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
… Keep reading
Dennis Burke is the well-known surgeon who blew the whistle on a surgical practice at the Massachusetts General Hospital known as “concurrent surgery” or “double booking.” After Dr. Burke publicized that practice, MGH engaged attorney Donald Stern to investigate the matter, which led to the Stern Report. MGH also terminated Dr. Burke, who then sued the hospital, claiming that he was fired in retaliation for publicizing its concurrent surgery practices. As part of his discovery in that case, Dr. Burke sought the contents of the Stern Report, and the hospital resisted, claiming, among other things, that the Stern Report was protected from disclosure by the attorney-client privilege. The Superior Court ultimately disagreed, however, and, although the case settled while that decision was on appeal, the Superior Court’s analysis (available at 2019 WL 6197040) provides a variety of points that should be of interest to any in-house counsel who is concerned about keeping internal investigations (and other communications) confidential.
First, while MGH asserted that the Stern Report was privileged, the Court focused on two factors to repudiate that assertion: (i) the engagement letter with Attorney Stern did not indicate that any report authored by Attorney Stern would be imbued with … 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
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
Who wouldn’t want to be able to dictate the terms of a contract rather than having to negotiate them with someone whose interests are not completely aligned with your own? If you ever find yourself in such a position, however, keep in mind that if a contract is too one-sided, it can be ruled illusory and unenforceable. Indeed, that is exactly what happened to the defendant in McNamara v. S.I. Logistics, Inc. when it tried to enforce its contractual right to arbitration.
Green Smoke, Inc. (which later changed its name to S.I. Logistics) was in the business of selling e-cigarettes, and it used third-party “Affiliates” to market its products. Tim McNamara became a Green Smoke Affiliate in late 2009 or early 2010, and the following year the company implemented a new (and mandatory) Affiliate Agreement. Any Affiliate who refused to sign on to the 2011 Agreement became ineligible to receive Green Smoke commissions going forward.
In 2014, McNamara was terminated from Green Smoke’s Affiliate program, and he subsequently sued Green Smoke for breach of contract and a variety of other claims. Green Smoke responded by moving to dismiss the complaint and compel arbitration. In support of its position, Green … Keep reading
In some transactions, such as those involving the acquisition of a business, the deal may be documented through a primary contract and subsidiary agreements that are referenced in, or even attached as Exhibits to, the primary. While there is nothing inherently good or bad about papering a transaction this way, it is important to keep in mind that doing so may mean that the dispute resolution provisions of the primary contract do not apply if litigation arises and only involves a claimed breach of a subsidiary contract. Indeed, that is the hard lesson that was learned by the defendant in National Dentix, LLC v. Gold.
In 2000, National Dentix acquired Phillip Gold’s business, and the transaction was documented with three agreements: a Stock Purchase Agreement (“SPA”), an Employment Agreement (“EA”) and a Non-Compete Agreement (“NCA”). While executing the EA and NCA were conditions precedent to – and even were attached to – the SPA, the EA and NCA contained standard integration clauses, which essentially said that each contract set forth the entire understanding between the parties with respect to the subject matter thereof. Further, while the SPA contained an arbitration clause, and the EA and NCA did not, … Keep reading
While the attorney-client privilege only protects confidential communications between an attorney and client that are for the purpose of giving or receiving legal advice, the work product doctrine, as codified in Fed. R. Civ. P. 26(b)(3), is much broader:
Ordinarily, a party may not discover documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative (including the other party’s attorney, consultant, surety, indemnitor, insurer, or agent) ….
Further, given that the work product privilege is designed to protect an attorney’s mental impressions, federal common law has extended work product protections to verbal communications even if they are not memorialized in documents and/or in other tangible ways. Having said that, however, as the Northern District of California recently discussed in Schenwick v. Twitter, assuming that the work product privilege will protect your attorney’s communications with a non-party can be a risky proposition.
In Schenwick, the plaintiff’s representative interviewed several “confidential” witnesses prior to filing suit, and the defendants sought to discover what was said in those interviews. Defendants objected based on the work product privilege, and the Norther District of California made three underlying rulings … 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 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
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