As I discussed in a 2015 blog post, the language in a forum selection clause is critical if you want to ensure that potential litigation takes place on your “home court.” Indeed, as the defendants in Genis v. Campbell recently learned, having a less than all-encompassing and precise forum selection clause can lead to unintended results.
Alfred Genis is a Massachusetts resident and a diamond laboratory scientist. In 2013, Genis met Martin Campbell, who, along with his brother, David, owned Pure Crystal, a company involved in growing laboratory diamonds. In October of that year, the three individuals executed what would later be referred to as the “October 2013 Agreement.” That Agreement indicated that Genis would be granted 25% equity in Pure Crystal and also would receive equity in two new companies to be formed. In that same month, the Campbell brothers formed the first of those companies, Kimberlite Applied Science, LLC, and Genis executed an “Employment Agreement” and a “License Agreement” with Kimberlite.
By 2017, the relationship between Genis and the Campbells had broken down, and Genis filed suit in Massachusetts Superior Court, alleging that his intellectual property had been misappropriated and that he had not been granted … Keep reading
The Act to Establish Pay Equity, amending G.L. c.149, §105A (MA Pay Equity Law), goes into effect July 1, 2018. All employers, regardless of number of employees, whose employees perform all or the greater part of their work in Massachusetts, are required to comply with the MA Pay Equity Law.
One of the law’s notable aspects is that a potential employer cannot ask a job candidate what his/her prior salary history is. Many employers regularly ask job candidates what they make as a way of gauging whether they can meet the compensation expectations of a job candidate or, in some cases, trying to determine the least amount of pay to offer. In this day of networking, management-level employees may also receive job inquiries from potential candidates, and it is not uncommon for managers to ask, “How much are you making now?” as a threshold question, to determine whether the inquiry is worth passing on. Unfortunately, if such benign questions are asked, the candidate may bring a legal claim for violating the MA Pay Equity Law.
With such a low threshold to assert a legal claim, what should you do? First, make sure all employees know that, under no … Keep reading
Effective April 1, 2018, for employers with six or more employees, Massachusetts’ prohibitions on discrimination in the workplace have been expanded to prohibit discrimination on the basis of pregnancy and pregnancy-related conditions. The Pregnant Workers’ Fairness Act specifically makes it unlawful to discriminate against an employee based on lactation or the need to express breast milk for a nursing child. Further, if an employee requests an accommodation for pregnancy or a pregnancy-related condition, an employer will be required to engage in a timely, good faith, “interactive process” to determine an effective, reasonable accommodation that enables the employee to be able to perform the essential functions of her position, just as an employer is required to do for an employee with a disability.
Reasonable accommodations under the new law include:
- more frequent or longer paid or unpaid breaks;
- time off to attend to a pregnancy complication or recover from childbirth;
- acquisition or modification of equipment or seating;
- temporary transfer to a less strenuous or hazardous position;
- job restructuring;
- light duty;
- private non-bathroom space for expressing breast milk;
- assistance with manual labor; and
- a modified work schedule.
Although employers are allowed to seek medical verification for certain types of accommodations, medical … Keep reading
It is not unusual for business people and/or in-house counsel to consult with accountants or other non-party experts when contemplating a potential business transaction. As the defendants in The C Company, Inc. v. Hackel recently learned, however, trying to protect such communications from disclosure based on the attorney-client privilege can be difficult, if not impossible.
In The C Company, attorney Todd Goldberg represented Michael Hackel and Dining-In, Inc. in connection with a 2008 transaction with The C Company and Nicholas Cercone. During negotiations, an employee of The C Company emailed a draft agreement to the company’s outside accountant, and asked him to evaluate the tax implications of the contemplated transaction. The accountant provided that advice, after which Attorney Goldberg and the accountant exchanged their own emails so that Attorney Goldberg could better understand the accountant’s viewpoint. After litigation related to the transaction was filed by The C Company and Cercone, they sought to discover all of the foregoing communications, and the defendants took the position that such communications were protected by the attorney-client privilege. In analyzing the matter, the Superior Court Judge began by stating that:
Massachusetts recognized the so-called “derivative” attorney-client privilege. Under this doctrine, the attorney-client
… Keep reading
Massachusetts employers will soon see the impact of House Bill 3822, signed last year by Governor Charlie Baker. In an effort to offset the significant shift from commercial to publicly subsidized health care coverage, in 2018 and 2019, there will be an increase in the existing Employer Medical Assistance Contribution, as well as a new supplemental fee for employers whose non-disabled employees either receive coverage through the Massachusetts Division of Medical Assistance (MassHealth) or have their coverage subsidized by the Massachusetts Health Insurance Connector Authority (ConnectorCare).
Beginning in the first quarter of 2018, all employers will likely see an increase in their existing EMAC, assessed through the Department of Unemployment Assistance. The increase is intended to be temporary and applicable to wages paid in calendar year 2018.
Additionally, employers with more than five employees who are non-disabled and receive health care coverage through MassHealth or receive subsidized care through ConnectorCare for a period of at least 56 continuous days, will be assessed a supplemental fee of up to 5% of a covered employee’s unemployment insurance taxable wages (up to a cap of $750 per covered employee). The assessment will be based on wages on record with the DUA for … Keep reading
Often, when settling a dispute, I include a general release that goes something like this:
Releasors hereby forever release and discharge Releasees from, and/or based on, any and all suits, etc. which Releasors ever had, now have or may in the future claim to have against Releasees, arising out of any acts or conduct that occurred from the beginning of time to the date of this Agreement.
Plainly, such a release is intended to “wipe the slate clean” and give the parties the comfort of knowing that neither can be sued by the other for any conduct that occurred up to that point in time – whether the other party knows about the conduct/claim or not. As a recent case from the Superior Court, Fratea v. Unitrends, Inc., reminds us, however, a general release of this sort will not bar a former employee from pursuing a claim under the Massachusetts Wage Act.
When Michael Fratea left the employment of Unitrends, he executed a release in exchange for the payment of $1,875. Thereafter, Fratea filed suit against the company and two individuals, alleging a violation of the Wage Act because he was not paid overtime compensation. The defendants … Keep reading
As I have written before, the Massachusetts Weekly Payment of Wages Act obligates employers to pay all earned wages to employees in a timely fashion. The Wage Act also specifies that the “president and treasurer of a corporation and any officers or agents having the management of such corporation” are personally liable for violations. In Segal v. Genitrix, LLC, et al., the Massachusetts Supreme Judicial Court, interpreting the phrase “agent having the management of the corporation” for the first time since it was added to the Wage Act in 1935, ruled that, as long as board members and investors acted in their ordinary capacities, they were not such agents and could not personally be liable for violations.
In Segal, the former president and chief executive officer of Genitrix, asserted that two former board members of the company, H. Fisk Johnson III and Stephen Rose, should be individually liable for wages that Segal claimed he was owed for services he performed for the company. Neither Johnson nor Rose was the president, treasurer, or any other officer of Genitrix. The Appeals Court, relying on Cook v. Patient Edu, ruled that Segal might have viable claims against Johnson and … Keep reading
In a recent blog post, I discussed how all-encompassing a fiduciary duty can be and how in-house counsel in closely held businesses might want to advise insiders about measures that could curb or even eliminate some of those duties. A new case from the Massachusetts Superior Court, Christensen v. Cox, highlights some other need-to-know aspects of fiduciary duties.
Clayton Christensen is a leader in the field of “disruptive innovation,” and he and his brother, Mathew, are involved in at least two companies working in that area, Disruptive Innovation GP, LLC and Rose Park Advisors, LLC. In 2010, Shawn Cox was hired as an employee at will of Rose Park, although he ended up providing various services to both companies. In April of 2013, Cox notified the Christensens that he would be taking a new job, and his last day of employment with Rose Park was at the end of May.
Shortly after Cox left, he asserted that he had been given equity in Disruptive Innovation and demanded a distribution based on that equity. While the Christensens disputed that Cox had been given any equity in Disruptive Innovation, Cox pointed to an April 2013 memo (signed by … Keep reading
Longstanding Massachusetts law holds that officers, directors, partners, and even equity holders in closely held corporations owe their respective entities and related equity holders a fiduciary duty to act with the utmost good faith and loyalty and “the punctilio of an honor ….” While that might sound eminently reasonable, if one has a fiduciary duty, she can risk personal liability by engaging in a variety of conduct that might seem to make sound business sense and/or appear to be completely benign.
For instance, if an officer of one company causes it to enter into a contract with another, and the officer has an equity interest in the second entity, he is exposed to a claim for self-dealing – even if it appears that the transaction will benefit both businesses. Likewise, a partner who invests in a business similar to her partnership could be sued for a “diverting a business opportunity” if she did not offer her partners an opportunity to participate equally in the investment.
Plainly, therefore, imposing fiduciary duties can have a chilling effect on conduct and transactions that might be good for business or, at least, would not be unfair. Fortunately, however, cases like the recently decided … Keep reading
As I have counseled many clients, a non-compete provision is different than most other contractual terms, because simply having mutual consent and consideration will not automatically render it enforceable for reasons of public policy. Thus, even in states like Massachusetts that are known to enforce non-competes, such restrictions will be deemed invalid unless they are reasonable in time and scope and also are necessary to protect against unfair competition – which occurs when the employee uses the company’s confidential information, trade secrets or goodwill to compete against it. As oxymoronic as it may sound, a non-compete that merely prevents “ordinary competition” will be deemed unreasonable and unenforceable.
While some businesses try to make an end-run around this law by requiring an employee to forfeit some benefit or pay liquidated damages if he/she competes against his/her company, any such requirement will be viewed through the same public policy lens used to scrutinize a formal non-compete provision. Indeed, as the Supreme Judicial Court of Massachusetts noted long ago in Cheney v. Automatic Sprinkler Corp.:
If forfeiture for competition provisions were enforced without regard to the reasonableness of their terms while covenants not to compete were subjected to such a
… Keep reading