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Column: Uber, Lyft’s attempt to gut labor law for their own benefit hits a roadblock in Massachusetts

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Column: Uber, Lyft’s attempt to gut labor law for their own benefit hits a roadblock in Massachusetts

Following their profitable effort to gull California voters into endorsing their technique of exploiting their drivers and discipline staff, Uber, Lyft and different gig corporations expanded their marketing campaign to intestine labor protections into different states.

That included Massachusetts, the place the businesses managed to get two measures resembling California’s Proposition 22 licensed for the state poll. On Tuesday, the state’s Supreme Judicial Courtroom threw them out.

The excessive court docket’s reasoning was much like that of Choose Frank Roesch of Alameda County Superior Courtroom, who dominated Proposition 22 unconstitutional in August: The Massachusetts initiatives had been overly grasping, and designed to confuse voters about their actual objective.

[Proposals ] that bury separate coverage choices in obscure language heighten issues that voters shall be confused, misled, and disadvantaged of a significant selection.

— Massachusetts Justice Scott Kafker

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Certainly, the Massachusetts justices wrote, they themselves discovered untangling the obscure language of the proposed poll measures to be “no easy process.”

The gig corporations say they’ll now attempt to persuade the state Legislature to enact the provisions they tried to sneak previous the voters.

“We hope the Legislature will stand with the 80% of drivers who need flexibility and to stay impartial contractors whereas gaining access to new advantages,” Conor Yunits, a spokesperson for Flexibility & Advantages for Massachusetts Drivers, the marketing campaign group for the gig corporations, informed me by e-mail. That’s not a promising possibility, as we’ll clarify.

Politicians in different states, equivalent to New York, are exhibiting much less willingness to bow all the way down to the businesses’ assertions that their enterprise fashions are good for shoppers and staff alike.

Fares are rising in some cities, partly as a result of as public corporations, somewhat than venture-funded startups, Uber and Lyft are below higher strain to start out exhibiting income. (Neither firm has ever turned a dime of revenue.) Organized labor can be responding extra aggressively to the risk the businesses pose to the well-being of their staff.

Right here’s the background to the gig corporations’ poll campaigns.

By spending a stupefying $205 million — the most important sum spent on a poll initiative in American historical past — the gig corporations managed to influence California voters in 2020 that Proposition 22 could be a boon for his or her drivers and supply staffers.

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The measure designated these staff as impartial contractors, overturning rulings by state regulators and judges that they had been staff entitled to all the advantages of employment. These embrace additional time pay, staff compensation and unemployment advantages, the peace of mind of a residing wage and the precise to unionize.

As a substitute, the businesses had been in a position to preserve a enterprise mannequin that entails sticking the employees with bills that usually are paid by employers, equivalent to gasoline, insurance coverage and maintenance of their autos.

The businesses maintained of their marketing campaign that the employees obtained one thing extra beneficial in return — “flexibility” to set their very own work schedules. Because it occurs, quickly after Proposition 22 handed, Uber began withdrawing among the flexibility choices it had granted drivers to win their assist in the course of the initiative marketing campaign, and even took steps that drivers stated decreased their revenue.

Then got here Roesch’s ruling. He noticed that the state Structure requires poll initiatives to be restricted to a single “topic.”

The measure’s personal textual content recognized its topic, in Roesch’s phrases, to be “defending the chance for Californians to drive their automobiles on an impartial contractor foundation, to supply the drivers with sure minimal welfare requirements, and to set minimal client safety and security requirements.”

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The initiative, nevertheless, contains language that “obliquely and not directly” prevents drivers and supply staff from unionizing, which is “not a acknowledged objective of the laws,” Roesch discovered. As a substitute, “it seems solely to guard the financial pursuits of the community corporations in having a divided, ununionized workforce.”

Roesch additionally discovered that the measure infringes on the Legislature’s proper, granted by the state Structure, to set staff’ compensation guidelines, equivalent to figuring out which staff are eligible.

“The proposition was grasping, it tried to cement the businesses’ enterprise mannequin and to remove all rights of staff on this sector,” Veena Dubal, a professor at UC Hastings Faculty of the Legislation and a longtime critic of the gig corporations, informed me after Roesch dominated. “We’ve by no means seen an initiative attempt to do what this initiative tried to do.”

The businesses are interesting Roesch’s ruling, however Proposition 22 stays in impact pending motion by the appeals court docket.

This brings us again to Tuesday’s motion by the Massachusetts Supreme Judicial Courtroom, which utilized to certifications by state Atty. Gen. Maura Healey of two virtually an identical poll measures modeled on Proposition 22.

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The unanimous determination written by Justice Scott Kafker cited a Massachusetts rule much like California’s, {that a} poll measure will need to have just one topic. The court docket discovered that the proposed initiatives had two unrelated objectives, “one in all which is buried in obscure language on the finish.”

The declared objective, Kafker noticed, was to cement in place the designation of gig drivers as impartial contractors. The hid objective, nevertheless, was to immunize the businesses from lawsuits by individuals who had been injured by drivers — say by assaults or in visitors accidents.

Usually, the using firm could be responsible for the actions of its staff whereas on the job; the proposals would totally take away that legal responsibility by stating that the drivers had been appearing on their very own.

Proposals “that bury separate coverage choices in obscure language heighten issues that voters shall be confused, misled, and disadvantaged of a significant selection,” Kafker wrote. Voters “might not even bear in mind” of what they’re voting on. That was precisely what occurred right here, he wrote.

As for the businesses’ efforts to acquire a legislative answer, indications are that the Democratic-controlled state Legislature is popping extra hostile to the concept.

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When the businesses tried to achieve admission to the state Democratic conference earlier this month, they encountered sturdy opposition from tons of of delegates, together with Healey, a candidate for governor; and all of the candidates looking for nominations for lieutenant governor, lawyer common and state auditor. The celebration already had voted to oppose the poll initiatives.

In her function as lawyer common, furthermore, Healey has sued Uber and Lyft, charging that by misclassifying their drivers as impartial contractors, they’re violating Massachusetts wage and hour legal guidelines.

The businesses’ success with Proposition 22 is starting to seem like a Pyrrhic victory: It opened the eyes of officers outdoors California to what actually is at stake within the corporations’ efforts to intestine employment legislation for their very own curiosity. That may’t be the end result they had been hoping for.

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Cookies, Cocktails and Mushrooms on the Menu as Justices Hear Bank Fraud Case

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Cookies, Cocktails and Mushrooms on the Menu as Justices Hear Bank Fraud Case

In a lively Supreme Court argument on Tuesday that included references to cookies, cocktails and toxic mushrooms, the justices tried to find the line between misleading statements and outright lies in the case of a Chicago politician convicted of making false statements to bank regulators.

The case concerned Patrick Daley Thompson, a former Chicago alderman who is the grandson of one former mayor, Richard J. Daley, and the nephew of another, Richard M. Daley. He conceded that he had misled the regulators but said his statements fell short of the outright falsehoods he said were required to make them criminal.

The justices peppered the lawyers with colorful questions that tried to tease out the difference between false and misleading statements.

Chief Justice John G. Roberts Jr. asked whether a motorist pulled over on suspicion of driving while impaired said something false by stating that he had had one cocktail while omitting that he had also drunk four glasses of wine.

Caroline A. Flynn, a lawyer for the federal government, said that a jury could find the statement to be false because “the officer was asking for a complete account of how much the person had had to drink.”

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Justice Ketanji Brown Jackson asked about a child who admitted to eating three cookies when she had consumed 10.

Ms. Flynn said context mattered.

“If the mom had said, ‘Did you eat all the cookies,’ or ‘how many cookies did you eat,’ and the child says, ‘I ate three cookies’ when she ate 10, that’s a false statement,” Ms. Flynn said. “But, if the mom says, ‘Did you eat any cookies,’ and the child says three, that’s not an understatement in response to a specific numerical inquiry.”

Justice Sonia Sotomayor asked whether it was false to label toxic mushrooms as “a hundred percent natural.” Ms. Flynn did not give a direct response.

The case before the court, Thompson v. United States, No. 23-1095, started when Mr. Thompson took out three loans from Washington Federal Bank for Savings between 2011 and 2014. He used the first, for $110,000, to finance a law firm. He used the next loan, for $20,000, to pay a tax bill. He used the third, for $89,000, to repay a debt to another bank.

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He made a single payment on the loans, for $390 in 2012. The bank, which did not press him for further payments, went under in 2017.

When the Federal Deposit Insurance Corporation and a loan servicer it had hired sought repayment of the loans plus interest, amounting to about $270,000, Mr. Thompson told them he had borrowed $110,000, which was true in a narrow sense but incomplete.

After negotiations, Mr. Thompson in 2018 paid back the principal but not the interest. More than two years later, federal prosecutors charged him with violating a law making it a crime to give “any false statement or report” to influence the F.D.I.C.

He was convicted and ordered to repay the interest, amounting to about $50,000. He served four months in prison.

Chris C. Gair, a lawyer for Mr. Thompson, said his client’s statements were accurate in context, an assertion that met with skepticism. Justice Elena Kagan noted that the jury had found the statements were false and that a ruling in Mr. Thompson’s favor would require a court to rule that no reasonable juror could have come to that conclusion.

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Justices Neil M. Gorsuch and Brett M. Kavanaugh said that issue was not before the court, which had agreed to decide the legal question of whether the federal law, as a general matter, covered misleading statements. Lower courts, they said, could decide whether Mr. Thompson had been properly convicted.

Justice Samuel A. Alito Jr. asked for an example of a misleading statement that was not false. Mr. Gair, who was presenting his first Supreme Court argument, responded by talking about himself.

“If I go back and change my website and say ‘40 years of litigation experience’ and then in bold caps say ‘Supreme Court advocate,’” he said, “that would be, after today, a true statement. It would be misleading to anybody who was thinking about whether to hire me.”

Justice Alito said such a statement was, at most, mildly misleading. But Justice Kagan was impressed.

“Well, it is, though, the humblest answer I’ve ever heard from the Supreme Court podium,” she said, to laughter. “So good show on that one.”

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SEC probes B. Riley loan to founder, deals with franchise group

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SEC probes B. Riley loan to founder, deals with franchise group

B. Riley Financial Inc. received more demands for information from federal regulators about its dealings with now-bankrupt Franchise Group as well as a personal loan for Chairman and co-founder Bryant Riley.

The Los Angeles-based investment firm and Riley each received additional subpoenas in November from the U.S. Securities and Exchange Commission seeking documents and information about Franchise Group, or FRG, the retail company that was once one of its biggest investments before its collapse last year, according to a long-delayed quarterly filing. The agency also wants to know more about Riley’s pledge of B. Riley shares as collateral for a personal loan, the filing shows.

B. Riley previously received SEC subpoenas in July for information about its dealings with ex-FRG chief executive Brian Kahn, part of a long-running probe that has rocked B. Riley and helped push its shares to their lowest in more than a decade. Bryant Riley, who founded the company in 1997 and built it into one of the biggest U.S. investment firms beyond Wall Street, has been forced to sell assets and raise cash to ease creditors’ concerns.

The firm and Riley “are responding to the subpoenas and are fully cooperating with the SEC,” according to the filing. The company said the subpoenas don’t mean the SEC has determined any violations of law have occurred.

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Shares in B. Riley jumped more than 25% in New York trading after the company’s overdue quarterly filing gave investors their first formal look at the firm’s performance in more than half a year. The data included a net loss of more than $435 million for the three months ended June 30. The shares through Monday had plunged more than 80% in the past 12 months, trading for less than $4 each.

B. Riley and Kahn — a longstanding client and friend of Riley’s — teamed up in 2023 to take FRG private in a $2.8-billion deal. The transaction soon came under pressure when Kahn was tagged as an unindicted co-conspirator by authorities in the collapse of an unrelated hedge fund called Prophecy Asset Management, which led to a fraud conviction for one of the fund’s executives.

Kahn has said he didn’t do anything wrong, that he wasn’t aware of any fraud at Prophecy and that he was among those who lost money in the collapse. But federal investigations into his role have spilled over into his dealings with B. Riley and its chairman, who have said internal probes found they “had no involvement with, or knowledge of, any alleged misconduct concerning Mr. Kahn or any of his affiliates.”

FRG filed for Chapter 11 bankruptcy in November, a move that led to hundreds of millions of dollars of losses for B. Riley. The collapse made Riley “personally sick,” he said at the time.

One of the biggest financial problems to arise from the FRG deal was a loan that B. Riley made to Kahn for about $200 million, which was secured against FRG shares. With that company’s collapse into bankruptcy in November wiping out equity holders, the value of the remaining collateral for this debt has now dwindled to only about $2 million, the filing shows.

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Griffin writes for Bloomberg.

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Starbucks Reverses Its Open-Door Policy for Bathroom Use and Lounging

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Starbucks Reverses Its Open-Door Policy for Bathroom Use and Lounging

Starbucks will require people visiting its coffee shops to buy something in order to stay or to use its bathrooms, the company announced in a letter sent to store managers on Monday.

The new policy, outlined in a Code of Conduct, will be enacted later this month and applies to the company’s cafes, patios and bathrooms.

“Implementing a Coffeehouse Code of Conduct is something most retailers already have and is a practical step that helps us prioritize our paying customers who want to sit and enjoy our cafes or need to use the restroom during their visit,” Jaci Anderson, a Starbucks spokeswoman, said in an emailed statement.

Ms. Anderson said that by outlining expectations for customers the company “can create a better environment for everyone.”

The Code of Conduct will be displayed in every store and prohibit behaviors including discrimination, harassment, smoking and panhandling.

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People who violate the rules will be asked to leave the store, and employees may call law enforcement, the policy says.

Before implementation of the new policy begins on Jan. 27, store managers will be given 40 hours to prepare stores and workers, according to the company. There will also be training sessions for staff.

This training time will be used to prepare for other new practices, too, including asking customers if they want their drink to stay or to go and offering unlimited free refills of hot or iced coffee to customers who order a drink to stay.

The changes are part of an attempt by the company to prioritize customers and make the stores more inviting, Sara Trilling, the president of Starbucks North America, said in a letter to store managers.

“We know from customers that access to comfortable seating and a clean, safe environment is critical to the Starbucks experience they love,” she wrote. “We’ve also heard from you, our partners, that there is a need to reset expectations for how our spaces should be used, and who uses them.”

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The changes come as the company responds to declining sales, falling stock prices and grumbling from activist investors. In August, the company appointed a new chief executive, Brian Niccol.

Mr. Niccol outlined changes the company needed to make in a video in October. “We will simplify our overly complex menu, fix our pricing architecture and ensure that every customer feels Starbucks is worth it every single time they visit,” he said.

The new purchase requirement reverses a policy Starbucks instituted in 2018 that said people could use its cafes and bathrooms even if they had not bought something.

The earlier policy was introduced a month after two Black men were arrested in a Philadelphia Starbucks while waiting to meet another man for a business meeting.

Officials said that the men had asked to use the bathroom, but that an employee had refused the request because they had not purchased anything. An employee then called the police, and part of the ensuing encounter was recorded on video and viewed by millions of people online, prompting boycotts and protests.

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In 2022, Howard Schultz, the Starbucks chief executive at the time, said that the company was reconsidering the open-bathroom policy.

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