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Showing 14 posts from September 2013.

The Inbox, Transition to Football Edition

Here at the Suits by Suits Global Operations Center, we’re a bit bummed that our beloved Washington Nationals Baseball Club has now exhausted any chance it ever had of making the playoffs, as have the almost-local Baltimore Orioles.  All is not lost, however, because now we can turn our undivided focus to our Washington football team – the one with the name that is something of a point of dispute.  The football season here will be exciting, even if it is off to a rough start

Glum as our sporting life may be, it’s a worthwhile distraction from the possibility of a government shutdown, although perhaps not as fun as our other new Washington fad: debating the merits of green eggs and ham

In any event, news of disputes between employers and executives – and news in related areas – continues to come in over our electronic transom.  Here are the highlights:

  • Here’s a story related to the Affordable Care Act that you may not have expected: a whistleblower suit arising out of the District of Columbia’s work to establish one of the exchanges called for by the new law.  This week, a federal judge in D.C. allowed Jennifer Campbell’s suit against the District to proceed.  Campbell, who seeks $5 million, alleges she was fired after she spoke out publicly about problems with a contract to set up the insurance exchange. 
  • We’ve written about former TV anchorman Larry Connors’ suit against his employer and the non-compete clauses at the heart of it.  But non-competes are apparently common in the radio business too: this interesting article looks at a few different ones being used in the Atlanta market. 
  • Not sure how well this translates (sorry), but language education company Rosetta Stone is trying to dismiss a Florida lawsuit brought against it by competitor Open English.  Open English alleges two employees violated non-compete clauses and stole trade secrets when they joined Rosetta Stone.   Shortly after Open English sued Rosetta Stone in Florida, Rosetta Stone filed its own case against Open English in California; Rosetta Stone argues that the Florida case should be thrown out to allow the California case to go forward.  The parties disagree over whether Florida or California law would apply to the dispute, as well – what’s Californian for “conflict of laws?”
  • Esteemed colleague P. Andrew Torrez wrote last year about this suit against Abercrombie & Fitch, alleging the clothing retailer violated Title VII by discriminating against employees who wore hijabs; now, the case is apparently settled for just over $70,000 – details here and here.   

Fifth Circuit Sends Dispute Over Free Parking Back to Trial Court

Free ParkingThose of us who live in or near big cities know the value of a good parking space.  Two years ago, New Yorkers paid an average of $540 a month to park in midtown Manhattan.  And here in Washington, D.C., a permanent space can go for as much as $100,000.

A good parking spot was also important to Pauline Feist, an assistant attorney general with the Louisiana Department of Justice.  Feist, citing a disability (osteoarthritis of the knee), asked the Department for a free space in her building rather than in the garage across the street, but her employer turned down her request.  She filed a complaint with the EEOC, and five months later, she was out of a job.  Feist sued the Department in federal court, alleging that it had discriminated against her by denying her a parking space and then by retaliating against her for filing the EEOC complaint.

The federal trial judge slammed the door on Feist, granting summary judgment on both of her claims.  However, in a ruling last week, the Fifth Circuit reversed the summary judgment ruling on Feist’s discrimination claim, sending the case back to the trial court for a second try.  Feist v. State of Louisiana, No. 12-31065 (5th Cir. Sept. 16, 2013). Read More ›

More on Larry Conners and Noncompetes in Missouri

Last month, we took a look at one aspect of the lawsuit brought by former news anchor Larry Conners, who had been terminated by KMOV-TV 4 in St. Louis, Missouri after posting various political comments to his Facebook page.  Specifically, we discussed the implications of the Missouri court’s denial of Conners’s motion for a Temporary Restraining Order (TRO) seeking to invalidate Conners’s non-compete clause in order to permit him to seek another TV job in St. Louis.  To refresh your memory:  we concluded that the court’s refusal to grant a TRO did not necessarily indicate that the clause would ultimately be held enforceable – given the heavy burden a litigant must meet in order to get a TRO – but several aspects of Missouri law seemed to weigh in favor of the clause’s enforceability.  (Our full reasoning is set forth here.)  We also told you that Conners would be headed back to court to argue his case on the merits. Read More ›

The Inbox – September 20, 2013 – From the Tennis Court to the Law Court Edition

Trade Secrets - Even if You Didn't Use or Disclose Them You Can Be Liable

Data TheftA recent decision by a federal court in Alexandria, Virginia, illustrates an important point about the trade secrets laws that is often missed:  you can be liable even if you merely took your former company’s trade secrets (such as by downloading them onto your thumb drive) but did not use them or disclose them to anyone else.  That’s what a company executive in the Alexandria case allegedly did, and the court allowed her former employer’s claim that she violated the Virginia Uniform Trade Secrets Act (the VUTSA) (which parallels many states’ trade secrets laws) to go forward. Read More ›

Virginia Supreme Court Last Week: Courts Should Not Rule on Non-Compete's Enforceability in a Factual Vacuum

Red VacuumLast week, the Virginia Supreme Court reversed a trial court’s ruling that a non-compete agreement was unenforceable on its face as a matter of law.  The VSC held that the trial court should not have decided the enforceability of the agreement on a demurrer (more about what that means below) because, in Virginia, whether a non-compete is enforceable (or valid) turns on whether it is “reasonable under the particular circumstances of the case” – that is, whether it is “narrowly drawn to protect the employer’s legitimate business interest, is not unduly burdensome on the employee’s ability to earn a living, and is not against public policy.”  According to the VSC, this means that the particular circumstances of the case matter, and that the enforceability of a non-compete should not be decided “in a factual vacuum.” Read More ›

The Wall Street Journal: Noncompetes are "Innovation-Killing"

We saw this over the weekend and thought you might like to know:  more on last week’s revelation that Massachusetts Gov. Deval Patrick (D) favors the “California policy” of making employee covenants not to compete generally unenforceable under state law.

As we told you last week, the linchpin of the administration’s argument is that while noncompete clauses may be perceived as generally pro-business, in the technology sector – a huge market in California, obviously, but also a significant industry in Massachusetts – many believe that the enforcement of noncompetes may hinder employee mobility necessary for such startups to thrive.  In this particular area, then, what's good for employees may also be good for employers.

This weekend, Gov. Patrick got an assist from a rather unlikely source – The Wall Street Journal.  Greg Gretch, managing director of Sigma West, a venture capital firm targeting technology startups, argues that noncompete agreements are “innovation-killing” and credits California’s decision not to enforce noncompetes for turning San Francisco into a “hot-bed of new startup activity.”  Mr. Gretch’s piece can be read in full here; it's worth checking out.

The Inbox

St. Basi'sWe thought about getting a Putin op-ed to cap off this week at Suits by Suits.  But instead, we decided to stick with our tried-and-true formula of canvassing the week’s headlines in employer-executive disputes:

  • Bloomberg Law reported on a recent ruling by the Delaware Chancery Court that a company officer and trustee could not invoke the attorney-client privilege for communications with their personal attorneys and advisors sent from their work e-mail accounts.  The court wrote that the company could access the e-mails because it had reserved the right to do so in its employee manual, and therefore the officer and trustee did not have a reasonable expectation of privacy in the e-mails.
  • Pete Brush of Law360 (subscription required) covered the hearing in the New York Court of Appeals, the state’s highest court, on claims by a former Intesa SanPaolo executive, Giuseppe Romanella.  Romanella alleges that the company illegally fired him after he complained of depression.  The company argues that it was allowed to fire him because he refused to provide any reasonable time frame for his return from leave.
  • A federal judge tossed a number of claims against Bloomberg LP in an EEOC case alleging that the company discriminated against employees who returned from maternity leave, reported Jonathan Stempel and Jennifer Saba of Reuters.  The court found that the EEOC could not pursue a class action because it failed to show that discrimination was Bloomberg’s standard operating practice.  Further, the judge said that the EEOC had failed to investigate its individual plaintiffs’ claims and unfairly rebuffed Bloomberg’s attempts to settle.  The Wall Street Journal characterized this as a “sue first, investigate later” approach.
Read More ›

Massachusetts Continues To Move Towards California On Noncompetes

As part of our “State-by-State Smackdown” series on the evolution of state law with respect to the enforceability of covenants not to compete contained in employment agreements, we’ve flagged for you proposed legislation in Massachusetts, House Bill No. 1715, that would essentially prohibit the enforcement of covenants not to compete over six months in length (unless certain narrow statutory exceptions apply).  Last week, we learned that the bill was headed to a hearing before the state legislature’s Joint Committee on Labor and Workforce Development on September 10.

Now, thanks to Boston Globe columnist Scott Kirsner, we’ve learned a little more about what happened at that hearing.  And it’s big news. Read More ›

Cough Syrup Manufacturer Suffers Bad-Tasting Appellate Defeat

Cough SyrupWhen Yu-Hsing Tu worked at pharmaceutical company UCB Manufacturing, he signed a strict confidentiality agreement.  In the agreement, Tu promised that he would never disclose any of UCB's “secret or confidential information,” including a laundry list of items such as “designs, formulas, processes, . . . techniques, know how, improvements, [and] inventions.”  Tu's work was important to UCB: he helped formulate its cough syrup products, including Delsym, and had significant knowledge of its “Pennkinetic system” for controlled release of cough medication in liquid form. 

In 2001, Tu left UCB and started working for his friend Ketan Mehta at Tris Pharma.  Soon after, Tu and Tris Pharma began formulating generic versions of UCB’s cough syrups.  Six years later, Tris's competitive products were on the market, and UCB lost a lot of market share. 

UCB immediately went to court and sued Tu and Tris for misappropriation of trade secrets, breach of contract, and unfair competition.  It asked for a preliminary injunction -- a court order early in the lawsuit that would require Tris to stop using its trade secrets until the merits were finally decided.  After a five-day hearing focused on the misappropriation claim, the trial judge denied the injunction, maintaining the status quo for Tris.

Shortly after that win, Tu and Tris took the offensive in the litigation, moving for summary judgment.  At that point, UCB made a decision that would end up costing it later on: it voluntarily gave up its claim for misappropriation of trade secrets.  The trial court then granted Tu and Tris’s motion for summary judgment on the other claims, relying on its finding during the preliminary injunction phase that Tu and Mehta were credible when they testified that they didn’t misuse UCB’s confidential info.  UCB appealed. Read More ›