Category: Business Law


Pennsylvania Supreme Court Rules

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Only Physicians Can Obtain Informed Consent From Patients

A recent Pennsylvania court ruling found that only physicians, not their subordinates, can obtain informed consent from patients prior to procedures. In Shinal v. Toms, 162 A.3d 429 (Pa. 2017), Plaintiff, Shinal, was a patient of Defendant, Dr. Toms. Shinal had consulted with Dr. Toms to discuss removal of a new tumor growth in her brain. In this consultation, Dr. Toms advised her of the risks associated with surgery and reviewed alternatives including a less aggressive approach called a subtotal resection (safer in the short run) versus a more aggressive approach called a total resection, which would be more dangerous in the short run but offer a better chance of resecting the entire tumor. After this consultation, Shinal decided to have the surgery but had not decided on the approach.

Following this consultation, Shinal’s interactions were entirely with Dr. Toms’ physician assistant. The assistant discussed potential scarring, whether radiation therapy would be necessary, and the date of the surgery. The assistant also answered Shinal’s questions about the craniotomy incision, and met with Shinal to obtain her medical history, conduct a physical and provide her with more information regarding the surgery. In this meeting, Shinal signed an informed consent form granting Dr. Toms permission to perform a resection of her tumor and the risks associated with this procedure. The form also acknowledged that Shinal had discussed the advantages and disadvantages of alternative treatments and that she understood the form’s contents, had an opportunity to ask questions and had sufficient information to give her informed consent to the operation. The form did not address the specific risks of total versus subtotal resection.

When Shinal underwent the procedure, the surgeon conducted a total resection and perforated her carotid artery resulting in hemorrhage, stroke, brain injury and partial blindness. Shinal initiated this medical malpractice lawsuit alleging that Dr. Toms failed to obtain her informed consent for the procedure. Shinal stated that if she had known the alternative approaches and risks of the total resection, she would have chosen the subtotal approach (less aggressive) alternative.

The Supreme Court of Pennsylvania held that a physician cannot rely upon a subordinate to disclose the information required to obtain informed consent, and cannot delegate to others his obligation to provide sufficient information to a patient prior to a procedure. The court ruling additionally stated that “without direct dialogue and two-way exchange between the physician and patient, the physician cannot be confident that the patient comprehends the risks, benefit, likelihood of success and alternatives.” The defendant’s actions ultimately violated the Medical Care Availability and Reduction of Error (MCARE) Act.

For more information, call our business lawyers in Philadelphia at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

Letters And Phone Calls Regarding Intent To Not Follow Agreement

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Enough To Find Anticipatory Breach Of Contract

In General Diversifield, Inc. v. Poole Truck Line, Inc., 1991 WL 53673 (E.D. Pa 1991) General Diversified (“Diversified”), a motor carrier broker, sued Poole Truck Lines (“Poole”), a motor carrier of freight, for Poole’s anticipatory breach of contract, because of its intent to not provide transportation of solid waste for a Diversified customer, as required in an agreement between Diversified and Poole.

Four days after signing the agreement, the Regional Sales Manager of Poole discovered that one of Poole’s main competitors was hauling waste for Diversified at a higher rate than Poole had agreed to (allowing the competitor to make more money than Poole). After complaining about the price difference, Poole’s Manager sent a letter to Diversified stating that they were left with “no other choice than to cancel our agreement” and “the atmosphere is not just one in which I nor Poole can do business.” Poole’s Manager also contacted Diversified customer that Poole was to do work for under the agreement, and informed them “the deal was off” and “Poole would not haul [the customer’s waste] on behalf of [Diversified].”

The District Court for the Eastern District of Pennsylvania held that these facts were sufficient to prove anticipatory breach of the agreement by Poole. The Court explained that between the letter and the phone conversation by Poole’s Manager, Poole made the decision not to haul under the terms of the agreement prior to the date on which performance was due, and communicated this to Diversified unequivocally. To make Diversified whole, the Court awarded damages to Diversified in the amount of its lost profits on loads hauled for its customer in the time Poole was to be hauling such loads.

For more information, call our business lawyers in Philadelphia at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

PA Supreme Court Agrees to Examine Contractual Relationships Between Law Firms and Non-Lawyers

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The Pennsylvania Supreme Court has agreed to evaluate whether an alleged fee-splitting arrangement between a law firm and a non-lawyer was proper, and whether the arrangement violated state law and public policy.

In SCF Consulting, LLC v. Barrack, Rodos & Bacine, No. 1413 EDA 2015, 2016 WL 4962900 (Pa. Super. Ct. July 8, 2-16), Plaintiff, SCF Consulting, LLC (SCF), alleged it was entitled to a promised share of profits for cases SCF had worked on as part of an oral consulting contract with Defendant, Barrack, Rodos and Bacine (“Barrack”). The contract regarded representation of various institutional investors who sought to bring class actions alleging securities violations. Pursuant to this contract, SCF claims it was paid a yearly consulting fee, plus “a five percent (5%) share of the firm’s annual profits attributable to the cases originated and worked on by Barrack, and a 2.5% of cases originated by other members of the firm.” Based on this compensation package, SCF assisted Barrack in becoming legal counsel for the class representatives in virtually all of its cases. SCF admitted that Barrack paid them their fixed annual consulting fee for each of the years worked, but alleges that Barrack failed to pay the share of profits due at the end of 2014.

SCF filed this suit claiming that Barrack breached the parties’ agreements by refusing to make the promised profit share payments for cases that were originated, worked on and resolved by SCF.

The trial court sustained Barrack’s demurrer to all counts of SFC’s complaint on the basis that the compensation plan they entered into was against public policy due to violation of Pennsylvania Rule of Professional Conduct, 5.4. The rule prohibits a lawyer or law firm from sharing legal fees with a nonlawyer exclusive of various exceptions. While SFC claimed the plan was an express exception to the rule [under section (a)(3)], both the Trial Court and Superior Court disagreed.

On February 1st, 2017, SCF appealed to the Supreme Court of Pennsylvania to determine “whether the trial court and superior court erred in sustaining Barrack’s demurrer to all counts of SFC’s complaint, even assuming that the compensation plan was in violation of 5.4., Pennsylvania law, public policy and the interests of justice require such an agreement to be enforced because an attorney must not be shielded from liability, nor financially rewarded for violating the Rules of Professional Conduct.”

For more information, call our business lawyers in Philadelphia at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

Pennsylvania Supreme Court Finds Strict Liability

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Improper Basis of Recovery Against Medical Device Manufacturers

Pennsylvania courts consider strict liability to be an improper basis for recovery in cases where manufacturers fail to provide adequate warnings regarding prescription drugs. In Hahn v. Richter, 543 Pa. 558 (Pa. 1996), the Plaintiff, Hahn, was treated for back pain by one of the defendants, Dr. Richter. The treatment included several surgical procedures and multiple intrathecal injections of Depo-Medrol, a drug manufactured by the other defendant involved in the case, Upjohn. A package insert accompanying the drug provided warnings to physicians that a condition called “arachnoiditis” was reported after doctors administered the drug by way of intrathecal injection, and that this method was not an approved usage by the Federal Drug Administration. Following his treatment, Hahn developed the condition “arachnoiditis”, which required further surgery and ultimately resulted in serious, permanent injury. Hahn filed a suit against both Dr. Richter and Upjohn alleging that his condition was caused by the Depo-Medrol and that Upjohn failed to provide adequate warnings to physicians regarding intrathecal use of the drug.

The court ruled that where the adequacy of warnings associated with prescription drugs is at issue, the failure of the manufacturer to exercise reasonable care to warn of dangers (i.e. manufacturer’s negligence) is the only recognized basis of liability. The court ruled that a “manufacturer of drugs is not strictly liable for unfortunate consequences attending the use of otherwise useful and desirable products which are attended with a known but apparently reasonable risk.”

For more information, call our Philadelphia business lawyers at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

Fraud in the Inducement Hurdle

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Parole Evidence Rule

When a contracting party has been painted a “false picture” of how a contract will operate, that party may have a fraud in the inducement claim. One instance of this is when an individual signs a materially different contract after the parties had agreed to language in earlier drafts. Under Pennsylvania law, plaintiffs are required to prove the following elements in a claim for fraud in the inducement: (1) a representation; (2) material to the transaction at hand; (3) made falsely with knowledge of its falsity or recklessness as to its truth; (4) with intent of misleading another into relying on it; (5) justifiable reliance on the misrepresentation; and (6) resulting injury. Broederdorf v. Bachelor, 129 F.Supp.3d 182, 198 (E.D. Pa. 2015). Successfully pled, such contracts are voidable. Giannone v. Ayne Institute, 290 F.Supp.2d 553, 564 (E.D. Pa. 2003).

However, in Pennsylvania, such claims are subject to the parole evidence rule. If the court finds that the agreement at issue constitutes “a writing that represents the ‘entire contract between the parties,’ then the court may not consider ‘preliminary negotiations, conversations[,] verbal agreements,’ or any other extrinsic evidence of representations made by the parties prior to the execution of the written contract.” Batoff v. Charbonneau, 130 F.Supp.3d 957, 970 (E.D. Pa. 2015). And so, the parole evidence rule will bar the admission of statements necessary to establish a fraud in the inducement claim, resulting in its dismissal. For instance, in Batoff, the court dismissed the fraud in the inducement claim because the settlement agreement clearly represented the entire contract between the parties through its integration clause. In a similar case, the District Court dismissed a fraud in the inducement claim because the contract expressly stated, “This Agreement contains the whole agreement between Seller and Buyer, and there are no other terms,” which triggered the parole evidence rule. Charlton v. Gallo, 2010 WL 653155, at *4 (E.D. Pa. 2010).

For more information, call our business lawyers in Philadelphia at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

Website Operator Denied Copyright Protection

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A recent Central District of California decision shed some light on the application of the Digital Millennium Copyright Act’s (DMCA) Section 512(c) safe harbor provision. Under the safe harbor, online service providers that meet certain requirements may avoid liability for damages that may arise from infringing content uploaded by service users. In Greg Young Publishing, Inc. (GYPI) v. Zazzle, Inc. (Zazzle), the court addressed the question of whether Section 512(c) safe harbor may protect an online service provider that commercially exploited infringing content.

Zazzle operates a website on which users may upload images. Other users may have the images printed on various merchandise including coffee mugs, posters, and t-shirts. The users typically do not own the images and have not obtained authorization from the owners to upload them. Zazzle does not ensure that images are not infringing, rather the company manufactures the product once it is ordered, delivers it to the purchaser, and pays a royalty to the user who uploaded the image.

Zazzle displayed 41 paintings owned by GYPI and created consumer products for sale from the paintings. GYPI sued Zazzle for copyright infringement and Zazzle asserted Section 512(c) safe harbor as an affirmative defense. GYPI argued that Zazzle could not rely upon safe harbor because: (1) Zazzle is not a service provider, (2) Zazzle knew that their services infringed upon GYPI’s copyright, and (3) Zazzle had the right and ability to control the infringing activity, choosing to exploit the paintings for financial benefit.

Case Argument

First, GYPI argued that Zazzle is not a service provider because it does not accept and display user-submitted images, but also manufactures and sells products based on those images. The court rejected this argument, finding that Zazzle was unquestionably a provider of online services and therefore a service provider within the definition of that term in Section 512(c) safe harbor.

Second, GYPI argued that Zazzle had specific knowledge of the infringing content, rendering Zazzle ineligible for safe harbor protection. The court held that a service provider only has such knowledge when the copyright holder submits a DMCA-compliant or a third party submits a sufficiently specific complaint. Therefore, GYPI’s complaints to Zazzle about infringing content and the fact that GYPI sent Zazzle a catalogue of images for them to check for infringement, were not enough to constitute specific knowledge.

Finally, the court held that Zazzle received a financial benefit from, and that it had the right and ability to control, the infringing activity. The court acknowledged that Zazzle had the ability to remove infringing content, terminate repeat infringers’ accounts, and engage in limited monitoring of the site. However, this does not amount to a right and ability to control, which only exists when a service provider plays a more active role in user content. This happens specifically when the service provider exerts substantial influence over activities such as selection, monitoring, and marketing of user content.

In this case, the court held that Zazzle did exert the substantial influence necessary to render it unable to be shielded by Section 512(c) safe harbor because Zazzle’s content management team approved user’s orders; the subsequent automated nature of the process is irrelevant. Therefore, Zazzle will be liable for copyright infringement damages resulting from the sale of products displaying the protected images.

Philadelphia Intellectual Property Lawyers at Sidkoff, Pincus & Green P.C. Represent Clients in Copyright Disputes

Philadelphia intellectual property lawyers at Sidkoff, Pincus & Green P.C. represent clients in copyright disputes throughout Pennsylvania and New Jersey, including Philadelphia and South Jersey. Contact us online or call us at 215-574-0600 to discuss your case.

Tortious Interference as applied by Pennsylvania Courts

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“One who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other for the pecuniary loss resulting to the other from the failure of the third person to perform the contract.” Adler, Barish, Daniels, Levin & Creskoff v. Epstein, 393 A.2d 1175 (Pa. 1978).

This duty of non-interference applies whether or not there is a contract with a third party See Restatement (Second) of Torts, § 766, Comment (b) (1979)( “there is a general duty not to interfere intentionally with another’s reasonable business expectancies of trade with third persons, whether or not they are secured by contract…). This duty also applies to contracts that are terminable at will. Restatement (Second) of Torts, § 766, Comment (g) (1979).  “Under Pennsylvania law, to succeed on a claim for tortious interference with existing or prospective business relationships, a party must show:

(1) The existence of a contractual or prospective contractual or economic relationship between the plaintiff and a third party

(2) Purposeful action by the defendant, specifically intended to harm an existing relationship or intended to prevent a prospective relation from occurring

(3) The absence of privilege or justification on the part of the defendant

(4) Legal damage to the plaintiff as a result of the defendant’s conduct and

(5) For prospective contracts, a reasonable likelihood that the relationship would have occurred but for the defendant’s interference.”

At Sidkoff, Pincus & Green P.C., our Pennsylvania and New Jersey attorneys handle many types of legal matters, including those involving tortious interference. To discuss your case with a Philadelphia business lawyer, call 215-574-0600 today or contact us online.

Philadelphia Business Lawyers: Court Rules on Copyright

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Recently, the U.S. Supreme Court issued a watershed decision in Star Athletica v. Varsity Brands, holding that the decorative features on cheerleading uniforms are protected by federal copyright law. The issue before the court was what was the appropriate test to determine whether a feature of a useful article, such as an article of clothing, is protected under the 1976 Copyright Act’s Section 101. The Court set out to resolve a widespread disagreement as to what testing standard is most appropriate.

Justice Clarence Thomas authored the opinion. He wrote that an artistic feature of a uniform’s design can be copyrighted if it can be perceived as a two or three-dimensional work of art that stands separate from the uniform itself. The analysis applies equally to all “useful articles.” In addition, the feature must qualify as a protectable pictorial, graphic, or sculptural work either on its own or in some other medium if imagined separately from the uniform.

Varsity Brands manufactures cheerleading uniforms and athletic apparel. Varsity has more than 200 copyright registrations for two-dimensional designs consisting of various patterns, chevrons, and shapes. Designers create concepts that consist of original combinations, positionings, and arrangements of elements and do not consider functionality or the ease of actually producing uniforms. Varsity sued Star Athletica, who also markets cheerleading uniforms, after they allegedly copied two-dimensional art designs that Varsity had copyrighted. The Court held that the uniforms at issue met the requirements set forth by the newly devised test.

Justice Stephen G. Breyer dissented, finding that Star Athletica’s designs looked like generic pictures of cheerleader uniforms. He compared the situation to a pair of old shoes in a Van Gogh painting—stating that it would not qualify as a shoe design copyright, though the painting itself would be copyrightable.

Justice Ruth Bader Ginsburg concurred with the majority’s judgment, but not its opinion. She said that designs are not designs of useful articles, but rather are themselves copyrightable graphic works reproduced on useful articles. She found that the designs were standalone works of sculptural art that were covered by Section 101 of the 1976 Copyright Act.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Handle All Types of Trademark Litigation

If you are seeking representation in any type of business, copyright, or trademark matter, the Philadelphia trademark litigation lawyers at Sidkoff, Pincus & Green P.C. are available to answer your questions. To schedule a consultation with us, call us at 215-574-0600 or contact us online today.

Philadelphia Wage Dispute Lawyers: Future of the Overtime Rule

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Last year, the Department of Labor issued a new ruling for overtime pay extending the maximum salary threshold a worker can earn and still be eligible for overtime to $47,500.  The new rule, which was set to take effect on December 1, 2016, would enable approximately 4 million more workers to become eligible for overtime pay.  However, in November of 2016, a federal court judge in Texas temporarily blocked the rule, holding that it does not comply with the Fair Labor Standards Act on the grounds that the Labor Department may not decide which workers qualify for overtime based only on their salary.  The Department of Justice under President Obama appealed this decision.

With the law temporarily blocked and a new administration in place, the future of the overtime rule is uncertain.  The federal court in Texas has given the DOJ until May 1, 2017 to file a brief stating its position.  Aside from the uncertainty of whether the DOJ pursues its appeal, another issue is whether the Department of Labor intends to simply repeal the new rule, or issue an alternative rule.  The current salary threshold below which workers qualify for overtime wages is just $23,660 per year.  Millions of workers will be impacted by the future of the overtime rule and their fates hang in the balance.

Philadelphia Wage Dispute Lawyers at Sidkoff, Pincus & Green P.C. Represent Employees in Overtime and Wage Disputes

If you have an employment concern or wage dispute issue, the Philadelphia employment lawyers at Sidkoff, Pincus & Green P.C. have the experience to help you achieve an optimal outcome. Call 215-574-0600 to schedule a consultation about your case or contact us online. Our offices are conveniently located in Philadelphia and we serve clients in Southeastern Pennsylvania and New Jersey.

Philadelphia Employment Lawyers: Philadelphia Passes Wage Equity Bill

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In an effort to close the wage gap between men and women, Philadelphia Mayor Jim Kenney recently signed a bill preventing employers from asking applicants about their salary history. The Wage Equity Bill makes Philadelphia the first major American city to ban employers from asking candidates what they were paid at previous jobs. Companies in violation of the new ordinance face fines of up to $2,000.

The bill, first introduced in September 2016, is designed to eliminate the income disparity between men and women. According to a 2015 United States Census Bureau report, women make 79 cents for every dollar that men make. This discrepancy exists regardless of experience, education, or industry. The Pew Research Center also reports that as of 2015, women earn 83% of men’s hourly wages.

The rationale behind the bill is that if women are paid less than what they deserve at beginning of their careers, and potential employers base their salary on previous jobs, they will never catch up to their male counterparts. Though similar legislation already exists in Massachusetts, Philadelphia is the first major city to ban salary inquiries. New York State and Pennsylvania are also considering passing wage equity bills.

The City Council passed the bill with a unanimous vote, but it is already experiencing some pushback from one of the city’s largest employers – Comcast. The media giant, with headquarters in Center City Philadelphia, has already vowed to challenge the ban in court on grounds that it violates employers’ free speech. The Greater Philadelphia Chamber of Commerce also opposes the bill, saying it gives the perception that the city is “anti-business,” and discourages new employers from setting up shop in Philadelphia.

Philadelphia Employment Lawyers at Sidkoff, Pincus & Green Represent Clients in Wage Disputes

The team of Philadelphia employment lawyers at Sidkoff, Pincus & Green understands the complexities of employment law matters. Our attorneys represent employees in all aspects of employment law, including wage disputes. Call our Center City Philadelphia offices today at 215-574-0600 or contact us online to schedule a consultation with one of our attorneys.

We serve clients throughout the Greater Philadelphia area including Delaware County, Montgomery County, Philadelphia County, and the towns of Bala Cynwyd, Merion Station, Wynnewood, Darby, Narberth, Upper Darby, Sharon Hill, Cheltenham, Clifton Heights, Folcroft, Lansdowne, Drexel Hill, Elkins Park, Havertown, Glenolden, Ardmore, Gladwyne, Wyncote, Norwood, Holmes and Haverford, as well as New Jersey.