December 2020 Legal Report
Print Issue: December 2020
Gender discrimination. In a consent decree with the U.S. Equal Employment Opportunity Commission (EEOC), Walmart, Inc., agreed to pay $20 million and provide other relief to end a hiring discrimination lawsuit.
The EEOC alleged that Walmart conducted physical ability tests that were biased against women applying for order filler positions at grocery distribution centers across the United States. The settlement was agreed to the same day that the suit was filed, and the court approved the agreement roughly a month later.
According to an EEOC press release, the quick settlement was achieved “due to Walmart’s willingness to engage in settlement discussions.” In the consent decree, Walmart denied any violation of applicants’ civil rights.
Such discrimination violates the Civil Rights Act of 1964, which bars employment and preemployment discrimination on the basis of sex or other protected classes. According to the EEOC, the agreement requires Walmart to stop asking applicants for these positions to go through physical ability testing for five years after the settlement went into effect.
The $20 million will pay lost wages to female applicants who were not hired for the positions due to the testing. The settlement will also close the EEOC’s investigation into the allegations that Walmart required the physical ability tests, according to the consent decree. (EEOC v. Walmart, Inc., U.S. District Court for the Eastern District of Kentucky, No. 6:20-cv-00163-KKC, 2020)
Patent infringement. A U.S. federal court found that Cisco Systems Inc. copied the cybersecurity patents of a Virginia-based cybersecurity startup. The presiding judge ordered Cisco to pay $1.9 billion for infringing on four of Centripetal Networks Inc.’s patents.
The patents in question involve systems—including switches, routers, and firewalls—that engage in complex computer networking security tasks. Centripetal alleged in its 2018 suit that Cisco used the patented network protection technology in its network switches and routers.
In his opinion, U.S. federal judge Henry Morgan wrote that Cisco repeatedly ignored its own technical documents during the proceedings. These documents, which were introduced as evidence by Centripetal, not only conflicted with Cisco’s assertions during the trial, but also “in several instances contradicted Cisco’s employee witnesses…. Cisco could not rely upon its own documents, as they proved Centripetal’s case.”
Of the total payout awarded to Centripetal, approximately $755 million was for products affected by the four stolen patents—as well as a prejudgment interest of $13 million.
Morgan also ordered Cisco to pay royalties on 10 percent of any future sales of products that used the four Centripetal patents until June 2023. After the first three years, the royalties will decrease to 5 percent for another three-year term.
Cisco said it would appeal the decision. (Centripetal Networks Inc. v. Cisco Systems Inc., U.S. District Court for the Eastern District of Virginia, No. 18-00094, 2020)
Active shooter. A grand jury refused to indict a volunteer church security guard who shot and killed a gunman who opened fire on a congregation in Texas.
Volunteer guard Jack Wilson killed Keith Thomas Kinnunen after the latter opened fire on the attendees of the West Freeway Church of Christ on 29 December 2019. A livestreaming video feed showed the shootings, including Wilson killing Kinnunen with one shot and then kicking away Kinnunen’s firearm. Kinnunen had already fatally shot two people.
A prosecutor from Tarrant County’s District Attorney’s Office agreed with the jury’s decision, noting that according to state law, bystanders can use deadly force to protect others.
Given the prosecutor’s agreement with the jury and that Texas Governor Greg Abbott awarded Wilson the Medal of Courage for his actions, it is unlikely that Wilson will face criminal charges.
Closure. A state circuit court ruling could set the tone for a growing number of lawsuits business owners are filing against their insurance providers.
Judge Joyce Draganchuk found that while the Gavrilides Management Company, which owns restaurants in Lansing and Williamston, Michigan, may have been financially impacted by coronavirus closure orders, the property insurer is not liable for those damages. Draganchuk determined that there must be a quantifiable alteration to a business’s property before a policy’s coverage is triggered. In some instances, even if physical damages are caused by a COVID-19 closure order, a viral exclusion in the insurance policy could nullify the claim.
Draganchuk supported Michigan Insurance’s decision to deny the $650,000 business interruption claims Gavrilides Management sought. She described the plaintiff’s argument—that the order is equivalent to a physical loss since it barred the public from entering the restaurants—as “nonsense.”
According to the law firm Faegre Drinker Biddle & Reath LLP, insurance companies have faced more than 500 lawsuits filed by persons claiming that business interruption coverage applies to losses from closures and other restrictions ordered by authorities to try to beat back the coronavirus. Besides restaurants, other businesses have filed these claims, including gyms, dental offices, and National Basketball Association Houston team, the Rockets. (Gavrilides Management Company v. Michigan Insurance Co., Michigan Circuit Court for Ingham County, No. 20-258-CB, 2020)
Rest periods. An amendment to California’s Labor Code limits facets of security officers’ permitted rest periods.
Employers previously could not ask security personnel—specifically those under the Private Security Services Act, including private guards, patrol operators, and armored contract carriers—to work during specified meal or rest breaks, unless financial compensation was provided in exchange.
The amendment (formerly AB 1512), which was enacted on 30 September, requires these security officers “to remain on the premises during rest periods and to remain on call,” according to the law. Officers must also keep and monitor a communication device during their breaks.
If an officer’s rest is interrupted, he or she will be allowed to restart the break once it is possible and practical to do so. Such interruptions could include instances where the employee must return to performing active duties—beyond remaining on the grounds, being on call, and/or monitoring communications.
The amendment will be effective until 1 January 2027.
Coronavirus. England initiated a new nationwide lockdown and implemented steep fines for individuals who break rules aimed at curbing the spread of the coronavirus pandemic.
Under the four-week lockdown which began as of Security Management’s deadline on 5 November, people are required to stay home and all nonessential stores, pubs, and gyms were closed.
People who violate the rules can initially be fined £200 ($263), which doubles for each offense to a maximum of £6,400 ($8,408). Organizers of gatherings can also be fined £10,000 ($13,000).
Law enforcement is encouraging individuals to voluntarily comply with the lockdown. But UK Justice Secretary Robert Buckland said he supports issuing fines to those who do not abide by the rules.
“I think the message has to go out very clearly that this will only work if we all play our part,” Buckland told the BBC.
Morality. The Pakistan Telecommunication Authority (PTA) banned five dating and messaging apps from smartphones and devices, citing concerns over “immoral” or “indecent” content hosted by the platforms.
The PTA determined that the apps—including Tinder, Grindr, SayHi, Skout, and Tagged—violate the country’s local laws. In the country, which hosts a Muslim majority, extramarital relationships and homosexuality are illegal.
The national Internet regulation agency previously asked the apps to remove their “dating services to moderate live streaming content,” according to a PTA press release. Under Pakistan’s Prevention of Electronic Crimes Act, the agency can remove, block, or order the blocking/removal of online content that violates the country’s decency and morality laws.
The regulator said that the ban on the apps was because the companies failed to respond to the previous notices by an undisclosed deadline.
Similar notices were sent to YouTube in August and TikTok in July, asking the platforms to block indecent or objectionable content, such as sectarian posts or “vulgar, indecent, immoral, nude, and hate speech content for viewing in Pakistan.” The platforms were also asked to maintain stronger content monitoring and mitigation practices to block or delete such content, preventing Pakistanis from accessing it.
Discrimination. Wells Fargo agreed to a $7.8 million settlement to end an investigation of allegations that the financial institution discriminated against job applicants based on their race and gender. The U.S. Department of Labor (DOL) claimed the bank discriminated against more than 34,000 Black applicants for positions in administration, banking, and customer service, as well as more than 300 female applicants seeking administrative support jobs.
The settlement will go to back wages and interest. Wells Fargo also committed to hiring 580 of the previously-rejected but qualified Black and female applicants for positions as administrative support professionals, customer sales and service representatives, personal bankers, and tellers.
The settlement was the result of an early resolution conciliation agreement to address “the issues found” in the agency’s investigation, while also allowing Wells Fargo to deny any wrongdoing according to the DOL’s Office of Federal Contract Compliance Programs.
Elsewhere in the Courts
Terrorism. A U.S. federal appeals court overturned the death sentence of one of the men responsible for bombing the 2013 Boston Marathon. Because the presiding judge in Dzhokhar Tsarnaev’s 2015 trial was found to be substandard in maintaining fairness during jury selection, Tsarnaev will receive a new sentencing trial. Tsarnaev was previously convicted of working with his brother to place two bombs close to the race’s finish line; the bombs killed three people and wounded hundreds more. Tsarnaev was also found guilty of three counts of carrying a firearm during crimes of violence. The new sentencing trial will be restricted to determining if he should be executed or spend the remainder of his life in prison. (United States of America v. Dzhokhar A. Tsarnaev, U.S. Court of Appeals for the First Circuit, No. 16-6001, 2020)
Sex discrimination. A U.S. federal appeals court overturned a 2019 ruling, maintaining the constitutionality of the United States’ all-male military draft system. The Selective Service, the U.S. agency responsible for the draft, had appealed a lower court ruling that the male-only draft was unconstitutional. The plaintiffs, who claimed the draft violated female U.S. citizens’ civil rights, are considering whether to request a rehearing before the full 17-judge appeals court or to submit the case for the consideration of the U.S. Supreme Court. Although the United States stopped drafting citizens in 1973, every man is still required to register for the draft once he reaches the age of 18. (National Coalition for Men v. Selective Service System, Fifth Circuit Appeals Court, No. 19-20272, 2020)
Active shooter. A court finalized the $800 million settlement that MGM Resorts International agreed to pay to the victims and families of the victims of the 1 October 2017 Las Vegas shooting. The shooter, who killed 58 people and injured more than 800 people, was in MGM’s Mandalay Bay Resort and Casino when he fired upon attendees at an outdoor country music festival. MGM will pay $49 million, and its insurers will pay the remaining $751 million to the more than 4,400 persons seeking damages. A Clark County District Court judge approved the settlement, which was the result of a mediation process between the victims and the resort. The initial lawsuit claimed that Mandalay Bay’s insufficient security gave the shooter time to gather his weapons and ammunition in his 32nd floor hotel room, from which he opened fire on the roughly 22,000 people attending the festival. (MGM Resorts International et al. v. David Aase et al., U.S. District Court for the Central District of California, No. 2:18-cv-06113, 2019)