August 2012

In Some Cases Victory Can be Determined by a Preemptive Suit

First to file in local jurisdictionIn my recent post, Ensuring Your Dispute is Resolved in the Forum You Want is Not Always Easy, I discussed various issues related to contractual forum selection clauses, i.e., clauses which dictate where parties can or must sue.  If a contract does not have a forum selection clause, courts in each of the contracting parties’ home states might be able to exercise jurisdiction over a dispute.  Further, and as many in-house counsel have experienced, the ultimate venue for litigation can create a substantial amount of leverage in favor of the home team and work to the detriment of the out-of-state party. 

If you believe that your company is likely to be sued by another in some far off jurisdiction, consider the following advice:

If you know you are going to be in a fight, make sure to get in the first punch."

I can’t emphasize enough the importance in evaluating whether you are going to be sued – as opposed to whether you might be sued. If you do not see any way to avoid litigation, following the above rule can pay real dividends, as it did for one of my clients several years ago.  In Keep reading

NLRB Employee Confidentiality

NLRB Employee ConfidentialityIn a prior post, I had discussed the importance of properly investigating allegations of sexual harassment.  Now, the National Labor Relations Board (NLRB) has added a related issue to consider: When can employers prohibit employees from discussing ongoing investigations? 

In its July 31, 2012 decision in Banner Health Systems, d/b/a Banner Estrella Medical Center and James A. Navarro, the NLRB held that Banner Health’s ongoing policy to instruct employees not to discuss ongoing investigations of employee misconduct with other employees was unlawful.  This decision was grounded in the finding that Banner Health did not have business interests that outweighed the employees’ rights under Section 7 of the National Labor Relations Act to engage in protected, concerted activity for mutual aid and protection.

In Banner, the employer’s human resources consultant routinely informed employees when they complained of employee conduct in violation of company policies or law that they should not discuss the matter with other employees while the investigation was ongoing.  Banner Health based its prohibition on its “generalized concern over protecting the integrity of its investigations;” however, the NLRB found Banner Health’s justification unpersuasive and insufficient to override employee rights under Section 7, which states:


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While many employers take comfort in knowing that some or all of their employees have agreed to non-compete covenants, obtaining and enforcing such agreements does not come without costs.  As such, it is important for in-house counsel to explore with their business clients whether it really makes legal and economic sense to seek such agreements.  Among the issues you may want to raise are the following:

Issue # 1: How Likely is it that the Contemplated Non-Compete Would Be Enforceable?

Most in-house counsel who have had any dealings with non-compete covenants know that if such a covenant merely limits competition, it is not enforceable.  Because many business clients do not have a clear understanding of this counterintuitive principle, in-house counsel can save a lot of future angst if they make sure that the business people know right from the start that a non-compete covenant only is enforceable if it is necessary to protect confidential information, goodwill or trade secrets.  Indeed, because there are many situations in which none of these three interests will be protected by a non-compete, if your client knows this up front, s/he may decide that it is not worth the time and expense to even … Keep reading