Two weeks ago, I participated on a panel for a webinar on liquidated damages with three other panelists from New Jersey, Florida and Texas. In preparing with the other panelists, I was surprised to learn that while there are many common threads running through the law of liquidated damages across the country, there also are some startling differences depending upon which jurisdiction’s law controls.
When thinking about liquidated damages, most people focus on the fact that a properly drafted liquidated damages provision will enable the non-breaching party to recover a set amount without ever having to prove how much, if any, actual damages were incurred. What people often forget to consider, however, is that a liquidated damages clause also sets a ceiling for damages.
Convincing a court that a company has properly classified a worker as an independent contractor has become increasingly difficult in Massachusetts. So, the Massachusetts Supreme Judicial Court’s decision just last week that taxicab drivers are, in fact, properly classified as independent contractors was somewhat unexpected.
In this installment of The In-House Advisor, we interview Stacey Constas, Senior Corporate Attorney / Corporate Governance Officer at Standex International Corporation, a global manufacturer of industrial components and food service equipment, trading on the NYSE. In addition to serving as the Chief Governance Officer, Stacey manages all employment, product liability, litigation and environmental compliance for the corporation. She also is a corporate generalist, conducting acquisitions and divestitures, and assisting business divisions with a wide variety of commercial, contractual and legal issues.
Earlier this week, the U.S. Supreme Court declared that a new test applies for pregnancy discrimination. In Young v. UPS, the Supremes decided that in pregnancy discrimination actions under the federal Pregnancy Discrimination Act (“PDA”), the long-standing McDonnell-Douglas burden shifting test does not apply. Employers should ensure their policies, especially any light duty policies, comply with the Young decision.
It makes perfect sense that when entering into a new business relationship the parties (and their counsel) are keenly focused on getting things started. While there is nothing wrong with this, sometimes parties forget to memorialize, or even discuss, when, how and under what circumstances their contractual obligations will end. A recent case from the Massachusetts Appeals Court, Robert and Ardis James Foundation v. Meyers, reminds us that failing to spell out when a contract ends can result in seemingly unfair consequences.
No doubt, ensuring that any agreement is consistent with judicial precedent is critical if you want to enforce that agreement at some point in the future. Nevertheless, merely incorporating precedential concepts or language into an agreement may not be enough to get your client to where it wants to be, and may even result in your client being put in a more difficult position than if the precedent had been ignored. Nowhere is this more apparent than when a company seeks to draft and implement a standard and seemingly straightforward noncompete covenant.
The obvious purpose of a liquidated damages provision is to make your client whole in the event that your business partner breaches the agreement. Nevertheless, K.G.M. Custom Homes. v. Prosky highlights that simply having a valid and enforceable liquidated damages provision is not enough to ensure this.
For years, the Massachusetts Maternity Leave Act (“MMLA”), M.G.L. c. 149, §105D, only applied to female employees by its literal terms. The Massachusetts Commission Against Discrimination (“MCAD”), the agency tasked with enforcing the MMLA, has taken the position that if the MMLA was applied literally, it would be unconstitutional, as it would give female employees greater employment rights than men. Although initially intended to protect women who were giving birth to children, since the MMLA also protects women who adopt children, it is not about the physical “disability” associated with giving birth to a child. Thus, the argument goes, men should also be covered by its protections. The conflict between the literal terms of the MMLA and the MCAD’s guidelines for interpreting the MMLA created difficulty for employers who were not subject to the Family and Medical Leave Act (which entitles eligible employees, regardless of gender, to up to 12 weeks of unpaid leave for the birth or adoption of a child).
On his last day in office, Governor Deval Patrick settled the matter once and for all, by signing into law a bill that expressly expands the protections of the MMLA to all employees, regardless of gender.
In order to obtain a an injunction under federal law, the moving party has to show each of the following:
(i) It has a likelihood of success on the merits of its claim.
(ii) Without injunctive relief, it would risk suffering irreparable harm.
(iii) Such harm outweighs the irreparable harm that the non-moving party would suffer if an injunction were to enter.
(iv) Entering an injunction is in the public interest.
In addition, however, Rule 65(c) of the Federal Rules of Civil Procedure states that:
The court may issue a preliminary injunction or a temporary restraining order only if the movant gives security in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined or restrained.
Indeed, as a recent case from the District of Massachusetts confirms, this is no small technicality, and something to which any company should give due consideration before having its outside litigation counsel seek injunctive relief.