use of star pagination in order to argue that its action should be dismissed on justiciability grounds. Hyperlaw I, 158 F.3d at 678. Although the ability to make these types of motions is a "right provided by the Federal Rules," Hyperlaw III, 240 F.3d at 126, they formed part of a wider bad faith effort to perpetuate West's tenuous hold on its exclusive right to publish judicial opinions.
Further evidence that West was attempting to maintain a monopoly by asserting copyright claims that it was afraid to have the courts resolve is found in the fact that, [*16] in order to avoid a judicial resolution of its copyright claims with respect to star pagination, it was willing to concede that it would not sue Matthew Bender with respect to its New York product. Because that product would include star pagination for hundreds of cases, it is difficult to understand why West would make such a concession if it had a good faith belief that its copyright claim would prevail.
In sum, the totality of West's conduct indicates that it knowingly attempted to maintain a monopoly in the vastly lucrative market for judicial opinions when it knew that it was likely that the courts wold reject its copyright claims. It did this by falsely threatening potential competitors with lawsuits that it knew it would not bring and by falsely denying that such threats had been made, in addition to the procedural tactics it employed to delay a final judicial ruling.
Because copyright law ultimately serves the purpose of enriching the general public through access to creative works, it is peculiarly important that the boundaries of copyright law be demarcated as clearly as possible.
510 U.S. at 527, 114 S. Ct. at 1030. [*17] Here, Hyperlaw's lawsuit resulted in just such a demarcation of the boundaries of West's copyright claim and thereby broke West's monopoly grip on thousands of judicial opinions.
While I particularly regret that these remand proceedings may have been made necessary by my failure to articulate more carefully the basis for the award in my earlier opinion, I hope that this further exposition of the reasons for the award will persuade the Circuit Court that Hyperlaw should prevail. As was noted at the [*18] outset, however, it is not certain that the Circuit Court will agree. To avoid another remand should the Circuit Court again find that I have abused my discretion by awarding Hyperlaw all of its attorneys fees, I will now turn to the narrower question of whether Hyperlaw should be awarded some portion of its attorneys' fees resulting from specific instances of bad faith conduct by West.
The court should not lose sight of the fact that it is awarding fees solely on the basis of West's bad faith conduct when it turns to the question of the precise amount of fees to which Hyperlaw is entitled. Any fees it awards should be related to costs or expenses incurred as a direct result of bad faith conduct by West.
Hyperlaw III, 240 F.3d at 126.
Although Hyperlaw points to certain specific actions of West that it claims were taken in bad faith, it completely fails to demonstrate any "costs or expenses incurred as a direct result of" that conduct. While some of the conduct that Hyperlaw cites, such as the false denial [*19] of threats by West, may have resulted in costs that could be identified at this late date in the litigation, Hyperlaw has not attempted to identify them. Thus, even though the Court agrees that the actions in question were committed in bad faith, it cannot calculate the costs incurred by Hyperlaw as a result of that conduct.
To the extent that Hyperlaw cites examples of West's refusal to supply appropriate discovery responses, it is obvious that, at this late stage in a case that has been pending for over seven years, it would be very difficult to identify with any degree of certainty the specific costs incurred as a result of a bad faith answer to an interrogatory or other discovery abuse. If Hyperlaw thought that these discovery abuses warranted an award of attorneys' fees, it should have brought a motion for costs under Rule 37 at that time, rather than requesting those costs as part of a request for counsel fees pursuant to 17 U.S.C. § 505.
n5 Hyperlaw also asks the Court to reconsider the rate at which its attorneys' fees should be calculated. However, that issue is not within the scope of the remand.
JOSE A. CABRANES, CHESTER J. STRAUB, SONIA SOTOMAYOR, Circuit Judges.
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment of said District Court be and is REVERSED.
Defendants West Publishing Co. And West Publishing Corporation (collectively, "West") appeal from a judgment entered on July 2, 2001, by Judge Martin awarding Intervenor-Plaintiff Hyperlaw Inc. $ 813,824.25 for attorneys' fees and costs incurred in a suit brought under the Copyright Act. Because we conclude that the record does not support the District Court's finding that West acted in "bad faith," we reverse the judgment of the District Court.
The instant appeal represents the fourth time this dispute has reached our Court. See Matthew Bender & Co. v. West Publ'g Co., 158 F.3d 674 (2d Cir. 1998); Matthew Bender & Co. V. West Publ'g Co., 158 F.3d 693 (2d Cir. 1998); Matthew Bender & Co. v. West Publ'g Co., 240 F.3d 116 (2d Cir. 2001) ("Hyperlaw III"). The judgment appealed from resulted from proceedings after our remand in Hyperlaw III, in which we vacated an identical award of fees and costs. See Hyperlaw III, 240 F.3d 116 at 118.
Assuming West legitimately believed that its products were protected--a reasonable belief, in light of the previous court decisions on the same issue--it had no duty to "recognize that there was an open question concerning its right to assert copyright protection in court opinions" and had the right vigorously to challenge any actions by Hyperlaw that might infringe on its copyrights. A party's good faith refusal to cooperate with a suspected infringer prior to the filing of suit is not a proper ground for the award of attorneys' fees to the prevailing party in the subsequent suit.
Because we found it unclear precisely what conduct on West's part the District Court relied upon in awarding fees, however, we vacated the judgment on fees and remanded for further clarification. See Hyperlaw III, 240 F.3d 116 at 126-27. We noted that "any fees [the District Court] awards should be related to costs or expenses incurred as a direct result of bad faith conduct by West." Id. at 126. Thus, on remand, Hyperlaw bore the burden of (1) identifying specific actions of West that were taken in bad faith, and (2) linking that conduct to costs it incurred as a result.
The District Court found on remand, however, that Hyperlaw did not link specific acts taken in bad faith to discrete costs it incurred. See Matthew Bender & Co. v. West Publ'g Co., 2001 U.S. Dist. LEXIS 8936, No. 94 Civ. 0589, 2001 WL 740781, at *6 (S.D.N.Y. July 2, 2001). Thus, the District Court properly considered only whether West's conduct of the entire litigation [**4] was in bad faith. See id. at *7 ("It appears that this is an all or [*509] nothing affair. Either Hyperlaw is entitled to recover the entirety of its attorneys' fees, or it has failed to establish a link between specific bad faith conduct and the fees incurred that might justify a more limited award."); see also Hyperlaw III, 240 F.3d 116 at 125 ("Bad faith in the conduct of the litigation is a valid ground for an award of fees.").
The District Court found that West's conduct throughout its dispute with Hyperlaw indeed had been in bad faith. See West Publ'g, 2001 U.S. Dist. LEXIS 8936, 2001 WL 740781, at *3 ("West engaged in bad faith conduct in an attempt to maintain a monopoly in the lucrative market for judicial opinions when it knew that there was little likelihood that it would prevail if the issue was presented to a court."); id. ("This Court is persuaded that West did not act in good faith both before and during the course of this litigation."). Put another way, the District Court found that, contrary to what we assumed in Hyperlaw III, West did not "legitimately believe that its products were protected," Hyperlaw III, 240 F.3d 116 at 125, and that its [**5] refusal to cooperate was not "in good faith," id.
In light of our request in Hyperlaw III for clarification of the basis for the fee award, the District Court set forth in detail the evidentiary basis for its conclusion that West did not subjectively believe that its claims were meritorious. See West Publ'g, 2001 U.S. Dist. LEXIS 8936, 2001 WL 740781, at *1. Specifically, the District Court relied upon the following: (1) West threatened suit against Matthew Bender and Hyperlaw then later falsely denied making the threats; (2) West's conduct of the litigation evinced the desire to prevent the copyright issues from being decided; and (3) West made a concession to Matthew Bender with respect to its New York product inconsistent with a good faith belief in its copyright claim. Id. at *4-5. Moreover, the District Court noted that West's reliance on West Publ'g Co. v. Mead Data Cent., Inc., 799 F.2d 1219 (8th Cir. 1986) as the basis of its purported "good faith" belief in its claims was substantially undermined by the Supreme Court's decision in Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340, 113 L. Ed. 2d 358, 111 S. Ct. 1282 (1991). [**6] West Publ'g,2001 U.S. Dist. LEXIS 8936, 2001 WL 740781, at *3.
We review the District Court's finding of bad faith for clear error. See Sierra Club v. United States Army Corps of Engineers, 776 F.2d 383, 390 (2d Cir. 1985). Factual findings that are not supported by sufficient evidence are clearly erroneous. See United States v. Barone, 913 F.2d 46, 51 (2d Cir. 1990).
We hold that the evidence cited by the District Court is insufficient to support its finding of bad faith with respect to West's conduct of the entire litigation. Neither a desire to avoid having an issue decided nor a settlement of an action leads inexorably to the conclusion that the party seeking to avoid adjudication does not believe its claims have merit. Indeed, even if West subjectively believed its claims were valid, it may nevertheless have been rational for West to choose to settle with those competitors that disagreed with it so long as at least some other competitors or potential competitors were deterred by its arguments from engaging in the allegedly infringing conduct and it also believed that there was a substantial risk that a court would rule against it. Thus, neither West's efforts to delay the litigation nor its settlement with Matthew Bender, standing alone, support the District Court's finding of bad faith.
West's false denials that it had threatened Hyperlaw with suit, which were made in support of its motion to dismiss Hyperlaw's declaratory judgment action, may have provided sufficient support for a finding of bad faith with respect to that motion. n1 [*510] Those denials do not, however, even considered in conjunction with West's efforts to avoid an adjudication of the rights it was asserting, support an inference that West subjectively believed that its claims were not valid.
- n1 Because Hyperlaw did not link that motion to any specific costs, the District Court did not make such a finding.
In sum, we hold that Hyperlaw failed to adduce sufficient evidence that West's conduct of the entire litigation was in bad faith, and that, therefore, the District Court's finding of bad faith was clearly erroneous. Accordingly, we reverse the judgment of the District Court.


GERBER + PICKETT vs. LONGBOAT HARBOUR NORTH CONDOMINIUM, INC.
LONGBOAT HARBOUR NORTH CONDOMINIUM, INC., Defendant.
Condominium unit owners brought action under § 1983 challenging condominium association regulation that prohibited him from displaying American flag except on designated holidays. On defendant's motion to dismiss and parties' cross motions for summary judgment, the District Court, 724 F.Supp. 884, granted plaintiff's motion for summary judgment and issued injunction. On reconsideration, the District Court, Kovachevich, J., held that material issues of fact existed, precluding summary judgment as to whether actions of condominium association regulating displays of American flags regulated exclusive use of common elements of condominium in violation of unit owners' free speech rights.
Motion granted, and prior orders reaffirmed in part and vacated in part and cause reopened.
Summary judgment should only be entered when moving party has sustained its burden of showing absence of genuine issue as to any material fact when all evidence is viewed in light most favorable to nonmoving party, and all doubt as to existence of genuine issue of material fact must be resolved against moving party. Fed.Rules Civ.Proc.Rule 12(b)(6), 28 U.S.C.A.
Court can grant summary judgment against movant, even though opposite party has not actually filed motion for summary judgment. Fed.Rules Civ.Proc.Rule 12(b)(6), 28 U.S.C.A.
Material issues of fact existed precluding summary judgment as to whether actions of condominium association regulating displays of American flags regulated exclusive use of common elements of condominium in violation of unit owners' free speech rights. U.S.C.A. Const.Amend. 1; Fed.Rules Civ.Proc.Rule 12(b)(6), 28 U.S.C.A.
*1340 James J. Boczar, P.A., Simon Rosin, P.A., Sarasota, Fla., for plaintiffs.
Becker & Poliakoff, P.A., Maitland, Fla., for defendant.
This cause is before the Court on Defendant's Motion for Reconsideration of Order granting Summary Judgment in Favor of Plaintiffs, Plaintiffs' response thereto, Defendant's Motion to Alter or Amend Judgment pursuant to Rule 59, Fed.R.Civ.P., and Defendant's request for oral argument.
Defendant urges the Court to reconsider its order granting summary judgment in favor of Plaintiffs, 724 F.Supp. 884, based on several arguments raised in its motion. The initial argument set forth by Defendant states that Plaintiffs did not file a separate motion for summary judgment and that the sole motion before the Court was Defendant's 12(b)(6) motion to dismiss, or in the alternative, motion for summary judgment. Defendant contends that the alternative motion for summary judgment was confined solely to the issue of state action and that it was filed only in the event the Court considered matters outside of the pleadings. Thus, Defendant asserts that the Court went far beyond the scope of the motion by entering a final summary judgment as to all issues in favor of Plaintiffs.
In addition, Defendant states that it filed its motion to dismiss for failure to state a claim prior to the filing of any other responsive pleading and because of the Court's order granting summary judgment in favor of Plaintiffs, it has not yet had an opportunity to answer Plaintiffs' complaint. The essence of Defendant's contentions is that the Court has not yet addressed the "manner" in which Plaintiffs displayed their flag and that this consideration has been wrongfully precluded by the Court's granting of a final summary judgment.
This cause is before the court on Defendant's motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), Plaintiffs response thereto, and both parties (Emphasis added) cross motions for summary judgment.
Plaintiffs argue that Defendant was put on notice of the Court's intention to proceed as though both parties had moved for summary judgment when they responded to that September 21, 1989, order and that Defendant cannot now complain of not being apprised of the intention to proceed in this manner. Lastly, Plaintiffs contest Defendant's assertion that the dispute was over the "manner" in which the Plaintiffs were flying the American flag. Plaintiffs reiterate their earlier arguments and allege that Defendant was not trying to regulate the "manner" in which the flag was flown but instead was attempting to prohibit Plaintiffs from flying the flag from the railing adjacent to their condominium unit.
Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) established the principle that a complaint should not be dismissed for failure to state a claim unless a plaintiff can prove no set of facts which would entitle him to relief. This exacting standard has long been a staple of federal practice and is supported by hundreds of cases. Equally well supported is the dictate that, when evaluating a motion to dismiss, the trial court must view the complaint in the light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1947).
Defendant's motion to dismiss is predicated upon its assertion that, since it is not a governmental entity and has not assumed substantially all of the functions of a governmental entity, [FN1] the provisions of the First Amendment as incorporated in the Fourteenth Amendment simply do not apply. This Court cannot agree with Defendants contention, and by applying the principles enumerated in Shelley v. Kraemer, 334 U.S. 1, 68 S.Ct. 836, 92 L.Ed. 1161 (1947), this Court found and continues to find that judicial enforcement of private agreements contained in a declaration of condominium constitutes state action and brings the heretofore private conduct within the scope of the Fourteenth Amendment, through which the First Amendment guarantee of free speech is made applicable to the states.
FN1. The landmark case finding a private entity to be the functional equivalent of a state actor is of course Marsh v. Alabama, 326 U.S. 501, 66 S.Ct. 276, 90 L.Ed. 265 (1945). In Marsh, the Gulf Shipbuilding Corporation had assumed virtually all of the responsibilities of local government in the Mobile, Alabama suburb of Chicksaw. The Court found the guarantees of the First and Fourteenth Amendments to apply in full force to the company owned town.
 This circuit clearly holds that summary judgment should only be entered when the moving party has sustained its burden of showing the absence of a genuine issue as to any material fact when all the evidence is viewed in the light most favorable to the nonmoving party. Sweat v. Miller Brewing Co., 708 F.2d 655 (11th Cir.1983). All doubt as to the existence of a genuine issue of material fact must be resolved against the moving party. Hayden v. First National Bank of Mt. Pleasant, 595 F.2d 994, 996-97 (5th Cir.1979), [FN2] quoting Gross v. Southern Railroad Co., 414 F.2d 292 (5th Cir.1969). Factual disputes preclude summary judgment.
FN2. Decisions of the former Fifth Circuit are binding precedent on this court. Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir.1981).
In our view the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.
Id. 477 U.S. at 322, 106 S.Ct. at 2552, 91 L.Ed.2d at 273.
The court also said, "Rule 56(e) therefore requires that nonmoving party go beyond the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, 'designate' specific facts showing there is a genuine issue for trial." Celotex, supra 477 U.S. at 324, 106 S.Ct. at 2553, 91 L.Ed.2d at 274.
 In addition, this circuit also holds that, in an appropriate case, the district court may grant summary judgment against the movant, even though the opposite party has not actually filed a motion for summary judgment. In re: Caravan Refrigerated Cargo, Inc., 864 F.2d 388 (5th Cir.1989). Thus, this Court clearly has the power to grant summary judgment for Plaintiffs in this case, even though they did not actually file a motion for summary judgment. However, as stated above, factual disputes with respect to a material issue preclude an order of summary judgment for either party.
 In the case at bar, Defendant contends that their actions were not directed at prohibiting Plaintiffs from flying the *1342 American flag, but instead, were aimed at regulating the manner in which the Plaintiff chose to display the flag. Also, Defendant states that the provisions of the condominium documents only forbade displaying flags from the common elements, except on designated occasions, but did permit displays of a flag not involving the common elements at any time.
Plaintiffs dispute these assertions by Defendant and argue that their flag displays did not utilize the common elements of the condominium. Instead, Plaintiffs charge that they displayed the American flag from the railing immediately adjacent to their unit or from the exterior wall of their condominium unit. Plaintiffs further argue that these areas are exclusive use common elements, as set out by the Declaration of Condominium of Longboat Harbor North, and are reserved for the exclusive use of the abutting unit and shall be appurtenant to it.
Based on these allegations and on the limited pleadings before this Court, it is clear that there are genuine issues as to material facts in this case.
ORDERED that motion for reconsideration be granted; the summary judgment order of November 17, 1989 be reaffirmed, only as to the state action issue, and vacated in the remainder; the cause of action be reopened; request for oral argument be denied; Plaintiffs shall have ten (10) days in which to file an amended complaint if they desire; and Defendant shall have twenty (20) days in which to file an answer to the complaint/or amended complaint.


text:
interpretar : Binisaya - Cebuano to English Dictionary and Thesaurus.
v. (cognition) 1. construe, interpret, see make sense of; assign a meaning to.; "What message do you see in this letter?"; "How do you interpret his behavior?"
~ be amiss, misapprehend, misconceive, misconstrue, misunderstand, misinterpret interpret in the wrong way.; "Don't misinterpret my comments as criticism"; "She misconstrued my remarks"
~ read between the lines read what is implied but not expressed on the surface.
~ mythicise, mythicize interpret as a myth or in terms of mythology.; "mythicize the ancient stories"
~ literalise, literalize make literal.; "literalize metaphors"
~ spiritualise, spiritualize give a spiritual meaning to; read in a spiritual sense.
~ reinterpret assign a new or different meaning to.
~ allegorise, allegorize interpret as an allegory.
~ read, take interpret something in a certain way; convey a particular meaning or impression.; "I read this address as a satire"; "How should I take this message?"; "You can't take credit for this!"
~ read interpret something that is written or printed.; "read the advertisement"; "Have you read Salman Rushdie?"
~ read, scan obtain data from magnetic tapes.; "This dictionary can be read by the computer"
~ consider, regard, view, reckon, see deem to be.; "She views this quite differently from me"; "I consider her to be shallow"; "I don't see the situation quite as negatively as you do"
~ educe, elicit, evoke, extract, draw out deduce (a principle) or construe (a meaning).; "We drew out some interesting linguistic data from the native informant"
v. (communication) 2. interpret, rede give an interpretation or explanation to.
~ moralise, moralize interpret the moral meaning of.; "moralize a story"
~ deconstruct interpret (a text or an artwork) by the method of deconstructing.
~ re-explain, reinterpret interpret from a different viewpoint.
~ commentate serve as a commentator, as in sportscasting.
~ explain, explicate make plain and comprehensible.; "He explained the laws of physics to his students"
~ annotate, gloss, comment provide interlinear explanations for words or phrases.; "He annotated on what his teacher had written"
~ commentate make a commentary on.
v. (creation) 3. interpret, render give an interpretation or rendition of.; "The pianist rendered the Beethoven sonata beautifully"
~ performing arts arts or skills that require public performance.
~ perform, do, execute carry out or perform an action.; "John did the painting, the weeding, and he cleaned out the gutters"; "the skater executed a triple pirouette"; "she did a little dance"
~ sing deliver by singing.; "Sing Christmas carols"
v. (creation) 4. interpret, represent create an image or likeness of.; "The painter represented his wife as a young girl"
~ artistic creation, artistic production, art the creation of beautiful or significant things.; "art does not need to be innovative to be good"; "I was never any good at art"; "he said that architecture is the art of wasting space beautifully"
~ re-create create anew.; "Re-create the boom of the West on a small scale"
~ carnalize, sensualize represent materialistically, as in a painting or a sculpture.
~ silhouette represent by a silhouette.
~ animalise, animalize represent in the form of an animal.
~ profile represent in profile, by drawing or painting.
~ paint make a painting of.; "He painted his mistress many times"
~ capture succeed in representing or expressing something intangible.; "capture the essence of Spring"; "capture an idea"
~ depict, picture, show, render show in, or as in, a picture.; "This scene depicts country life"; "the face of the child is rendered with much tenderness in this painting"
~ stylise, stylize, conventionalize represent according to a conventional style.; "a stylized female head"
~ map make a map of; show or establish the features of details of.; "map the surface of Venus"
~ limn, portray, depict make a portrait of.; "Goya wanted to portray his mistress, the Duchess of Alba"
~ portray, present represent abstractly, for example in a painting, drawing, or sculpture.; "The father is portrayed as a good-looking man in this painting"
~ draw represent by making a drawing of, as with a pencil, chalk, etc. on a surface.; "She drew an elephant"; "Draw me a horse"
~ mock up, model construct a model of.; "model an airplane"
~ graph, chart represent by means of a graph.; "chart the data"
v. (communication) 5. interpret, render, translate restate (words) from one language into another language.; "I have to translate when my in-laws from Austria visit the U.S."; "Can you interpret the speech of the visiting dignitaries?"; "She rendered the French poem into English"; "He translates for the U.N."
~ ingeminate, iterate, reiterate, repeat, restate, retell to say, state, or perform again.; "She kept reiterating her request"
~ gloss provide an interlinear translation of a word or phrase.
~ latinize translate into Latin.
~ translate be translatable, or be translatable in a certain way.; "poetry often does not translate"; "Tolstoy's novels translate well into English"
v. (cognition) 6. interpret, read, translate, understand make sense of a language.; "She understands French"; "Can you read Greek?"

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NONPRECEDENTIAL DISPOSITION To be cited only in accordance with Fed. R. App. P. 32.1 United States Court of Appeals For the Seventh Circuit Chicago, Illinois 60604 Submitted October 23, 2017 Decided December 15, 2017 Before FRANK H. EASTERBROOK, Circuit Judge MICHAEL S. KANNE, Circuit Judge DIANE S. SYKES, Circuit Judge No. 16-3913 UNITED STATES OF AMERICA, Plaintiff-Appellee, v. GERARD M. LILES, Defendant-Appellant. Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 13 CR 860 Ronald A. Guzmán, Judge. ORDER Gerard Liles pleaded guilty to distributing crack cocaine and was sentenced to 105 months in prison and a four-year term of supervised release. He appealed, and the parties agreed that the district judge failed to evaluate the conditions of supervised release under the relevant factors outlined in 18 U.S.C. § 3553(a) as required by recent circuit caselaw. See, e.g., United States v. Falor, 800 F.3d 407, 411 (7th Cir. 2015); United States v. Kappes, 782 F.3d 828, 844–45, 847–62 (7th Cir. 2015). They further agreed that the appropriate remedy for this error was a remand for resentencing. See Kappes, 782 F.3d at No. 16-3913 Page 2 866–67. We accepted the confession of error, vacated the judgment, and remanded for resentencing. On remand the judge entertained argument from the parties and imposed the same prison term and term of supervised release. The judge then imposed a modified set of supervised-release conditions and gave the parties an opportunity to state “any objections, modifications, amendments, or additions” to the conditions. Liles’s attorney replied that he had “[n]othing on the supervised release conditions, Your Honor.” The judge accordingly entered judgment. Liles again appealed, but his attorney has moved to withdraw under Anders v. California, 386 U.S. 738 (1967). Liles has not accepted our invitation to respond to counsel’s motion. See 7TH CIR. R. 51(b). Counsel’s brief explains the nature of the case and addresses the issues that this kind of appeal might be expected to involve. Because the analysis appears complete, we limit our review to the subjects counsel has raised. Counsel begins by explaining that any challenge to Liles’s conviction was waived because no such challenge was raised in the first appeal. See United States v. Whitlow, 740 F.3d 433, 438 (7th Cir. 2014) (“[A]n issue that could have been raised on appeal but was not is waived and, therefore, not remanded.”). As such, counsel properly rejects as frivolous any challenge to Liles’s conviction. Next, counsel explains that the district judge correctly calculated an offense level 23 and a criminal history category V, yielding an advisory sentencing range of 84 to 105 months in prison under the Sentencing Guidelines. Counsel properly rejects as frivolous any challenge to the court’s calculation of the range. Counsel also concludes that any challenge to the substantive reasonableness of the 105-month sentence would be frivolous. The sentence was within the advisory range and thus is presumed reasonable on appeal. Rita v. United States, 551 U.S. 338, 347 (2007); Kappes, 782 F.3d at 846. Counsel explains that no nonfrivolous argument can be advanced to overcome the presumption. We agree. Finally, counsel concludes that any challenge to the supervised-release conditions was waived. The judge expressly invited the parties to identify any “objections, modifications, amendments, or additions” to the conditions. Liles’s counsel said he had none. That is indeed a waiver. See United States v. Lewis, 823 F.3d 1075, 1079 (7th Cir. 2016). We agree that any challenge to the supervised-release conditions would be frivolous. No. 16-3913 Page 3 Accordingly, we GRANT the motion to withdraw and DISMISS the appeal.


text:
Note that this is an evolving syllabus, as we will discuss key issues of technology antitrust using current cases and materials. In other words, stuff on this website will change during the course of the semester.
U.S. v. Andreas, 216 F.3d 645 (7th Cir. 2000). Excerpt. Yes, The Informant is based on that case.
Disruption via de novo entry as per se illegal antitrust violation?
Dan Wall & Hanno Kaiser, Brief of Economists as Amici Curiae in Support of Apple, Amicus Brief to the U.S. Supreme Court in re U.S. v. Apple Inc. (2015).
Class 4: An in depth look at Algorithms and Collusion. New normal or smoke without fire?
Replace computers and algorithms with humans—does that change the analysis?
Are there “plus factors” akin to (e.g.) regular meetings?
Duty to encode “collusion avoidance” into commercial pricing algorithms?
What makes a firm dominant?
United States v. Microsoft, 253 F.3d 34 (D.C. Cir. 2001). Excerpts. Super high-level summary.
What constitutes an abuse of a dominant position?
United States v. Microsoft, 253 F.3d 34 (D.C. Cir. 2001). Finish reading the case. Excerpts. Super high-level summary.
Windows Media Player: Microsoft v. European Commission, Judgment of the Court of First Instance (9/17/2007). This is a long and rather tedious opinion. Read the excerpts from the Commission Decision posted on bSpace.
What are the (beneficial and detrimental) effects of these agreements on competitors, users, and developers?
“Closing an open system" v. "maintaining a closed system"
Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451 (1992). Excerpts. (Here are some additional case notes).
Blizzard Entertainment v. Ceiling Fan Software, et al., 41 F.Supp.2d 1227 (C.D. Cal. 2013). Excerpts.
Apple, Inc. v. Psystar Corp., 586 F. Supp. 2d 1190 (N.D.Cal. 2008). Excerpts.
Datel Holdings Ltd. v. Microsoft Corp., 712 F. Supp. 2d 974 (N.D. Cal. 2010) Excerpts.
Standard setting implies that competitors agree not to compete on certain technologies. Why is that legal?
Imagine a world without standards, e.g., power plugs, rail gauges, phone networks, the internet (TCP/IP), the world-wide web (HTTP), eurorack, etc.
Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297 (3rd. Cir. 2007). Excerpt.
Case C-170/13 Huawei v ZTE (European Court of Justice) (July 16, 2015) Please read the judgment of the court, which is the first document on the web page and then focus on the holding after para. 77.
Outline the mandatory elements of the offense, using "the grid"

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Most of us have heard the term “double jeopardy” and associate it with the principle that no person may be tried twice for the same offense. In fact, it is likely one of the most recognized Constitutional principles, rivaled only by Freedom of Speech or the Right to Bear Arms.
As is the case with most legal principles, however, the prohibition against double jeopardy is subject to a massive exception — the Doctrine of Dual Sovereignty. Put simply, a person may be tried twice for the same crime if the offense violates the laws of different sovereignties.
As recently as December 2016, the federal Fifth Circuit Court of Appeals reiterated this legal tenet in United States v. Richardson.
What does this mean? Using a simple example, a person who delivers methamphetamine in Dallas, Texas, could be subject to prosecution in a State district court in Dallas County as well as a Federal district court in the Dallas Division of the Northern District of Texas.
The reasoning underlying Dual Sovereignty is relatively straightforward. “When a defendant in a single act violates peace and dignity of two separate sovereigns by breaking laws of each, he has committed two distinct offenses for double jeopardy purposes.” This statement, made by the U.S. Supreme Court in Heath v. Alabama, simply means that the Fifth Amendment prohibition against Double Jeopardy only applies within a specific sovereignty.
What is a Sovereignty for purposes of Double Jeopardy?
How is the term “sovereignty” applied? According to the Supreme Court, “this determination [whether two entities are separate sovereigns] turns on whether the two entities draw their authority to punish the offender from distinct sources of power.” In Heath, the Supreme Court reiterated that States draw their power from a different source than the U.S. Government. The Court also found in that case that States are separate sovereigns from each other. Thus, in the Heath case, the successive prosecution in an Alabama state court for capital murder during a kidnapping, subsequent to Heath’s conviction for the same murder in Georgia, did not offend the Fifth Amendment and was held to be Constitutional.
Are there practical limitations upon successive federal and state prosecutions? The answer is yes, but with a major exception. The Department of Justice’s Petite-Policy (pronounced like ‘pet it’ not ‘puh-teet’) generally bars the successive federal prosecution of a crime where a state conviction has already taken place. However, this is an internal DOJ rule and is not binding upon any Court. In U.S. v. Patterson, the Fifth Circuit clearly stated such.
It is also very important to recognize that the Petite-Policy is not a blanket ban upon federal prosecutions of offenses already resulting in state convictions, rather, the policy limits such federal prosecutions “ only where there are compelling reasons, and the prosecuting attorney obtains prior approval from an assistant United States attorney general.” See, Rinaldi v. United States, 434 U.S. 22, 28,(1977) (per curiam).
So, is there any case where a Court may bar the federal prosecution of a case where there has already been a state prosecution? Yes, but only in limited circumstances. The “Sham Test” has been applied by federal courts as an exception to the Dual Sovereignty Doctrine. The Fifth Circuit recognizes the possibility for this exception in a case called U.S. v. Moore, stating, “the Supreme Court suggested in dicta that there may be an exception to the dual sovereignty doctrine when one sovereign is “merely a tool” of the other in bringing a second prosecution that is a “sham and a cover” for a prosecution that would otherwise be barred under the Double Jeopardy Clause.” This rule exception is from a Supreme Court case titled Bartkus v. Illinois.
Ironically, Dual Sovereignty does not afford the federal prosecution of a crime occurring in Puerto Rico if such crime was originally prosecuted in the Supreme Court of Puerto Rico. In Puerto Rico v. Sanchez Valle, the U.S. Supreme Court held that the Government of Puerto Rico is not a separate sovereignty from the federal government, at least not in terms of the Doctrine of Dual Sovereignty. Puerto Rico v. Sanchez Valle. In this case, Luis Sanchez Valle and Jaime Gomez Vazquez were indicted for selling guns to an undercover police officer in Puerto Rico under the Puerto Rico Arms Act of 2000. Then they were indicted for violating U.S. gun trafficking statutes found under Section 922 and 924 of the US Code. The Supreme Court held that the federal prosecution was barred under the Fifth Amendment’s prohibition against Double Jeopardy.
Ultimately, federal prosecutions for cases that are already prosecuted as state offenses are not highly common but absolutely permissible and encouraged by the DOJ if “compelling reasons” exist. Obviously, the DOJ determines what qualifies as a compelling one. Persons who face potential prosecutions on both the state and federal levels need to understand that the systems work very differently and oftentimes encompass different sentencing implications. They also involve variations regarding evidentiary precepts. Also significant is the fact that many federal prosecutions proceed under conspiracy statutes, which trigger massive hearsay loopholes.
Defense attorneys representing persons facing potential dual prosecutions need to understand the differences between state criminal procedure and federal procedure. They need to quickly take steps to dissuade federal prosecutors from proceeding with a successive prosecution as well as determine whether the federal prosecution is simply a ruse to allow state prosecutors a second bite at the apple. Being able to quickly establish a dialogue with federal prosecutors and demonstrate that a federal prosecution is not an effective use of resources could mean the difference between facing, and not facing, a federal charge. In most instances, but not necessarily all instances, the state system would be preferable.

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Klimovskii I.I., Scheglov V.A. On Principle Possibility to Create New Lasers on the Repulsion Terms of Biatomic Flying Away Molecules. // Atmospheric and oceanic optics. 1999. V. 12. No. 11. P. 958-963.
Churikov V.A. On Creating the Gamma-Laser. // Atmospheric and oceanic optics. 1999. V. 12. No. 11. P. 964-965.
Gridnev A.G., Shestakov D.U. Photoresonant Plasma Produced by Open Discharge in Metal Vapour. // Atmospheric and oceanic optics. 1999. V. 12. No. 11. P. 966-969.
Izmailov I.V., Magazinnikov A.L., Poizner B.N. Laser Beam in Ring Interferometer with Delay: Simulation of Structurization. // Atmospheric and oceanic optics. 1999. V. 12. No. 11. P. 970-971.
Kovalenko E.S., Mandel A.E., Orlovskii V.M., Panarin V.A., Sharangovich S.N. Generation of Nanosecond Radiation Pulses by Small-Scale CO2-Lasers with Sealed off Source of Electrons. // Atmospheric and oceanic optics. 1999. V. 12. No. 11. P. 972-973.
Fedorov A.I. The Effect of Automatic Corona Preionization and Buffer Gases on XeCl-laser Radiation Parameters. // Atmospheric and oceanic optics. 1999. V. 12. No. 11. P. 974-976.
Malinin A.N., Shimon L.L., Guivan N.N., Polyak A.V. The Optimization of Energy Characteristics in Gas-Discharge Plasma on the Working Mixtures of HgBr-laser. // Atmospheric and oceanic optics. 1999. V. 12. No. 11. P. 977-979.
Sergeev A.K., Filinov D.N., Kuznetsova R.T., Kopylova T.N., Tel'minov E.N. Measurement of the Gain of the Laser-active Media Based on Dyes. // Atmospheric and oceanic optics. 1999. V. 12. No. 11. P. 980-983.
Akimov A.I., Grachev A.V., Tsyganova O.Yu., Yuzhakov V.I., Siling S.A., Shamshin S.V. Spectral-Luminescent Properties of New Polymer-Bifluorofors. // Atmospheric and oceanic optics. 1999. V. 12. No. 11. P. 984-989.
Ivanov V.N., Lasica A.M. Influence of Sonic and Low-Frequency Electromagnetic Waves Propagating in a Substance, on Spectral Composition of Scattered Laser Radiation. // Atmospheric and oceanic optics. 1999. V. 12. No. 11. P. 990-992.
Breusova E.G., Kuznetsova R.T., Maier G.V. Effect of Substitution in Phenyl Cycle on Lasing Properties of the Pyridylphenyloxazole Derivates. // Atmospheric and oceanic optics. 1999. V. 12. No. 11. P. 993-996.
Ivanov V.N., Lasica A.M. Laser Harmonic Generation in a Shock Wave by an Ensemble of Three-Level Atoms. // Atmospheric and oceanic optics. 1999. V. 12. No. 11. P. 997-998.
Erofeev M.V., Lomaev M.I., Skakun V.S., Sosnin E.A., Zimakov V.P., Shitz D.V. Capacitive Discharge Excilamps. // Atmospheric and oceanic optics. 1999. V. 12. No. 11. P. 999-1001.
Fedenev A.V., Skakun V.S., Zimakov V.P. Third Continuum in Argon and Krypton Under Pumping by Electron Beam and Electron Beam Initiated Discharge. // Atmospheric and oceanic optics. 1999. V. 12. No. 11. P. 1002-1007.
Ivanov N.G., Losev V.F., Prokop'ev V.E. Conversion of High-coherent Radiation of XeCl-laser at SRS in Gaseous Hydrogen. // Atmospheric and oceanic optics. 1999. V. 12. No. 11. P. 1008-1014.
Karpukhin V.T., Klimovskii I.I., Malikov M.M., Markovets V.V. Peculiarities of CVL and System "CVL-UV-converter" in Regime of Lasers Monitor. // Atmospheric and oceanic optics. 1999. V. 12. No. 11. P. 1015-1019.
Kolbychev G.V., Ptashnik I.V. Measurement of Electric Field Distribution in the Open Discharge. // Atmospheric and oceanic optics. 1999. V. 12. No. 11. P. 1020-1024.

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§ 38.2-2212 Grounds and procedure for cancellation of or . . .
b. Any other four-wheel motor vehicle which is not used in the occupation, profession, or business, other than farming, of the insured, or as a public or livery conveyance, or rented to others. The term “policy of motor vehicle insurance” or “policy” does not include (i) any policy issued through the Virginia Automobile Insurance Plan, (ii) any policy covering the operation of a garage, sales agency, repair shop, service station, or public parking place, (iii) any policy providing insurance only on an excess basis, or (iv) any other contract providing insurance to the named insured even though the contract may incidentally provide insurance on motor vehicles.”Renewal” or “to renew” means (i) the issuance and delivery by an insurer of a policy superseding at the end of the policy period a policy previously issued and delivered by the same insurer, providing types and limits of coverage at least equal to those contained in the policy being superseded, or (ii) the issuance and delivery of a certificate or notice extending the term of a policy beyond its policy period or term with types and limits of coverage at least equal to those contained in the policy. Each renewal shall conform with the requirements of the manual rules and rating program currently filed by the insurer with the Commission. Except as provided in subsection K of this section, any policy with a policy period or term of less than 12 months or any policy with no fixed expiration date shall for the purpose of this section be considered as if written for successive policy periods or terms of six months from the original effective date.
B. This section shall apply only to that portion of a policy of motor vehicle insurance providing the coverage required by §§ 38.2-2204, 38.2-2205, and 38.2-2206.
s. The refusal of a motor vehicle owner as defined in § 46.2-1088.6 to provide access to recorded data from a recording device as defined in § 46.2-1088.6.
2. Nothing in this section shall require any insurer to renew a policy for an insured where the insured’s occupation has changed so as to materially increase the risk. Nothing contained in subdivisions C 1 n, 1 o, and 1 p of this subsection shall prohibit an insurer from refusing to renew a policy where a claim is false or fraudulent. Nothing in this section prohibits any insurer from setting rates in accordance with relevant actuarial data.
1. The named insured or any other operator who either resides in the same household or customarily operates a motor vehicle insured under the policy has had his driver’s license suspended or revoked during the policy period or, if the policy is a renewal, during its policy period or the 90 days immediately preceding the last effective date.
2. The named insured fails to pay the premium for the policy or any installment of the premium, whether payable to the insurer or its agent either directly or indirectly under any premium finance plan or extension of credit.
3. The named insured or his duly constituted attorney-in-fact has notified the insurer of a change in the insured’s legal residence to a state other than Virginia and the insured vehicle will be principally garaged in the new state of legal residence.
1. Be in a type size authorized under § 38.2-311.
2. State the effective date of the cancellation or refusal to renew. The effective date of cancellation or refusal to renew shall be at least 45 days after mailing or delivering to the insured the notice of cancellation or notice of refusal to renew. However, when the policy is being canceled or not renewed for the reason set forth in subdivision 2 of subsection D of this section the effective date may be less than 45 days but at least 15 days from the date of mailing or delivery.
3. State the specific reason of the insurer for cancellation or refusal to renew and provide for the notification required by §§ 38.2-608, 38.2-609, and subsection B of § 38.2-610. However, those notification requirements shall not apply when the policy is being canceled or not renewed for the reason set forth in subdivision 2 of subsection D of this section.
4. Inform the insured of his right to request in writing within 15 days of the receipt of the notice that the Commissioner review the action of the insurer.The notice of cancellation or refusal to renew shall contain the following statement to inform the insured of such right:IMPORTANT NOTICE Within 15 days of receiving this notice, you or your attorney may request in writing that the Commissioner of Insurance review this action to determine whether the insurer has complied with Virginia laws in canceling or nonrenewing your policy. If this insurer has failed to comply with the cancellation or nonrenewal laws, the Commissioner may require that your policy be reinstated. However, the Commissioner is prohibited from making underwriting judgments. If this insurer has complied with the cancellation or nonrenewal laws, the Commissioner does not have the authority to overturn this action.
5. Inform the insured of the possible availability of other insurance which may be obtained through his agent, through another insurer, or through the Virginia Automobile Insurance Plan.
6. If sent by mail or delivered electronically, comply with the provisions of § 38.2-2208.Nothing in this subsection prohibits any insurer or agent from including in the notice of cancellation or refusal to renew, any additional disclosure statements required by state or federal laws, or any additional information relating to the availability of other insurance.
4. If an affiliated insurer has manifested its willingness to provide coverage at a lower premium than would have been charged for the same exposures on the expiring policy. The affiliated insurer shall manifest its willingness to provide coverage by issuing a policy with the types and limits of coverage at least equal to those contained in the expiring policy unless the named insured has requested a change in coverage or limits. When such offer is made by an affiliated insurer, an offer of renewal shall not be required of the insurer of the expiring policy, and the policy issued by the affiliated insurer shall be deemed to be a renewal policy.
G. There shall be no liability on the part of and no cause of action of any nature shall arise against the Commissioner or his subordinates; any insurer, its authorized representatives, its agents, or its employees; or any person furnishing to the insurer information as to reasons for cancellation or refusal to renew, for any statement made by any of them in complying with this section or for providing information pertaining to the cancellation or refusal to renew. For the purposes of this section, no insurer shall be required to furnish a notice of cancellation or refusal to renew to anyone other than the named insured, any person designated by the named insured, or any other person to whom such notice is required to be given by the terms of the policy and the Commissioner.
H. Within 15 days of receipt of the notice of cancellation or refusal to renew, any insured or his attorney shall be entitled to request in writing to the Commissioner that he review the action of the insurer in canceling or refusing to renew the policy of the insured. Upon receipt of the request, the Commissioner shall promptly begin a review to determine whether the insurer’s cancellation or refusal to renew complies with the requirements of this section and of § 38.2-2208 if the notice was sent by mail or delivered electronically. The policy shall remain in full force and effect during the pendency of the review by the Commissioner except where the cancellation or refusal to renew is for the reason set forth in subdivision 2 of subsection D of this section, in which case the policy shall terminate as of the effective date stated in the notice. Where the Commissioner finds from the review that the cancellation or refusal to renew has not complied with the requirements of this section or of § 38.2-2208, he shall immediately notify the insurer, the insured and any other person to whom such notice was required to be given by the terms of the policy that the cancellation or refusal to renew is not effective. Nothing in this section authorizes the Commissioner to substitute his judgment as to underwriting for that of the insurer. Where the Commissioner finds in favor of the insured, the Commission in its discretion may award the insured reasonable attorneys’ fees.
I. Each insurer shall maintain for at least one year, records of cancellation and refusal to renew and copies of every notice or statement referred to in subsection E of this section that it sends to any of its insureds.
J. The provisions of this section shall not apply to any insurer that limits the issuance of policies of motor vehicle liability insurance to one class or group of persons engaged in any one particular profession, trade, occupation, or business. Nothing in this section requires an insurer to renew a policy of motor vehicle insurance if the insured does not conform to the occupational or membership requirements of an insurer who limits its writings to an occupation or membership of an organization. No insurer is required to renew a policy if the insured becomes a nonresident of Virginia.
K. Notwithstanding any other provision of this section, a motor vehicle insurance policy with a policy period or term of five months or less may expire at its expiration date when the insurer has manifested in writing its willingness to renew the policy for at least 30 days and has mailed or delivered the written manifestation to the insured at least 15 days before the expiration date of the policy. The written manifestation shall include the name of the proposed insurer, the expiration date of the policy, the type of insurance coverage, and the estimated renewal premium. The insurer shall retain a copy of the written manifestation for at least one year from the expiration date of any policy that is not renewed.
1970, c. 564, § 38.1-381.5; 1972, c. 273; 1975, cc. 63, 319; 1978, c. 441; 1982, c. 482; 1983, cc. 125, 371; 1984, c. 340; 1986, c. 562; 1988, c. 655; 1990, c. 960; 1991, c. 116; 1995, c. 3; 1996, cc. 206, 239; 1998, cc. 141, 142; 2003, cc. 543, 553; 2006, cc. 851, 889; 2008, cc. 58, 221; 2009, c. 215; 2013, c. 257.
If you’re reading this for anything important, you should double-check its accuracy—read § 38.2-2212 on the official Code of Virginia website.
. . . in substance as § 15.2-1604 (1997)), 36-96.1, 38.2-2212(C1), 38.2-2213, 38.2-43 12(3)(E) (1994), as . . .


1. Usually wage and hour claims, and class actions are excluded from EPLI coverage.
It is normal practice for insurance companies to exclude coverage of wage and hour issues and class action claims. This is normally the large liability ticket issue that an employer is attempting to protect against when purchasing an EPLI policy, but then are surprised to learn that these types of claims are not covered once sued for a wage and hour claim or named in a class action lawsuit.
2. Similarly, liability for California’s Private Attorney General Act representative actions is usually not covered.
Just as class actions usually are not covered, insurance companies usually carve out coverage for wage and hour claims under California’s Private Attorney General Act (PAGA) representative actions. These representative actions can carry substantial liability for employers. For more information about PAGA claims, see a prior post here.
3. Intentional acts cannot be insured under CA law.
California law prohibits an insurance company from covering willful acts as set forth in Insurance Code section 533. The policy rational behind this law is to discourage intentional acts that cause harm or property loss to others. If it is an intentional act, California law prohibits insurance from covering the act. Therefore, if an employment lawsuit alleges willful acts took place as part of the allegations, it is also likely not going to be covered by insurance. This prohibition on covering intentional acts can be used by insurance companies to exclude coverage for employment claims of sexual harassment, discrimination, and retaliation.
4. Loss of control of defense counsel.
Most insurance policies will dictate which law firm must be used to defend the case. This is another surprise to many employers who have used a law firm for many years in setting up employment policies, handbooks, and procedures, only to find out that some other law firm that may not have experience in the employer’s industry, and does not have the trusted relationship built over a number of years, suddenly defending its interests in litigation. Unlike items 1 through 3 above, employers can negotiate this term with the insurance company, but this negotiation is better done when purchasing the policy or renewing the policy. Employers are advised to not wait until a lawsuit is filed and the insurance company assigns its preferred law firm to your case to start the discussion of which law firm should be defending the case. Employers should negotiate this term up front so that they have the option to select its preferred law firm to defend any litigation.
5. Loss of control over settlement of lawsuit.
Once the insurance company agrees to cover the liability of a lawsuit, it can dictate whether to settle a case and for how much. Insurance companies can look at a covered claim differently than an employer who is defending the lawsuit. For example, companies facing litigation are concerned that settling for too high of an amount may bring on additional copy-cat lawsuits. Insurance companies view settling the case with different concerns, such as risk for that one case, and their concerns may not be in line with the employer’s. Once an insurance company is covering a risk, the employer loses control on the potential resolution of the case. Employers need to understand this dynamic in assessing whether an EPLI policy is a good fit for their business.
Many employers have been able to effectively manage risks using EPLI policies, but there are many issues that must be understood prior to purchasing these types of policies. EPLI policy costs are rising, and employers should work with their broker and current employment attorney in assessing whether an EPLI policy meets their needs, and go into the purchase well-informed in order to make the best cost-benefit analysis.
1. If it was not a formal write-up put in the employee’s file, then the action does not constitute disciplinary action.
There is no legal definition of what constitutes a write-up. Likewise, there is no legal requirement of what need to be placed in an employee’s personnel file. Therefore, documentation about verbal warnings, e-mails, letters, even notes on napkins can be evidence to support an employer’s position that an employee was terminated because of performance issues. The key item employers need to remember is if the employee challenges the reason for the termination, the employer has support for the termination decision, either through testimony and/or documentation. The documentation can come in any form and does not have to be a formal write-up that is maintained in the employee’s personnel file. However, this is not to say that employers can do away with formal employee reviews and write-ups, as these are good practices to maintain.
2. Verbal warnings do not have to be documented.
If there is no record of a verbal warning, it is very difficult to prove later that the employee had been counseled about the issue. Managers should always document a verbal warning in some manner, such as in a manager’s log or e-mailing themselves the specifics about the verbal warning. By preparing an e-mail and sending it to human resources or even to himself or herself, a manager creates a great time-stamped record that is excellent evidence should there ever be any litigation concerning a termination.
3. Employees must sign disciplinary documents for them to be effective.
Some employers do not think a write-up for an employee is valid unless the employee signs the write-up, but this is not true. While it is a good policy to have some system that proves the employee was presented with the write-up, it is not required that the employee sign the document. It is common that an employee will refuse to sign such documents because they do not agree with them, but this should not prevent the employer from documenting the discipline. To alleviate this issue, employers can provide a line on the document that states the employee does not necessarily agree with the write-up, but is signing the document only to acknowledge receipt. If the employee still refuses to sign the document, the manager administering the writ-up should simply record on the bottom of the document that it was presented to the employee, the date, and that the employee refused to sign.
Another method to avoid the argument that the employee never received the written warning is to email the employee. This creates a great record of when the warning was prepared and sent to the employee, which will be hard for the employee to argue was never provided to them.
4. Employers must follow a progressive disciplinary policy and cannot fire employees on their first offense.
While employers may choose to implement a progressive discipline policy that starts discipline with a verbal warning and progresses to a second or third written warning prior to termination. However, if using a progressive disciplinary system, employers should be careful to preserve the employee’s at-will status and reserve the right to not follow the progressive disciplinary system. If the employee is at-will, they can be terminated at any time, even after their first small infraction of a company policy. For more information about at-will employment, click here for my previous article.
5. Disciplinary documentation should be as broad as possible.
While write-ups and performance documentation should address the overall issue that the employee needs to improve, employers need to avoid general statements without providing specific examples. For example, instead of writing-up an employee for having a “poor attitude,” the employer should provide a specific performance issue, such as the employee’s response to a customer was rude and not professional and set forth what the employee said. The employer should also document the time, date and facts of the incident. Write-ups should also list the conduct that is expected of the employee in the future.
3) Part C of the test requires that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
4) The contractor must actually be in business for themselves.
The court in Garcia v. Border Transportation Group, LLC (2018) 28 Cal.App.5th 558, explained that “Dynamex makes clear that the question in part C is not whether [Border Transportation] prohibited or prevented [plaintiff] from engaging in an independently established business.” Instead, the analysis is if the plaintiff “independently has made the decision to go into business for himself or herself” and “generally takes the usual steps to establish and promote his or her independent business – for example, through incorporation, licensure, advertisements, routine offerings to provide services of the independent business to the public or to a number of potential customers, and the like.” Id. at 572-573.
5) The Dynamex ABC test only applies to wage-order claims, and the Borello test applies to all other claims.
Border Transportation, 28 Cal.App.5th at 571.
So employers not only have to comply with the ABC test, they also have to comply with the factors set forth in Borello for all non-wage order labor code issues. The “most significant consideration” is the putative employer’s “right to control work details.” S.G. Borello & Sons, Inc. v. Dep’t of Indus. Relations (Borello), (1989) 48 Cal. 3d 341, 350. Recently, the California Supreme Court noted that under the right-of-control test, it is “not how much control a hirer [actually] exercises, but how much control the hirer retains the right to exercise.” Ayala v. Antelope Valley Newspapers, Inc., (2014) 59 Cal. 4th 522 at 533.
(h) whether or not the parties believe they are creating the relationship of employer-employee.
California employers have many different obligations to train employees on certain issues. The primary training obligation that applies to nearly every employer (with 5 or more employees) is to provide sexual harassment prevention training. However, as set forth below, different industries have different standards, and employers need to review the requirements that pertain to their industries and companies to ensure compliance.
1. Employers with 5 or more employees must provide sexual harassment prevention training to all employees (even nonsupervisory employees) by January 1, 2020.
SB 1343 is a bill that was passed in 2018 that requires employers with 5 or more employees, including temporary or seasonal employees, to provide at least 2 hours of sexual harassment training to all supervisors and at least one hour of sexual harassment training to all nonsupervisory employees by January 1, 2020, and once every 2 years thereafter.
The bill does require that the Department of Fair Employment and Housing (“DFEH”) is to develop or obtain 1-hour and 2-hour online training courses on the prevention of sexual harassment in the workplace and to post the courses on the DFEH’s website. The bill requires the DFEH to make existing informational posters and fact sheets, as well as the online training courses regarding sexual harassment prevention, available to employers and to members of the public in specified alternate languages on the DFEH website. At this point the DFEH has not indicated when the training and materials will be available, but check back here throughout the year for updates.
2. Harassment prevention training must cover certain topics.
The law that applies, such as California’s Fair Employment and Housing Act (“FEHA”) and Title VII of the Civil Rights Act of 1964.
Remedies available for sexual harassment victims in civil actions, and potential employer and individual exposure and liability.
The essential elements of an anti-harassment policy and how to utilize it if a harassment complaint is filed.
Anti-Bullying – A review of the definition of abusive conduct (for more information on this aspect see my prior article here).
3. Talent agencies required sexual harassment training and educational materials.
AB 2338 requires talent agencies to provide educational materials about sexual harassment prevention, retaliation, and reporting to its artists. At a minimum, the materials shall include the information listed in the DFEH’s Form 185. Materials may be provided electronically, such as a website or other means. The bill also requires talent agencies to make available educational materials regarding nutrition and eating disorders available to adult artists within 90 days of agreeing to representation. Talent agencies must keep records for three years confirming it has made the required information available.
4. Hotel and motel operators must provide training on human trafficking awareness.
SB 970, passed in 2018, requires hotel and motel operators to provide at least 20 minutes of “interactive training and education” regarding human trafficking awareness to employees who are likely to interact or come into contact with victims of human trafficking.
The require training must take place by January 1, 2020 and must be provided to employees within six months of employment in such a covered position. Training is required once every two years thereafter.
5. Employers need to develop an anti-harassment policy that includes a complaint procedure.
Identification of the Department and the U.S. Equal Employment Opportunity Commission (EEOC) as additional avenues for employees to lodge complaints.
Instructs supervisors to report any complaints of misconduct to a designated company representative, such as a human resources manager, so the company can try to resolve the claim internally. Employers with 50 or more employees are required to include this as a topic in mandated sexual harassment prevention training, pursuant to section 11024 of these regulations.
Indicates that when an employer receives allegations of misconduct, it will conduct a fair, timely, and thorough investigation that provides all parties appropriate due process and reaches reasonable conclusions based on the evidence collected.
States that confidentiality will be kept by the employer to the extent possible, but not indicate that the investigation will be completely confidential.
Indicates that if at the end of the investigation misconduct is found, appropriate remedial measures shall be taken.
Makes clear that employees shall not be exposed to retaliation as a result of lodging a complaint or participating in any workplace investigation.
In addition, employers are required to distribute the pamphlet, Sexual Harassment Is Forbidden by Law (DFEH-185), to all employees. Employers should also routinely discuss the sexual harassment policy with employees at meetings and remind them of the complaint procedures and document these additional steps. This additional training will show that the company is serious about preventing harassment and took affirmative steps to protect its employees.
1. DOL’s proposed salary threshold for exempt employees.
The DOL’s proposal increases the minimum salary required under the FLSA for an employee to qualify as an executive, administrative or professional exemption (referred to as the “EAP” exemption) from the currently-enforced level of $455 to $679 per week (equivalent to $35,308 per year).
Since 2004, the salary required under the FLSA was set at $23,660 per year. The Obama administration proposed rules that would have required employers to pay employees that qualify for the EAP exemption a minimum salary level of at least $921 per week or $47,892 annually. The Obama administration rules were set to take effect on December 1, 2016, but were blocked by a lawsuit filed by 21 states. The March 7, 2019 proposed rules lower the salary requirement by about $12,000 as compared to the Obama administration proposed rules.
The DOL’s proposed rules are expected to become effective in January 2020.
The proposal increases the total annual compensation requirement for “highly compensated employees” (“HCE”) from the currently-enforced level of $100,000 to $147,414 per year. This amount is about $13,000 higher than the proposed rule under the Obama administration.
3. The DOL did not propose any changes to the job duties test and did not set any automatic increases to the salary levels.
There were no changes to the job duties test that is required to qualify as an exempt employee. In addition, there are no future automatic adjustments to the salary threshold.
4. California employers must still comply with California’s more stringent standards regarding exempt employees.
Under California law, exempt employees must perform specified duties in a particular manner and be paid “a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.” (Lab. Code, § 515(a).) As of January 1, 2019, the minimum wage in California increased from $11.00 to $12.00 per hour for employers with 26 or more employees (the increase is from $10.50 per hour to $11.00 per hour for employers with 25 or fewer employees on January 1, 2019). With the increase in the state minimum wage, there is a corresponding raise in the minimum salary required to qualify as exempt under the EAP exemptions.
Therefore, on January 1, 2019, in order to qualify for an EAP exemption under California law, the employee must receive an annual salary of at least $49,920 for large employers and $45,760 for small employers.
In addition, California does not permit employers to consider bonuses, commissions, or other payments made to the employee during the year as part of the employee’s salary to meet the minimum threshold. Finally, California does not contain a “highly compensated employee” exemption.
5. Don’t forget about the duties test.
With attention on the DOL’s salary increase required to meet the EAP exemptions, it is important for employers to remember that this is only one-half of the test used to qualify as an exempt employee. The law also requires that the employee perform more than 50% of their time performing exempt duties. The duties that qualify as exempt can be difficult to determine, and many industries, such as insurance claim adjusters, financial service industry employees, executive assistants, and purchasing agents are just a few job classifications that have been the subject of litigation in the past.
California’s Stand Together Against Nondisclosure (STAND) Act prohibits certain terms in agreements with employees. The law voids any confidentiality provisions in agreements settling claims for sexual harassment under Civil Code section 51.9, workplace sexual harassment or discrimination, failure to prevent harassment, and retaliation for reporting sexual harassment or discrimination.
This law applies to agreements entered into on or after January 1, 2019 involving claims filed in court or filed in an administrative action. The law permits the claimant to request a term in the settlement that his or her identify remain confidential, including all facts that could lead to the discovery of his or her identity, including pleadings filed in court.
The law does not apply to pre-litigation settlements. The law also permits parties to keep the amount of the settlement confidential (unless a government agency or public official is a party to the settlement agreement).
Civil Code section 1670.11 makes any provision in a contract or settlement agreement entered on or after January 1, 2019 void and unenforceable if it waives a party’s right to testify in an administrative, legislative, or judicial proceeding about alleged criminal conduct or alleged sexual harassment.
SB 1300 added section 12964.5 to the Government Code which makes it an unlawful employment practice for an employer to require and employee to sign a release of a claim or right under the Fair Employment and Housing Act (“FEHA”). In addition, the law prohibits an employer from requiring an employee to sign a nondisparagement agreement or other document that denies the employee the right to disclose information about unlawful acts in the workplace, including, but not limited to sexual harassment. The new law took effect on January 1, 2019.
The law makes any document violating its terms unenforceable.
Enacted on December 22, 2017, the Tax Cuts and Jobs Act changed the Internal Revenue Code to prohibit tax deductions as an ordinary and necessary business expense for any settlements or payments “related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement.” The law also disallows any deductions for attorney’s fees related to the confidential settlement or payment. See 26 U.S.C. § 162(q).
Is there a company policy that was violated? This is policy in writing? Has it been distributed to the employee, and has the employee signed an acknowledgment of the policy?
Who was involved in the termination decision?
Review reasons for termination, and have clear guidelines for seeking legal counsel to avoid any potential wrongful termination or discrimination claims.
An employee who is discharged must be paid all of his or her wages, including accrued vacation, immediately at the time of termination. Ensure that the final paycheck will be available to the employee on a timely basis (see below for timing requirements). If an employee had direct deposit, an employee must re-authorize direct deposit for a final paycheck, and this should be documented. In Canales v. Wells Fargo, N.A., (2018) the court held that employers are not required to provide final wage statements (pay stubs) at the same time as the final check, but instead have until the semimonthly deadline set forth in Labor Code section 226(a).
An employee who is discharged must be paid all of his or her wages, including accrued vacation, immediately at the time of termination. This does not mean that the company cuts the check and mails it to the employee, the check must be provided to the employee at the time of termination.
Final wage payments for employees who are terminated (or laid off) must be made at the place of termination. For employees who quit without giving 72 hours’ notice and do not request their final wages be mailed to them, the location is at the office of the employer within the county in which the work was performed.
Employers should take time to review their obligations and forms that are required for their particular industry or situation.
5. Have established protocol for references and disclosing why the employee left the company within the company itself.
Employers often establish that it will only confirm the title and dates of employment for former employees, and, if authorized by the former employee, the former employee’s final pay rate. Employers do this to avoid potential claims for misrepresentation, violation of privacy, and defamation. Also, employers need to be careful about disclosing the reason for an employee departure within the company, as that may violate the former employee’s privacy rights. Employers should remind employees and management not to disclose this information to people in the company that do not have a reason to know, and remind employees about who any requests for references should be directed to within the company.