Is Texas Lawyer Master of His Domain (Name)?

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The United States Court of Appeals for the Fifth Circuit last week in John E. Gibson v. Texas Dept. of Insurance--Div. of Workers' Compensation et al. (Case No. 11-11136) reversed a trial court in holding that a Lubbock, Texas, attorney can proceed with his claim that a state law barring his Web site domain name violates his First Amendment rights.

As reported by the Wall St. Journal Law Blog, Gibson, a Texas board-certified specialist in workers' compensation law, was prohibited by state officials in 2011 from using the domain name texasworkerscomplaw.com because the combined use of Texas and Workers Comp constituted  inherently deceptive speech that violated a state regulation intended to protect consumers that only allows state government to use those words in tandem.

A federal district court judge dismissed Gibson's First Amendment challenge, ruling that the Texas regulation restricts commercial speech (e.g., advertising copy), which isn't accorded the same level of First Amendment protection as pure speech. The appellate court, however, sent the plaintiff's lawyer's case back to the lower court for review to determine if applying the Texas regulation to the John Gibson & Associates domain name violates First Amendment-protected speech. Not the kind of injury that would require the plaintiff to wear a neck brace.

Appellate Court Grounds Airlines' First Amendment Challenge to DOT Rule

(Photo credit: Wikipedia)In its 21-page opinion in Spirit Airlines, Inc. et al. v. U.S. Dept. of Transportation (No. 11-1219), the United States Court of Appeals for the District of Columbia decided 2-1 to uphold the constitutional validity of a DOT rule that restricts how airlines can display a break down of how much of a passenger's airfare goes toward taxes and fees.

Judge David S. Tatel and Judge Karen LeCraft sided with the DOT in the opinion written by Tatel and Judge A. Raymond Randolph wrote a spirited dissent. The DOT contended its rule requiring airlines prominently to display in advertised fare prices the full-cost of the ticket, including government taxes, was designed to eliminate confusion by informing consumers about their actual flying cost. 

Plaintiffs, led by Spirit Airlines, Allegiant Air and Southwest Airlines, alleged the DOT rule violated their First Amendment rights of political speech by impeding their ability to discuss the onus of airline taxation. Judge Tatel, however, wasn't buying the First Amendment argument, saying the speech at issue was not political speech, which invites strict scrutiny by the court, but rather, less-protected commercial speech, which warrants only intermediate scrutiny.

The DOT rule, Judge Tatel wrote, "does not prohibit airlines from saying anything; it just requires them to disclose the total, final price and to make it the most prominent figure in their advertisements."

(Tip of the hat to the Wall St. Journal Law Blog for initially landing this case.)

Potboiler Publisher Won't Share the Pot, Romance Novelists Claim in Contract Suit

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Expect plenty of bodice-ripping, burning eyes and flaming lips, and waves crashing against the ocean in the United States District Court for the Southern District of New York as three romance novelists have filed a putative class action breach of contract/unjust enrichment suit against Harlequin Enterprises Ltd. ("HEL") concerning E-book royalties.

The case, reported on by Courthouse News Service and the Wall St. Journal Law Blog, is Barbara Keiler, Mona Gay Thomas & Linda Barrett v. Harlequin Enterprises Ltd., Harlequin Books, S.A. & Harlequin Enterprises B.V. (Case No. 12-cv-5558). Toronto-based HEL, the subject of a copyright infringement suit earlier this year reported here (see "TUOL" post 4/23/12), reportedly cranks out 110 titles monthly in 34 languages reaching 114 international markets from its stable of 1,200 authors. As faithful readers of this blog no doubt know, lead plaintiff Keiler is the author of Right Place, Wrong Time and Blooming All Over, Thomas penned His Secret Duchess and The Heart's Desire, while the collected works of Barrett include Apple Orchard [not to be confused with Anton Chekhov's obvious knock-off Cherry Orchard] and Love Money and Amanda Shaw.

The plaintiffs are seeking class-action status that would cover Harlequin authors who penned books for the defendants overflowing with heaving bosoms during the period from 1990 to 2004. The plaintiffs allege in their complaint that they are owed royalties on E-book editions of their works because of a standard contract clause that pays authors 50 percent royalties on net receipts of the "publisher, from the exercise, sale or license of digital rights to their works."

The plaintiffs contend that defendants Switzerland-based Harlequin Books S.A. and Netherlands-based Harlequin Enterprises B.V. are HEL subsidiaries that perform no publishing functions and merely provide tax benefits to the parent company. HEL claims it had to obtain a license from its Swiss arm to publish the authors' E-books and that any royalty calculation should be based on the publisher Harlequin Switzerland license, or 6 percent to 8 percent of the E-book's cover price, which means 3 to 4 percent for the authors.

As set forth in the plaintiffs' complaint:

 "In 2011, Harlequin Enterprises sent written communications to plaintiffs and the other class members in which it took the position that royalties for e-books were covered by the AOR [All Other Rights] Clause in the Publishing Agreements and that the authors' 50% royalty was to be calculated based on the net amount received by Harlequin Switzerland, from a 'license' that Harlequin Enterprises claims Harlequin Switzerland granted to it to publish the e-books," the complaint states. "Harlequin Enterprises claimed in those communications that the net amount received by Harlequin Switzerland was 6% to 8% of the cover price of the e-books, and that the royalties owed to plaintiffs and to other class members were therefore 50% of that amount, or 3% to 4% of the cover price.

     Under the publishing agreements, defendants have been paying plaintiffs and the other class members e-book royalties of 3% to 4% of the cover price based on the net amount received by Harlequin Switzerland from the claimed 'license' granted to Harlequin Enterprises, far less than what plaintiffs and the other class members would have been paid if their royalties were based, as they should have been, on the net amount received by Harlequin Enterprises." 

The "TUOL" staff can't help but wonder whether the judge hearing the case wears an eyepatch and has a handsome scar.

UPDATE: Sponsored Story Suit Put to Rest by Facebook?

(Photo credit: Wikipedia)It hasn't been the best of weeks for social media leviathan Facebook. Its stock has performed poorly since its IPO ("It's Probably Over-valued"), shareholder suits already have been filed, and inquiries into the launching itself are underway.

Now comes word, via the Wall St. Journal Law Blog (Blogs.wsj.com) that Facebook is on board with a "settlement agreement in principle" with users who allege Facebook commercially exploited them without their consent.

United States District Court for the Northern District of California Judge Luch H. Koh revealed in a Case Management Order that a resolution may be imminent in the case of Fraley v. Facebook (Case No. 11-cv-01726-LKH). Last December, Judge Koh refused to dismiss the putative class action suit against Facebook based on its "Sponsored Story" ads [see "TUOL" post 12/22/11].

A Sponsored Story ad is created when a user "likes" a product or service, which is then transmitted to that user's friends. The plaintiffs contend the Sponsored Story ads run afoul of California's right to publicity statute that guards against the unauthorized use of an individual's image, name or voice for a commercial purpose.

Neither side has confirmed the existence of a settlement or disclosed terms.

No Rule-Changing Mid-game: Judge Says Unpaid HuffPo Writers Will Stay That Way

Jonathan Tasini . (Photo credit: Wikipedia)United States District Court for the Southern District of New York Judge John Koeltl ruled last Friday  in Jonathan Tasini v. America Online, Inc. (Case No. 1:11-cv-02472-JGK) that just because The Huffington Post hit the mother lode when Internet Service Provider AOL acquired the news aggregator for $315 million (see "TUOL" post 2/7/11), uncompensated HuffPo writers were not entitled to payment after the fact.

Authors Molly Secours and Jonathan Tasini were among writers whose work appeared on the Web site of The Huffington Post, which was founded in 2005. As reported by the New York Law Journal and The Wall St. Journal Law Blog, the plaintiffs sued for upward of $105 million, alleging they were deceived by Arianna Huffington into writing for the site gratis in exchange for the exposure that appearing on the popular site purportedly would generate.

In granting the defendant's motion to dismiss, Judge Koeltl said the plaintiffs, many of whom are professional journalists, knew they weren't getting paid for having their work published on the HuffPo site.  "No one forced the plaintiffs to give their work to The Huffington Post for publication," Judge Koeltl wrote, "and the plaintiffs candidly admit that they did not expect compensation. The principles of equity and good conscience do not justify giving the plaintiffs a piece of the purchase price when they never expected to be paid; repeatedly agreed to the same bargain and went into the arrangement with eyes wide open."

The plaintiffs advanced both an implied-in-law contract argument to prevent unjust enrichment to AOL, and alleged the defendant's purported deceptive conduct violated New York General Business Law sec. 349.  The case brought by the unpaid contributors was dismissed with prejudice by the Court.