Nissenbaum Law Blog

Are Personal Emails Sent From Work Protected in New York?

Internet Law: New York courts are still developing the law as it applies to electronically stored information. Generally, there are numerous legal issues associated with the use of email and other forms of electronically stored data.

One such issue is an employee’s right to privacy when sending personal email from work. Courts often look at whether a workplace has a written email policy when determining the level of privacy to give to an employee's email. If there is an email policy, courts will look at where it is posted and whether it was sent to each employee. Even if an employee does not sign and acknowledge that they received or read the policy, courts may still be able to find that an employee has no privacy rights if the employee should have known about the policy. Even emails to an employee's personal attorney from a work computer may not be protected against an employer's perusal, and therefore the employee may have waived the attorney-client privilege as it relates to that communication. Courts will also look to the language of an employer's email policy to determine if the employer has the right to review and/or prohibit such email communications.

Under the circumstances, it is imperative that every business consult with an attorney prior to creating an email and computer usage policy and properly inform employees of such regulations. A well drafted email and computer usage policy may provide an employer with an advantage in litigation and may legally minimize employee misconduct. On the other hand, it is important that employees understand that emails sent from work may not be private and therefore may become evidence in a lawsuit. For more advice on an employee's privacy rights, an inquisitive employee should consult a qualified attorney.

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC

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In New York, Can An Email Confer Jurisdiction Upon An Out-of-State Business?

Internet Law: New York courts have discussed whether email can confer jurisdiction upon a business. More specifically, an out-of-state company that merely sends an email to purchase goods may not be subject to the jurisdiction of the courts of New York. Nonetheless, New York courts will examine the email’s content to see how far it goes to specifically solicit business from New Yorkers. Courts will also look to the content of an email to find out whether there is a nexus between the email that was sent and the reason that the business is being sued. Further, courts will examine whether the potential subjects of any lawsuit purposely availed themselves of the privilege of transacting business within New York.

Unfortunately, there are no bright-line rules. Since each case is different, prior to soliciting business via the Internet, a business should consult an attorney to be sure that it fully understands the legal implications of such solicitations.

As technology begins to take a more active role in the administration and solicitation of business, it is important to keep in mind that the use of that technology may have unintended legal consequences which could become irreversible if not handled in a timely manner.

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC

Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com

The Legal Aspects of Spyware

Internet Law: As most of us know, spyware is something that is hard to define. As Justice Potter Stewart said in the famous Supreme Court opinion, Jacobellis v. Ohio, 378 U.S. 184 (1964), "I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it . . . .” He was referring to obscenity, but he could just as easily have been discussing spyware.

Perhaps a reasonable definition would be a program that allows a third party to monitor another’s computer activities. As one might imagine, since most people have an expectation of privacy in their own computer operations, when a third party surreptitiously monitors that usage, lawsuits inevitably follow.

However, those lawsuits are not always successful. In Zango v. Kaspersky, Lab, Inc., No. C07-0807 (W.D. Wash. August 28, 2007), a lawsuit was brought against a company that manufactured software that had inserted spyware on another’s system. The Court ruled in favor of the software manufacturer. It based its holding on Section 230(c)(2)(b) of the Communications Decency Act based on a determination that the software manufacturer was an “access software provider” and that it had provided a means to restrict the utility of the spyware. Similarly, in Zango v. PC Tools Pty. Ltd., 494 F. Supp. 2d 1189 (W.D. Wash. 2007), the Court concluded that the spyware was a legitimate tool to prevent illegal downloading.

On the other hand, there are certainly other lawsuits in which the spyware claim has been successful. One notable example is Kerins v. Intermix Media, Inc., No. 05-4408 (C.D. Cal. 2006) in which California state law was the basis for the Court’s ruling that the claims could proceed. But, it is important to keep in mind that California has numerous state laws that are specifically applicable to Internet and computer related acts. Many of these provisions do not have counterparts in other states. It would therefore not be surprising to see a claim that failed elsewhere succeed under California law.

The law of spyware is constantly evolving. Only time will tell whether current law provides sufficient remedies to those adversely affected by it.

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC

Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com

New York‘s Consumer Protection Laws

Consumer Protection Law: New York’s consumer protection laws generally prohibit deceptive acts or practices when conducting business or providing services. Where a person or entity has engaged in a deceptive act or practice, the injured consumer may commence a private cause of action and recover either actual damages or statutory damages in the amount of $50.00, whichever is greater.

However, the Court has discretion to increase actual damages subject to certain constraints in situations involving an individual or entity that willfully engaged in a deceptive act or practice. But, this discretion is limited in that the amount cannot exceed three times the actual damages up to $1,000.00. In addition, and unlike New Jersey’s mandatory attorneys’ fee shifting provision in its Consumer Fraud Act, New York courts have wide discretion to award or not award attorneys’ fees to a prevailing consumer.

New Jersey’s Consumer Protection Act is superior to New York’s in a number of other respects. In New Jersey, there is no limit on the compensatory amount; it is tripled automatically; and there is a very elaborate set of regulations that define what is a per se violation of the Consumer Fraud Act. In sum, if a transaction involves both New York and New Jersey, careful attention should be given to decide whether New Jersey’s enhanced remedies are available.

Much of the law of consumer fraud relates to class actions. Recently, class actions have been brought by consumers alleging deceptive acts or practices in violation of New York’s consumer protection laws. Many of these claims are based on the failure of a seller to disclose a material fact about a product or service being offered for sale. Although class actions may prove effective where a seller repetitively engages in deceptive acts and practices, the Court will first have to certify the class of consumers. In accordance with general principals of law, the Court will likely not certify a class where the class is overbroad or the claims among the class members are distinct.

It is truly important to carefully evaluation the potential of consumer protection related claims to determine the preferred laws under which to sue and whether it should be structured as an individual lawsuit or a class action, among other things.

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC

Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com

Are E-mails Sufficient To Satisfy The New York Statute Of Frauds? It Depends.

Commercial Real Estate: The New York Statute of Frauds requires certain agreements to be in writing in order to be enforceable. Among the types of agreements that must be in writing are those conveying an interest in real estate (other than a lease for a term not exceeding a year) and a contract to pay compensation for services rendered in negotiating a purchase and sale of real estate. However, New York, by statute, provides different standards as to what constitutes a writing for these purposes.

Specifically and with respect to a contract to pay compensation for services rendered in negotiating a real estate transaction, an email exchange between the parties will constitute a writing where it contains the essential terms and there is an indication by the sender of the email as to his intention to authenticate this transmission. This is because this section of New York’s General Obligations Law was amended to specifically include a provision that written text produced by electronic signals constitutes a writing.

However, and with respect to an agreement for the purchase and sale of real estate, it appears that an email exchange is insufficient to constitute a writing even if it contains all of the essential terms and the e-mail sender authenticates the transmission. Thus, the revision made to the statute as to the brokerage services was not made to the statute pertaining to a conveyance of real estate.

In this day and age, the use of email to transact and conduct business is commonplace and occurs in a large quantity and variety of transactions. It makes sense for the legislature to deem certain agreements as more important than others and, thus, require a higher standard for them to be deemed “in writing.” However, once this determination is made, it is confusing to the public to render an e-mail a sufficient writing with respect to certain agreements and not others. It will not be surprising if the New York State Legislature clarifies this. Hopefully, this will occur sooner rather than later so that the general public can proceed with certainty as to whether or not they are bound.

Comments/Questions: ljm@gdnlaw.com
© 2008 Nissenbaum Law Group, LLC

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Avoiding Potential Pitfalls of Electronic Discovery Rules

Commercial Litigation: Courts are taking a hard line in requiring litigants to preserve evidence. It is only logical that given the increased use of technology in our lives, courts are taking an active role in sanctioning litigants for destroying electronically stored data. The problem arises because electronically stored data can be voluminous and often erased by a mere click of a button. Sometimes evidence is destroyed by companies who routinely erase data. However, it can be difficult to determine whether documents were destroyed in the ordinary course of business or in an effort to avoid presentation in a lawsuit. For this reason, simply asserting that the destruction of electronic documents was routine might not avoid court sanctions.

The problem becomes more burdensome since many litigants are not aware of some of these rather elaborate court rules regarding discovery and yet the litigants are still required to follow the rules. And the consequences of failing to abide by electronic discovery rules may be harsh. Sanctions may include requiring a litigant to pay an adversary’s attorney’s fees, preclusion of evidence and/or striking a litigant’s pleadings, the latter two of which could certainly prejudice a litigant in his case.

Even more troubling are situations where discovery is destroyed prior to the filing of a lawsuit. A potential litigant should be aware that courts can impose sanctions for failing to comply with the litigant’s discovery obligations even if the destruction of the documents happened prior to the commencement of the litigation.

Accordingly, there are some steps that can be taken to help minimize the risk of sanctions. First, we generally recommend that all businesses have a document retention policy, that it has prepared with its attorney. This should outline what can be destroyed and when. Moreover, businesses should always be prepared for a situation where litigation is commenced or threatened. At that point, the attorney for the claimant may create what is called a “litigation hold.” During that time, there is usually a moratorium placed on any destruction of emails, documents and other materials in the possession of the business. In such event, the “hold” would likely interrupt the destruction that may have transpired in the ordinary course of business under the document destruction policy.

In short, it is important to consult an attorney sooner rather than later when a lawsuit is brought or threatened. In addition to evaluating the claim, defenses and potential counterclaims, you need an attorney to advise you as to the type of information that should be preserved and the amount of time that preservation should last.

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC

Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com

Enforcing A Foreign Judgment In New York: Application of the Hague Convention

Commercial Litigation: Let’s assume that you obtain a judgment for monetary damages in another country and you now want to satisfy that judgment by levying on assets that are in the State of New York. Before doing so, you generally have to institute an action in New York so that the State will recognize the foreign judgment. The Courts will recognize a foreign judgment only where (i) the court that issued the foreign judgment had personal jurisdiction over the debtor; (ii) the court that issued the foreign judgment had subject matter jurisdiction over the case; (iii) the court that issued the foreign judgment engaged in procedures in accordance with due process of law; and (iv) enforcing the judgment will not be unfair or in direct contravention to the public policies of the State of New York.

In determining whether a foreign country had personal jurisdiction over the debtor, the Court will often look to see if the foreign county complied with the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters, assuming that the foreign country is a signatory of this convention. Under the Hague Convention, service is proper where the document is served in accordance with the internal laws of the participating country. For instance, if a creditor is seeking to enforce a French judgment in the United States, service would be proper if made in accordance with United States law.

In addition, a participating country may require a document to be translated into the official language of the country in which an individual or entity is seeking to enforce the judgment. However, this obligation is not automatic. The United States Department of Justice, for instance, does not require that documents be translated in English when serving a defendant in the United States. Thus, where a debtor in the United States is served with a legal document that he cannot understand, it nonetheless constitutes sufficient notice for jurisdictional purposes.

In light of the various rules and requirements applicable to the enforcement of foreign judgments in New York, it is important to consult an attorney before seeking to enforce such a judgment. Moreover, it is generally recommended that you consult with an attorney where you are looking to enforce the judgment, regardless of where the lawsuit is being brought, at the outset of the litigation process. This can help to ensure that the service and general proceeding of the litigation are conducted in a manner so as to conform with the rules of the jurisdiction where the judgment will be enforced.

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC

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Commencing Commercial Small Claims Action As A Cost-Effective Way To Recover Certain Damages

Commercial Litigation: Pursuant to Section 1809 of New York’s Uniform District Court Act, corporations, partnerships and other legal entities cannot generally sue in New York City Small Claims Court. However, where these claimants have monetary damages that do not exceed $3,000.00, they may be able to instate an action in the New York City Commercial Small Claims division. This relatively unknown vehicle for litigation can often prove to be a cost effective and speedy way to recover small sums of monies.

However, there are certain requirements that apply prior to commencing a Commercial Small Claims action. First, the defendant must reside or have an office for the purpose of conducting business or have regular employment within New York City. In addition, the claimant must have a principal place of business in New York City. Where a claimant does not have a principal place of business in New York City, the Court will lack subject matter jurisdiction to hear the matter and will likely dismiss it. This is so even where the defendant consents and/or does not oppose to the commencement of the action in the Commercial Small Claims part.

In sum, utilizing the Commercial Small Claims division can be an effective way for corporations, partnerships and other legal entities to take care of smaller matters without the cost and expense of going through the New York Supreme Court system.

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC

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Whether a Worker is an Employee or Independent Contractor: the Vicaino v. Microsoft Legal Precedent

Employment Law: The issue of whether a person has been engaged to render a service as an employee or an independent contractor is a legal minefield. While it is true that many people would rather be paid as an independent contractor so that payroll taxes and other items are not deducted from their pay check, if they become sick or disabled, they may switch gears and argue that such deductions should have been made. Therefore, the person’s initial preference as to whether they would like payroll deductions to be taken from their pay check should not be the deciding factor.

This was highlighted by the Viciano v. Microsoft case in which the independent contractors working for Microsoft were actually paid more per hour than normal employees performing comparable jobs. They nevertheless, successfully argued to the Ninth Circuit Court of Appeals that they were actually employees who should have been eligible for the Microsoft Savings Plus Plan (“SPP”). They relied upon an Internal Revenue Service ruling against Microsoft in regard to other workers in a similar situation. The Court sided with them and ordered Microsoft to treat them as employees entitled to participate in the SPP.

The key here is the interplay between a ruling by the IRS in one instance and the application of that ruling by the employees for their own benefit in a different instance. This is akin to a situation in which a State taxing authority finds that independent contractors should be reclassified as employees, and this triggers a reclassification by the Federal taxing authorities. There are many ways that a reclassification can occur, and once it does, it can cascade to other levels within an institution.

Therefore, it is critical that employers determine whether a person is an employee or independent contractor at the outset of the engagement, and without regard to the person’s initial preference.

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Caution When Negotiating A Contract For The Sale Of Real Estate

Commercial Real Estate: Commentary: The New Jersey Statute of Frauds requires that certain contracts be in writing. The most well-known type of contract subject to these requirements are contracts for the sale of personal property for $500 or more be in writing. In addition, contracts for the sale of real estate are generally required to be in writing. Quite surprisingly, however, under certain circumstances an oral agreement concerning the transfer of a real estate interest may be enforceable.

Specifically, an oral agreement concerning the sale of real estate will be enforceable where it is established by clear and convincing evidence that the following has been articulated (a) a sufficient description of the real estate; (b) the nature of the interest that is to be transferred; (c) the identity of the transferor and transferee of the interest; and (d) the existence of an agreement. The “agreement” can be found from this perspective even where the parties anticipated the drawing up of a written and more formal contract of sale.

If you think of a transaction for the sale of residential property, the above terms are generally agreed upon earlier on in the negotiations. What that means is that a buyer and seller arguably could be bound by an oral agreement for the sale of real estate even though they contemplated negotiating additional terms and incorporating them in a written contract of sale at a later point in the transaction.

Given this risk, parties to a real estate transaction in New Jersey should proceed cautiously and act with the understanding that they may be bound to their oral representations. There are a few things that can be done to lessen the risk that an oral agreement will be binding. First, they should avoid utilizing letters of intent or term sheets. But, if they do utilize such a document, they should explicitly state on its face that they do not intend to be bound by the terms therein until a written agreement is executed. In addition, when they are negotiating orally with respect to the terms, they should provide the other party to the transaction a short correspondence and/or email at the very outset that they do not intend to be bound to any terms as stated orally or any other writings until a formal contract for sale is executed. In this situation, they should also reiterate their position orally to the other side and take notes of these conversations. In these notes, they should make particular note of those items as to which they have not yet come to an agreement. Although the risk continues, this may help to generally preclude the Court from finding that an oral agreement for the sale and purchase of real estate is enforceable. Of course, this is a nonexclusive list. Further, none of these suggestions is a guarantee that the parties will be protected from such a risk, and the particular facts of each situation are critical in determining a legal strategy. However, they should be kept in mind when a real estate deal is being negotiated.

Comments/Questions: ljm@gdnlaw.com
© 2008 Nissenbaum Law Group, LLC

Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com