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Legal News Report 7-10-15
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Uber Files Motion Opposing Driver Class-Action Suit
Jul 9, 2015 | New York Times
By Mike Isacc and Noam Scheiber
In a counteroffensive filled with driver testimonials, expert witnesses and a highly produced video, Uber on Thursday filed a motion in a California court to oppose the certification of a class-action lawsuit that spotlights the work status of drivers for the ride-hailing service. -
Lawsuit: New York foster care officials didn’t protect kids
Jul 8, 2015 | Washington Post
By Tom Hays
Advocates for foster children in New York City sued the system Wednesday, accusing state and city agencies of putting children at risk by letting them languish for years without being placed in permanent homes. -
Judge approves settlement in upstate NY anti-Semitism suit
Jul 10, 2015 | Wall Street Journal
By Associated Press
A judge has approved a $4.48 million payout as part of a settlement between an upstate New York school district and five current and former Jewish students who say they were victims of anti-Semitism at the schools. -
Biotech Investor Steven Burrill Is Sued by Fund
Jul 10, 2015 | Wall Street Journal
By Dawn Lim
G. Steven Burrill, the well-known founder of life-sciences investment firm Burrill & Co., is being sued by a venture capital fund that his firm previously managed for alleged fraud, breach of fiduciary duty and theft. -
Detained Immigrants Sue Over Getting $1 a Day for Work
Jul 10, 2015 | New York Times
By Associated Press
Immigrants who were detained at a suburban Denver facility while they awaited deportation proceedings are suing the private company that held them, alleging they were paid $1 a day to do janitorial work, sometimes under threat of solitary confinement.
Legal News
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Uber Files Motion Opposing Driver Class-Action Suit
Jul 9, 2015 | New York Times
By Mike Isacc and Noam Scheiber
In a counteroffensive filled with driver testimonials, expert witnesses and a highly produced video, Uber on Thursday filed a motion in a California court to oppose the certification of a class-action lawsuit that spotlights the work status of drivers for the ride-hailing service.
The plaintiffs assert that they are employees, and they are seeking reimbursement for expenses and what they say were improperly withheld tips.
The case speaks to the heart of Uber’s business model, in which the company treats the more than 160,000 people who drive for the service in the United States as independent contractors. The classification means Uber does not need to pay drivers’ payroll taxes or apply minimum wage and overtime laws to them. It also lets Uber bypass paying for benefits like health care or vehicle upkeep in some states.
In its motion, Uber said that its driver base was incredibly diverse and that the handful of drivers who filed the lawsuit should not represent the wishes of the whole.
“The reality is that drivers use Uber on their own terms: They control their use of the app,” Uber said in a statement. “It’s why there’s no typical driver — the key question in this case. And why no three people can ever represent the interests of so many different drivers.”
Along with a 52-page filing opposing the class-action status, Uber gathered declarations from more than 400 drivers across California who spoke glowingly of the autonomy that Uber’s service gives them as drivers. The app, which lets customers hail rides with the push of a smartphone button, lets drivers pick up rides whenever they wish to work.
Labor lawyers said that Uber’s argument was flawed, and that the heart of the class-action certification case was how much uniformity there was in Uber’s treatment of its drivers when they were working for the company — not how much uniformity there was among the drivers themselves.
“The employer will try to draw out as many distinctions as possible between the Uber drivers,” said Rachel Bien, a labor lawyer who has litigated many class-action cases on behalf of plaintiffs and is not involved in the Uber case. “But certain policies and procedures appear to be common to most drivers.”
She added that the Supreme Court precedent that Uber’s legal team invoked to help it defeat the class certification, Walmart Stores v. Dukes, was a gender discrimination case that had little application in this context.
In that case, the company gave individual managers discretion over pay and promotion decisions, allowing it to claim with some justification that there was no uniform policy. Given that Uber drivers are challenging Uber’s explicit policy of classifying them as independent contractors, the company may find it harder to make a similar claim, though it may be able to argue that certain practices were not applied uniformly.
The Walmart case “did raise the bar on what it takes to certify a class,” Ms. Bien said. “We operate in a post-Walmart era.”
An Uber spokeswoman said the Walmart analogy held because just as the facts of each Walmart employee’s case had determined whether discrimination occurred, the facts of each driver’s case would determine whether misclassification had occurred, and there is no typical driver.
Shannon Liss-Riordan, a lawyer based in Boston representing the drivers in the class-action suit, which was filed in 2013, also waved aside Uber’s arguments. “The flexibility issue is a red herring,” she said. “That people have flexibility in their work hours does not make them independent contractors.”
The issue of Uber drivers’ work status has long been controversial. In June, the California Labor Commissioner’s Office ruled that Uber should have classified Barbara Ann Berwick, a former Uber driver, as an employee instead of a contractor; Uber was ordered to pay Ms. Berwick roughly $4,000 in back expenses and associated costs. The ruling does not apply beyond Ms. Berwick’s case, and it could be altered if Uber succeeds in an appeal.
The classification hearing is scheduled for Aug. 6 in the Federal District Court for the Northern District of California in San Francisco, where Uber and the plaintiffs in the suit will present arguments to Judge Edward M. Chen, who is presiding over the case.
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Lawsuit: New York foster care officials didn’t protect kids
Jul 8, 2015 | Washington Post
By Tom Hays
Advocates for foster children in New York City sued the system Wednesday, accusing state and city agencies of putting children at risk by letting them languish for years without being placed in permanent homes.
The lawsuit filed in federal court in Manhattan claims the more than 11,000 children in the city’s system average far more time there than most places in the country. It says the needless bureaucratic delays subject them to emotional distress and increase the odds of physical or sexual abuse.
“Foster care is supposed to be safe and temporary,” the suit says. “For children in New York City’s foster care system, it is neither.”
Ten foster children and city Public Advocate Letitia James were named as plaintiffs in the suit against the city Administration for Children’s Services and the state Office of Children and Family Services. At a news conference outside the courthouse, James accused ACS of failing to provide proper oversight for 29 nonprofit contractors responsible for day-to-day care of foster children.
“We are here today because children are suffering — at the hands of bureaucracy and at the hands of government,” James said.
Among the plaintiffs is a 16-year old girl who has spent the past 12 years in foster care, suffering abuse in one home and needing treatment for depression, the suit says. Another is a 12-year-old girl who has been in nine homes in the last eight years.
According to the suit, it takes longer for a foster child to be adopted in the city than almost anywhere else in the country. It also says disadvantaged biological parents are unable to get social services they need to regain custody of their children.
“Many children who are without a permanent home never get adopted at all and leave the foster care system only when they get too old to stay in it any longer,” the court papers say. “Approximately, 1,000 children ‘age out’ of the foster care system each year, often winding up homeless and without any adult with whom they have a permanent connection.”
The lawsuit asks the court to force ACS to use stricter oversight of the contract agencies so children are safer and spend less time in foster care.
In a statement, ACS took credit for helping drastically reduce the number of children in foster care from a high of 45,000 in the 1990s. It also said it was taking “significant steps in preventive work designed to keep families together and avoid placing children in foster care in the first place.”
The Juvenile Rights Practice of The Legal Aid Society, which is working with the city to improve the system, called the suit short-sighted.
The case is being brought “at a time when foster care numbers are at an all-time low and collaboration is at an all-time high,” Legal Aid attorney Tamara Steckler said in a statement. “We are concerned that this development may stall the progress being made by those of us actually working with these families and children to improve the foster care system.”
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Judge approves settlement in upstate NY anti-Semitism suit
Jul 10, 2015 | Wall Street Journal
By Associated Press
WHITE PLAINS, N.Y. — A judge has approved a $4.48 million payout as part of a settlement between an upstate New York school district and five current and former Jewish students who say they were victims of anti-Semitism at the schools.
The students who were bullied for being Jewish said at a hearing to approve the settlement Thursday that they "lost part of their childhood" due to the abuse.
The suit accused Pine Bush Central School District officials of failing to take action to protect the students from anti-Semitic bullying.
The students will receive two-thirds of the payout. The rest will go to lawyers. The district must also implement curriculum and training reforms as part of the settlement.
The district has indicated it will sue its insurer, which denied coverage for the case.
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Biotech Investor Steven Burrill Is Sued by Fund
Jul 10, 2015 | Wall Street Journal
By Dawn Lim
G. Steven Burrill, the well-known founder of life-sciences investment firm Burrill & Co., is being sued by a venture capital fund that his firm previously managed for alleged fraud, breach of fiduciary duty and theft.
The lawsuit, filed on July 6 with the Superior Court of California in San Francisco, alleges that Mr. Burrill, as well as corporate entities and individuals tied to him, embezzled more than $17 million from Burrill Life Sciences Capital Fund III L.P. between late 2007 and 2013.
The lawsuit also claims that the improper use of the fund’s money drained it of capital to support further investments in companies it backed, causing “more than $30 million in investment losses.”
Earlier this year, investors in Burrill Life Sciences Capital Fund III L.P. installed executives from San Francisco-based Kearny Venture Partners to manage the fund. A corporate entity affiliated with Kearny authorized the lawsuit.
Mr. Burrill didn’t respond to requests for comment over email and LinkedIn and Burrill & Co.’s phone number is no longer in service.
Victor Hebert, formerly chief legal counsel for Burrill & Co., and Helena Sen, who served as the firm’s chief financial officer, are also named as defendants in the lawsuit. Mr. Hebert didn’t respond to either phone calls or LinkedIn messages. Ms. Sen didn’t respond to requests for comment when reached via LinkedIn and a phone number linked to her is no longer in service.
The lawsuit isn’t the first one filed against the three professionals over alleged misuse of the fund’s money. A lawsuit filed last year by Ann Hanham, a former managing director at Burrill & Co., in the same California court also alleged improper diversions of capital from that fund.
The defendants named in that suit—including Messrs. Burrill and Hebert, and Ms. Sen—have requested arbitration, according court docket materials. They stated in an April court document they “deny each and every claim” Ms. Hanham brought.
Attorneys at Villarreal Hutner PC, which represented the three in that prior lawsuit, didn’t respond to phone calls or emails inquiring about allegations in the suits.Advertisement
Burrill & Co. originally raised $283 million for Fund III and began investing it in 2006, backing companies that include pharmaceutical business Neos Therapeutics Inc. and renewable-chemicals company Gevo Inc.
The fund’s investors, after launching an investigation into the fund’s books, removed the firm as manager of the fund as the fund’s manager last year, a rare move in the private-equity and venture-capital world. Investors usually must secure more than a majority consensus to remove a fund manager.
“We fully support the fund’s new general partner in pursuing legal recourse,” a spokesman for the roughly $90 billion North Carolina Retirement Systems said this week. The state pension system originally committed $50 million to Fund III and used its influence to help turn the tables against the former fund manager.
The lawsuit cites suspected accounting discrepancies that appeared in the fund’s books as money that was allegedly siphoned out of the fund from late 2007 through 2013. Some of the discrepancies in question were labeled as management fees for work not yet done—even though the fund’s contracts didn’t allow for advanced payment of those fees, the suit said.
The suit also claims that certain capital calls—signed by Mr. Burrill—gave investors the impression that the money drawn from the fund would be used for business purposes and for follow-on investment rounds, and not flow into unauthorized channels.
Firms that manage funds typically pledge to invest a portion of the firm’s own money into the funds to show their goals are aligned with those of their investors. However, the lawsuit claims the fund’s former general partner hadn’t made all of the capital contributions that it had initially agreed to make.
Additionally, the suit alleges that improper transactions by Mr. Burrill took place over several years with the “knowledge and assistance” of Mr. Hebert and Ms. Sen, and that the latter two’s failure to disclose the misuses of investors’ money was “a fraud on the fund.”
After almost three decades at Big Four accounting firm Ernst & Young, Mr. Burrill became a high-profile biotechnology investor whose namesake firm backed companies such as genomic profiling company Strand Life Sciences and medical device developer Flexible Stenting Solutions Inc.
In 2013, however, he came under fire as executives at the firm sparred over alleged unauthorized transactions, and the partnership unraveled shortly after.
The separate lawsuit filed in June 2014 by Ms. Hanham claims a standoff ensued when she and two other managing directors, Roger Wyse and Bryant Fong, discovered in September 2013 that money had gone missing from Fund III.
The three managing directors took the issue directly to the fund’s investor advisory committee in October 2013, according to the 2014 suit.
The three managing directors were fired by Mr. Burrill after they disclosed that money had been siphoned from the fund, the newest suit filed by the fund this week claims. Mr. Wyse declined to comment. Neither Mr. Fong nor an attorney for Ms. Hanham responded to requests for comment.
The fund investors took matters into their own hands in late 2013, mobilizing to dismantle the previous fund management team created under Mr. Burrill.
Ms. Hanham, Mr. Fong and Mr. Wyse were called on to manage the fund for a temporary period, according to Ms. Hanham’s suit. The fund investors then handed Kearny the reins earlier this year.
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Detained Immigrants Sue Over Getting $1 a Day for Work
Jul 10, 2015 | New York Times
By Associated Press
DENVER — Immigrants who were detained at a suburban Denver facility while they awaited deportation proceedings are suing the private company that held them, alleging they were paid $1 a day to do janitorial work, sometimes under threat of solitary confinement.
They scrubbed toilets, mopped and swept floors, did laundry, and prepared and served meals, among other duties, according to attorneys who filed the lawsuit in October on behalf of nine current and former detainees.
U.S. District Court Judge John L. Kane declined a request Monday from Florida-based GEO Group Inc. to dismiss the claims against the company, allowing the federal lawsuit to proceed.
GEO is one of the largest contractors with the federal government for the detention of immigrants suspected of being in the country illegally or legal permanent residents with criminal records who face deportation. The company has denied wrongdoing and said in court documents the work is voluntary and it is abiding by federal guidelines in paying $1 a day.
Attorneys for the immigrants say they'll move to expand the case by seeking class-action status. They say the judge's ruling clears the way to gather more information from GEO through discovery proceedings about how many detainees were put to work.
The attorneys said they have heard from clients for years that immigrants labor for almost nothing at private detention facilities around the country, but they called the lawsuit filed in Colorado the first of its kind.
"It's their job to run the facility, and instead they used and abused us to run the facility, and that's why we're suing," said plaintiff Alejandro Menocal, 53. Menocal is a legal permanent resident who was detained for three months at GEO's Aurora facility while facing deportation last fall.
GEO responded in a statement that its facilities "provide high-quality services in safe, secure and humane residential environments, and our company strongly refutes allegations to the contrary."
The company says attorneys and immigrant advocates have full access to its facilities that U.S. Immigration and Customs Enforcement contracts with, and they're routinely audited and inspected by the government.
Anita Sinha, a faculty member at Washington College of Law, American University who has researched immigrant labor at private detention centers, said Congress set the daily wage in 1950 and it hasn't been adjusted for inflation.
She said on a daily basis, immigrants facing deportation occupy about 34,000 beds nationally in private and government-run facilities. More than 60 percent of the beds are in privately held facilities, she said.
The company succeeded in getting the judge to dismiss a claim that it violated Colorado's minimum wage law because detainees were paid $1 a day instead of $8.23 an hour. In tossing that claim, Kane said the detainees do not qualify as employees under state law.
But he said the lawsuit could proceed on the allegations that GEO unjustly profited from the detainees and violated the federal Trafficking Victims Protection Act, which prohibits forced labor.
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"Legally, this is a big step forward," said Hans Meyer, Menocal's attorney.
It's common for inmates at state or privately run prisons to work below minimum wage, in some cases for the purpose of gaining job training.
"The difference here is that these are civil immigration detainees who are not being held for any criminal violation," said Brandt Milstein, another attorney in the lawsuit.
Menocal, a Mexican immigrant from Baja California, was released in September and kept his legal resident status after his attorney won his case. He said he faced deportation proceedings last year when authorities learned after a traffic stop that he had a criminal record from 2010 for driving with a suspended license and having his wife's prescription painkillers in his car.
He pleaded guilty and served a year of probation soon after, but he didn't come to the attention of immigration authorities at the time.
The lawsuit focuses only on the GEO's suburban Denver facilities, but the American Civil Liberties Union said the claims are similar to allegations they have heard around the country.
"There is a name for locking people up and forcing them to do work without paying real wages. It's called slavery," said Carl Takei, staff attorney at the national prison project of the ACLU.
The monetary amount the lawsuit seeks hasn't been determined.
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