Pre-Litigation Considerations

Under the Massachusetts Wage Act, M.G.L. c. 149 § 150, a terminated employee is entitled to be paid all wages, including accrued vacation time, on the day of termination, and the failure to do so makes the employer liable for mandatory treble damages and attorneys’ fees. As the Supreme Judicial Court recently ruled in Reuter v. City of Methuen, while this rule may seem harsh and offers no “good faith exception,” that is what the legislature intended. Indeed, Reuter is a cautionary tale from which in-house counsel should take note.

After having worked for the City of Methuen for 25 years, Beth Reuter was convicted of larceny, prompting the City to terminate her employment. At the time of her termination, Reuter was owed $8,952.15 for accrued vacation time, which the City did not pay until three weeks later. Eventually, Reuter’s counsel noted that the City’s conduct violated the Wage Act and demanded triple the accrued vacation pay and attorneys’ fees (less the $8,952.15 already paid). Reuter filed suit, and the City took the position that because it paid the accrued vacation amount before any demand had been made and prior to the lawsuit being filed, the most for … Keep reading

Massachusetts General Laws Chapter 93A is one of the most potent weapons in any business litigator’s arsenal. That statute prohibits deceptive or unfair acts or practices in the course of trade or commerce, and it allows for the recovery of attorneys’ fees and even multiple damages (when the malevolent conduct is knowing or willful). While many cases have held that a mere breach of contract alone is not to invoke Chapter 93A liability, other cases have held that leveraging a business partner into a concession even if there is no breach of a contractual obligation is actionable under Chapter 93A.

In light of this, it should come as no surprise that for years transactional attorneys have been trying to insulate their clients from the reach of Chapter 93A by using limitation of liability clauses. Unfortunately, the law as to the enforceability of a limitation of liability clause in the Chapter 93A context has been murky. Essentially, precedent set by the Appeals Court held that such provisions could be enforced if the alleged deceptive or unfair conduct arose out of contractual conduct but could not be enforced where the conduct at issue was tort-based (as in the case … Keep reading

In some contracts, a party must meet its obligations by a certain date or forfeit its rights, and some of those contracts also include a “time is of the essence” clause. As most practitioners know, coupling a date for performance with a time is of the essence clause means that the deadline is inflexible. Having said that, there also are a number of cases where such hard deadlines were deemed to have modified by the conduct of the parties. Seee.g., McCarthy v. Tobin.  However, it is perilous to assume that your negotiations imply an extension when a time is of the essence clause is in play. Indeed, that is exactly what happened to the defendant in Reem Property, LLC v. Transfer Financial, LLC.

Reem Property was the high bidder in a foreclosure sale of real estate, and it entered into a Memorandum of Understanding with Transfer Financial to purchase that property. Pursuant to the MOS, Reem paid a $10,000 deposit. The time for closing was set for 12:00 p.m. on June 30, 2014, and time was of the essence. Before the closing, Reem’s counsel found that there was a problem with the newspaper advertisement … Keep reading

 

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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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