Bernstein Shur Business and Commercial Litigation Newsletter #46

By Paul McDonald and Dan Murphy

We are pleased to present the 46^th edition of the Bernstein Shur Business and Commercial Litigation Newsletter. This month, we highlight recent cases that address class actions pending against Silicon Valley companies, limitations on the reach of arbitration clauses, and other news that will have an impact on business and litigation. We hope you enjoy the newsletter and have a Happy Thanksgiving.

In the News:

Google, Apple, and other Silicon Valley companies are facing a potential class action by former employees alleging that the firms engaged in anti-competitive behavior by conspiring not to hire employees from each other. In the underlying case, U.S. District Court Judge Lucy Koh rejected a proposed settlement of $325 million reached between class counsel and the companies. Noting that there was “ample evidence of an overarching conspiracy[,]” Judge Koh rejected the proposed settlement as “inadequate.” Apple and several other companies named in the suit have appealed the decision. If the class action proceeds to trial, plaintiffs have indicated that they will seek $3 billion in damages, which could be trebled under anti-trust law. In related lawsuits filed against Oracle and Microsoft based on the same legal theories, Google produced documents in discovery that stated that the company would agree to restricted hiring protocols with other Silicon Valley companies.

Read more about these developments here.

A Federal Appeals Court holds that Sirius XM cannot force vehicle purchasers to arbitrate claims against the satellite radio provider based on free trial subscriptions. In the case, an owner of a Toyota Tacoma truck with a free trial subscription to Sirius sued that company for violating the Telephone Consumer Protection Act by sending unauthorized calls to his cellphone during his subscription period. Sirius sought dismissal of the action based on an arbitration clause contained in a welcome kit provided to purchasers of new vehicles. On review, the Ninth Circuit Court of Appeals concluded that the owner could not be bound by the arbitration clause because a reasonable purchaser in the same circumstances would not understand that his vehicle purchase would create contract duties owed to Sirius. Concluding that there was no meeting of the minds to support any agreement addressed to arbitration, the court noted that a “party cannot be required to submit to arbitration of any dispute which he has not agreed so to submit.”

Read more about this development here and access the court’s decision here.

A Massachusetts company is employing crowdfunding techniques as a means of obtaining financing for high-value commercial lawsuits. The company, called LexShares, serves as a matchmaker between plaintiffs and accredited investors that seek to invest in the potential recoveries in commercial lawsuits with a value of at least $10 million. The company already has crowdfunded its first case, a product liability suit seeking recovery of $250,000. The company aims for a return of 50 percent for investors and expects to be paid out of the funds raised by plaintiffs in exchange for their sale of a share in lawsuit proceeds.  In 1997, Massachusetts abolished the doctrine of champerty, which, at common law, prohibited financing of claims by strangers to a lawsuit in return for a share of the proceeds. See Saladini v. Righellis, 426 Mass. 231 (1997) (abrogating the common law rule). In contrast to Massachusetts, the doctrine of champerty is alive and well in ME. See 17-A M.R.S. § 516 (making champerty a Class E crime).

Read more about this development here and access the ME statute here.