I have written a number of blog posts on liquidated damages over the years, and one of the foundational points under Massachusetts law is that they will be enforceable if, but only if, at the time the contract is executed:
- It would be difficult to determine the damages that would accrue if the contemplated breach were to occur; and
- The liquidated amount designated in the contract is a reasonable estimate of the actual damages that a party would suffer if the breach were to occur.
In Cummings Properties v. Hines, the Supreme Judicial Court emphatically re-affirmed Massachusetts’s commitment to this “single look” doctrine.
In 2016, Cummings Properties entered into a five-year lease with MCO, Inc., and Darryl Hines, MCO’s sole officer and director, signed on as guarantor. The lease provided that if MCO defaulted, Cummings could terminate and the “entire balance of rent due . . . immediately [would] become due and payable as liquidated damages, since both parties agree that such amount is a reasonable estimate of the actual damages likely to result from such breach.”
Within only a few months of signing the lease, MCO defaulted on its payment obligations and was evicted. One … Keep reading
Most people expect that by signing a contract they are going to be bound by it absent special circumstances. But do situations where the signatory is unsophisticated and/or doesn’t even speak the language in which the contract is written qualify as such special circumstances? As the Massachusetts Appeals Court recently confirmed in Lopez Rivera v. Stetson, the answer to that question is a resounding No!
Carlos Lopez Rivera was awaiting surgery and signed a form stating that any disputes regarding the surgery would be subject to arbitration. Notwithstanding the foregoing, Lopez Rivera later filed a malpractice action against Steven Stetson in the Massachusetts Superior Court. Stetson moved to dismiss based on the arbitration clause in the form Lopez Rivera signed, but Lopez Reiver countered that because he did not speak English and no one translated the form to him, his supposed agreement to arbitrate was invalid based on the doctrines of fraud, mistake and unconscionability.
The Superior Court agreed with Lopez Rivera, noting that he did not speak English and no translation of the form was provided to him. Stetson appealed that ruling, and the Appeals Court acknowledged that a party who signs a contract can avoid his … Keep reading
A recent decision from the Superior Court of Massachusetts in MIM Mass Convertible Note v. MIM Management, LLC reminded me of other posts I have written warning that a seemingly clear choice of law provision is not always clear enough.
In MIM Mass Convertible Note, the parties had a business relationship memorialized by a promissory note and Loan Agreement, paragraph 23 of which stated that “The laws of [South Carolina] shall govern in the interpretation, enforcement, and all other aspects of the obligations and duties created under this Agreement and all other instruments referred to in this Agreement.” Sounds pretty clear and all-encompassing, right…?
The relationship between the parties eventually soured, and the plaintiff filed suit. The defendant answered, and filed counterclaims, including a counterclaim for deceptive and unfair conduct in violation of Massachusetts General Laws Chapter. 93A.
The plaintiff moved to dismiss the Chapter 93A counterclaim, arguing that the choice of law provision in the Loan Agreement limited claims to those available under South Carolina law, and Chapter 93A was a Massachusetts statute. In addressing that motion, the Superior Court emphasized that the choice of law provision in the Loan Agreement was self-limiting and only … Keep reading
No company wants to be sued by its current or former employees, particularly for discrimination claims. Even if you prevail, litigating such claims inevitably exposes you to public stigma and internal discord. In such situations, an early “procedural victory” can be worth much more than the mere cost savings of legal fees. So, wouldn’t it be nice if you could do something now to either decrease the chance of such a suit being filed and/or increase the chance of obtaining a quick, procedural victory if litigation does ensue? As a recent decision in the Federal District Court, Morales v. FedEx, makes clear, a contractual “statute of limitations provision” may allow your company to achieve these objectives.
Hector Morales began working for Federal Express in 2015 and was terminated on July 31, 2017. In May 2018, Morales filed a claim with the Massachusetts Commission Against Discrimination, alleging that his termination was based on racial discrimination and was retaliatory. In July of 2020, Morales filed a complaint in the Federal District Court, alleging, among other things, that FedEx had discriminated against him in violation of 49 U.S.C. § 1981.
Eventually, FedEx moved for summary judgment on the § 1981 claim … Keep reading
Few terms make litigators shudder like the dreaded spoliation; and for good reason. The consequences of a company’s failure to preserve evidence that might be relevant in prospective litigation can be severe. What many non-litigators (including in-house counsel) may not realize, however, is that decisions made before litigation counsel is engaged can profoundly affect the chances that spoliation will later become a significant issue during litigation. A recent decision in the Business Litigation Session, JFF Cecilia LLC v. Weiner Ventures, LLC, highlights that very risk.
In JFF Cecilia, Weiner Ventures and its principals, Stephen and Adam Weiner, agreed to partner with Suffolk Construction owner, John Fish, to develop a luxury, high-rise tower on Boylston Street over the Massachusetts Turnpike in Boston. Just as construction was set to begin, the Weiners abruptly backed out of the project, which had been over a decade in the making. Four days later, on August 20, 2019, Fish sent the Weiners a formal notice, claiming that they had breached their agreement and stating that he was reserving all rights. While Fish ultimately filed suit, he did not do so until two months later. During the period between Fish’s August 20th… Keep reading
As a follow up to my post a few weeks ago on McLaren Macomb, the NLRB has issued new Guidance of which in-house counsel should take note.
- The McLaren Macomb decision is retroactive. This means that any severance agreement entered into by an employee prior to February 21, 2023, which violates the McLaren Macomb decision, is now unlawful.
- An unlawful severance agreement is a “continuing violation” of the Act, such that the six-month statute of limitations does not prohibit an employee from bringing a claim based upon a past severance agreement entered into over six months ago.
- The decision applies to current and former non-supervisory employees, which means in-house counsel must consider whether past and current severance agreements are lawful.
- Employees cannot waive their right to lawful confidentiality and/or non-disparagement clauses.
- An employee need not execute a settlement agreement for there to be a violation; the Board will find a violation of the Act if an unlawful severance agreement is offered, which could result in equitable and economic remedies in favor of the impacted employee.
- The McLaren Macomb decision impacts any employer communication to employees that tends to interfere, restrain, or coerce an employee’s Section 7 rights (i.e.,
… Keep reading
If your company, like many, includes “standard” confidentiality and non-disparagement provisions in its employee severance agreements, those agreements may contravene a recent NLRB decision, McLaren Macomb. In that matter, the NLRB considered the validity of severance agreements offered to 11 employees who were furloughed where such severance was conditioned on them agreeing to the following, seemingly innocuous, confidentiality and non-disclosure provisions:
Confidentiality Agreement. The Employee acknowledges that the terms of this Agreement are confidential and agrees not to disclose them to any third person, other than spouse . . . professional advisors . . . or unless legally compelled to do so . . . .
Non-Disclosure. At all times hereafter, the Employee promises and agrees not to disclose information, knowledge or materials of a confidential, privileged, or proprietary nature of which the Employee has or had knowledge of, or involvement with, by reason of the Employee’s employment. At all times hereafter, the Employee agrees not to make statements to Employer’s employees or to the general public which could disparage or harm the image of Employer, its parent and affiliated entities and their officers, directors, employees, agent and representatives.
Prior to McLaren Macomb, such provisions had … Keep reading
I just came across a decision issued in the District of Massachusetts, Logue v. The Rand Corporation, and it reminded me of some key aspects of the attorney-client privilege related to in-house counsel about which I have written over the years. Some of those principles include the following:
… Keep reading
While many attorneys aspire to be a General Counsel, the path to becoming a company’s chief legal officer can be even more convoluted than becoming a partner at a law firm. Recently, it was my pleasure to host an engaging panel discussion about what it takes to become a GC – and what it takes to stay there – amongst three outstanding general counsels: Jason Ellis of Staples, Thanda Fields Brassard of Fiduciary Trust of New England, and Levina Wong of Veson Nautical.
Discussion topics included:
- The skills needed to be a General Counsel and how to get them
- How the GC interacts and interrelates with the Board of Directors and C-Suite.
- What you must do as General Counsel to understand the company’s business and stay in touch with the people who run it — from the CEO to the hourly employees.
Click here to watch the webinar.… Keep reading
Company leaders—whether the GC, chief executive, or some other officer in charge—often call their outside counsel when a formal claim is made against them, or a dispute appears headed toward formal litigation. What business leaders often don’t think to do is put their insurance carrier on notice as soon as a claim is made. As a recent District of Massachusetts decision related to the heavily publicized Harvard affirmative action lawsuit reinforces, failing to alert your insurance carrier of a claim can have severe consequences.
For Harvard, these consequences materialized as a $15 million loss.
In November 2014, Harvard was sued in connection with rejecting a group of anonymous Asian American students from admission to the university. Still, the school did not provide its insurance carrier, Zurich, a notice of the claim until May 23, 2017. Zurich then denied coverage, relying on its “claims-made” policy, which requires that any claims asserted in the policy period be reported to Zurich no later than 90 days after the expiration of the policy period, i.e., by January 30, 2016. Significantly, that coverage would have applied to the $15 million in legal fees Harvard incurred to defend the lawsuit.
Incredulous by … Keep reading