Court Punts on Karsky Appeal
drink giant Coca Cola is feeling the fallout from evidence that its
employees rigged market acceptance tests of Frozen Coke. A lawsuit
filed by a former Coke manager alleged that Coke marketing employees
improperly influenced marketing tests conducted in Burger King restaurants
three years ago by paying customers to purchase Value Meals featuring
Frozen Coke in test markets. The inflated sales data generated from
the tests prompted Burger King franchisees to purchase over $65 Million
in Frozen Coke equipment for their restaurants. Sales of Frozen Coke
in Burger King outlets have not met franchisees’ expectations.
Coke has admitted that its employees rigged the tests and have offered
over $20 million to Burger King and its franchisees to settle any
accusations have also prompted a criminal investigation from a Federal
Grand Jury in Atlanta. Coke acknowledged the criminal probe in July
and has pledged to cooperate with the government. Burger King has also
acknowledged receiving subpoenas from the Grand Jury.
Will Not Appeal Verdict Allowing Direct Wine Shipments
Texas Alcoholic Beverage Commission has decided against appealing a
decision of the 5th U.S. Circuit Court of Appeals allowing direct wine
shipments to Texas consumers. Earlier this year the Appeals Court upheld
a District Court decision that the Texas regulations prohibiting direct
shipments of out of state wines violated the interstate commerce clause
of U.S. Constitution. Wholesale distributors, who act as middlemen between
producers and consumers and take a cut of all Texas wine sales, had
persuaded the Commission to keep the restrictions in spite of efforts
from wine consumers to open up the market for direct to consumer shipments.
The Commission and wholesalers had maintained throughout the litigation
that loosening the rules would make it easier for children to order
alcohol. Under the court decision, adult consumers living in parts of
Texas that allow alcohol sales can purchase wine from out of state and
have it shipped by any of 400 carriers licensed to carry alcoholic beverages
in the state such as United Parcel Service. Shipping wine through the
U.S. Postal Service is still illegal.
Note: Many other states still have restrictions on direct to consumer
wine shipments. Zackler & Associates can provide you with a
current listing of wine shipping rules for all 50 states and the
District of Columbia.
Court Sides with Producers in Geographical Food Names Dispute
European Court of Justice has resolved a longtime dispute over the
use of geographic names on food products. The Court sided with two
Italian trade associations that sued over the use of the Parma ham
and Grana Padano cheese names on cheeses and hams that had been sliced,
grated and packaged outside of their Italian production regions.
The Court reasoned that the grating of cheese and the slicing of
ham constituted “important operations which may damage the quality and authenticity
and consequently the reputations of the geographical names” if
those requirements are not followed. As a result of the ruling, distributors
or retailers can no longer use geographic designations if they choose
to slice, shred or re-package these products outside of the production
California Organic Law Goes Into Effect
first significant changes in California’s 1990 pioneering organic
labeling law became effective on January 1, 2003. The changes conform
California law to the National Organic Program (“NOP”)
rules established by the USDA. The new law is intended to included
organic labeling of products not covered by the NOP, specifically cosmetics;
but the statutory language as well as the rules that have been promulgated
by the California Department of Agriculture include any product that
is labeled organic. This would include products such as clothing or
Law Allows Competitors and Employees to Sue Companies Hiring Illegal
Isn’t Limited to the Tony Soprano School of Management
separate decisions two United States Circuit Courts of Appeal have
held that competitors and employees of companies that have a business
practice of hiring undocumented workers can sue those companies under
the Racketeer Influenced and Corrupt Organizations Act of 1970 which
is commonly known as RICO. While RICO is far too complex and esoteric
to fully explain in this article, one of its requirements is that
the defendant engaged in certain “predicate acts,” the
most common of which are mail and wire fraud. RICO encourages private
lawsuits by giving successful plaintiffs treble damage recoveries
and reimbursement of their attorney fees.
coverage of hiring undocumented workers has not been in question because
Congress amended RICO to make the knowing hiring of undocumented
workers a predicate act. What has been in issue is who could sue
a company that had such a engaged in such practices. The Ninth Circuit
Court of Appeals recently held in Mendoza v. Zirkle Fruit Co. that
employees of two Washington State fruit packers could sue their employer
for knowingly hiring undocumented workers in order to depress wage
rates. Previously the Second Circuit, which is based in New York,
held in Commercial Cleaning Services v. Colin Service Systems that
a janitorial services company could be sued if they hire undocumented
workers in order to pay lower wages and thereby under bid its competitors.
lawsuits were in part supported by The Federation for American Immigration
Reform or FAIR. In a press release FAIR stated that similar lawsuits
are pending against Tyson Foods and IBP and that the organization expects
many more workers and businesses to take advantage of the rulings.
that the occasional hiring of an undocumented worker is not a RICO
violation. On the other hand, the deliberate failure to check worker
immigration status could be characterized as an intentional scheme
under RICO. Zackler & Associates can review your hiring practices
for potential RICO related issues.
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