Making It Legal:

It probably passed unnoticed by most people, but the Supreme Court handed down a decision recently that raised more than just a few eyebrows in the legal community.

In the case of CBOCS West v. Humphries, a black manager at a Cracker Barrel restaurant filed suit under the Civil Rights Act of 1866 (now codified at 42 U.S.C. Section 1981), alleging he was fired after complaining about discrimination against other black mid-level managers. Whereas some civil rights statutes explicitly prohibit retaliating against an employee who is trying to assert his or her rights, Section 1981 was silent. It prohibits discrimintation on the grounds of race in making contracts, but says nothing about retaliation as a prohibited form of discrimination. So the narrow question before the court was: “Can someone bring a race retaliation claim using Section 1981?” The court’s answer was yes (by a 7-2 margin).

The result is surprising for a couple of reasons. First, it seems to run counter to the increasingly conservative trend of court decisions. In fact, just last year in Ledbetter v. Goodyear, the court faced an employee complaint of discrimination. The plaintiff employee had 180 days to bring a claim of sex discrimination to the Equal Employment Opportunity Commission. She claimed that there was a repeated pattern of unfair evaluations and (lesser) pay raises that existed for a period of time. However, since many of them predated the 180-day period, the court held that she could no longer base a claim on them. Based on that strict reading of the statute, civil rights activists were concerned about the decision-making trend of the court. The Humphries decision takes a much more liberal approach.

The second reason it’s surprising (sort of in line with the first) is that the majority decision seemed to weigh the legislative history of the Civil Rights Act and similar statutes more heavily than case precedent. Sure, the court found cases on which to hang its collective hat. But the approach taken to arrive at the decision was not one normally associated with a conservative court, which would tend to look at the strict language of the law: “Does the language specifically allow a claim? No. If that’s the case, it’s for Congress to pass a law amending it, not for the court to imply a right of action.” Rather, the majority decision took the position that it is presumed that federal civil rights statutes prohibit retaliation whether they say so explicitly or not. See the wiki on the U.S. Supreme Court for a cogent analysis of the history of the case and the arguments before the court.

In practical terms, what does this mean for employers? Quite possibly, that they’ll see a rise in retaliation claims. An effective way to prevent them is to ensure that your company has an employee manual outlining the appropriate procedures for airing grievances and proper training for managers in dealing with these kinds of claims.

This week, I received a frantic call from “Rosie,” who had been referred by a colleague of mine. She plunked down a huge chunk of change (well into the five figures) to buy a day spa from the current owner. The seller told her he wanted to get out of the business because he wanted to retire. Of course it generated more than enough to meet its expenses, he cooed. It’s a great business, terrific location. The seller didn’t want to get lawyers involved: “They always complicate matters.” Rosie wanted to do the deal without laywers, too– it’s cheaper that way. So she bought it–the business… and the seller’s lines about the health of the company.

Turns out, there was very little the seller told her that was true, smooth operator that he was. And Rosie fell for it, hook, line and sinker. What didn’t she do?

• She didn’t ask to see the financials to verify his rosy (no pun intended) reports.
• She didn’t ask to see the lease for the premises to verify arrangements with the landlord.
• She didn’t ask to see the corporate documentation, verifying the seller’s ownership of the company.

Rosie wants out, but getting her out of this deal now is like trying to get milk out of the coffee when you realize you should have had cream. She can’t afford proper legal help because she sank her money into the deposit and on shoring up the ailing business.

As Twilight Zone creator Rod Serling would say: “Offered for your consideration.” Rosie rushed into the deal without guidance from an attorney or any other professional advisor. For whatever her reasons, she had to have this particular business now. For want of spending a few thousand dollars to make sure she got good advice and had seasoned experts watching her back, Rosie is now facing the possible loss of tens of thousands of dollars (that is, a perfectly good down payment that could have been put to better use), additional tens of thousands to get the business up and running (which should already have been up and running), and tens of thousands in possible litigation fees (to either sue the seller or be sued by the seller should she choose to walk away).

So I ask you: When you do the math, is it worth it not to get lawyers involved?

In a recent round of litigation concerning online content hosts, the online complaint site Ripoff Report won a defamation (and trademark) lawsuit filed in Florida by a Colorado company.

According to the site, the Ripoff Report is a worldwide consumer reporting website and publication by consumers, for consumers, to file and document complaints about companies or individuals. Apparently, it provides users with pre-programmed categories, or labels, for classifying their posts. The defendant, Whitney Information Network, became riled when it discovered that the posts complaining about it had been tagged with labels such as “corrupt companies” and “false TV advertising,” in addition to the more banal (and benign) “seminar programs” and “trade schools.”

The Florida federal district court relied on Section 230 of the federal Communications Decency Act, which protects content hosts from liability for the comments and information placed on the site by users. Even though the Ripoff Report site provided the “categories,” the court found that that was not sufficient to move it out of the realm of mere host (where it is protected) and into the realm of content provider (where it would be more vulnerable).

To learn more about the case, see Wendy Davis’s article in Online Media Daily.

Much as I swore I would not begin Chanukah/Christmas shopping before Thanksgiving (I am blessed with Jewish family and Catholic in-laws, so I get it from all sides), I did. The lure of the catalogs I received in the mail, and avoiding the lines, the stress and the rush, were too great. After sifting through dozens of catalogs and circling items, I spent a good few hours online and made all my purchases. I haven’t received everything yet, nor have I wrapped it, but I’m done with shopping already!

So I say now. What happens if something arrives that doesn’t meet my specifications? Or wasn’t what I ordered? Or was broken? Or, contrary to the enticing photo in the catalog, simply wasn’t “all that” in person?

Many large businesses post their return policies on their websites. Many small businesses don’t have one, and therein lies the danger. Massachusetts attorney Michael Goldstein examines what it takes for you, as an “injured” purchaser, to be able to sue an internet retailer in your home state. One significant factor is known in legalese as “jurisdiction.” Has the shabby seller established a business presence in your state? Or made a concerted effort to attract customers from your area? If so, you may be able to haul them into court in your neighborhood.

On the flip side, if you’re the internet retailer, the last thing you want is to get hauled into court in every little town and vale across the country. If someone is going to be so dissatisfied that he or she wants to sue, you want this to happen in your backyard so that you are spared the expense of schlepping all over the place. That’s where having website terms and conditions come into play. They make it clear where disputes will be resolved–it’s a condition of the privilege of purchasing from your site.

Most purchasers don’t even focus on those terms when making a purchase. But they’re there. Usually introduced by language such as: “Welcome to BlahBlahBlah.com. The Company and its affiliates provide their services to you subject to the following conditions. If you visit or shop at BlahBlahBlah.com, you accept these conditions.” If you purchase from that site, you agree to resolve disputes wherever the retailer chooses. Consider the following: Amazon.com (Washington state); Sephora (California); Target (Minnesota); Office Depot (Florida–OK, not exactly for holiday presents… but you get the point).

Why not provide your business with the same leverage and protections? For other website terms that you might want to consider, see my own Words to the Wise newsletter article (just released last week!) at Wise Counsel Press: “‘Attention Internet Shoppers: Your Website Terms and Conditions.” It’s free to subscribe, and you’ll receive a special report, Top 10 Legal Pitfalls, just for doing so!