Legal Issues Surrounding the Colorado Movie Massacre

The Aurora, Colorado movie theater massacre left 12 people dead and 58 wounded. The latest mass shooting in America brings up many legal issues on a national scale, including gun control, the insanity defense, liability and the death penalty. Lawyer2Lawyer co-hosts and attorneys, Bob Ambrogi and Craig Williams, analyze the legal arguments of this case with Professor Adam Winkler from UCLA School of Law and Professor Daniel Filler from the Earle Mack School of Law at Drexel University.


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Skaters Detail Abuse And Sabotage Allegations As Racing Season Begins

U.S. skaters are split over allegations of abuse leveled against two coaches and a claim that a coach ordered the sabotage of a Canadian athlete’s skates at an international competition last year. Twelve skaters are now part of a demand for arbitration that seeks the ouster of U.S. Speedskating’s short track head coach Jae Su Chun, and an assistant.

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California employers must “provide” meal breaks, but need not “ensure” employees take them

Here it is: Brinker v. Superior Court (California 04/12/2012):

Employee Hohnbaum brought a class action claiming violations of California Labor Code Sections 226.7 and 512, and California Industrial Welfare Commission Wage Order No. 5. The trial court granted a motion for class certification. The Court of Appeal reversed, concluding that the trial court erred in granting class certification without first considering the elements of Hohnbaum’s claims. The California Supreme Court held that trial courts usually are not required as a matter of law to resolve such threshold disputes over the elements of a claim, but went ahead and resolved some of them anyhow.

(1) Meal breaks.

The most significant issue deals with the employer’s duty to provide meal breaks. The court said,

“We conclude an employer’s obligation is to relieve its employee of all duty, with the employee thereafter at liberty to use the meal period for whatever purpose he or she desires, but the employer need not ensure that no work is done.” “The employer satisfies this obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so.” “The employer is not obligated to police meal breaks and ensure no work thereafter is performed.”

(2) Meal break timing.

The court concluded that,

“absent waiver, section 512 requires a first meal period no later than the end of an employee’s fifth hour of work, and a second meal period no later than the end of an employee’s 10th hour of work,” and that “Wage Order No. 5 does not impose additional timing requirements.”

(3) Rest breaks.

Wage Order No. 5 is interpreted as meaning that “an employee would receive no rest break time for shifts of two hours or less, 10 minutes for shifts lasting more than two hours up to six hours, 20 minutes for shifts lasting more than six hours up to 10 hours, and so on.” The court rejected the idea that employees are entitled to a rest period before any meal period.

(4) Class certification.

The court remanded the certification of the meal break subclass, upheld certification of a rest break subclass, and rejected certification of an off-the-clock subclass.

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New York Appellate Court Adopts Delaware Supreme Court’s Tooley Test For Determining Whether a Stockholder’s Claim Is Direct or Derivative

In Yudell v. Gilbert, 2012 WL 3166788 (N.Y. App. Div. 1st Dep’t Aug. 7, 2012), the Appellate Division of the New York Supreme Court, First Department, abandoned its prior ad hoc approach to determining whether a stockholder’s claim is “direct” (i.e., on behalf of the stockholder personally) or “derivative” (i.e., on behalf of the corporation as a whole), and held that the test applied by the Delaware Supreme Court in Tooley v. Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031 (Del. 2004), provides the appropriate analysis for resolving this inquiry. Under the Tooley test, the court must consider (i) who suffered the alleged harm (the corporation or the stockholder) and (ii) who would receive the benefit of any recovery or other remedy (the corporation or the stockholders individually). If the court determines that the corporation suffered the alleged harm and would receive the benefit of any remedy sought in the stockholder’s claim, then the claim must be brought derivatively, on behalf of the corporation, and is subject to the pre-suit demand requirement. Although the court’s decision appears to provide greater clarity to this often vexing issue under New York law, Delaware cases applying the test show that Tooley is far from the last word on the subject.

In Yudell, plaintiffs owned an interest in a joint venture partnership intended to construct and manage a shopping center. Dissatisfied with the perceived mismanagement of the shopping center, plaintiffs initiated a lawsuit against the manager of the shopping center and their partners in the joint venture purporting to allege both direct and derivative claims.

Defendants moved to dismiss the complaint for a failure to plead demand futility with the requisite specificity. In response, plaintiffs argued that although most of their claims were derivative, their third cause of action for breach of fiduciary duty was direct and thus not subject to the demand requirement. In this claim, plaintiffs alleged that the manager “failed to preserve [the entity’s] rights to collect unpaid tax obligations … and rent.”

The trial court disagreed, holding that all of plaintiffs’ causes of action were derivative in nature. For this reason, it dismissed the complaint after concluding that plaintiffs failed to plead either (i) that they made a pre-suit demand upon the board to pursue the claim on behalf of the entity or (ii) particularized facts indicating that pre-suit demand upon the board would have been futile. Plaintiffs appealed.

The Appellate Division affirmed. It began by recognizing that New York courts had not previously articulated a clear test for determining whether a claim is direct or derivative. Instead, New York jurisprudence approached the issue on a case-by-case basis depending upon the nature of the allegations. After discussing various circumstances where New York courts found that a stockholder’s claims are derivative (e.g., where the stockholder suffers solely through depreciation in the value of his or her stock, sues for mismanagement or alleges diversion of corporate assets or corporate opportunity), the Appellate Division adopted the Tooley test as consistent with New York law and applied it expressly to the facts of Yudell.

The Appellate Division observed that the manager’s alleged failure to collect the tax obligations and rent affected each of the joint venture members in proportion to their ownership interest in the entity. Moreover, in the event plaintiffs were successful with their lawsuit, the court recognized that any recovery would properly inure to the benefit of the corporation, not plaintiffs. Accordingly, the court held that plaintiffs’ claims were properly classified as derivative because the harms alleged in the complaint were suffered by the corporation.

By adopting the Delaware Supreme Court’s Tooley test, the court in Youdell appears to articulate a clearer test in New York for determining whether a claim is direct or derivative. Delaware cases applying Tooley, however, have recognized that applying this test can be difficult in practice. For example, in Feldman v. Cutaia, 951 A.2d 727 (Del. 2008), the Delaware Supreme Court rejected the stockholder plaintiffs’ argument that their claims against the company’s directors in connection with a cash-out merger were direct because the shareholders would have ultimately recovered the damages alleged. Instead, the Delaware Supreme Court concluded:

The mere fact that the alleged harm is ultimately suffered by, or the recovery would ultimately inure to the benefit of, the stockholders does not make a claim direct under Tooley. In order to state a direct claim, the plaintiff must have suffered some individualized harm not suffered by all of the stockholders at large.

Likewise, in In re NYMEX Shareholder Litigation, 2009 Del. Ch. LEXIS 176 (Del. Ch. Sept. 30, 2009), stockholders brought a class action alleging, inter alia, that the chairman of the New York Mercantile Exchange (“NYMEX”) breached his fiduciary duties by rejecting a proposed acquisition of NYMEX by the NYSE and favoring a merger with the Chicago Mercantile Exchange in order to secure a continued position with the exchange. Applying Tooley, the Delaware Court of Chancery explained, “the critical question is: ‘Looking at the body of the complaint and considering the nature of the wrong alleged and the relief requested, has the plaintiff demonstrated that he or she can prevail without showing an injury to the corporation.’”

In short, while Youdell certainly clarifies the law in New York, the question of whether a claim is direct or derivative is highly fact-intensive and can still be difficult to resolve.

For further information, please contact John Stigi* at (310) 228-3717 or Alejandro E. Moreno at (619) 338-6664.

* Admitted in New York and California.


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Absolute Novelty Worldwide – Not Always So Absolute

In this Intellectual Property webcast, Thomas McNulty and Sandra Szela Congdon of Lando & Anastasi, LLP discuss absolute novelty worldwide. Learn more about Lando & Anastasi, LLP at


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What is Parody?

Our Intellectual Property Podcast Series continues this week with Gordon Firemark, a Los Angeles-based entertainment attorney, discusssing parody. Learn more about Suffolk’s nationally ranked IP Concentration at


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The Presidential Race and the Judiciary

On November 6, 2012, people across the States will cast their vote for President. Whatever the outcome, it will influence our justice system. Lawyer2Lawyer hosts Bob Ambrogi and Craig Williams join Kenneth L. Manning, a professor of political science at the University of Massachusetts at Dartmouth and Professor Carl Tobias from the University of Richmond School of Law, to discuss everything from diversity in the courts, Supreme Court vacancies and obstruction and the impact on the justice system.


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Wisconsin public employee collective bargaining statute amendments declared unconstitutional

A teachers’ union sought declarative and injunctive relief against the governor, claiming that statutory amendments dealing with municipal employees’ collective bargaining rights and payroll deductions of dues and pension contributions were unconstitutional.

The trial court declared the statute unconstitutional. Madison Teachers v. Walker (Wisconsin Circuit Ct 09/14/2012)

(1) Certain portions of the statute violated the free speech clauses of the Wisconsin and US constitutions. Although there is no constitutional right to collective bargaining, the statute imposes burdens on the speech and associational rights of employees represented by unions which burdens are not imposed on other employees. They cannot negotiate wage increases greater than the cost of living, they cannot pay dues by payroll deductions solely because the dues go to labor organizations. A ban on fair share agreements means that union members bear the cost of bargaining for non-members who receive the befits of bargaining. Requiring unions to be recertified annually burdens members with the full costs of the election.

(2) The trial court applied strict scrutiny to the equal protection claims because of the infringement on speech rights. The statute creates two classes of employees (represented and non-represented), and the defendants “offer no defense of the statute that would survive strict scrutiny.”

(3) Certain portions of the statute violated the Wisconsin constitution’s home rule amendment, violated the constitutional bar on impairment of contracts, and deprived employees of property without due process.

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How Medical Apology Programs Harm Patients

Gabriel Teninbaum, Associate Professor of Legal Writing at Suffolk Law, discusses his May 2012 Boston Globe editorial and recent article on how medical apology programs harm patients. Read the article at


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Pa. Voters Battle Bureaucracy Ahead Of ID Law Ruling

Even as Pennsylvania’s controversial new voter ID law faces court challenges, nonprofits and other groups are busy helping the state’s voters, especially the poor and elderly, weave their way through a sometimes complicated bureaucratic process to get a photo ID before the election.

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