Friday, August 30, 2013

Spectrum Health employees fired over Facebook picture

Story originally appeared on WWZM13.

GRAND RAPIDS (WZZM) -- Several employees at Spectrum Health have been terminated over a picture posted on Facebook.

A source tells WZZM 13 News that an off-duty employee was in the emergency room when he saw an attractive female. He took a picture of her back side and posted it on Facebook. His message read, "I like what I like." The woman was not identified and her face could not be seen.

Danielle Leek teaches social media at Grand Valley State University. She says people have to be careful about what they post, even if the person isn't named. "Even though that might seem irrelevant to us, it can still be identifying to other people, especially to audiences on social media."

The employee who posted the picture was fired and so was everyone that liked it.

On Thursday, Spectrum would only say that it "Took appropriate action."

Spectrum wouldn't provide WZZM 13 with a copy of its social media policies, but we found it online. There were several guidelines, including upholding Spectrum's standards. The policy says that any violations of these standards could result in disciplinary action up to, and including, termination. It goes on to say that it's unacceptable to use images that are offensive or in poor taste. Employees also have to comply with HIPAA regulations. That's the Health Insurance Portability and Accountability Act that protects patient information.

The Spectrum source tells WZZM that it was another employee who notified administrators about the posting.

Leek says it's a lesson for all; when it comes to social media, be careful what you say and always err on the side of caution.

Among those who were fired include a registrar, a physician'sassistant, and an emergency room doctor. Not all were direct employees of Spectrum; some worked for a company that provided employees to the hospital.

Thursday, August 29, 2013


Story originally appeared on Bloomberg News.

In 2010, Pete Warden, a software engineer living in Colorado, developed a software program to “crawl” publicly accessible Facebook pages and “scrape” (i.e., collect) information relating to Facebook’s members. Within hours of deploying his software, the application had visited approximately 500 million pages and collected information related to approximately 220 million Facebook users – including users’ names, location information, friends and interests. Using this dataset, which Mr. Warden offered to release in anonymized form for research purposes, he created a graphical analysis of the regional and relationship patterns among Facebook’s members. The cost of this exercise: about $100. The results: more than 500,000 visits to Mr. Warden’s website, national media coverage, and cease-and-desist warnings from Facebook, which perceived Mr. Warden’s collection of data from its webpages as a violation of its terms of use prohibiting automated access to the website without the company’s permission. Ultimately, in order to avoid a potential legal dispute, Mr. Warden abandoned his plan to release the information he collected, and agreed to delete all copies of the dataset.1Summing up his experience, he later quipped, “Big data? Cheap. Lawyers? Not so much.”2


The use of web crawlers, scrapers and others automated tools for gathering online content has long been a feature of Internet (to the extent “long” can be used to describe the history of the Internet). For example, searches engines use web crawling “bots” or “spiders” to continuously visit billions of webpages to create relevant and accurate search results, and the Internet Archive – a non-profit digital library that archives historical versions of publicly accessible webpages – has since 1996 used web crawling tools to create a historical record of the Internet comprising 10 quadrillion bytes of data. Others have used similar tools to offer services that compete with or complement the offerings of the scraped websites – including uses of these tools to aggregate news content, and to monitor and facilitate purchases of airlines and concert tickets (with or without the permission or involvement of the scraped website). As Mr. Warden’s experience suggests, the use of these tools pit the interests of website owners in protecting, controlling and profiting from the content they provide against the interests of others who seek to gather and use that content for other purposes (be they harmful, helpful or irrelevant to the website owner). Not surprisingly, the use of these tools has spurred litigation under a variety of theories, including copyright infringement, breach of contract (e.g., website terms of use), “hot news” misappropriation, trespass to chattels, and criminal statutes prohibiting unauthorized access to a computer system or website.

With the advent of Big Data – the increasingly widespread practice of using advanced data analytics to identify trends and patterns in extremely large datasets collected from a variety of sources – the potential applications for scraped data, and the benefits associated with analysis of that data, have increased exponentially. Whereas past cases involving unauthorized web crawling and scraping often involved simple copying and republication of website content in direct competition with the scraped website, the growing use of advanced data analytics is giving rise to instances where the connection between the data analytics service and the scraped website is attenuated and not directly competitive. Nevertheless, the online content of websites that may be scraped is among such businesses most valuable data, and great lengths are understandably taken to protect such content.

Given both the tremendous value and Big Data-driven demand for Internet-based information, and the relative ease by which such information can be compiled using automated data collection tools such as that deployed by Mr. Warden, it is likely that future cases relating to web crawling and scraping will focus on the legal issues raised by automated data gathering for analytics purposes – and what theories a website owner may exercise to protect any factual data so collected and what theories a data collector may use to justify such collection. Few courts, however, have directly addressed the legal issues raised by Big Data or the collection of data for related purposes, leaving uncertain the legal environment faced by website owners wishing to protect the data on their websites, and those who would gather such data for analytics purposes. Without taking sides – and while recognizing that the legal landscape relating to the Internet is constantly evolving, with previously challenged technologies such as search engines now recognized as nearly per se legitimate while others such as peer-to-peer networks have continually been subject to scrutiny – this article seeks to outline the legal issues such parties may face. In doing so, this article will consider the legal theories that have been applied in prior cases relating to the use of web crawling and scraping tools in other contexts, and will identify issues relating to whether claims under these theories are likely to succeed in connection with disputes relating to automated data collection for Big Data and analytics purposes.



The Copyright Act protects original expressions that are fixed in a tangible medium, including mediums such as computer memory or a web server.3 These protections extend not only to original expressions such as images contained on a website, but also the underlying code that enables the display of any content on the website – including facts displayed on a website that are not otherwise entitled to copyright protection. Accordingly, because web crawling and scraping tools generally index information on a targeted webpage regardless of whether the tool seeks to obtain copyrighted content or unprotected facts4, courts have recognized claims for copyright infringement in connection with the use of web crawling and scraping tools.5

Because some courts have recognized that such activities may infringe a website owner’s copyrights, the focus in such cases is generally on whether the web crawling or scraping at issue is a fair use of the copyrighted content. For example, in Kelly v. Arriba Soft Corp., the defendant search engine conceded that its display of low-resolution “thumbnail” copies of high-resolution photographs constituted reproduction of those photographs, but argued that such display was a transformative, fair use of the copied photographs. The Ninth Circuit agreed – holding that the search engine’s display of low-resolution photographs to facilitate the general public’s access to information on the Internet was highly transformative of, and did not provide a substitute for, the plaintiff’s high-resolution photographs whose purpose was primarily artistic.6 Notably, the fact that such use was for a commercial purpose did not bar the court’s finding that the search engine made a fair use of plaintiff’s copyrighted photograph.7 In contrast, in Associated Press v. Meltwater Holdings U.S., Inc., the court found that an online news aggregator that provided its subscribers with nearly 500-character excerpts of copyrighted articles scraped from the website’s of the Associate Press’s licensees did not engage in a fair use of those articles. The court distinguished the news aggregator’s services from those at issue in Kelly on the grounds that the news aggregator did not facilitate the general public’s access to information on the Internet, but instead only provided word-for-word excerpts of the copied articles to the aggregator’s paying customers without transforming that content in any way.8 The court further held that the aggregator’s use of that content to generate analytics relating to the online news sources it covered, while potentially transformative in and of itself, did not render the aggregator’s excerpting transformative insofar as the analytics and excerpting were separate and distinct services.9

While even incidental reproduction of copyrighted webpage material may give rise to copyright liability, courts have also recognized that such reproduction may constitute a fair use of the protected content. For example, inTicketmaster Corp. v., Inc., the defendant argued that the momentary copying of Ticketmaster’s webpages by its spiders for the purpose of extracting factual information concerning concert times, ticket prices, and venues that defendant then posted to its website constituted a fair use. The court agreed. In so finding, the court emphasized that the copying was momentary, the effect on the market value of the copyrighted material was “nil”, and that the “amount and substantiality” of the material used was negligible insofar as defendant did not reproduce the copyrighted material on its webpage. Further, the court observed that the central purpose of the Copyright Act – i.e., “to secure a fair return for an author’s creative labor and to stimulate artistic creativity for the general good” – would not be served by restricting defendant from momentarily copying Ticketmaster’s webpages for the purpose of obtaining non-protected, factual information.10

In addition to the fair use defense, courts have also considered whether a plaintiff’s copyright claims are subject to implied license or estoppel defenses based on its failure to deploy the “robots.txt” protocol to deter unwanted web crawling or scraping. The robots.txt protocol is industry-standard programming language that a website may deploy to instruct cooperating web crawlers generally, or certain web crawlers specifically, to voluntarily refrain from accessing all or part of the website.11 In Parker v. Yahoo, Inc., the court held that the plaintiff’s failure to deploy the protocol granted Yahoo an implied license to create cache copies of his website where plaintiff was aware that Yahoo – which has a policy of not creating cache copies of websites that deploy the protocol – would do so in the absence of the protocol.12 Conversely, in Meltwater, the court rejected the defendants’ implied license and estoppel defenses based on the Associated Press’s purported failure to require its licensees to deploy the protocol. The court distinguished Parker on several grounds, including that the defendants reserved the right to ignore the protocol if deployed. The court further emphasized that the defendants’ arguments, if accepted, would shift the burden of preventing infringement to the copyright owner, and threatened the “openness of the Internet” by forcing copyright owners to choose between deploying the protocol and deterring all web crawlers (including search engines which may help users locate the website), and refraining from doing so and losing the right to prevent unauthorized use of its protected content.13

With respect to future cases involving use of scraped content for analytics purposes, courts are likely to follow a similar analysis driven by the facts of the specific case. Issues regarding whether the copying is momentary, whether the information extracted is factual, the effect on the market value of the copyrighted material, and the amount and substantiality of the material used are likely to be key issues in these cases. Courts are further likely to focus on whether the object of the Copyright Act – “to secure a fair return for an author’s creative labor and to stimulate artistic creativity for the general good” – would be served by prohibiting the challenged conduct. Courts are also likely to consider, in the context of defenses to copyright claims, the specific circumstances relating to a website’s deployment of the robots.txt protocol, including whether the defendant has a practice or policy of complying with the protocol if deployed.


Most commercial websites contain terms of use that provide that access and/or use of the website is premised on the user’s agreement to such terms.14 A claim sometimes made in cases regarding web crawling or scraping is that the defendant violated the terms of use by crawling and scraping content. While these cases have explored somewhat novel uses of technology, they often turn on fundamental issues of contract15 – including whether the targeted website’s terms of use are enforceable as against the defendant, whether the conduct complained of violates those terms, and whether any such violation causes any compensable damages. These cases suggests that use of such tools to gather data may give rise to a claim for breach of contract, while also demonstrating the potential hurdles to prevailing on such claims. These issues are discussed in turn.


As is the general rule with any contract, a website’s terms of use will generally be deemed enforceable if mutually agreed to by the parties. In determining whether such mutual agreement exists, courts look to whether the terms of use constitute a “clickwrap” agreement – which typically require that a visitor indicate her agreement by clicking an “I accept” icon before accessing the website – or a “browsewrap” agreement – pursuant to which the user is provided with notice of the website’s terms of use, and informed that use of the website constitutes agreement to those terms.16 Clickwrap agreements, because they require a user to formally indicate his knowledge and awareness of the terms of use, are generally found enforceable.17Browsewrap agreements have also generally been found enforceable where the defendant has actual knowledge of the terms of use or constructive knowledge of such terms.18 Actual knowledge is sometimes demonstrated by evidence that a defendant was advised of its violations of the terms of use via a cease-and-desist letter from plaintiff.19 Constructive knowledge is sometimes found where a website’s terms of use are prominently or conspicuously displayed on the website, such as where a hyperlink to those terms is underlined and set forth in distinctively colored text.20

Regardless of whether a website’s terms of use are clickwrap or browsewrap, the defendant’s failure to read those terms is generally found irrelevant to the enforceability of its terms.21 One court disregarded arguments that awareness of a website’s terms of use could not be imputed to a party who accessed that website using a web crawling or scraping tool that is unable to detect, let alone agree, to such terms.22 Similarly, one court imputed knowledge of a website’s terms of use to a defendant who had repeatedly accessed that website using such tools.23 Nevertheless, these cases are, again, intensely factually driven, and courts have also declined to enforce terms of use where a plaintiff has failed to sufficiently establish that the defendant knew or should have known of those terms (e.g., because the terms are inconspicuous), even where the defendant repeatedly accessed a website using web crawling and scraping tools.24

Issues regarding enforceability of contract are likely to continue to be an issue addressed by courts in this area, with content providers citing clickwrap agreements and actual knowledge of terms, and those using crawling and scraping tools arguing a lack of mutual assent to such terms.


The terms of use for websites frequently include clauses prohibiting access or use of the website by web crawlers, scrapers or other robots, including for purposes of data collection. Courts have recognized causes of action for breaches of contract based on the use of web crawling or scraping tools in violation of such provisions.25

Also common are terms of use that limit visitors to personal and/or non-commercial use of a website. For example, in Southwest Airlines Co. v. BoardFirst, LLC, the plaintiff airline alleged that the defendant violated its terms of use restricting access to Southwest’s website for “personal, non-commercial purposes” by offering a commercial service that helped Southwest’s customers take advantage of the company’s “open” seating policy and check-in process to obtain priority seating in the front of the plane. The court granted Southwest’s motion for summary judgment on its breach of contract claim, finding that the defendant’s conduct directly contravened Southwest’s prohibition on commercial uses of Southwest’s website.26

Cases addressing the purported violations of these terms tend to hinge on the precise language of the contractual provisions at issue, and the scope of the agreement between the parties that can be ascertained from that language. Thus, for example, in Southwest, the court rejected defendant’s argument that Southwest’s terms of use were too ambiguous to be enforced against defendant where those terms specifically prohibited use of the website “for the purpose of checking [c]ustomers in online or attempting to obtain for them a boarding pass in any certain boarding group.” Defendant’s services, which helped Southwest’s customers obtain priority seating, fell “within the heart of this proscription.”27 In contrast, in TrueBeginnings, LLC v. Spark Network Servs., Inc., the court found that the defendant did not violate the terms of service of plaintiff’s dating website – which limited use of the “website and related services” to a visitor’s “sole, personal use” – by visiting the website to obtain evidence for use in a patent infringement action against plaintiff. In so holding, the court analyzed the entirety of plaintiff’s terms of use, including those prohibiting use of web crawlers or spiders to gather data from the website, to determine that they related to use of the website’s dating services. Defendant’s use of the website to gather evidence for use in a patent lawsuit did not involve unauthorized uses of the dating services, and thus did not breach plaintiff’s terms of use.28

Terms of use designed to prevent reproduction of website content also raise issues regarding whether such claims are preempted by copyright claims. Courts have generally declined to find claims for enforcement of such terms to be preempted by the Copyright Act, reasoning that terms of use restricting the manner by which a website can be accessed or used go beyond the protections provided under the Copyright Act. For example, in Internet Archive v. Shell, the Internet Archive sought dismissal on preemption grounds of the plaintiff’s claim for breach of contract relating to Internet Archive’s crawling and indexing of plaintiff’s website in violation of terms of use that prohibited any copying of plaintiff’s website for a “commercial or financial purpose.” The court rejected Internet Archive’s preemption argument, finding that Internet Archive’s alleged agreement to refrain from use of the material on plaintiff’s website “for commercial or financial purposes … lie[s] well beyond the protections [the website owner] receives through the Copyright Act”29 (which, as discussed, allows for limited use of copyrighted content, even for a commercial purpose, if sufficiently transformative or unlikely to provide a substitute for the copyrighted work). The court reached this conclusion despite the fact that the Internet Archive is a non-profit entity – apparently on the basis of disputed allegations that Internet Archive’s copying of the content at issue allowed it to “acquir[e] … grant awards, donations, … and the expectation of acquiring additional intellectual property.”30

These cases suggest that future contractual disputes relating to web crawling or scraping for analytics purposes based on terms of use violations will likely focus on the proscriptions on automated data collection that are set forth in those terms of use.


The cases discussed above establish that website terms of use may be enforced against any party who accesses or uses a website in violation of those terms, and that, if sufficiently clear and unambiguous, those terms may prohibit any automated data collection from the website. However, a breach of contract claim also requires a showing of damages. To date, few of the cases involving breaches of contract relating to website terms of use have been decided on the merits. As a result, the issue of damages in such cases has received scant attention in reported case law. Those cases that have addressed the damages issue acknowledge the challenges and showing required to establish damages relating to violations of website terms of use.

For example, in Southwest Airlines, the court granted summary judgment to Southwest on its breach of contract claim based on its finding that Southwest sufficiently demonstrated that defendant’s services allowed Southwest customers to avoid the online check-in process, thereby decreasing web traffic to Southwest’s website. By decreasing that traffic, the defendant deprived Southwest of valuable selling and advertising opportunities, and also interfered with Southwest’s brand-building opportunities. Nonetheless, while Southwest established that it suffered some form of harm from the defendant’s breach of the terms of use, the court declined to award any damages – finding that calculation of damages was “impossible.” Though it declined to award any damages, the court granted a permanent injunction in connection with Southwest’ breach of contract claim.31

Indeed, because damages relating to violations of website terms of use may in some circumstances be difficult if not impossible to quantify, some courts have looked to liquidated damages provisions as an estimate of such damages. In Myspace, Inc. v. The, MySpace alleged that the defendant used an automated script to send spam e-mails from various MySpace accounts established by defendant in violation of MySpace’s terms of service providing that “MySpace is for … personal use … only and may not be used in connection with any commercial endeavors,” and which prohibited “any automated use of the system” or “transmission of … spam[].” MySpace’s terms also provided that users agreed to pay $50 for each item of spam sent in violation of MySpace term’s as “a[n] … estimation of such harm.” The court granted summary judgment on MySpace’s motion for summary judgment on its breach of contract claim, and found that – because MySpace’s actual damages from defendant’s conduct was impracticable or extremely difficult to determine – liquidated damages of $50 per spam message was a reasonable measure of damages.32

The issue of damages is, of course, an intensely factual determination, but it should be noted that this issue is likely to play a key role in these cases in the future – with content owners trying to either quantify actual damages or establish the applicability of liquidated damages provisions, and those who use crawling and scraping tools arguing the impossibility of establishing such amounts. Based on the difficulty in establishing damages, content owners may also seek injunctive relief in such cases.


Courts have also considered whether web crawling or scraping in breach of a website’s terms of service constitutes a violation of the Computer Fraud and Abuse Act (“CFAA”), which prohibits access to a computer, website, server or database either “without authorization” or in way that “exceeds authorized access” of the computer.33 While these terms have been variously defined, in essence, a person who accesses a computer “without authorization” does so without any permission at all, while a person “exceeds authorized access” where she “has permission to access the computer, but accesses information on the computer that the person is not entitled to access.”34 So long as a computer is publicly accessible, and not protected by password or other security measures, courts have declined to find any access of the website to be “without authorization.”35Conversely, a CFAA claim may lie where a computer or website is protected from unauthorized access, either by technical measures or even explicit warnings in a cease-and-desist letter.36

Courts are split, however, as to whether access of a website in a manner prohibited by its terms of use “exceeds authorized access” of the website in violation of the CFAA. For example, in an early case on this topic, a federal court in Virginia granted summary judgment on AOL’s CFAA claim based on the defendant’s admission that it harvested email addresses from AOL’s website in violation of its terms of use.37 Several years later, in 2003, the Court of Appeals for the First Circuit seemingly agreed with this theory by stating in dicta that “[a] lack of authorization could be established by an explicit statement on a website restricting access.”38

These decisions, however, have been greeted with skepticism by later courts and commentators.39 For example, in 2012, the Ninth Circuit, held in an en banc decision captioned U.S. v. Nosal that “the phrase ‘exceeds authorized access’ in the CFAA does not extend to violations of use restrictions,” but rather concerns “hacking—the circumvention of technological access barriers.”40 In reaching this decision, the Ninth Circuit emphasized the legislative history of the CFAA, noting that it was enacted in 1984 “primarily to address the growing problem of computer hacking.”41 The court further discussed the absurd results that would follow from criminalizing violations of website terms of use – e.g., on dating websites that purport to require honest self-descriptions, describing “yourself as ‘tall, dark and handsome,’ when you’re actually short and homely, will earn you a handsome orange jumpsuit” – and moreover, would allow for ever-shifting grounds for criminal liability as website terms of use are subject to change at any time, in any way, at the website owner’s complete discretion. Thus, “behavior that wasn’t criminal yesterday can become criminal today without an act of Congress, and without any notice whatsoever.”42

While the current trend appears to be to reject broad theories that allow terms of use violations to be used as a basis to establish criminal liability under the CFAA (or analogous state statutes), this is a still an unresolved area in most circuits – and one that will likely further be argued in crawling and scraping cases.


In addition to asserting copyright claims based on incidental reproduction of copyrighted webpage material, numerous plaintiffs have asserted claims for hot news misappropriation relating to scraping of purely factual information. “Hot news” misappropriation – once a claim that existed under the federal common law, but which now exists only under the laws of five states43 – provides a cause of action where a party reproduces factual, time-sensitive information that was gathered at the effort and expense of another party, and thereby deprives the gathering party of the commercial value of that information. Thus, for example, in Int’l News Serv. v. Associated Press, the Supreme Court in 1918 recognized a claim under federal common law for hot news misappropriation in connection with a wire service’s re-publication of breaking news gathered by the Associated Press, which thereby deprived the Associated Press of the news value of its reporting.44 The court justified its decision as protecting the “quasi-property” rights of profit seeking entrepreneurs who gathered time-sensitive information from those who would free-ride on the efforts of those entrepreneurs.45

Since hot news misappropriation generally concerns factual information rather than content that is subject to copyright protection, it is generally found not to be preempted by the Copyright Act.46 However, courts have recognized hot news misappropriation as an extremely narrow claim that survives preemption only in very narrow circumstances that mirror the circumstances in Int’l News Serv. For example, in Barclays Capital Inc. v., Inc., financial services firms alleged claims for copyright infringement and hot news misappropriation against a news aggregation website that reported on investment recommendations issued by the firms to their clients who paid to receive those recommendations before they became generally known to the investment community. On appeal from a denial of the defendant’s motion to dismiss the hot news claim, the court found that plaintiff’s claim was preempted by the Copyright Act. In so finding, the court emphasized that the plaintiffs’ claim lacked an “indispensable element of an INS ‘hot news’ claim,” i.e., “free-riding by a defendant on a plaintiff’s product, enabling the defendant to produce a directly competitive product for less money because it has lower costs.”47 Rather, though the defendant’s conduct potentially threatened plaintiffs’ businesses, the defendant was actually breaking news generated by the plaintiffs’ recommendations (and attributing the recommendations to plaintiffs), rather than merely repackaging news that had been reported by plaintiffs.48

The Barclays case suggests the difficulty of stating a valid hot news misappropriation claim against a party engaged in automated data collection for purposes of data analytics. In many factual scenarios, scraping of information would not appear to qualify as “free-riding” within the meaning of INS so long as the scraper did not attempt to pass the information off as his own without attribution to the content provider. Indeed, many factual circumstances would appear similar to the recommendations at issue in Barclays, where the information is only valuable because it was attributed to the source. The fact that data analytics often involves the use of information to create entirely new insights (including in combination with information from other sources) suggests further difficulties in establishing the requisite “free-riding,” which under Barclays involves demonstrating that the underlying information was used to produce a directly competitive product.


Courts have also recognized, in certain narrow circumstances, that unauthorized use of web crawling or scraping tools can give rise to a trespass to chattels claim, which “lies where an intentional interference with the possession of personal property has proximately cause injury.”49 For example, in eBay, Inc. v. Bidder’s Edge, Inc., eBay brought a trespass to chattels claim against the defendant, an online auction aggregation service that scraped auction information from eBay’s website using spiders that accessed the website approximately 100,000 times per day in violation of eBay’s terms of service and in defiance of cease-and-desist demands from eBay. eBay also moved to preliminary enjoin the defendant from accessing its website. In granting that motion, and finding that eBay was likely to prevail on its trespass to chattels claim, the court relied on the fact that defendant’s spiders consumed a portion – albeit very small – of eBay’s server and server capacity, and thereby “deprived eBay of the ability to use that portion of its personal property for its own purposes.”50

In contrast, where tangible interference is absent, or is no more than theoretical or de minimus, courts have declined to recognize claims for trespass to chattel relating to the use of web crawling or scraping tools. For example, in, the court granted summary judgment dismissing Ticketmaster’s trespass to chattel because Ticketmaster failed to present any evidence that its competitor’s scraping of its website either caused physical harm to Ticketmaster’s servers or otherwise impeded Ticketmaster’s use or utility of its servers. In so holding, the court criticized the decision of the eBay court, and required a showing of “some tangible interference with the use or operation of the computer being invaded by the spider.” 51 Later courts have generally agreed with the holding in

To the extent that presents the prevailing statement of law, and evidence of a tangible interference with a computer or server is necessary to state a claim for trespass to chattels based on unauthorized web crawling or scraping, courts are likely in the future to focus on evidence of tangible interference with systems.53


As indicated above, the legal landscape relating to web crawling and scraping is still taking shape—particularly insofar as few courts have considered claims based on crawling or scraping for analytics purposes. Further, because most cases involving the use of web crawling and scraping tools in other contexts have been highly fact specific, it is difficult to identify bright line rules for determining when use of such tools for analytics purposes is likely to give rise to liability. Nonetheless, the cases discussed above suggest a number of issues that should be considered both by website owners and by those who seek to perform analytics using data gathered from web-based sources.

These issues include (1) the language of the terms of use or service, and whether such terms address access to the website through automated means, use of any data collected through such means, and use of the website for anything other than the user’s personal, non-commercial use; (2) the enforceability of the terms of use, for example, whether they are presented to the user through a clickwrap mechanism that requires the user to indicate his or her assent to those terms as opposed to a browsewrap agreement, or on a terms of use page that can be reached through a conspicuous link on every other page on the website and which indicates that any use of the website is subject to the user’s agreement to those terms; (3) use of technological tools to deter unwanted crawling or scraping, including but not limited to the robots.txt protocols; (4) whether the website owner will license or authorize uses of content; (5) whether access to the website is protected such that a claim the CFAA or California’s Penal Section 502 may be alleged; and (6) the extent to which the website content is protected by copyrighted.

Ultimately, while the claims and theories that may be advanced in connection with the use of web crawling and scraping tools for analytics purposes have yet to be deeply explored by courts, this is likely a temporary state of affairs. Rather, given the increasing number and availability of tools for aggregation and analysis of content in the Big Data era, courts will ultimately be required to address these complicated issues.

Wednesday, August 28, 2013

Trump faces two-front legal fight over 'university'

Story originally appeared on USA Today.

New York attorney general's charges that Donald Trump and Trump University fleeced students hoping to become real estate investors echoes similar allegations in a California case. A Newark Auto Accident Lawyer was watching the story closely.

A newly filed lawsuit that accuses real estate developer Donald Trump of bilking students of his "Trump University" confronts the reality TV star with a potentially risky two-front legal battle over his name, reputation and integrity.

New York Attorney General Eric Schneiderman accused Trump of using an unlicensed university real estate program to scam would-be real estate investors who sought the mogul's secrets of success. The petition, filed Saturday, also charges Michael Sexton, the Trump venture's former president.

The case comes amid Trump's so far unsuccessful efforts to dismiss a California federal court lawsuit based on similar allegations filed on behalf of disillusioned former students.

Plaintiff lawyers are seeking class-action designation of the California case. Trump's effort to continue a defamation countersuit against the lead plaintiff was overturned by a federal appeals court in an April ruling his lawyers are now trying to appeal.

Schneiderman, whose petition contains references to the California case, said during a CNBC appearance Monday that Trump is "going to have to face justice. And he doesn't like doing that."

Trump quickly shot back. In a blitz of TV news show appearances, a newly launched website and numerous tweets, he accused the first-term Democrat of filing false allegations and being a "lightweight" who "sues a school w/ a 98% approval rating but doesn't go after billion $ fraudsters all over Wall St."

Trump also alleged Schneiderman sought campaign contributions from him during the probe. Schneiderman spokesman Damien LaVera said it's not unusual for investigation subjects to "make wild accusations" to "distract from the substance of the case." A Hackensack Auto Accident Lawyer agrees.

Seeking restitution for former students allegedly defrauded of more than $40 million, the New York petition charges:

  • Trump University LLC was formed in New York in 2004 and was told by state education officials the name was improper because the business wasn't chartered as a university. It operated as an "illegal educational institution" whose name wasn't changed to Trump Entrepreneur Initiative until May 2010.
  • Students were lured to free, 90-minute classes that "served as a sales pitch for a three-day seminar costing $1,495." Those seminars were "an upsell to increasingly costly 'Trump Elite' packages starting at around $10,000" and ending with a year-long mentorship for $35,000.
  • A widespread marketing campaign claimed students would be taught by real estate "experts" who were "handpicked" by Trump. Allegedly, none were, though Trump claimed otherwise Monday.

Trump University's day-to-day operations were directly managed by Trump's corporate headquarters firm, and both Trump and Sexton were "personally and knowingly involved with the operations of Trump University," the petition charged.

In sworn subpoenaed testimony, Sexton acknowledged that "(t)here wasn't anything sophisticated about" the three-day seminar.

The California case was filed in 2010 and listed Tarla Makaeff, who took a Trump University class two years earlier, as the lead plaintiff. Like the New York petition, the California lawsuit said the university "is anything but" a program to help students gain financial independence through real estate investing, as allegedly promised.

Instead, "Defendant Trump University is more like an infomercial, selling non-accredited products, such as sales workshops, luring customers in with the name and reputation of its founder and Chairman, billionaire land mogul Donald J. Trump," the California lawsuit charged.

A hearing to amend the allegations is scheduled for Friday. Plaintiff attorney Jason Forge declined to comment. Trump attorney David Schneider argued in an Aug. 16 court filing that the proposed amendment represented a "wholesale metamorphosis" of the case from fraud-based claims against the business to "quasi-criminal claims" against Trump. He called the claims "completely false."

Trump's new website also included a link to a video in which Makaeff called a Trump University presentation "great" and said "all the speakers were really good." Trump lawyers have used the statements in a bid to undermine her credibility and continue the defamation case.

But in blocking that case from proceeding, the U.S. Court of Appeals for the Ninth Circuit wrote: "As the recent Ponzi-scheme scandals involving onetime financial luminaries like Bernard Madoff and Allen Stanford demonstrate, victims of con artists often sing the praises of their victimizers until the moment they realize they have been fleeced."

Lawyer: Sandusky's son, 'Victim 2' settle with PSU

Story originally appeared on the Detroit News.

Harrisburg, Pa. — Seven men, including Jerry Sandusky’s adopted son and a Sandusky victim key to longtime coach Joe Paterno’s firing, have finalized deals with Penn State over claims of abuse by the school’s former assistant football coach, their lawyer says.

Settlements were reached by Matt Sandusky, as well as the young man known as “Victim 2” in court records and three other victims who testified last summer against Jerry Sandusky at his criminal trial, Philadelphia attorney Matt Casey said Friday. A Boston Car Accident Lawyer was unavailable for comment.

Matt Sandusky had been expected to be a defense witness for his father until the trial, when he told investigators that he also had been abused by Jerry Sandusky. He has since petitioned for a legal name change for himself and his family.

“Victim 2” has said he was the boy then-graduate assistant Mike McQueary testified he saw being attacked by Jerry Sandusky in a team shower in 2001. McQueary notified Paterno and school officials at the time, but police were never called, an omission that eventually led to Paterno’s firing.

Casey did not disclose the terms of the settlements but said they took shape some time ago and were completed a week ago, followed by passing paperwork back and forth to memorialize them.

“To say they’re relieved, I think, is a fair statement,” Casey said. “But it’s also accurate to say that while we’ve closed this chapter, there’s a whole lot of this that’s necessarily inadequate.”

The university has not announced the deals.

Nearly a week ago, a lawyer disclosed the first settlement among the 31 lawsuits filed against the school amid the Sandusky scandal. Earlier this week, a lawyer brought in by Penn State to facilitate negotiations said he expected 24 more cases to settle in the near future.

A Penn State spokesman said Friday only that settlement talks continued to progress. He declined to comment further.

The school has spent nearly $50 million on the Sandusky scandal, not including any payments to the victims and accusers. A Detroit Car Accident Lawyer was unable to confirm this information.

Other lawyers involved in settlement talks said Friday they were still working with the university but none had a signed, final agreement.

Sandusky spent three decades at Penn State under Paterno. A 1998 complaint about Sandusky showering with a boy — one of those who testified against him — was investigated by university police but no charges were filed. McQueary witnessed a different incident involving “Victim 2” in the team shower in 2001.

The response of university leaders, including Paterno, was heavily criticized in a report commissioned by the school last year. The NCAA penalized the school for its response to complaints about Sandusky and imposed a $60 million fine, a four-year bowl ban, a loss of scholarships and the elimination of 112 Paterno-era wins.

Paterno died in January 2012. Criminal charges for an alleged cover-up are pending against three others: former president Graham Spanier, retired vice president Gary Schultz and retired athletic director Tim Curley. All three deny the allegations.

Sandusky, 69, was convicted of 45 counts of child sexual abuse and is serving a decades-long prison sentence. He maintains he is innocent, and an appeals hearing is scheduled for next month in Dallas, Pa.

Union demands messages, serves subpoenas in effort to stop Detroit bankruptcy

Story originally appeared on the Detroit News.

Detroit— The city’s largest union demanded a comprehensive list of text messages, emails and documents Friday that could strengthen its bid to kick Detroit out of bankruptcy court. A Minneapolis Bankruptcy Lawyer was very interested in the request.

The American Federation of State, County & Municipal Employees filed a request in federal bankruptcy court for copies of emails, text messages and other communication sent among Gov. Rick Snyder, Emergency Manager Kevyn Orr and others.

Separately, the union disclosed Friday it served subpoenas on 26 people, including Snyder, Orr, Mayor Dave Bing, state Treasurer Andy Dillon, members of the governor’s staff and several bankruptcy consultants. The subpoenas compel the people to sit for depositions next month in connection with the bankruptcy case.

The documents and depositions could shed light on Snyder’s green-lighting the biggest municipal bankruptcy in U.S. history and bolster the union’s objection to Detroit getting bankruptcy relief if lawyers find evidence the city negotiated in bad faith with creditors, said Douglas Bernstein, a Bloomfield Hills attorney and expert on municipal bankruptcy.

“My suspicion is this is the way they are going to support their challenge,” Bernstein said.

Sara Wurfel, spokeswoman for Gov. Rick Snyder, on Friday defended Orr’s actions, saying Orr clearly outlined why bankruptcy was the only option for the city.

“We remain fully confident in the constitutionality and legality of all related actions,” Wurfel said.

The request came two days after U.S. Bankruptcy Judge Steven Rhodes questioned why the city was being so secretive about giving creditors and the public access to financial projections while Detroit is trying to prove it is insolvent. The union’s request was the most far-reaching among several filed by creditors Friday, including the city’s pension funds.

In response, the city said Friday it would no longer require creditors to sign non-disclosure agreements before accessing a digital data room containing the city’s financial information and other documents.

Creditors also will no longer have to sign non-disclosure agreements to review materials compiled by Milliman, the consulting firm performing actuarial analysis of the city’s pension programs.

"Kevyn Orr's letter to the Governor, and the Governor's response authorizing the bankruptcy, clearly outlined why bankruptcy was the only viable option left to resolve the fiscal crisis in the City of Detroit. We remain fully confident in the constitutionality and legality of all related actions."

The union wants all communication involving Orr’s appointment, a list of consultants hired to work on the bankruptcy and, among other things, a tally of city debts, including any owed by the Mike Ilitch-owned Olympia Entertainment. The company leases Joe Louis Arena, home of the Detroit Red Wings.

Bernstein expects the city will turn over some documents and object to certain requests. Any dispute could be resolved by mediators. A Chicago Car Accident Lawyer was unsure of the possible outcome.

The request Friday came four days after the union objected to Detroit’s eligibility for relief from its creditors. The union claimed Detroit is not insolvent and said Orr failed to negotiate in good faith with creditors before filing bankruptcy July 18.

The union wants the documents by Sept. 13 and to depose a city official Sept. 16. “I haven’t seen it, but it is one of those things that we are going to respond to in court,” Orr spokesman Bill Nowling said Friday.

The city filed its own request Friday, demanding documents from the actuary firm, Gabriel, Roeder, Smith & Co., that calculated the financial health of the city’s pension funds. Orr has said he wants to pare an estimated $3.5 billion in pension debt — a figure the city’s pension funds dispute as overinflated by at least $2 billion.

Spokespeople for the union and Snyder could not be reached for comment Friday.

Rhodes is giving the city until Sept. 6 to respond to objections in advance of an Oct. 23 trial on Detroit’s eligibility for bankruptcy that could last weeks as the judge sorts through objections from numerous creditors with competing agendas.

The union’s top priority is obtaining any proposals made by Orr regarding retiree benefits and pensions, according to the court filing.

The union also wants communications regarding the city’s eligibility to file Chapter 9 bankruptcy and details about Orr requesting permission to file from the governor.

The request includes any communication about Snyder granting permission and the union wants to know how early the governor considered approving a bankruptcy request. AFSCME wants text messages and emails sent among Snyder and staffers, including Chief of Staff Dennis Muchmore and Transformation Manager Richard Baird.

Other requests include:
  • All correspondence regarding the city’s eligibility to file for Chapter 9 protection.
  • Communications involving the value of city assets.
  • A list of city debts, including any owed by Olympia Entertainment or debts involving the lease of Joe Louis Arena and Cobo Center.
  • A list of each tax abatement or reduction offered to city taxpayers since 2011.
  • A list of city assets worth $50,000 or more, including items owned by the Detroit Institute of Arts. The city has hired Christie’s Appraisals, the New York-based international auction house, to appraise part of the DIA collection, which could be sold to satisfy debts.

Thursday, August 22, 2013

Woman suing Patriots for $10 million in damages over her husband’s 2010 death at stadium

Story originally appeared on Yahoo! News.

According to the Springfield (Mass.) Republican, the wife of a deceased Patriots fan is suing the team and NFL for at least $10 million in damages for the death of her husband during a 2010 game at Gillette Stadium.

Kimberly Chartier, a native of nearby Chicopee, Mass., is filing a civil suit against the team, alleging that the franchise and three other parties are responsible for the death of Jeffrey Chartier, 40, in the season opener that year. Gillette Stadium operator NPS and security service provider TeamOps also are named in the suit, according to the Republican's report. A Boca Raton Truck Accident Lawyer is accustom to accident cases.

Reports surfaced at the time that an altercation with a security guard during the Week 1 game against the Bengals immediately preceded Chartier’s death.

The suit indicates that Chartier was invited to go on the field before the game with his then-6-year-old son, Tedy, by two team officials. Reportedly, Tedy did not have a field pass and was denied access by a security guard identified as Arthur Sherman.

Following a 15-minute confrontation, Chartier returned to his seat where he is believed to have suffered a heart attack. The suit says that stress related to the argument with the security guard was the cause of the heart attack. A Charleston Car Accident Lawyer believes this is plausible.

The filing reads:

“Jeff Chartier died as a result of cardiac arrest that was precipitated by agitation and stress caused by an interaction with a security guard at Gillette Stadium who inappropriately and unnecessarily confronted Jeff Chartier and his son Tedy in a harsh, unprofessional, confrontational, disrespectful and antagonistic manner.” 

Chartier had been a season-ticket holder since the start of the 2000 season and named his son after former Patriots linebacker Tedy Bruschi.

The Patriots held a moment of silence of Chartier’s death prior to their next home game, two weeks later against the Bills. The team also donated a Tom Brady jersey for auction to raise money for his family, and owner Robert Kraft, Hall of Fame linebacker Andre Tippett and media spokesman Stacey James attended Chartier’s funeral, according to the report.

Maryland guard Dez Wells suing Xavier for expulsion

Story originally appeared on Yahoo! News.

University of Maryland guard Dez Wells filed a federal lawsuit Tuesday seeking damages against his former school, Xavier University, and its president, Father Michael Graham, over what he asserts was his wrongful expulsion last summer. Many lawyers including a Miami Car Accident Lawyer were fascinated by the case.

The suit alleges Xavier failed to follow its own policies when deciding to expel him following a 2012 allegation of sexual assault. The local prosecutor investigated the case and not only declined to charge Wells but declared in media accounts the allegation "didn't reach anything close to a standard of proof" and "should never have gotten to the point where someone's reputation is ruined." A grand jury also declined to indict the basketball star.

The lawsuit, filed at the United States District Court in Cincinnati, seeks monetary compensation as well as an overturning of the expulsion to clear Wells' name of what he calls a false accusation.

Wells, according to his attorney, has no interest in returning to Xavier, but has suffered "severe emotional distress" for having been essentially deemed a rapist – and heckled as such while playing road games. This, Wells said, is his best chance to set the record straight with the public and hold Xavier accountable.

"From the moment this nightmare began, I've been trying to get everyone to understand that I am innocent," Wells said in a statement through attorney Peter Ginsberg. "The supposed leaders at Xavier destroyed my reputation. It needs to make this right. Xavier needs to set the record straight."

 Xavier released a statement from Father Graham to Yahoo! Sports on Tuesday evening.

 "We have read the complaint and the allegations of wrongdoing are unfounded and cannot be supported," Graham said. "The process used by the Xavier University Conduct Board (UCB) applies to all of our students and is the standard used in American universities. After members of the Conduct Board reached their decision, the matter was considered and upheld in an appeal. The sanction for the offense was expulsion.

"The University has never revealed the specific charge against Dez Wells other than to say he was found responsible for a violation of the Student Code of Conduct. The university will vigorously defend the process and the decision."
After being expelled in the summer of 2012, Wells transferred to Maryland. The NCAA, in a rare move, ruled on appeal to grant him immediate eligibility rather than make him sit out a season like most transfers. He started 37 of 38 games and led the Terrapins in scoring with 13.1 points a game. He will be a focal point of the team again this season.

It is highly unusual, if not unprecedented, for an active, high-profile player to file a federal suit against another NCAA member institution. Adding to the uniqueness of the case, Wells' most powerful advocate is Hamilton, Ohio prosecutor Joseph Deters, who has forcefully and publicly, defended Wells and blasted Xavier's handling of the incident as "fundamentally unfair."A Virginia Beach Car Accident Lawyer agrees that the case is unique.

"If I thought [Wells] did this, he'd be in prison," Deters says in the lawsuit. "I wouldn't pull any punches."

Wells, a native of Raleigh, N.C., was named to the Atlantic 10 All-Rookie team following the 2011-12 season.

Last summer, on the night of June 7, 2012, he engaged in what he asserts was consensual sex with an Xavier student.

The two, among others, had been hanging out that night in their dorm playing a game of group "truth or dare," according to the lawsuit. "A number of the dares were sexual in nature," the suit alleges, including lap dances and stripping. The two kissed multiple times during the evening before going to the woman's room, where, according to the suit, she asked if Wells had a condom before they had sex.

The next day she reported to the campus police she had been sexually assaulted. She later met with Cincinnati police but declined to press charges. Undeterred, Deters, the local prospector assigned two staff members to look into the incident.
Deters, according to the suit, quickly "developed serious concerns about [the] truthfulness of the allegations." He left messages with Father Graham, the Xavier president, in an effort to convey those concerns but the messages were not returned, the suit alleges. He later discussed with another Xavier official and instructed his concerns be passed on to Graham.

Before the prosecutor finished his work and a grand jury cleared Wells, however, the player was called before Xavier's University Conduct Board, where the lawsuit alleges a group of administrators, faculty and students "impermissibly placed the burden on Wells to prove his innocence."

The suit runs through a litany of what it alleges are breaches of the UCB rules and procedures. It also hammers the group for either dismissing or ignoring the concerns of the prosecutor's office, failing to wait for "vital laboratory tests" and allowing for just a brief, two-day appeal process. It also alleged UCB members "had received woefully inadequate training" to make a ruling on these kinds of cases.

The UCB expelled Wells on Aug. 3, 2012. On Aug. 28, a grand jury declined to indict him and Deters took to the local media to stand up for the player and urge Xavier to reconsider.

Ginsberg alleges Xavier acted unfairly to Wells because it was under pressure from an investigation by the U.S. Education Department's Office of Civil Rights for mishandling previous allegations brought against male students and treating them too leniently.

"It was much more anxious to appease the Department of Education then satisfy its own obligations to fairness for its own students," Ginsberg told Yahoo! Sports Tuesday night. "Unfortunately, Dez was the sacrificial lamb."
Ginsberg cites Father Graham ignoring the prosecutor's urge for caution and reconsideration as proof.

"It should have been clear to university officials on their own that the accusations were fictitious," Ginsberg said. "Add to that a trained professional with no skin in the game was imploring Father Graham to hold off and act responsibly and Father Graham simply ignored Mr. Deters admonitions."

The suit seeks a jury trial in Ohio and seeks unspecified damages. Outside the specific wording of the lawsuit, Wells stated he is also seeking an apology from Father Graham.

Thursday, August 15, 2013

Florida Pharmacists Win $597 Million Blowing Whistle on Scheme

Story originally appeared on Bloomberg.

T. Mark Jones learned about the costs and benefits of health-care delivery when he treated AIDS patients in Key West, Florida, in the late 1980s. The pharmacy he co-founded -- unusual at the time -- provided a humane last step for gay men who didn’t want to spend their final weeks confined to a hospital.

Jones, a registered nurse, went into homes to dispense infusion-therapy drugs and teach patients to care for themselves.

“I was worn out,” he says. “But I loved it.”

His dream job began to unravel in 1991, when a national health-care chain came to Key West to open an AIDS clinic. It secured the support of local doctors by offering them padded insurance reimbursements, Jones says, Bloomberg Markets magazine will report in its September issue.

Referrals to Jones’s pharmacy, Ven-A-Care of the Florida Keys Inc., dried up. By the late 1990s, Jones had hit bottom. Broke and bereft, he borrowed money from friends and maxed out credit cards. In 1999, he moved his wife and two children into his parents’ home in Key West.

“I just got to the point where we couldn’t survive anymore,” he says.

Jones, now 57, turned his misfortune into a mission ignited by the company that nearly destroyed him. National Medical Care Inc., then a unit of W.R. Grace & Co., planned to prescribe medications for patients based on how much profit they would generate, Jones says.

Overbilling Medicare

He and his two partners decided to investigate exactly how NMC was making money. They found it was overbilling Medicare, cheating U.S. taxpayers. This practice, they later discovered, was widespread.

Big Pharma was routinely reporting inflated drug prices, leading Medicare and Medicaid to overpay doctors and pharmacies by billions of dollars. Jones and his partners dedicated their lives to exposing that hard-to-detect scheme.

Ven-A-Care, operating from a quiet street in Key West, has filed whistle-blower lawsuits against dozens of pharmaceutical companies since 1995 -- many later joined by the U.S. and states -- that have recovered more than $3 billion for the U.S. government.

In those settlements, Ven-A-Care secured awards totaling $597.6 million for suing on behalf of taxpayers, making it the most successful whistle-blower in U.S. history.

Saved Billions

No industry has felt the sting of whistle-blowing more than health care. Since 1988, whistle-blowers have helped the U.S. government recover $24.2 billion, and 75 percent of that involved medical treatment, according to the Department of Justice. The pace is accelerating. Since 2009, 91 percent of the $10.6 billion recovered has come in health-care cases.

Ven-A-Care stopped a scheme that was costing taxpayers billions of dollars a year, says Suzanne Durrell, a former U.S. prosecutor who worked on the pharmacy’s first case.

“They figured out these pricing scams were going on that affected virtually every drug manufacturer in the United States,” Durrell says. “Because they were a pharmacy, they could easily get a lot of inside information on what the industry was doing and charging.”

As a result of Ven-A-Care’s actions, at least 24 pharmaceutical companies settled civil lawsuits and an NMC unit pleaded guilty to U.S. criminal charges. Largely in response to Ven-A-Care’s evidence, Congress passed the Medicare Modernization Act of 2003, says Charles Clapton, a former counsel to the House Committee on Energy and Commerce.

The Scheme

The Congressional Budget Office estimated that the law saves taxpayers $15.7 billion per decade.

The scheme Ven-A-Care revealed worked like this:

Drugmakers sold medicines to pharmacies, hospitals and doctors at one price and then falsely reported higher amounts to independent publishers of pricing data. Medicare and Medicaid relied on the figures pharmaceutical companies reported to those firms to set reimbursement rates.

For example, Abbott Laboratories sold its antibiotic Vancomycin 1 GM FTV to customers for $4 a dose, according to a joint Justice Department and Ven-A-Care lawsuit. Abbott reported the cost to pricing publishers as $72.48 -- 18 times the actual amount, the lawsuit says.

Abbott, based in Abbott Park, Illinois, denied liability and settled that case, which involved dozens of drugs. It paid $126.5 million to the U.S. government in 2010.

Inflated Reimbursements

Though the scheme benefited the pharmacies and doctors that purchased the medicines, Ven-A-Care figured out that drugmakers made billions beyond that. In court papers, Ven-A-Care referred to the inflated reimbursements as kickbacks from pharmaceutical companies to its customers.

The drugmakers were encouraging physicians to prescribe more drugs and pharmacies to buy more, according to Ven-A-Care’s lawsuits. That allowed drug companies to increase sales and expand market share.

The difference between the price drug companies charged pharmacies and physicians and the price it reported to set Medicare and Medicaid reimbursements was called “the spread.” Drugmakers used the spread as a marketing pitch to pharmacies and doctors, Ven-A-Care showed.

Jones says it took him a long time to understand what was happening. The strategy became clearer when a drug representative pitched her company’s version of intravenous immune globulin, which cost more than a rival’s.

Internal E-Mails

“The rep said, ‘Well, my product may be more expensive on the purchase end, but you get a higher reimbursement,’” Jones says. Data publishers were using inflated prices reported by drugmakers to set what’s known as an average wholesale price, or AWP, which was the basis for Medicare reimbursements.

Internal pharmaceutical-company e-mails obtained by the Justice Department, working with Ven-A-Care, show the importance of the AWP. In one case, a Bayer AG executive wrote in an e-mail that the company should raise its reported price for a hemophilia drug to keep pace with Baxter Healthcare Corp., which was selling a similar medicine.

Baxter falsely reported prices for 13 drugs, including five by as much as 10 times the actual cost, according to a 1999 lawsuit filed by Ven-A-Care.

“If Baxter has increased their AWP, then we must do the same,” wrote the Bayer executive, who wasn’t identified. “It is a very simple process to increase our AWP and can be done overnight.”

Lawsuits Settled

Bayer and Baxter settled lawsuits filed by Ven-A-Care that accused the drugmakers of falsifying prices. Bayer denied wrongdoing in settling for $14 million in 2001. Bayer spokeswoman Lauren Trocano declined to comment. Baxter settled two civil cases, denying wrongdoing in 2006 and 2011, for a total of $38.2 million.

“We settled to avoid costly and protracted litigation,” spokeswoman Deborah Spak says. Abbott spokesman Scott Stoffel says his firm complies with all laws and settled to end the uncertainty of litigation.

Ven-A-Care didn’t sue pharmacies, hospitals or doctors over drug pricing because it didn’t have as much information as it did for Big Pharma, says Ven-A-Care’s lead attorney, Jim Breen.

Jones says he never expected his career as a nurse would extend much beyond caring for patients. Darkly tanned with close-cropped brown hair and a quick laugh, Jones says he’s proud to be a conch, as lifelong Key West residents are known.

Cherry Smash

Revelers begin to crowd bars to see bands in town for a songwriters’ convention in May, as Jones and his partners tell their story in their new offices on the first floor of a converted bus depot on Duval Street.

As a child, Jones says, he bought Cherry Smash sodas at Cobo Pharmacy on the island outpost known for its artists, fishermen, key lime pie and tolerant attitudes. After earning a nursing degree from the University of Florida in Gainesville, Jones co-founded Ven-A-Care with his friend Luis Cobo.

Cobo filled prescriptions, and Jones administered AIDS drugs intravenously at patients’ homes. Jones and Cobo, a pharmacist who ran his father’s store, teamed with Cobo’s brother-in-law, Zach Bentley, who managed Ven-A-Care. By 1991, they were taking in $1 million annually.

All of that changed when W.R. Grace’s NMC, which ran dialysis centers, came to the island. NMC managers offered Ven-A-Care a deal that they said would make Jones, Cobo and Bentley millionaires if they joined NMC in a new AIDS clinic, Jones says.

Profitable Prescriptions

NMC proposed that doctors prescribe and share profitable insurance reimbursements for drugs, the Ven-A-Care owners say. The partners say they declined because they believed it was wrong for physicians to choose drugs based on profit margins rather than medical reasons.

NMC proceeded without Ven-A-Care, and Key West doctors who had made referrals to Ven-A-Care took their business to NMC instead. Ven-A-Care lost almost all of its income, Cobo says.

“I was very upset,” Jones says. “I felt like everything I had worked for, someone was trying to snatch, and for the wrong reasons. It took away something that I loved.”

The Ven-A-Care partners decided to take a closer look at their competitor. They probed how NMC billed at its largest business -- running dialysis centers around the U.S. Jones and Bentley hired former Federal Bureau of Investigation agents to learn whether NMC was overbilling Medicare.

Jones called NMC centers, saying he was a nurse, and asked about their drug costs.

Defrauded Medicare

In 1994, Ven-A-Care sued NMC in federal court in Miami under the False Claims Act. Passed during the Civil War and amended in 1986, the law allows citizens to sue on behalf of the government and share in recoveries. The lawsuit against NMC said the company had defrauded Medicare through overbilling for a type of nutritional therapy for dialysis patients.

The case was under seal, and NMC didn’t publicly respond for six years while the Justice Department investigated.

As the case progressed behind closed doors, the Ven-A-Care partners widened their probe. They began looking at how some of the largest pharmaceutical companies were using excessive reimbursements as kickbacks to pharmacies and doctors to increase sales.

The scheme revolved around the spread between what drugmakers charged providers and how much they reported to the data companies. Drug salespeople distributed computer software with spread calculators, says John Lockwood, a doctor who joined Ven-A-Care as a partner in 1998.

Expanding Probe

Lockwood, 59, says he was offended that many doctors were making thousands of dollars per patient from inflated reimbursements.

Ven-A-Care investigated the pricing spread for HIV and cancer medicines and then expanded to other drugs, eventually looking at tens of thousands of pharmaceuticals. The pharmacy compiled prices from flyers, catalogs and faxes. Jones and Bentley called the Florida Medicaid office to ask about reimbursements for specific drugs.

“You’d tell them what pharmacy you are, and they’d tell you what the reimbursement was,” Jones says. “Every day, I’d sit down and do a list of drugs. They only allowed you five an hour. Then we’d hang up and call back.”

In late 1999, Ven-A-Care got a boost from the company that had nearly buried it. NMC, then owned by Fresenius Medical Care AG, agreed to settle Ven-A-Care’s lawsuit. The Justice Department joined Ven-A-Care’s complaint in January 2000.

Criminal Charges

At the same time, the U.S. criminally charged three NMC units with conspiracy, including one for violating Medicare’s anti-kickback regulations. One of those units was charged with overbilling Medicare for the fraud that Ven-A-Care identified.

The NMC units pleaded guilty to the conspiracy charges in 2000, and NMC paid $486 million to the U.S. In the civil case, NMC denied wrongdoing. Ven-A-Care got $40 million as its cut of the civil settlement.

“It miraculously settled, so I got back on my feet,” Jones says. “I got my life back, to a degree.”

The settlement gave Jones the strength and money to continue. Cobo closed the family pharmacy, and Lockwood quit practicing medicine to work full-time on litigation. The firm sued more drugmakers in federal courts and in state courts in Texas, California and Florida.

The Ven-A-Care settlements began piling up after 2007, when Bristol-Myers Squibb Co. agreed to pay $515 million. Mylan Inc. and Par Pharmaceuticals Cos. also settled. All three denied wrongdoing. Bristol-Myers, Fresenius, Grace, Mylan and Par declined to comment.

Unusually Adept

Ven-A-Care was unusually adept at smoking out a hidden ploy by Big Pharma, says Durrell, the former prosecutor. There are likely still far more undetected Medicare frauds by companies, she says. The U.S. spends $2.8 trillion annually on health care, or 17.8 percent of the nation’s gross domestic product, according to the World Health Organization.

More than half of those medical expenses are paid by Medicare and Medicaid.

Ven-A-Care’s $597.6 million in settlement awards have stoked the debate about whether whistle-blower payouts should be capped. Michael Loucks, a former acting U.S. attorney in Boston, says awards should be limited to $2 million per case.

“The purpose of the statute is to incentivize people to blow the whistle, not to make whistle-blowers rich,” Loucks says.

Breen bristles at such arguments. He says he and Ven-A-Care repeatedly took risks and spent tens of millions of dollars on a national legal team to investigate and litigate cases for the government. While the Justice Department joined some cases, the company secured settlements for the U.S. on its own in others. Breen assembled dozens of lawyers and expert witnesses throughout the country, Jones says.

‘About Perfectly’

“It was really good, strategic prosecution,” Jones says. “Jim ran that just about perfectly.”

Bentley, a Key West resident for 35 years, retired in 2004 and oversees finances at a church. The remaining partners say they made modest lifestyle changes despite their wealth. Lockwood spends time with grandchildren and travels to ski or play golf. Cobo visits his three daughters and his grandchildren, and has invested with Jones in real estate.

Jones is the globe-trotter, planning trips to Greece, Italy and Spain. Although he says he regrets losing his nursing job when NMC took over the Key West market, he’s proud of the way Ven-A-Care protected taxpayers.

“I really believed in what we were doing,” he says.

Judge: White woman cannot sue Paula Deen for racial discrimination

Story originally appeared on the L.A. Times.

Lisa Jackson, the woman suing maligned Southern cook Paula Deen for racial discrimination and sexual harassment, has no standing as a victim of race, according to the federal judge overseeing her suit.

Jackson is white and was not directly discriminated or professionally harmed by her relations with black employees. Therefore, the former employee can't claim to be a victim of racial discrimination targeting African American workers, U.S. District Judge William T. Moore Jr. wrote in his ruling.

Moore threw out Jackson’s discrimination complaint Monday but kept intact her sexual harassment claim. "At best, plaintiff is an accidental victim of the alleged racial discrimination," Moore wrote. "Her difficulties do not fall within the zone of interests sought to be protected by Title VII."

Jackson’s civil suit, based on the years she worked as manager at Uncle Bubba's Seafood and Oyster House, a restaurant owned by Deen and her brother,  brought down the silver-haired, sassy Food Network star in June and cost her several endorsement deals.

Specifically, it was Deen’s admitted use of the N word and seemingly insensitive fondness for racial stereotypes and slave history that caused an empire to crumble at lightning speed.

"We are pleased with the court’s ruling today that Lisa Jackson's claims of race discrimination have been dismissed," a representative of Deen told People magazine in a statement. "As Ms. Deen has stated before, she is confident that those who truly know how she lives her life know that she believes in equal opportunity, kindness and fairness for everyone."

Deen’s testimony in the civil suit was leaked in June, causing an immediate swirl of bad publicity and a frenzy on social media, where she was both defended and castigated. All of that was compounded by some of her own mistakes, including not showing up for a promised "Today"  appearance and then clumsily posting a rambling video apology.

Thursday, August 8, 2013

Should Lance pay for doping lies in his autobiographies?

Story originally appeared on USA Today.

Lance Armstrong once wrote a best-selling book entitled, 'It's Not About the Bike,' but now some readers say it was about the doping, and they want their money back

SACRAMENTO, Calif. -- Thirteen years before he finally confessed to doping, Lance Armstrong published a book that remains one of the most popular sports autobiographies ever written.

Entitled It's Not About the Bike, the book told the story of Lance's legend – how he overcame cancer to become a cycling Superman, always clean and never cheating with the use of performance-enhancing drugs.

It was based on lies – or at least big parts of it were.

Now a federal judge will decide just how much that matters. Should readers of his books get refunds after discovering they've been duped?

Or does the First Amendment protect Armstrong's right to lie in his memoirs?

U.S. District Judge Morrison England will consider the matter at a hearing here Thursday – part of a potential class-action fraud lawsuit against Armstrong and his book publishers. England could throw out the case, based on the cyclist's freedom-of-speech argument. Or the judge can let the case proceed, which Armstrong's lawyers say would be unprecedented. Such a decision might encourage similar claims and lead to a larger debate about the free-speech rights of those who sell falsehoods disguised as truth.

"Courts have unanimously held that publishers… owe no duty to publish accurate information or otherwise verify the truth of the statements of their authors," the attorneys said in court filings. "No American court has ever sustained a fraud action against a publisher for false or inaccurate statements within the pages of a book, and no plaintiff has successfully pleaded a fraud claim against an author based on ... the contents of an autobiography."

The readers who filed the suit say it's more complicated than that – the truth should mean something in the marketing of nonfiction books.

They originally filed their case in January, a week after Armstrong confessed to doping in a televised interview with Oprah Winfrey. Seeking refunds and other costs on behalf of California readers, they claim they were defrauded by false advertising and his lies about doping in five of his books, including It's Not About the Bike, published in 2000, and another autobiography, Every Second Counts, published in 2003.

One of the plaintiffs, Gloria Lauria, is a fellow cancer survivor.

"Lauria would not have purchased either book had she known Armstrong doped his way to 'victories,'" the suit states.

Staunch denials

Armstrong's books include lengthy false passages proclaiming he'd never doped.

"I would never take a substance like EPO or human growth hormone and jeopardize my health after what I'd been through (with cancer)," he wrote in Every Second Counts. He said his performances were the result of "hard work."

Earlier this year, Armstrong apologized to his books' co-author, Washington Post columnist Sally Jenkins, for misleading her.

The question is whether he owes something more to the books' readers.

The answer depends on more than whether Armstrong lied. Last year, the U.S. Supreme Court ruled that the First Amendment protected a person's right to tell lies, even striking down a law – the Stolen Valor Act – that had made it illegal for people to falsely claim military honors.

In another 2012 decision, a federal judge dismissed a fraud suit filed by readers who accused author Greg Mortenson of lying in his best-selling book Three Cups of Tea. Similar to the Armstrong saga, the readers claimed Mortenson fabricated parts of his books to build himself up as a false hero, making money for himself and his charity. But that suit relied on allegations of lies, not admitted lies, and also accused Mortenson of racketeering.

The judge ruled, "Plaintiffs are not entitled to rely on general allegations of purported lies within the books' content. At a minimum, plaintiffs must show that they relied on some particular statement by the defendants made outside the text of the books," such as during a marketing campaign.

Random House, a defendant in the suit as publisher of Every Second Counts, faced similar claims in 2006 involving a book called A Million Little Pieces. In that case, author James Frey admitted fabricating portions of the popular memoir. Readers filed suit, and nine months later the case settled – without a court ruling – when Frey and the publisher agreed to provide refunds to readers if they showed proof of purchase.

But the defendants admitted no wrongdoing, with Frey's attorney even telling the New York Times that "the desire to move on became a powerful incentive to resolve what are otherwise very weak cases."

Chilling effect?

A big issue in the Armstrong case is whether his books and books promotion can be considered commercial speech or false advertising, which enjoy less protection under the First Amendment. Armstrong's attorneys say the books are not commercial speech and have asked England to throw out the case, saying his lies about doping are protected speech. They say the readers failed to identify any false statements that induced them to buy the books and that they merely experienced anger and frustration because of Armstrong's lies, not economic damage.

"With the exception of denying (drug) use, the two books are wholly truthful accounts covering 30-plus years of Armstrong's life," the defense attorneys argue.

In response, the readers claim that Armstrong employed a sophisticated book marketing campaign that built up a false wholesome image for economic gain and book sales. Therefore, they argue he violated California law and engaged in commercial speech that is not protected.

"If I sell you a mango drink and claim that it's made of pure fruit, and then I find out it's not what you said it was, that's certainly punishable (by law)," said Eugene Volokh, a UCLA law professor and First Amendment expert.

Yet if inaccuracies in books are subject to legal liability, will a publisher ever dare publish again for fear of being sued by readers? Isn't it understood that many authors might be fibbing in their memoirs?

"No new allegation can change the fact that Every Second Counts truly is a `'biography,' whether Armstrong lied in it or not," Random House attorneys state.

Erwin Chemerinsky, a First Amendment expert at the University of California Irvine, said it is difficult to argue a book is commercial speech. If that were allowed, "then every book or magazine or film becomes commercial speech," he said, which could chill free expression.