Contracts

 

You have gone back and forth with an adversary via email several times and keep getting closer to a monetary settlement. Finally, the other side makes an offer that is over your bottom line, and you want to put the matter to rest. Should you accept? Maybe, but before you do, be sure that you have thought through all the non-monetary components of that offer. Failing to do so could end up binding you to an agreement that does not include provisions that are important to your client.

Lane v. Powell started as a wrongful death and personal injury action that became particularly nasty during the litigation. Certain lawyers, expert witnesses and other non-parties were accused of defamation and criminal witness tampering. Eventually, summary judgment limited the claims in the case, and the remaining parties engaged in serious settlement negotiations. After several emails between counsel closed the gap, the following exchange took place:

  • First, Defendants’ counsel wrote: “I’ve got $120,000 for all claims and nowhere else to go for more.”
  • Two days later, Plaintiffs’ counsel responded: “$120,000 is accepted. …The releases will include the 93A case, but no confidentiality.”
  • Twelve minutes later, Defendants’ counsel answered: “Excellent, that’s great.
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How many times over the years have you seen a clause in a contract stating that it only can be modified by a written instrument signed by the parties? Depending upon how long you have been practicing, the answer may well be hundreds, if not thousands. The problem with such a clause, however, is that it may not be as binding as it appears. Indeed, in a recent decision by Judge Saris in the Federal District Court, she ruled that a series of contracts prohibiting oral modifications or modification by conduct were, in fact, modified by words and acts.

In May of 2019, Sasha Hoffman began working for Thras.io Inc. pursuant to a written “Consulting Agreement” covering the period May 1 through July 31, and the parties subsequently entered into three additional Consulting Agreements that extended the term of her work through October. Each Consulting Agreement contained the following clause:

No provision of this Consulting Agreement may be modified, amended, waived or terminated except by a prior instrument in writing signed by the parties to this Consulting Agreement. No course of dealing between the parties will modify, amend, waive or terminate any provision of this Consulting Agreement

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Over the years, I have written a number of blog posts dealing with forum selection clauses, often in disputes where a party who wanted to enforce those provisions was not able to do so. While in-house counsel may view a forum selection clause as a boilerplate provision (and that is not necessarily inappropriate), it is critical that such a boilerplate provision be drafted properly. As the First Circuit’s recent decision in Bautista Cayman Asset Co. v. Fountainebleu Plaza, 2021 WL 2154778, confirms, failing to do so can lead to a forum selection clause being of little or no value.

In March of 2017, Bautista Cayman Asset Company brought a collection action against Fountainebleu Plaza, S.E. and others in the Federal District Court for the District of Puerto Rico. While Bautista eventually was awarded summary judgment on its claim, the defendants appealed, arguing that the Federal District Court had no subject matter jurisdiction, because the parties’ contract had a forum selection clause stating:

In the event of any litigation that arises in connection with this contract, with the Loan, or with the other documents connected hereto, the parties submit to the jurisdiction of the General Court of Justice

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As part of your company’s onboarding process, all employees sign an agreement making it crystal clear that if there ever is any dispute between them and the company, that dispute must be decided by an arbitrator in arbitration and not by a judge or jury in a court of law. Your agreement then adds a belt to those suspenders by itemizing a wide variety of specific claims that would be covered by the agreement and, thereby, subject to arbitration. Your agreement even specifically includes a statement to the effect that employees have a right to consult with an attorney of their own choice before signing the document. Surely, then, when an employee brings a suit in a court of law, you will be able to dismiss the claim and compel arbitration, right? Well, as GrubHub learned earlier this year, that may not be the case.

From September of 2016 through July of 2019, Veronica Archer worked for GrubHub as a driver delivering food and other products to consumers. At or about the time her employment with GrubHub began, Ms. Archer electronically signed an agreement that included provisions akin to those described above. In October of 2019, Ms. Archer joined … Keep reading

One of the prime reasons many companies require employees to arbitrate disputes is to ensure confidentiality. Indeed, absent an arbitration provision, an employee can file publicly available papers containing unfounded and scurrilous allegations that leave the employer with no recourse but to litigate or settle. Moreover, even if the employer eventually prevails, severe damage may be done by having its name dragged through the mud due to the publicity associated with the claims.

As the recent decision in Boursiquot v. United Healthcare Services of Delaware confirms, however, merely having a clause mandating that disputes be arbitrated is not be enough to ensure confidentiality. And there is no reason to leave this to chance.

In the Spring of 2016, Yvlande Boursiquot was a student beginning an unpaid internship with United Healthcare. As part of her onboarding with the company, Ms. Boursiquot was asked to sign an agreement entitled “Alternative Resolution for Conflicts Agreement,” and that Agreement included the following language:

Except as it otherwise provides, this Agreement is intended to apply to the resolution of disputes that otherwise would be resolved in a court of law or before a forum other than arbitration. This Agreement requires all such disputes to

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When Jeremy Hernandez, a California resident, went to work for Oxford Global Resources, a Massachusetts company, in 2013, he signed a non-competition agreement. In 2016, Hernandez resigned from Oxford and, apparently unbeknownst to Oxford, began working for one of its competitors. Several months later, Oxford received an anonymous tip that Hernandez had taken Oxford’s confidential, client information and was using it to solicit customers for his new employer. Shortly thereafter, Oxford sued Hernandez in the Superior Court in Massachusetts based on a forum selection clause stating:

All suits, proceedings and other actions relating to, arising out of or in connection with this Agreement will be submitted to the in personam jurisdiction of … the courts of the Commonwealth of Massachusetts …. Venue for all such suits, proceedings and other actions will be in Massachusetts. Employee hereby waives any claims against or objections to such in personam jurisdiction and venue. [Emphasis added]

Notwithstanding the foregoing language, Hernandez moved to dismiss Oxford’s complaint on the grounds of forum non conveniens and the Superior Court allowed that motion. Oxford appealed, and the Supreme Judicial Court of Massachusetts took the case on its own initiative (by-passing the Appeals Court). Surprisingly, the SJC … Keep reading

In another post, I discussed how an email can satisfy the signature requirements of the Statute of Frauds. Nevertheless, an email is not always sufficient. Indeed, as the plaintiff in Terry v. Vinfen recently learned, sometimes you just have to do things the old fashioned way, and send a letter.

In June of 2019, Richard Terry filed a lawsuit against Vinfen and one of its employees. Not long thereafter, the parties engaged in mediation, which resulted in a settlement. After verbally acknowledging that settlement on the record, a written settlement agreement was prepared and executed by all parties on October 10, 2019. In order to comply with the Older Workers Benefit Protection Act, the settlement agreement specifically provided that Terry:

May revoke [the Settlement] Agreement within seven (7) days after he signs it, by delivering a letter in hand or first class mail (postage prepaid), to Jaclyn Kugell, Morgan, Brown & Joy, LLP, 200 State Street, Boston, MA 02109. This [agreement] shall be of no force and effect unless Mr. Terry … does not revoke this [agreement] within the seven (7) day period outlined [in the previous sentence].

On October 13, 2019, Terry emailed Attorney Kugell, stating: … Keep reading

While being a defendant in a lawsuit is no fun, being a defendant in a class action lawsuit is especially painful. If you are in-house counsel in a service business, you may be particularly vulnerable to such actions and, no doubt, want to do whatever you can to avoid them. One strategy that has been employed over the years to thwart class actions is to include an arbitration clause in service agreements. Sometimes, however, companies also want to reserve the right to unilaterally modify the terms of their agreements – and doing so can invalidate an arbitration clause. Nevertheless, a recent decision from the Federal District Court of Massachusetts in Wainblat v. Comcast shows how one company was able to thread this needle and achieve both objectives.

Robert Wainblat was a Comcast customer, and in 2017 he agreed to a Subscriber Agreement that required arbitration for:

[A]ny claim or controversy related to [Comcast] or our relationship, including but not limited to any and all: (1) claims for relief and theories of liability, whether based in contract, tort, fraud, negligence, statute, regulation, ordinance, or otherwise; (2) claims that arose before this or any prior Agreement; (3) claims that arise after

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When seeking to enforce a restrictive covenant, whether a noncompete or a nonsolicit, the standard play-book calls for an aggrieved party to file suit and seek a temporary restraining order and preliminary injunction to preclude the defendant from continuing to compete or solicit during the restrictive period. In order to obtain such relief, however, a plaintiff must show not only that it is likely to succeed on the merits, but also that (i) absent such relief it has a substantial risk of suffering irreparable harm, and (ii) the risk of such harm outweighs the risk of irreparable harm to the defendant if injunctive relief were to issue. Thus, it is possible that even if a plaintiff convinces the court that the defendant is violating a restrictive covenant, the court may not grant any injunctive relief. (One common scenario where this happens is when the defendant can show that enforcing the restrictive covenant, essentially, will prevent him/her from being able to be gainfully employed.)

Assuming your case is strong, even if no injunctive relief enters, you still may want to pursue a claim for damages against your former employee. While that is all well and good, proving damages for a … Keep reading

Your company is entering into a contract with a new business partner and everything looks rosy. As a savvy General Counsel, however, you know that even the best of situations can turn sour a few months or a few years into the relationship. Coincidentally, you just read an article by Attorney David Tang in which he suggests including a clause in business contracts mandating that before a lawsuit or arbitration can be filed, the parties must first (i) have senior principles of the contracting parties meet to try to resolve the impending dispute; and, if that fails, (ii) engage in formal mediation.

The theory behind such multi-tiered pre-litigation dispute resolution mechanisms is straight-forward and quite laudable: if the parties can resolve a dispute without resorting to litigation or arbitration, they likely will save themselves a lot of pain, anxiety and, most of all, money. In reality, however, forcing people to engage in settlement discussions may actually cause one party or the other to lose substantive rights. Take this real life example that I lived about 12 years ago….

My client engaged me to sue its business partner and obtain a temporary restraining order to enjoin him from engaging in … Keep reading