Business & Commercial Litigation Newsletter

By Paul McDonald and Dan Murphy

Our October recap highlights cases that address the battle between McDonald’s and the NLRB regarding “joint employer” status, new crowdfunding rules, and other news that will have an impact on business and litigation.

“Joint Employer” Status for McDonald’s

 The National Labor Relations Board has sought to enforce subpoenas against McDonald’s after filing 13 complaints against the franchisor alleging that it is a joint employer of employees of its franchisees, a determination that could erode the traditional legal distinction between franchisors and franchisees. McDonald’s is alleged to have retaliated against employees of its franchisees who protested working conditions and sought higher wages. Traditionally, “joint employer” status could only be found where a franchisor exerted sufficient control over conditions of employment, such as determinations on wages, hiring, and firing. However, in a case issued in August 2015, the NLRB broadened the test for joint employer status, concluding that the status existed where unrelated employers of the same employees “share or codetermine those matters governing the essential terms and conditions of employment.” Under the new standard, joint employer status is determined based on a totality of circumstances in each particular case. The NLRB’s subpoenas are addressed to email communications and other documents of the McDonald’s executives who had direct contact with franchisees. To date, McDonald’s has expended more than $1 million in its effort to avoid a determination of joint employer status.

Read more about this development here.

SEC Crowdfunding Rules

Today, the Securities and Exchange Commission is set to announce new rules on crowdfunding that are expected to greatly expand access to ordinary investors to this alternative method of fundraising. Crowdfunding refers to the practice of raising small amounts of money from a large amount of individuals, often through the internet.

To date, crowdfunding has been limited to accredited investors, individuals with net worth in excess of $1 million (exclusive of primary residence) or who earn more than $200,000 per year. However, under the new rules, it is expected that individuals will be permitted to invest up to $2,000, or 5 percent of their annual income or net worth, whichever is greater, in crowdfunding projects over a 12-month period. The new rules will be adopted as part of the final rules under Title III of the JOBS Act.

Read more about this development here and access the voluminous rule proposal here.

LegalZoom Resolves Dispute with State Bar Association

LegalZoom, the online legal document provider, has settled its lawsuit against the North Carolina State Bar Association. In June 2015, LegalZoom sued the North Carolina Bar Association based on the Sherman Act, alleging that the association maintained an unlawful monopoly by refusing to register its prepaid legal plans. The suit followed accusations by the bar association that LegalZoom was engaged in the unauthorized practice of law in North Carolina. Under the agreement concluded between the parties, LegalZoom will have licensed attorneys review its templates and will provide access to the text of forms to customers before purchase. The company also will provide a disclaimer that its documents are no substitute for advice from an attorney. For its part, the bar association will seek to clarify ambiguous language used in North Carolina’s statutes governing the unauthorized practice of law.

Read more about this development here.

Selected Trends in Legal Advertising

The U.S. Chamber of Commerce has issued a report addressed to new trends in advertising in the legal profession, including increased use of television spots and Google keyword services. The report notes that television advertising for legal services is expected to exceed $800 million in 2015 and that the most expensive Google keyword matches cost $600 per click for certain areas in Texas and Florida.

Read more about this development here.