He Said/She Said, Save Our Sons, and the Stories that Stick: Part Two of a Two-Part Series of Columns

SHERRY F. COLB

In this second in a series of columns on the U.S. Department of Education’s recent push toward a higher burden of proof in determinations of sexual harassment or assault under Title IX, Cornell Law professor Sherry F. Colb suggests that gendered narratives play a role in people’s willingness to regard an acquaintance rape case as “he said/she said.” Colb describes several examples in which people prefer a story that confirms a pre-existing bias over truth based on evidence.

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Prince v. Appleton Auto LLC

Court: US Court of Appeals for the Seventh Circuit

Docket: 20-1106

Opinion Date: October 21, 2020

Judge: Joel Martin Flaum

Areas of Law: Business Law, Corporate Compliance, Labor & Employment Law

Applecars is a member of a network of Wisconsin used-car dealerships. McCormick owned a majority share in each dealership. Each dealership received management services from Capital M, which McCormick also owned. Capital M tracked shared dealership inventory, held employee records, and issued identical employee handbooks for each dealership; Capital M’s operations manager hired and fired each dealership’s general manager. The employees of each dealership gathered as one for events several times per year. The dealerships advertised on a single website, which included some language suggesting a single entity and some indicators that each dealership is a separate entity. Each dealership properly maintained corporate formalities and records. Capital M billed each dealership separately. Each dealership had a distinct general manager, bank accounts, and financial reports. The dealerships separately filed and paid taxes, paid employees, and entered into contracts. Prince worked at Applecars for several months before he was fired. Prince claims his firing was retaliatory and sued Applecars and its affiliates for racial discrimination under Title VII of the 1964 Civil Rights Act. The court granted the defendants summary judgment, noting that Applecars had fewer than 15 employees and was not subject to Title VII. The Seventh Circuit affirmed. There is insufficient evidence to support Prince’s theory that the court should pierce the corporate veil of the network, aggregating the number of employees such that Title VII would apply.

J-B Weld Co., LLC v. The Gorilla Glue Co.

Court: US Court of Appeals for the Eleventh Circuit

Docket: 18-14975

Opinion Date: October 20, 2020

Judge: Tjoflat

Areas of Law: Business Law, Intellectual Property

J-B Weld filed suit against Gorilla Glue, alleging claims for trade dress infringement under the Lanham Act, Georgia law, and the common law of unfair competition; trade dress dilution under Georgia law; and false advertising under the Lanham Act and Georgia law. The Eleventh Circuit affirmed the district court's grant of summary judgment for Gorilla Glue as to the false advertising claims, agreeing with the district court that J-B Weld has not shown that the inclusion of "steel bond epoxy" on GorillaWeld's packaging is material to consumers. However, the court reversed and remanded with respect to the trade dress infringement and trade dress dilution claims. In regard to the trade dress infringement claims, the court held that, although the posture of the case required the district court to view the evidence in the light most favorable to J-B Weld, the district court failed to do so in analyzing the "likelihood of confusion" between J.B. Weld Original's trade dress and GorillaWeld's trade dress. In regard to the trade dress dilution claims, the court held that the district court's abbreviated treatment of this claim leaves it with serious doubt that it applied the correct standard in concluding that J-B Weld was unable to show trade dress dilution. In this case, the district court's remarks about the indistinguishability of the applicable standards indicates that it applied the elements of the trade dress infringement claims to the trade dress dilution claim, thus conflating the two different sets of requirements.

People v. Uber Technologies, Inc.

Court: California Courts of Appeal

Docket: A160701(First Appellate District)

Opinion Date: October 22, 2020

Judge: Streeter

Areas of Law: Business Law, Labor & Employment Law

The state brought a civil enforcement action against Uber and Lyft, alleging that the companies improperly misclassify drivers using their ride-hailing platforms as independent contractors rather than employees, depriving them of benefits to which employees are entitled. This misclassification, the state alleged, also gives the defendants an unfair advantage against competitors, while costing the public significant sums in lost tax revenues and increased social-safety-net expenditures. The court of appeal affirmed the entry of a preliminary injunction that restrains the companies from classifying their drivers as independent contractors. Based on the breadth of the term “hiring entity” and the absence of an exemption for ride-sharing companies in Labor Code section 2775, there is little doubt the Legislature contemplated that rideshare drivers would be treated as employees. While the defendants’ business models are different from traditional employment, particularly with regard to drivers’ freedom to work as many hours as they wish, when and where they choose, and their ability to work on multiple apps at the same time, the mode in which the drivers are used met the elements of employment. The companies solicit riders, screen drivers, set standards for drivers' vehicles, track information on drivers using the apps, and may use negative ratings to deactivate drivers. Riders request rides and pay for them through defendants’ apps. The remuneration may be seen as flowing from riders to the defendants, then from defendants to drivers, less any fee associated with the ride.

In re Altaba, Inc.

Court: Delaware Court of Chancery

Docket: C.A. No. 2020-0413-JTL

Opinion Date: October 19, 2020

Judge: Laster

Areas of Law: Business Law, Securities Law

In this litigation in which Altaba, Inc. (the Company) sought dissolution under the framework established by Sections 280 and 281(a) of the Delaware General Corporation Law the Court of Chancery held that the Company may make an interim distribution using its proposed amounts of security on the condition that it reserve funds for lawsuits pending in Canada resulting from data breaches that the Company disclosed in 2016 (the Canadian Actions Claim). As to all but two claims, in which the Company agreed to hold back the full amount of security requested by respective claimants, the Court of Chancery held that there was no obstacle to an interim distribution based on the amounts of security. For two claims, however, the Company sought to hold back less than the full amount of security requested by the claimants. The Court of Chancery held (1) as to the Canadian Actions Claim, if the Company wished to make an interim distribution to its stockholders it must reserve $1.05 billion Canadian; and (2) as to the second claim, the Company made a convincing showing that the amount it proposed to reserve was likely to be sufficient to provide compensation for claims that had not been made known to the Company or that had not yet arisen.

Bismarck Financial Group, et al. v. Caldwell

Court: North Dakota Supreme Court

Citation: 2020 ND 207

Opinion Date: October 21, 2020

Judge: Lisa K. Fair McEvers

Areas of Law: Business Law, Civil Procedure

Bismarck Financial Group, LLC, and its individual members (together “BFG”) appeal from an order granting James Caldwell’s Rule 12(b)(6) motion to dismiss their complaint. According to BFG’s complaint, Bismarck Financial Group, LLC, was formed in 2009 as a limited liability company. After Caldwell became a member, the parties executed various governing documents, including an operating agreement. While Caldwell was a member, the company entered into a 10-year office lease. The company also had one salaried employee. In 2019, Caldwell informed the other members he was dissociating from the company. BFG subsequently brought this lawsuit requesting a declaration that Caldwell’s dissociation was wrongful and damages in excess of $137,879.55 based on Caldwell’s pro rata share of the company’s debt obligations, employee salary, office overhead, and other expenses. Caldwell moved to dismiss for failure to state a claim upon which relief could be granted. Caldwell argued that he could not be held personally liable for company expenses and obligations under principles of corporate law. Caldwell also asserted BFG had not incurred any damages caused by his dissociation because, according to the terms of the operating agreement, the members have no obligation to contribute capital to cover company expenditures. The district court granted Caldwell’s motion. The court assumed Caldwell wrongfully dissociated from the company, but concluded BFG had not pleaded a cognizable claim for damages because Caldwell could not be held liable for future company expenses and obligations. Finding only that the district court erred in dismissing BFG's complaint as a matter of law in its entirety, the North Dakota Supreme Court reversed in part, "BFG’s allegation that Caldwell’s withdrawal caused additional, currently-unidentifiable damages, if proven, is sufficient to support recovery against Caldwell." The Court affirmed in all other respects, and remanded for further proceedings.

Titan Machinery v. Kluver

Court: North Dakota Supreme Court

Citation: 2020 ND 225

Opinion Date: October 21, 2020

Areas of Law: Business Law, Civil Procedure

Shawn Kluver and Little Knife Disposal, LLC, appeal from a district court judgment ordering them to pay $140,042.83 to Titan Machinery, Inc., and $100,731.62 to Renewable Resources, LLC. In 2016, Kluver was the general manager of Renewable Resources, which was in the business of oilfield waste disposal. “At Kluver’s request and direction,” Renewable Resources leased a Case excavator and other equipment from Titan. The rental agreement for the Case excavator showed an estimated return date of June 28, 2016. Kluver also executed a credit application and personal guaranty with Titan to ensure Renewable Resources’ payment obligations under the rental agreement. Renewable Resources made all payments under the rental agreement from June 21, 2016, to December 6, 2016. No additional rental payments were made. In February 2017, while still employed by Renewable Resources, Kluver executed the operating agreement of Little Knife Disposal, LLC, as its sole member. Little Knife was also in the business of oilfield waste disposal. After Renewable Resources failed to make rental payments, Titan retrieved the Case excavator in October 2017. The excavator was damaged during the lease, and the excavator’s bucket was missing. In November 2017, Titan sued Renewable Resources for damaging the equipment and failing to pay the balance due under the rental agreement. In January 2018, Renewable Resources filed a third-party complaint against Kluver and Little Knife, claiming they wrongfully used the equipment leased from Titan and did not reimburse Renewable Resources. Renewable Resources requested that Kluver and Little Knife indemnify Renewable Resources for their use of the equipment. In October 2018, Titan obtained a $140,042.83 money judgment against Renewable Resources. In January 2019, Titan sued Kluver, claiming that under the personal guaranty he was liable for Renewable Resources’ debt to Titan. Kluver denied Titan’s allegations and brought a third-party complaint against Renewable Resources, asserting Renewable Resources should indemnify him for any amounts he was required to pay to Titan. Kluver and Little Knife argued the district court erred in finding they benefited from the equipment leased by Renewable Resources. They claimed there was no evidence they received a benefit from the Case excavator leased by Renewable Resources and the court erred in ordering them to indemnify Renewable Resources. Finding no reversible error in the district court's judgment, the North Dakota Supreme Court affirmed the order in favor of Titan Machinery and Renewable Resources.