Archive for August, 2009

Another Reminder About Using the Internet

Wednesday, August 19th, 2009

I’ve been busily involved in a trial the past few days, so I’m a couple of days late in posting on an article that appeared in the Toronto Star on Saturday about an unfortunate employee in England who decided to take a few swipes at her boss through her facebook page.  The unfortunate part, for the employee at least, was that she had agreed to have her boss as one of her friends on Facebook.  Not surprisingly, he happened to see the comments, he responded and essentially fired her over the Internet.

This case is another example of the burdens of using sites such as Facebook – or use of the Internet generally – that accompany the many benefits that come with it.  In particular, social engineering sites such as Facebook can be either disadvantageous or advantageous.  I’ll give a recent example from one of my files.  I have a client who was suing someone who came from a foreign country.  The defendant, in essence, said to my client “go ahead and sue me, I’m headed back to [the foreign country], so good luck in tracking me down there to get paid.”  And, with that, the defendant appeared to go away and it became difficult to find the defendant.  Except for one little snag for the defendant (or benefit for my client) – the defendant’s teenage child had a Facebook page and anyone in the Toronto area was permitted to view the full page.  My office was able to access the page (like anyone else in Toronto) and could see that the page was recently updated and it showed that the child was still in Toronto and, as such, we were able to track down the defendant.  I’m sure the defendant and the defendant’s spouse went to great pains to cover their tracks.  As it turned out, a quick look on Facebook got around all of their work to hide themselves.

I work with several computer experts – usually in fraud cases – and it never ceases to amaze me the amount of information that they can obtain from a computer’s hard drive or from information over the Internet.  All of it goes to say, however, that the informality that is part of the Internet’s charm can also lead to problems for the unwary – just ask the English ex-employee.  Something to think about.


Be Careful How You Ship Goods!

Sunday, August 9th, 2009

There are a couple of legislative provisions that have clearly come to the consciousness of either carriers of goods or else paralegals who are acting for those carriers. I am starting to see numerous examples (and they are almost all carbon copies of the others) in lawsuits against small businesses.

OK, here’s the typical example. A small business in Toronto needs to get supplies from a supplier in, say, Kingston. The supplier (in this case, known as the “consignor”) agrees to ship the supplies from Kington to the small business (in this case known as the “consignee”) by means of transport delivery – usually through a tractor-trailer delivery. Now here comes the twist. Since most people don’t know the trucking delivery companies, they ship the goods through someone who is known as a “load broker”. So, let’s follow the bouncing ball. The small business says “send me a pallet or skid of widgets as soon as possible.” The supplier goes “fantastic, a sale!” and then arranges for the load broker to send the goods to the small business. The load broker then sub-contracts the actual delivery work to the carrier who goes to the supplier’s warehouse, picks up the goods and delivers them to the small business. The supplier pays the the load broker and all is good – OH, except for the fact that the load broker then has financial difficulties of some sort and does not pay the carrier. The carrier then sues the load broker, the supplier AND the small business. The small business turns around and says “hey, my contract was only with the supplier. Whomever they chose the actually deliver the goods, that’s not my problem – that’s a matter for the carrier to take up with the load broker because I didn’t have any contract with the carrier.” Right? Wrong!

The carriers and their companies are now suing on the basis of Section 190.0.1 of the Ontario Highway Traffic Act, Section 7 of the Ontario Mercantile Law Amendment Act and Section 2 of the federal Bills of Lading Act. From what I have seen recently, the paralegals are simply quoting all three acts whether they apply or not.

As a starting point, Section 190.0.1 of the Ontario Highway Traffic Act will not apply to either the shipper or the receiver of the goods. This section applies to provide that, in the above example, the load broker holds the money received from either the consignor or the consignee in trust for the carrier. To the extent that any carrier starts to say to you that you owe them money because of the provisions of the Highway Traffic Act, the answer is simple: take a long walk off a short pier.

The answer, though, is not as simple for the provisions of the Mercantile Law Amendment Act and the Bills of Lading Act. These are basically the same provision – one being provincial (to cover transportation of goods within the province) and one being federal (to cover transportation of goods from one province to another). The provision in both statutes basically provides that even though the receiving party did not contract directly with the carrier, the law will make it as if the receiving party did contract with the carrier. Thus, if the load broker in our example does not pay the carrier (or even if the shipper fails to pay the load broker) then the receiving party (the consignee or the small business in our example) can be sued for the unpaid shipping bill of the carrier.

An exception exists, though, for situations where the goods are delivered but the receiving party refuses to accept them and title to the goods does not pass. So, using our example, suppose the small business has the truck pull up and it inspects the widgets and they are either the wrong type or they are faulty and the small business refuses to accept delivery and tells the carrier to take the goods back to the shipper. In that instance, if the carrier is not paid, then it will not be able to sue the receiving party / consignee.

To say the least, this situation can really stink for the small business because it could pay the supplier the amount of the contract, which would include an amount for shipping and then get sued by the carrier to, in effect, have to pay for the shipping again. So what can you do? I would suggest two options. The first, and more preferable, would be to arrange for the shipping yourself and to ensure that the carrier is paid directly. From a “political” perspective, though, this can be problematic. The shipper may refuse to agree since it may have some exclusive contract requiring all deliveries to be done through its shipper or load broker. Similarly, if you deal directly with a load broker, it will not likely want you to know exactly how much the shipper is getting paid because then you would know how much of a “mark up” the load broker is charging you. So, if you are getting problems with respect to the first option, go to the second option – Plan B, so to speak. And that is to agree to hold back a certain amount or percentage of the purchase price to ensure that there is no claim for shipping. So, if the total contract price is $100, agree with the shipper to hold back $20 (or however much you feel is appropriate in the circumstances) to ensure that the carriers are paid. Once you get confirmation from the supplier and the carrier that the carrier has been paid in full, then you pay the amount held back.

Are either of these options convenient? Are either of these options conducive to good relations with the supplier? No. But which would you rather have: (a) blind trust that the carrier won’t come after you to pay for the shipping a second time; or (b) a plan to ensure that you won’t have to pay double for shipping?

As always, something to think about.


The New Supreme Court of the United Kingdom

Saturday, August 1st, 2009

When I was a kid, I was always baffled when I watched a movie about knights in shining armour and often heard at least once during the movie the line “The King is Dead, Long Live the King!” Of course, it makes sense if you think of it as “The [Old] King is Dead, Long Live the [New] King”, but it still seems a funny way of expressing the situation.

I’m reminded of this saying as I received my last e-mail update from the United Kingdom’s House of Lords. As of this past Thursday, the Law Lords stopped doing business as part of the House of Lords. Rather, as part of reforms brought into place in 2005, the judicial functions of the House of Lords will give way to a new Supreme Court of the United Kingdom which will start to sit as the new final court of appeal in the U.K. as of October 1.

From a practical perspective, nothing will change. But every lawyer has had to read at some point in time or another multiple decisions of the House of Lords. The basic principles on which contract, real estate, corporate and pretty much all types of law are based in North American and other common law countries were first stated by the English House of Lords.

I guess in this case the cry would be “The Court is Dead, Long Live the Court”.


Illegal Copies of Music or Software

Saturday, August 1st, 2009

The New York Times online has reported that on Friday a student in Boston was ordered to pay a total of $675,000 to the recording industry for the downloading and distribution of 30 songs. On average, that works out to $22,500 per song. I’m sure many will see this and immediately think about how harsh this is and that it isn’t fair. I am certainly sympathetic to the student’s situation, but I can also see the problem with illegal downloading.

The second thing that may cross your mind is “yes, well, that is the U.S. They have huge jury awards so this isn’t too different – play big, pay big.” But I wanted to take this opportunity to remind (warn?) you that this isn’t just a situation that could happen in the United States.

Until 1997, in Canada if someone was sued for copyright infringement (such as through downloading and sharing of songs or computer programs), the owners of the copyright had to prove the amount of their losses. In 1997 the Copyright Act was amended to create what are known as “statutory damages”. Now, if the owner of the copyright wants to sue an infringer, the owner has a choice – it can either prove its damages or it can elect to seek statutory damages. Statutory damages are provided for in Section 38.1 of the legislation and they permit a court to award a minimum of $500 in damages and a maximum of $20,000 for each infringement if the infringer knew what he/she/it was doing.

OK, so that applies to situations like college students exchanging copies of the latest Black Eyed Peas song but it’s not a concern for your small business, right? Wrong. Two examples come to mind – what if your employee is doing it on his computer at work and either you know about it and don’t do anything to stop it or you are involved in doing it yourself. Similarly, what if you have several computers that do not all have properly licensed software. A common occurrence is for a company to say “we’re just starting up so we don’t have a lot of money, so we’ll buy one copy of Microsoft Office 2007 and put it on all of the computers … but we’ll purchase full copies when we start making money.” While that is an explanation for breach of copyright, it’s neither an excuse nor a valid defence. Organizations such as the Business Software Alliance and the Canadian Alliance Against Software Theft exist to stop copyright infringement and to sue infringers. How do I know? Because I used to be a lawyer who sued infringers for BSA and CAAST at a former firm. How do they find out? Disgruntled former employees or IT contractors or anyone who has some knowledge of your business and its computers.

It might be a good idea to conduct a software and music audit to ensure that nobody at your business could leave you facing hundreds of thousands of dollars in damages just like the college kid in Boston now has to pay. Otherwise, “Boom Boom Pow” might mean more than a Black Eyed Peas song.


The 25 Greatest Legal TV Shows (?)

Saturday, August 1st, 2009

It’s a long weekend, so it’s time for a moment or two of pure fluff.

I received my latest issue of the ABA Journal from the American Bar Association. I had to smile because it sets out in order the “25 Greatest Legal TV Shows”. Why did I smile? Because of the 25, 24 are U.S. shows. The one that was not a U.S. show was Rumpole of the Bailey (Number 7), which is a British show – oh yeah, if you don’t count the fact that old Rumpole has been a longtime fixture on PBS so it’s almost as good as being a U.S. television show.

And yet you have shows such as Street Legal that ran for 7 years in Canada. Just as LA Law (Number 1) was groundbreaking, so too was Street Legal – but more so. Street Legal is the only show I’ve ever known to actually truly mix (for the first several years at least) not only civil litigation (including family law) and criminal law but also corporate law. Yes, I will agree, Douglas Brackman got a lot of “face time” on LA Law. But it never was in the sense of watching him do corporate work. Instead, it was such memorable episodes as Douglas having to go on a trip and getting stuck on the tarmac at Los Angeles Airport (LAX) and calling one of the firm’s associates to go get a court order to force the pilot to return to the terminal so that Douglas could get off the plane (because, hey, that happens all the time – I go running to court for that type of injunction for my clients regularly – as if). Or who can forget the time that Douglas was dating Vanna White from Wheel of Fortune – except that he was suffering from uncontrollable flatulence and some form of narcolepsy – which resulted in Douglas kissing Vanna and immediately passing out while passing gas. Funny, and bizarre, storylines to be sure. But we never really saw Douglas or any corporate lawyer going into a closing or actually doing any corporate work.

Then you can compare this to Street Legal where we have numerous instances of Chuck or Olivia dealing with fights among owners of corporations or problems with the Ontario Securities Commission. Again, I’ll admit that even Street Legal started to run out of actual corporate stories to tell. In fairness, the “excitement” that corporate lawyers get from a large merger and acquisition is still pretty dull to the outside observer. And, ultimately, Street Legal in the later years had Chuck doing criminal law and we saw Olivia going into court which she wouldn’t have done in her earlier years on the show.

Don’t get me wrong, I loved LA Law as a kid and never missed a show. I still have my LA Law sweatshirt and keychain. But it never went as far to show the legal profession as Street Legal did. Do I take issue with LA Law being given the Number 1 spot in the list? Probably not. But I just wish that the team of judges would have decided to look a little further afield to determine the candidates.

In case you want to see the whole list, you can find it online here.