Hey! Welcome to Not Billable, your weekly dose of legal insight and trends. Stop the clock, put the timesheet down and get ready to read about facial recognition tech that's stopping lawyers from attending events, WeWorking through bankruptcy court, and the rights over Top Gun.
đźš« PRIVACY
A Slap in the Fac(ial Recognition)
Going to Madison Square Garden to see the Knicks, Rangers, or Rockettes? If your firm has filed suit against them, you'll have to hang outside by the hotdog stands. That's right; you could be barred from attending any MSG, Radio City, or Beacon Theater events.
WAIT, WHAT?
MSG's controversial facial recognition technology has blocked many attorneys from attending the venue, catching patrons by surprise and culminating in lawsuits. In December 2022, Kelly Conlon was barred from chaperoning her daughter's Girl Scout troop into the Christmas Spectacular at Radio City Music Hall when facial recognition technology identified her as a member of a law firm involved in litigation against MSG. Her coworker, partner Sam Davis, described his exclusion from attending a Rangers game as “a dystopian, shocking act of repression.” Larry Hutcher, a partner at Davidoff Hutcher & Citron and a Knicks season ticket holder since the 1970s, was blocked from MSG in 2022 — as were the 60 other firm members, even those not involved in the litigation against MSG. Hutcher, who sued MSG for his exclusion, warns: "Today it's lawyers. Who is it tomorrow: Dentists, doctors, you as a journalist? Anybody who criticizes Madison Square Garden, they're going to be on the list. So, there's got to be controls. There has to be somebody who says, enough is enough.”
“AMBULANCE CHASERS AND MONEY GRABBERS”
MSG has defended itself by refusing to apologize for singling out “ambulance chasers and money grabbers whose business is motivated by self-promotion and who capitalize on the misfortune of others.” The CEO, James L. Dolan, argues that “litigation creates an inherently adversarial environment” and therefore attorneys defending “ticket scalpers who make getting tickets for the average game and concert-goer next to impossible and exorbitantly expensive” should be excluded from MSG. Last week, Dolan explained the attorney exclusion policy: “if you're suing us, we're just asking of you—please don't come until you're done with your argument with us. And yes, we're using facial recognition to enforce that.”
Hutcher argued that this “ vindictive act against attorneys” would have a “chilling effect” on attorneys' willingness to represent parties opposed to MSG. In contrast, MSG lawyer Randy Mastro argued that Hutcher's suit was “an insult to lawyers who do what we do. Mr. Hutcher has not been chilled in his advocacy.” He has also argued that “a private property owner has a a right to say, I don't want to do business with people who sue me.'” A NY appeals court upheld MSG's ability to exclude ticket-holding lawyers from events, overturning the lower court's preliminary injunction. However, the court stipulated that MSG must pay $500 per person denied from non-sporting events and that MSG is subject to criminal charges from excluded persons. Thus, the New York State Bar Association's legislative efforts might be New York attorneys' only hope of seeing the inside of MSG again.
THE NY STATE BAR??
The NYSBA is urging the NY legislature to amend the existing state laws to stop MSG's use of facial recognition technology to exclude individuals from its venues. The NYSBA specifically hopes for sports venues to be added to the NY Civil Rights Law, as it currently prohibits exclusion of paying customers “public entertainment and amusement” but only covers theaters and music venues as of now. The NYSBA also seeks an increase in fines against companies that violate this law. Further, the Biometric Privacy Act — which was introduced to the NY Assembly in January 2023 — seeks to “require private companies to establish a policy and timeline for permanently destroying biometric information about people who have interacted with the company.”
THE VERDICT:
Until these legislative changes take effect, MSG might remain a lawyer-free zone.
POST OF THE WEEK
WeBroke pic.twitter.com/FFvLvcfHCg
— Lawtrades (@LawTrades) November 7, 2023
📉 BANKRUPTCY
WeBroke
Valued at $47 billion in 2019, WeWork was recently among the United States' most valuable startups. But this week, the company filed for Chapter 11 bankruptcy. A lot has happened between 2019 and now: a pandemic, the end of Modern Family, and a presidential election, to name a few. But what happened in the last four years to alter WeWork's promising trajectory so drastically?
WeWork started in 2010 in SoHo, NYC. In the following years, the company racked up over 700 locations internationally. However, things seemed to take a turn for the worse in 2019 when the company filed for an IPO, but its public filings highlighted large losses. WeWork then delayed its IPO and changed its estimated market valuation from $10 billion to $47 million. Shortly after, CEO and cofounder Adam Neumann stepped down after criticism and allegations of self-dealing from board members.
FROM BAD TO WORSE
Then, in 2020, the pandemic added further strain on the company's operations. Fortune Magazine estimated that office vacancy is now 1.5 times the amount it was at the end of 2019.
Cushman & Wakefield noted that as “the death of the office” is upon us, there is “an unprecedented imbalance in supply and demand which, by the end of the decade, will result in a surplus of 330 million square feet of vacant office space that hasn't kept pace with demands to support hybrid working and efficiency/ESG priorities.”
As a result of the pandemic and its disenfranchisement of office work, WeWork faced a drastic decrease in demand for its product and thus was unable to see returns on its many real estate investments. After signing hundreds of long-term leases, 80% of company's revenues flowed into rent and interest payments in June 2023. It seems that WeWork's aggressive growth efforts might have actually stunted its success in the long run. WeWork had accumulated 43.9 million rentable square feet—only 18.3 million of which were in North America—all over the world by the end of 2022. Accordingly, WeWork's filings suggest it has over 600 landlord relationships globally. With locations in 39 countries, WeWork's bankruptcy filing is limited to its spaces in the U.S. and Canada. And on Monday, over 400 of its other entities also filed.
Ann K. Chandler, a real estate attorney at Hall Estill in Denver, CO, noted that “Decisions by landlords over how to address WeWork's situation may be compounded by the difficult task of trying to find similar tenants,” and that renegotiating leases will likely be an uphill battle for WeWork due to “growing competition in the coworking industry.” Still, WeWork announced in September its plans to renegotiate “nearly all” of its leases. By abandoning underperforming locations, cutting operational costs, and and reinvesting in better-performing markets, WeWork suggested it would continue to chug along. However, this plan is hot on the heels of WeWork's August expression of “substantial doubt” about its ability to continue operating.
Interim CEO David Tolley said that 90% of their lenders have agreed to convert their debt into equity. WeWork has also shared its intention to break 69 leases in the initial days of its bankruptcy, including 41 in New York City, and it could seek to reject additional leases later in its bankruptcy. Will WeWork seek to renegotiate the terms of those its other leases? Yes.
THE VERDICT:
Cofounder Neumann's goal of “elevat[ing] the world's consciousness” through WeWork might still be reachable, albeit defined differently than in 2019; the WeWork bankruptcy has certainly raised consciousness about the seemingly impending plight of commercial real estate in cities. It seems that vacancies are likely coming in many cities across the country.
🎥 COPYRIGHT
‍Top Gun in the Air
The rights over Top Gun are up in the air, but for how long? Paramount Pictures just moved for summary judgment the case surrounding the rights over Top Gun: Maverick (the sequel to 1986 classic, Top Gun). Here's the context:
TOP GUN?
In the 1980s, Ehud Yonay wrote an article about Top Gun, the real life the Navy Fighter Weapons School, for California Magazine. The article detailed the school, it's history, the planes utilized, and two real-life lieutenants, Alex “Yogi” Hnarakis and Dave “Possum” Cully. Yonay eventually assigned the rights to the story to Paramount back in the 1980s —— which Paramount contends was unneeded because “all the facts are public domain.”
That assignment provided that Yonay would get credit if a movie was “produced…[]under” the Assignment and that is “substantially based upon or adapted from [the Article] or any version or adaptation thereof, substantially incorporating the plot, theme, characterizations, motive and treatment of [the Article] or any version or adaptation thereof.” Yonay eventually terminated the assignment, which was effective in 2020.
Eventually a Top Gun sequel, Top Gun: Maverick, was produced and hit the box office. The story — if you haven't seen the movie and aren't planning on it — is detailed in the Paramount's motion for summary judgment. To save you time, just know it's like 30 years into the future and follows the next batch of Top Gun recruits (while also including a few of the main characters from the last movie).
Paramount has now moved for summary judgment, asserting that the new movie is not derivative/substantially similar of Yonay's article. Addressing the movie's plot, themes, setting, dialogue, pacing, selection, and arrangement, Paramount lays out how it believes the movie differs substantially from the article.
THE VERDICT:
Given the movie was a blockbuster success (grossing $1.496 billion worldwide), it's clear this case is as contentious as it can be. This case is far from over and the fight is just beginning.
POST OF THE WEEK
WeBroke pic.twitter.com/FFvLvcfHCg
— Lawtrades (@LawTrades) November 7, 2023
VIDEO OF THE WEEK
@lawtrades Just added an autopay feature to our platform. Check it out #law #lawyer #corporate ♬ original sound - Lawtrades
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