Legal Roundup: Supreme Court Ruling Supports Scandalous Trademark, AG Cracks Down on Ticket Reselling and More

A look at recent court decisions and how their rulings have an impact on risk management and the insurance industry.
By: | July 23, 2019

Big Win for Vessel Owners May Lower Marine Insurance Rates

The Case: Chris Batterton was a seaman employed by Dutra Group working aboard a dredge.

He became injured when he “had his hand crushed when a hatch cover blew open due to a pressurized buildup of air,” according to the Waterways Journal Weekly.

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“Batterton sued his employer, seeking maintenance and cure and remedies under the Jones Act but also alleging negligence and seeking punitive damages with a claim of unseaworthiness.”

The term “unseaworthy” had a broad legal definition over the years — covering everything from insufficient or defective equipment to slippery decks and the failure of a vessel captain to instruct their team to wear life preservers.

Would the conditions leading to Batterton’s injury determine unseaworthiness?

Scorecard: The U.S. Supreme Court ruled in favor of Dutra Group, “ruling that the plaintiff may not recover punitive damages on a claim of un-seaworthiness, which reversed a previous ruling by the Ninth Circuit that the plaintiff was eligible for punitive damages,” according to the Seafood Source.

Takeaway: It’s a big win for vessel owners. Not only does it stop allowing punitive damages for the wide category called “unseaworthiness” — it should lower insurance premiums, according to Isaak Hurst, a lawyer at the International Maritime Group interviewed by Seafood Source.

“[It] should, in theory, lower insurance premiums for protection and indemnity [P&I] risks associated with vessels that use SP-23 and SP-38 forms. For some of my clients last year, the punitive damage endorsement was upwards of 15 percent of their P&I policy.”

Give us Your Immoral, Scandalous Trademarks, Says Supreme Court

The Case: Erik Brunetti, the founder of 30-year-old streetwear clothing line FUCT had been denied a trademark by the U.S. Patent and Trademark Office on the grounds that his company name was immoral or scandalous.

The case went all the way to the U.S. Supreme Court.

Scorecard: The court sided with Brunetti in a 6-3 vote.

Justice Elena Kagan wrote, according to USA Today: “The First Amendment does not allow the government to penalize views just because many people, whether rightly or wrongly, see them as offensive.”

Even the three dissenters admitted that “immoral” was too broad of a term.

Takeaway: Brunetti could legally sell his apparel but had less protection against competitors without the trademark.

USA Today reports: “The government already could not stop Brunetti from selling his wares, which the Justice Department pointedly noted are available even in children’s and infants’ sizes. The issue was whether he deserved to register his trademark — a federal benefit that makes it harder for competitors to challenge.

“The ‘FUCT’ case is the second one in three years contesting trademark registration restrictions. In 2017, the court ruled unanimously that trademarks considered to be disparaging nonetheless deserve First Amendment protection.”

Health Insurer to Pay $10 Million to 30 States After Data Exposure

The Case: For nearly a year beginning in May 2014, a hacker tapped into the network of Premera Blue Cross, the largest health insurance company in the Pacific Northwest.

“The individual had access to patient data including social security numbers and health information,” according to GeekWire.

Washington State Attorney General Bob Ferguson said the company violated HIPAA requirements violated the state’s Consumer Protection Act and misled consumers about it privacy practices.

Scorecard: Premera agreed to pay a total of $10 million to 30 states in a decree filed in Snohomish County Superior Court. Washington gets the bulk of the cash — $5.4 million.

Geekwire explains: “Premera’s payment to the states is part of a consent decree that also requires the company to take additional security steps, perform regular security reporting and hire a chief information security officer, among other requirements.

Takeaway: Data privacy rules are strict. Even if you get hacked, you could be responsible for the fallout.

Ticket Re-Sellers Settle Dispute With New York AG

The Case: New York Attorney General Letitia James accused ticket resellers Ticket Galaxy, TicketNetwork Inc. of “tricking tens of thousands of people into buying tickets for concerts, shows and other live events that they never owned,” according to Reuters.

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The so-called “speculative tickets” drove up prices.

“She said that from January 2012 to April 2018, New York consumers unknowingly placed more than 96,000 orders through speculative ticket programs, roughly one-third of which went through Ticket Galaxy,” Reuters explained.

The defendants countered that their practices were basically equivalent to “drop shipping” — selling a product online before you actually buy it. Drop shipping has made Shopify a major new tech titan and lots of sellers on the platform use it to sell goods directly from China and other places without ever physically touching their products.

Scorecard: Ticket Galaxy, TicketNetwork agreed to pay $1.55 million to settle the lawsuit. They did not admit liability.

Takeaway: It’ll be interesting to see how far the New York AG goes with this case. Is drop shipping the next business practice in the cross-hairs? Or is this more a matter of artificially driving up prices? We’ll see how it plays out. &

Jared Shelly is a journalist based in Philadelphia. He can be reached at [email protected]

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The R&I Editorial Team can be reached at [email protected]