Companies often use written Employment Agreements to set out the duties/responsibilities of, and the compensation/benefits to, some or all of their employees. The most obvious reasons for doing so are to ensure clarity and limit the chance that either might misunderstand the other’s expectations. While using such documents is all well and good, what happens when an employee takes on responsibilities that go beyond the scope of what is covered by a written agreement? As one Massachusetts company recently learned, the answer to this question can be unpredictable and expensive.

In 1988, Ronald Nardone began working for LVI Services, and he eventually rose to become corporate vice-president of business development. At various times from 1997-2005 LVI was searching for investors, and Nardone became part of the “roadshow presentation” team that sought such investments. In that regard, LVI’s one-time President, Burton Fried, testified:

I asked [Nardone] if he wanted to appear and give the presentation on behalf of the business development aspect of the business and he said yes. … I didn’t require him, he just accepted the invitation.

After one of the roadshows in 2005, Nardone learned that a large investment was going to be made, and all of … Keep reading

Over the years, I have written a lot of blog posts on the attorney-client privilege, and they cover a wide variety of issues. One issue that comes up very frequently (whether in-house counsel realize it or not) is what happens when a communication with an attorney intertwines legal and business advice? As Marriott Vacations Worldwide found out last year, the answer is not always crystal clear and, more importantly, may create issues for in-house counsel and the client.

As part of Marriott’s discovery responses in RCHFU v. Marriott Vacations Worldwide, the company objected to producing a strategic plan memorandum to the Corporate Growth Committee (the “CGC”) based on the attorney-client privilege. The plaintiff challenged Marriott’s objection, which left Marriott with the burden of proving that the CGC memorandum was privileged. In analyzing the issue, the Court began by recounting a few overarching principles:

Business communications are not protected merely because they are directed to an attorney, and communications at meetings attended or directed by attorneys are not automatically privileged as a result of the attorney’s presence. The corporation must clearly demonstrate that the communication in question was made for the express purpose of securing legal not business

Keep reading

As I discussed in a blog post several years ago, even an informal email can constitute acceptance of a contractual offer. Moreover, just a few months ago, Judge Timothy Hillman took this principle one step further by ruling, in Witt v. American Airlines, that an exchange of emails can form a binding settlement agreement, even if the parties have not agreed to all of the terms of that settlement.

In 2014, Diane Witt sued American Airlines for injuries she claimed to have sustained while on a flight. After litigating that case for more than three years, the parties finally engaged in serious settlement discussions. Ultimately, American Airlines’ counsel sent the following email to Witt’s counsel:

I have been informed $15,000 is firm (together with acceptable release) and that the settlement must happen promptly before more costs are incurred. This really needs to get done this week and certainly before any further hearing for the experts have to spend any more time preparing for deposition.

Witt’s counsel eventually responded: “Thanks for getting back to me. Ms. Witt accepts the settlement offer of $15,000. Please send the proposed release when you can.”

Less than one month later, however, Witt’s counsel … Keep reading

While employee reviews have obvious benefits from a Human Resources standpoint, implementing a policy that ensures employee reviews are well-crafted and accurate today, can go a long way toward insulating the company from potential liability tomorrow. Courts have consistently held that discharged or transferred employees can use performance reviews to show that they were treated differently based upon their membership in a protected class. In such “disparate treatment” cases, a performance review may establish or contradict that: 1) the employee was qualified for a position; and 2) someone outside of the protected class with similar qualifications was treated more favorably.

When deciding whether an employee was “similarly situated” to someone who may have been treated more favorably, a court will consider “whether a prudent person, looking objectively at the plaintiff and her comparator would think them roughly equivalent, and similarly qualified for the position.”

Employee reviews may be used as a tool to create evidence of work experience, or lack thereof. For example, if Employee A completed six significant projects in 2018, but Protected Employee B, who held a similar position, only completed three significant projects, employee reviews documenting the work experience of Employees A and B may be … Keep reading

In this installment of The In-House Advisor, we interview Bill Gabovitch, General Counsel at Primark U.S. Corp. Primark is a fast-fashion retailer, based in Europe, with 350 stores in 10 countries. The company’s first U.S. store opened three years ago – in the former Filene’s space at Downtown Crossing, Boston – and it now operates nine stores in five Northeast states. Bill is a former associate general counsel at Staples, a former associate at two Boston law firms, and a graduate of Indiana University and the University of Pennsylvania School Of Law. He lives in Newton, MA, with his wife Lauren and their daughters Rebecca and Naomi.

The In-House Advisor: What do you see as the main focus of your role as in-house counsel, and how do you see that role evolving over the next few years?

Bill Gabovitch: Overall, the value that an in-house counsel brings to the table is in how much he or she helps the business achieve its objectives with the lowest reasonable risk. Sometimes that involves helping on a transaction or a strategy, or choosing the right way to deliver the company’s products or services to the market, after properly assessing for … Keep reading

While most parties and their counsel are vigilant in keeping their communications confidential, so as to avoid any chance that the attorney-client privilege can be invaded, there are some situations in which a party makes a tactical decision to waive that privilege. When this happens, courts generally agree that such a waiver will extend to all communications on the same “subject matter” as the disclosed communications. Having said that, however, there do not appear to be any general guidelines or bright-line tests to determine what is meant by the subject matter of a communication. Rather, such analyses are done on a case-by-case basis.

While trying to determine what a court will define as the scope of the subject matter of a particular communication can be a bit like reading tea leaves, a related area that is even more fraught with peril is where a party decides to have counsel undertake an investigation and then publicizes some or all of a report generated from that investigation. Indeed, this is the exact, and unfortunate, position in which the Hamilton County (Tennessee) Board of Education found itself earlier this year.

In 2015, three members of a high school basketball team located in … Keep reading

Electronic agreements have become a staple of today’s e-commerce world, and such agreements generally are as enforceable as those written on parchment and signed with a quill pen. One notable exception, however, is where the proponent of such an agreement seeks to enforce an arbitration provision. In that case, more may be required than simply having a clause stating that all disputes must be resolved through arbitration at the AAA, JAMS, or some other organization. Indeed, that is the hard lesson the defendants in Cruz v. Jump City Everett LLC (34 Mass.L.Rep. 586) learned earlier this year.

In 2015, after visiting the defendants’ recreational trampoline facility with his two minor children, Elmer Cruz filed suit in Suffolk Superior Court, claiming that he suffered an injury at the establishment. The defendants moved to dismiss that claim, contending that Mr. Cruz had affixed his electronic signature to a “Participant Agreement” that included a clause requiring all disputes to be resolved via arbitration. Mr. Cruz countered by submitting an affidavit in which he asserted that (i) he does not speak English; (ii) his son, who does speak English, led Mr. Cruz to a computer screen, where the son entered various information and … Keep reading

In Part I of Key Changes to Massachusetts Noncompetes, I outlined some of the most significant new mandates that will apply to all noncompete agreements executed on or after October 1. In this post, I want to discuss some of the practical implications of the new law and how in-house counsel might address them.

  • The new law does not apply to covenants not to solicit customers, clients, or vendors of the employer

 

While this may not sound like a significant exception, in many instances, it provides the ultimate loophole. For example, if your company uses noncompetes primarily or exclusively to prevent your sales force from competing against you, simply revising those agreements so that they are structured as nonsolicitation agreements may give you most, if not all, of the functional protections of a noncompete – but without having to worry about any of the requirements of the new law.

  • Noncompete agreements entered at the outset of employment only are valid if they are provided to the employee by the earlier of a formal offer of employment or 10 business days prior to the commencement of employment

 

In light of this, it is critical that in-house counsel … Keep reading

Over the years, I have written blog posts related to a plethora of nuances concerning noncompetition agreements. While the signing into law last Friday of new legislation on noncompetes does not eviscerate them (despite advocacy on the part of some for such a result), there are a number of new mandates that significantly change the legal landscape – but only for noncompete agreements entered into on or after October 1, 2018. Here are what I believe to be the most significant changes to Massachusetts noncompete law:

I. The definition of noncompetes does NOT include, and the new law will NOT apply to:

  • A. Covenants not to solicit or transact business with customers, clients, or vendors of the employer
  • B. Noncompetes in the context of the sale of a business or substantial assets thereof, when the individual is a “significant” equity holder and will receive “significant” consideration for the transaction
  • C. Noncompetes in connection with a separation agreement, if the employee is given seven days to rescind the agreement
  • D. Covenants not to solicit or hire employees of the employer

II. To be valid, a noncompete MUST meet ALL of the following conditions:

  • A. The noncompetition period may
Keep reading

As I noted in a prior post, the differences between arbitration and litigation go well beyond the fact that arbitration generally is a quicker and less expensive process. As such, there are a host of reasons why a company may want certain disputes – including, but not limited to, those brought by its own employees – resolved through arbitration. Similarly, companies almost always want to avoid the risk of being sued in a class action. Recently, the U.S. Supreme Court, in its consolidated decision in Epic Systems Corp. v. Lewis; Ernst & Young LLP v. Morris; and NLRB v. Murphy Oil USA, Inc., ruled that class action waivers are enforceable.

As Justice Gorsuch noted at the outset, while the three consolidated cases had different facts, they each essentially revolved around the same related questions:

Should employees and employers be allowed to agree that any disputes between them will be resolved through one-on-one arbitration? Or should employees always be permitted to bring their claims in class or collective ac­tions, no matter what they agreed with their employers?

In the Ernst & Young case, Stephen Morris entered into an employment agreement with E&Y, stating that (i) all … Keep reading