My Journey Below the Gnat Line in United States v. Stewart Parnell: How to Pass the Long Trial Test

Friday, August 19th, 2016

This article by Gentry Locke criminal defense attorney Justin Lugar was published by the American Bar Association.

Being the incredibly interesting human being that I am, sometimes I find myself comparing dictionary definitions between American English dictionaries and Oxford English dictionaries or what I call an “English-English dictionary.” This bizarre habit, I think, stems from my less than successful efforts to learn Latin in high school as well as my great fortune to have lived and practiced law in London for the first four years of my career. During my time in London, I had the great pleasure of working with several literary types who were not shy to express their distaste for American English and their love of the Queen’s English. Despite recognizing that American English is a language unto itself, these Oxford and Cambridge grads (mainly Oxford grads) were always quick to correct any Americanized (or as they would write, “Americanised”) version of an English word.

The point of this diatribe at the very outset of this article is twofold: 1) to pique your interest and 2) to explain why it is that I look up words. (Wait for it … there is a point to all of this and never mind the self-indulgence).

That brings us to the point of this whole endeavor (or is it “endeavour”?): the word “trial.” While there are any number of differences between American English and “English English”, one thing we both agree on is the meaning of the word “trial.” At its most basic level, a trial is a test. In the legal context, it is a test of evidence and a test of proof. Any practitioner will tell you it is also a test of credibility, a test of common sense, and a test of practicality. It is a test to a jury; it is a test to a judge; it is a test to the lawyers and parties that are part of the proceeding.
What I learned during a sweltering summer down in southwest Georgia during a two-month criminal trial for the much maligned former president of Peanut Corporation of America is that a trial of such length and complexity is a real test for an individual, and for a team. It is my hope that in sharing my successes and challenges in this endeavor, I can assist at least one other person in preparing for, executing, and succeeding at such a difficult test.

Here are some of the key lessons I learned:

I. Pace Yourself

A long trial is like a marathon. Most of the hard work goes into the training leading up to the event, and if you fail to pace yourself along the way, you will certainly fall short in the end. I know what you’re thinking: great, Justin, common sense; why do I need to read this article to understand that? The reason is simple: no matter how many times you hear it, no matter how many times someone tells you this specifically and no matter how many times you can tell yourself this, you still won’t do it. You’ll start off out of the blocks so excited and ready to go that you’ll wear yourself out if you’re not careful. Fortunately, I was part of a team of experienced trial attorneys who have conducted hundreds of jury trials, some of which lasted months on end. These folks refused to let me burn out. They knew that proper preparation and the ability to step back and reflect on a day’s trial happenings are just as important, if not more important, than checking and rechecking and rechecking and rechecking … and rechecking and rechecking … every little fact, nuance and legal theory upon which you’ve been building for the months leading up to trial. So when practical, and based on witnesses and various responsibilities, we took time off during the week in the evening to reset and to unwind (insert beverage of choice … in our case, bourbon). This was key. Jurors noticed it, the court noticed it, and our opponents noticed it. We were rested, we were sharp, and we had a demeanor in court that conveyed confidence and trust.

II. Don’t Be Afraid to Listen to Your Spidey Sense at ALL Times

Even if you can’t put your finger on why your Spidey sense is tingling at that particular moment, jot down some notes when something feels off. If you notice some physical movement or an inconsistency of some sort by a witness, even though you may not know what it is inconsistent with at the moment, jot a note down. Be ready to explore it on cross examination or with other witnesses. Be ready to remind your trial partners of it. Even if nothing is inconsistent or “off” about what you observed, the jury might begin to think there is something there. Pay attention to what is not apparent. And you might be able to make a mountain out of a molehill. So do not underestimate your gut instinct as a human being. Evolution has equipped our brains to recognize unspoken and sometimes inarticulable observations about our environment. Listen to them. Embrace them. Act purposefully and with thought based on these observations.

III. Keep It Old School

I like technology. I am not afraid of it. I like to use my iPad and I have used it in court before in trial presentations. I also use document vendors and review platforms such as Concordance, Relativity … you name it, we’ve tried it. But a trend I’ve noticed both from the government’s side, and on any side of the courtroom really, is the fact that sometimes people rely too heavily on technology in large cases. Sometimes there is just no substitute for good old-fashioned sleuthing. By necessity in our peanut case, we had to figure out the government’s organization of its electronic files because there were problems with the databases they provided to us (stay tuned for the exciting episode of “Brady violations: our pending appeal in the Eleventh Circuit … riveting stuff, I know”). I personally had the good fortune of spending hours and hours and hours and hours and hours and hours … familiarizing myself with documents obtained through search warrants, information obtained from personal laptops, and from various electronic sources across the company. During the course of my review, however, structures and patterns emerged that were lost on the prosecution in this case. It made me think this probably happens a lot more often than people realize in the ever burgeoning world of large document cases. What I noticed that no one else noticed was the fact that structures existed within the organization of the documents that told me something about the documents that nobody else knew or understood. I will save you the boring details (unless you want to talk about it at the next WCC conference – I plan to take the arduous journey to the Chateau Elan again this year), but suffice it to say, buried in box 13 of 3,612, in a subfolder that was labeled a particular way, I found a key file that the government knew nothing about. In relying solely on search terms and sophisticated review platforms, the government entirely missed a key piece of information that we were able to later use to our great advantage. So while we all know the devil is in the details, sometimes the devil is in the structure of the files and not the content or search terms solely.

IV. Push the Fear Inexperience Out of Your Mind

In criminal cases, at least in my view, the most basic human right is at issue – liberty – and this can weigh on you. Yes, money is important, declarations of right and wrong are important, but ultimately, apart from death penalty cases, human freedom is the most valuable asset one can lose in a legal proceeding. So, when my trial partners, Thomas J. Bondurant, Jr. and E. Scott Austin approached me the night before the government’s summary witness, a 25+ year FBI veteran, was expected to testify, and asked if I was willing to cross-examine her, I was faced with a terrifying, but ultimately easy decision. Of course I would do it. Tom and Scott recognized that I had ultimate command of the material that would be at issue with the witnesses. I had proven to them, and to the jury, that I could be trusted to elicit important points on cross-examination in an effective manner. They had all observed my confidence grow throughout the trial, and knew that I was best suited to help our client in that setting. And I was. It was a thrilling and rewarding experience and our client was grateful and thankful that we were able to cut at the heart of the government’s case with the last witness.

Remember, all trials are just a series of tests. If you weren’t good at taking tests, you wouldn’t be a lawyer. So, the good news is, even if you don’t have a lot of experience yet trying cases, you can certainly recognize and appreciate the fact that you have a lot of experience taking tests and doing well taking tests. The hard part, at least for someone defending against the might of the federal government as I find myself doing constantly, is the fact that your odds of winning or passing the test are usually incredibly small. Despite all its shortcomings and failures, we are fortunate to have a system that requires our government or our opponents in any civil matter to pass a significant and difficult test in matters that can be of such importance as preserving liberty and property.

While my natural American tendency is to end on a note of sentimentality about how our system (even with all of its problems) is the best system on the planet, it probably makes more sense to share with you something you can actually use. If you’re going to be in a long trial, get a room with a kitchen. Eating out gets very old, very quickly and does a number on your health. Two, stay somewhere with a pool if you can. Nothing washes the courtroom off after a long day’s trial like a good swim. Three, try to spend some free time with family and friends if possible. Do not talk about the case! Finally, if you are in South Georgia, south of the Gnat Line, around the peanut harvest, bring a lot of bug spray and prepare to refine your palate to the delicacy that is Chloropidae (wiki it, and then read A Man in Full by Tom Wolfe).

Tree Disputes Between Neighbors

Tuesday, August 16th, 2016

In the fertile ground for disagreements between neighbors, trees are a recurring problem. Whether the issue involves encroaching branches or roots or the accidental or intentional cutting of a tree, it is important to understand the legal landscape.

In an urban or suburban setting, problems with trees can arise in a number of ways. Overhanging branches can block light or satellite reception; they can damage structures; and they can drop leaves, fruit, flowers or other items.  Encroaching roots can cause significant structural damage to foundations, walkways, and underground utilities.  Although a neighbor does not have the right to enter onto your property and cut down all or part of a tree growing on your lot, he does have the right to cut or trim branches or roots which are encroaching onto his property at the property line.  This remedy, known as self-help, is available regardless of whether the encroaching branches or roots are actually causing damage to the neighbor.  In the event that your tree is determined to be a nuisance, meaning that its encroaching branches or roots have caused actual damage or pose an imminent threat of causing actual damage to a neighbor, then the neighbor may be able to obtain injunctive relief from a court, which could include requiring you to completely remove the tree.

In a rural setting, where trees usually grow more densely, issues may arise between neighbors in the form of timber harvesting which crosses a property line. When this happens, Virginia statutes allow for the recovery of triple damages and attorneys’ fees, which are not ordinarily available to plaintiffs.  However, a specific process must be followed in order to be eligible for this relief.

First, within thirty days of discovering that your timber has been cut and the identity of the person responsible, you must notify the responsible person and appoint an experienced timber appraiser to determine the amount of your damage. This should be done by letter, email, or other correspondence.  The person responsible then has thirty days to either deny the trespass or appoint his own appraiser.  If he appoints an appraiser, the two appraisers must work together to estimate the damage, but if they cannot agree, they must appoint a third appraiser, whose estimate will control.   The estimate must be completed within thirty days of the appointment of the second appraiser.  If, however, the person responsible fails to timely name an appraiser or dispute the claim, you may proceed with obtaining an estimate from the appraiser you selected.  You must then give a statement to the person responsible setting forth the amount you seek to recover under the statute.  That amount includes three times the value of the timber on the stump; the cost of reforestation; the cost of the timber appraisal; and attorneys’ fees incurred.  If the amount is not paid within thirty days, you may file suit and obtain a judgment for that amount.

Notably, the statutory relief is not available when the person responsible proves that he acted prudently and under a bona fide claim of right—in other words, when he reasonably thought he had the right to enter onto the land and cut the trees. In such a case, the person responsible remains liable for the simple stumpage value of the timber and any related property damage.  On the other hand, if the person responsible knowingly and willfully cut the timber, he may be subject to criminal prosecution for timber theft, and you may be entitled to damages in the amount of the manufactured value of the timber.

As is the case with all neighbor disputes, it is important to fully understand your rights and obligations. Hiring an attorney and land surveyor are important steps in that process.

Change in Virginia Workers’ Compensation “Cumulative Trauma” Law? It’s Unclear.

Friday, August 5th, 2016

Virginia workers’ compensation law has long required that claims can only be compensable if they are “injuries by accident.” There are parts of the law that provide for compensation for “occupational diseases,” but the idea for injuries like sprains and contusions is that such injuries qualify under the Workers’ Compensation Act only if they occurred “by accident.”

This has of course led to a great deal of judicial discourse on what constitutes an “injury by accident.” The upshot is that claims based on either repetitive trauma or cumulative trauma are not compensable.

This was the state of the law for decades. But, the Virginia Court of Appeals recently released an opinion that may have made the law at least a little friendlier to claimants. In Van Buren v. Augusta County, the Court considered a case in which a firefighter claimed an injured shoulder and a herniated disc as a result of approximately forty-five minutes’ worth of maneuvering a large man from where he was stuck in his shower to an ambulance down the hill from the man’s residence. This forty-five minutes included lifting, twisting, dragging, and pushing.

There was a persuasive medical record indicating that the shoulder injury and the disc herniation occurred sometime during the rescue. But the medical records did not pinpoint it any more specifically than that. As such, the question at the heart of the case was whether the forty-five minutes’ worth of varied exertions qualified as an “injury by accident,” rather than repetitive or cumulative trauma.

The Court of Appeals rejected the idea that the injury could have been caused by repetitive trauma, as the firefighter did not perform the same action over and over again. Rather, he had lifted, twisted, pushed, and dragged at various points.

Thus, the only defense possibility left was cumulative trauma. The employer had won on that basis at the Virginia Workers’ Compensation Commission, which concluded that, because it could not be precisely determined what had caused the claimed injuries, no injury by accident had occurred.

But, then it got interesting. The firefighter appealed to the Court of Appeals. In its July 19, 2016 decision, the Court quoted extensively from the leading cases on “injury by accident,” concluding that such injuries must occur due to an “identifiable incident or sudden precipitating event.” It further defined an “identifiable incident” as one being “bounded with rigid temporal precision.”

The Court proceeded to reason that the firefighter could not have been injured by “cumulative events” because—even though the firefighter’s actions were varied and the medical records did not establish any one of those actions as the cause of the shoulder injury or the herniated disc—the forty-five minutes “provided the necessary rigidity of temporal precision to constitute one ‘event.’” Relying on previous authority, the Court referred to this one “event” as a “single piece of work.”

In other words, how long can a “single piece of work” be? If the rescue had taken about three hours, would that be rigid and precise enough? What if the rescue had been complicated enough to take place in shifts, or if the firefighter had taken breaks to briefly rest or catch his breath during the rescue?

This decision leaves those questions unanswered for now. And the opinion is couched in the language of decades’ worth of judicial precedent, making it at least seem like it is not a deviation from the previous state of the law. But unless this opinion is overruled by the Virginia Supreme Court, the likely practical effect is that claimants will have an easier time getting around cumulative trauma defenses by arguing that their injuries occurred during a “single piece of work,” even if it took place over a long time and required several different kinds of actions and exertions.

If you have questions about whether your injury—or your employee’s injury—might not be compensable, you should consult with the knowledgeable attorneys of Gentry Locke’s workers’ compensation practice.

Protecting Critical Company Assets – Part 4: The “Inevitable Disclosure” Doctrine

Wednesday, June 29th, 2016

Consider the following hypothetical: Ivan is an important employee of the ABC Company in Virginia. Ivan has been employed by ABC for 4 years and has learned a great deal of proprietary information. He is not subject to a non-compete agreement, but has signed an agreement not to disclose confidential information. With no prior notice, Ivan has unexpectedly tendered his immediate resignation. You have heard from a reliable source that Ivan has accepted employment with XYZ Company in Virginia, an aggressive and fairly new competitor.

ABC’s President is livid. She believes that Ivan will “inevitably” use or disclose ABC’s trade secrets if XYZ employs him. Will ABC be able to stop Ivan from accepting employment with XYZ under an “inevitable disclosure” theory? As explained below, the answer is probably not.

There is a legal doctrine that has been accepted in some states (but not Virginia) known as the “inevitable disclosure” doctrine. The most prominent application occurred in a 1995 case in Illinois. William Redmond was a high-level manager working for Pepsi’s “All Sport” sports beverage division. Redmond resigned to accept a similar management position for Quaker to work for its “Gatorade” division. Both companies agreed that 1995 was a critical year for the highly competitive sports beverage industry. Even though Redmond did not take any tangible documents or threaten to use or disclose Pepsi’s trade secrets, Pepsi sued Redmond (and Quaker) and sought an injunction to prevent Redmond from accepting employment with Quaker on a theory that it was “inevitable” that he would rely upon Pepsi’s trade secrets. Applying Illinois trade secret law, a district court agreed, and an appeals court affirmed on appeal. The appeals court found that Redmond possessed particularized plans and highly confidential strategic information that would enable Quaker to achieve an unfair advantage over Pepsi. Thus, the court held that Redmond could not work for Quaker for six months and could never disclose Pepsi’s trade secrets. Pepsi Co., Inc. v. Redmond, 54 F.3d. 1262 (7^th Cir. 1995).

As you may know from other recent articles Gentry Locke has posted, the federal Defend Trade Secrets Act (DTSA) took effect on May 11, 2016. It provides powerful new options in federal court to protect a company’s trade secrets from unlawful use or disclosure. The important point for this article is that the DTSA rejects any attempt to rely on the inevitable disclosure doctrine for any case under the DTSA. Specifically, the law provides, in pertinent part, as follows:

In a civil action . . . with respect to the misappropriation of a trade secret, a court may grant an injunction to prevent any actual or threatened misappropriation . . . provided the order does not prevent a person from entering into an employment relationship, and that conditions placed on such employment shall be based on evidence of threatened misappropriation and not merely on the information the person knows.

– 18 U.S.C. § 1836(3)(A)(i)(emphasis added).

Some commentators have referred to this as the “no ban on employment” provision.

So, what would happen if ABC sought to preclude Ivan’s employment by filing a lawsuit against him in a Virginia state court under the Virginia Trade Secrets Act?

As a threshold comment, Virginia courts hold that non-competition covenants are “disfavored.” Moreover, as noted above, courts applying Virginia law have not adopted the “inevitable disclosure” doctrine. Thus, it is unlikely that a Virginia state court would prohibit Ivan’s employment with XYZ based on the doctrine.

ABC would have been in a better legal position to protects its interests if Ivan had signed a properly drafted employment agreement. Depending on the circumstances of Ivan’s employment, such an agreement could include non-competition, non-solicitation of customers, and/or non-disclosure of trade secrets covenants.

Please contact the Employment Law Team at Gentry Locke if we can assist you with the drafting of agreements that will allow your company to safeguard its business interests, or if you would like us to evaluate your existing employment agreements.

Protecting Critical Company Assets – Part 3: The DTSA’s Ex Parte Seizure Procedure

Thursday, June 23rd, 2016

Under the Defend Trade Secrets Act (“DTSA”), signed into law by President Obama on May 11, 2016, private employers now have a powerful and unprecedented tool to help them in the fight against trade secret misappropriation. As previously mentioned in Part I of this series, the DTSA provides a unique remedy which was never an option under the Uniform Trade Secrets Act.[1]

This remedy is an ex parte seizure provision which allows for “the seizure of property necessary to prevent the propagation or dissemination” of trade secrets. Ex parte means that an employer may petition a court to seize the property in question without prior notice to the other party, and the court can decide the issue without the “offending party” being present to defend him/herself. Under this seizure provision, if the court grants the request for seizure, then federal law enforcement officers will be authorized to enter private property and take the item(s) away and return them to the court. This article walks through the seizure provision of the DTSA in three parts. First, I examine how an application for seizure is made, acted on, and adjudicated by the courts. Second, I discuss the practical realities for employers seeking to utilize this remedy. Finally, I offer concluding remarks.

I. The DTSA’s Seizure Regime

Recognizing the potential for abuse that comes with an extraordinarily powerful remedy, the DTSA creates a high hurdle employers must meet when seeking this seizure relief. To receive a court ordered seizure, the employer must:

1. Set forth specific facts in an affidavit or verified complaint which establishes, among other things: a.) an immediate and irreparable injury if the seizure is not ordered; b.) a likelihood of success on the merits of the underlying trade secret claim; c.) the balance of harm favors the employer; d.) the identity and location of the material to be seized, with reasonable particularity; and e.) a showing that more ordinary procedures (such as a temporary restraining order under Federal Rule of Civil Procedure 65) would be ineffective because the seizure target would evade the order or destroy the evidence.
2.  Not have publicized the requested seizure.
3.  Post a bond sufficient to cover the damages should the seizure turn out to be invalid or excessive.[2]

If granting the requested relief, the DTSA requires that any seizure order be limited only to “provide for the narrowest seizure of property necessary.”[3] A court’s seizure order must also “clearly delineate[ ]” the scope of the executing official’s authority, as well as provide details as to how the seizure will be conducted, such as the hours that the seizure may be conducted and whether force may be used to access locked areas.[4]

Who can go with Law Enforcement on the Raid?

To minimize the risk of confrontations, an employer who obtains the seizure order is prohibited from participating in the seizure with the federal official. However, to ensure the seizure occurs properly, an unaffiliated technical expert may accompany the federal officials.[5]

Post Seizure Hearing

Once the property is seized, it will remain in the possession of the court until a hearing can take place where the interested parties have the opportunity to appear. The law prescribes that a court is to set a hearing at the earliest possible time, but not later than seven days after the seizure order is issued, although the party affected by the seizure may consent to a later date for a hearing. Furthermore, the party affected by the seizure or any third party harmed by the seizure order may move the court at any time to dissolve or modify the order after giving notice to the party who requested seizure.

II. The Practical Realities for Private Employers: Utilizing the DTSA’s Seizure Procedure

Employers may be all too familiar with this hypothetical: An employee leaves your company and you have strong reason to believe (or maybe even proof) that the employee has taken some of your valuable confidential information, some of which may qualify for “trade secret” protection, and may disclose it to his or her new employer. You are able to allege specific facts showing that the “former employee” is shifty, duplicitous, and unlikely to comply with a temporary restraining order. The clock is ticking and it may already be too late, but after careful consultation with counsel, you are convinced that you need to take action to secure the property which constitutes your company’s trade secret.

Seizure under the DTSA is intended for extraordinary relief only, which means that you must be able to show facts that will allow the court to determine that you will suffer both immediate and irreparable injury. For example, a court might question whether certain encrypted or piecemeal data that is stolen will take the “bad actor” or his/her compatriots time to decrypt or reverse-engineer such data. Moreover, irreparable injury generally requires that such a loss is not compensable with money damages. Employers will need to carefully consider the specific facts which they assert to establish these required elements.

What you are seizing – defining the items to be seized

In many cases, the employer may be able to identify, with reasonable particularity, the property it is seeking to seize; yet in others it may not be so easy. Describing and identifying the particular piece of property which contains the trade secret may be an employer’s toughest task, and experienced trade secret counsel should be consulted to help with this task.

For instance, if an employee leaves and secretly takes a flash drive containing electronically stored data or printed material, then identification is made easier. However, in today’s digital world, the particular item stolen may have been sent to the employee’s personal cloud service, email server or mobile storage device. An employer might make an application to seize the employee’s specific tangible mobile device, however it is not clear if such seizure would go beyond the “narrowest seizure of property necessary.”

If the employee has uploaded the trade secret data to a third party cloud provider like Dropbox or iCloud, can an employer seek a seizure of the employee’s account? It is unclear how the DTSA will address this situation. What is clear is that under the DTSA, ex parte orders may only be directed against wrongdoers, not against innocent third parties. As a result, the language of the DTSA suggests that a third party provider cannot be ordered to seize or shut down the accounts of the “bad actors” under this provision of law, and there may be a need to seek injunctive relief in this context to secure its valuable assets.

The Bond Requirement

Next, employers seeking seizure will be required to post a security, and the court retains discretion to determine the amount of that security based on its calculation of the damages that any person may be entitled to recover as a result of a wrongful or excessive seizure, or a wrongful or excessive attempted seizure. One can see how this requirement can quickly become a double edged sword for an employer: if, in its affidavit or amended complaint, it alleged that the value of the trade secret is so high and important that its loss will result in irreparable harm to the company, one could imagine a court setting this bond rather high. Moreover, employers should also be aware that this security posted will not act as a cap on damages if it is later determined that the property was wrongfully seized. Counsel should be consulted throughout the application and hearing process.

III. Concluding Remarks

The great advantage of the DTSA’s seizure remedy is its multi-state application. So often, an employee who misappropriates a trade secret moves or transfers the material to another state, which makes effective legal action more difficult and expensive as counsel must utilize out-of-state court procedures and subpoena processes. Moreover, states have adopted a largely dissimilar patchwork of trade secret law, and remedies and procedures vary. Now, under the DTSA, employers have the security of the federal court system and subpoena procedure to go after those who have misappropriated trade secrets. The new DTSA seizure provision now adds to this arsenal of relief and affords private employers the ability, in the right case, to seize and retrieve their trade secrets without having to worry about differing state laws and procedures.

The seizure provision of the DTSA is brand new, and this new tool for employers must be considered in the most egregious cases. Those private companies seeking to prevent the misappropriation of their trade secrets or take action to recover and obtain other appropriate remedies for actual or threatened misappropriation may contact Brad Tobias or any other member of Gentry Locke’s Employment Law Team for assistance.

[1] Virginia has adopted this act. The Virginia Uniform Trade Secrets Act does not contain a civil seizure mechanism.

[2] 18 U.S.C. § 1836(b)(2)(A)(ii).

[3] Id. § 1836(b)(2)(B)(ii).

[4] Id. § 1836(b)(2)(B)(iv).

[5] Id. § 1836(b)(2)(E).

Read the Order Before You Sign It

Tuesday, June 21st, 2016

The recent case of Lopez-Rosario v. Habib, 785 S.E.2d 214 (2016), demonstrates the sometimes devastating consequences of an Order that does not fully reflect what transpired at a hearing. In 2010, the parents of Ms. Lopez-Rosario, an adult, petitioned the Loudoun County Circuit Court to be appointed guardians of their child. The reason for the petition was that “Ms. Lopez-Rosario ‘[was] an incapacitated individual’” and needed someone to make medical decisions for her. While the facts of the underlying guardianship proceeding made clear that the purpose of having the parents appointed as guardians “was to enable Lopez-Rosario’s parents to make medical decisions on her behalf[,]” the Order appointing the parents as guardians gave them authority that went above and beyond making medical decisions. Specifically, the Order appointed the parents as “Guardians” without any limitations on their authority. This made the parents full guardians, not limited ones. This distinction is important because, under Virginia Code Section 64.2-2000, a guardian appointed with no limitation of authority has the responsibility to file lawsuits on behalf of their ward (the ward in this case would be Lopez-Rosario). This means that all lawsuits involving Lopez-Rosario must be prosecuted by her parents and left Lopez-Rosario without standing to file suit on her behalf and “in her own name.”

In March of 2014, Lopez-Rosario underwent surgery to remove her gallbladder. The surgeon performing the removal injured Lopez-Rosario during the surgery. A medical malpractice lawsuit was filed by Lopez-Rosario individually and not by her guardians on Lopez-Rosario’s behalf. The defendants moved to dismiss the case arguing that the suit must be filed by Lopez-Rosario’s guardians, not by Lopez-Rosario individually. Lopez-Rosario argued that the guardianship “was limited to medical decisions and did not include matters such as filing lawsuits.” The circuit court disagreed and granted the motion to dismiss.

The Court noted that “the language of the order [appointing the Guardians] is controlling” and that because trial courts speak only through written orders, those “‘orders are presumed to reflect accurately what transpired.’” While the record from the guardianship proceeding was clear in that the immediate purpose of the petition was to have Lopez-Rosario’s parents make medical decisions for their daughter, the Order did not limit their authority in this fashion. As a result, the Order appointing the parents as guardians resulted in a general appointment as opposed to a limited one. This vested the parents with the responsibility to file suits on behalf of Lopez-Rosario and stripped that ability from her. The Court concluded that Lopez-Rosario lacked standing to file the medical malpractice case and affirmed the trial court’s dismissal of the case. While the record is not clear on this, the statute of limitations for the guardians to file suit may have passed, which would leave Lopez-Rosario without a legal remedy in her medical malpractice case.

While this is a harsh result, it is a reminder of the importance of carefully reviewing orders before signing them and submitting them to a court for consideration and entry. Practitioners should be careful about signing any order that goes beyond the specific purpose of a hearing or that addresses matters not raised at a hearing. To avoid the problem that cropped up in Lopez-Rosario, it can be helpful to have someone else take a look at a proposed order before submitting it. So, too, can waiting a day or two after receiving the draft order before making changes or signing it and sending it out. While we all may want to get an order entered quickly to help move a case along, none of us wants an order with unintended consequences, such as taking away an individual’s ability to file a lawsuit.

Protecting Critical Company Assets – Part 2: DTSA and Employment Agreements

Monday, June 20th, 2016

One important new feature of the Defend Trade Secrets Act of 2016 (DTSA) is the duty imposed on employers to notify “employees” of the whistleblower and anti-retaliation protection provisions of the DTSA.

In 18 U.S.C. § 1833(b)(3)(A), any agreement entered into or updated after May 11, 2016 with an “employee” that includes a provision that governs the use of confidential information must include a provision that explains the new criminal and civil liability immunity provisions provided to whistleblowers and the provision that expressly allows employees to use trade secret information in anti-retaliation lawsuits. This provision makes it clear that “any” agreement with an “employee” that includes a provision that “governs the use” of “confidential information,” and not just information that qualifies as a “trade secret,” is covered.

This new notice requirement has given rise to a number of questions:

No Retroactive Effect. The DTSA does not require employers to amend contracts with employees that contain a provision that protects confidential information and trade secrets where the contract was entered into before May 11, 2016.[1]

Any agreement entered into with a new employee after May 11, 2016 that includes a provision governing the use of trade secrets or confidential information needs to include this DTSA notice provision. The DTSA also indicates that when pre-existing agreements are “updated,” the notice provision needs to be included. The DTSA provides no guidance as to what constitutes an “updating” of a contract, but to be safe, anytime a written agreement with an employee is amended in any way, the conservative approach will be to include the newly required notice language.

Who Is An Employee? The DTSA broadly defines who must get this notice. In 18 U.S.C. § 1833(b)(4), the term “employee” is defined to include not only a traditional employee who gets a W-2, but “any individual performing work as a contractor or consultant for the employer.” As a result, if you have contracts with third parties who provide services and you require them to sign a non-disclosure agreement, this new DTSA notice language will need to be incorporated into all such agreements going forward.[2]

What Types of Contracts Are Covered? The DTSA notice provisions apply to “any” agreement with an employee that governs the use of trade secrets or confidential information. This provision makes it clear that the DTSA notice obligation is not limited just to a traditional employment agreement. Companies use a broad range of agreements to protect and regulate the use of confidential information with the various individuals who meet the DTSA’s definition of “employee.” Examples of these types of agreements are: work-for-hire agreements, technology/invention assignment agreements, non-disclosure agreements, and consulting agreements.

In addition to these agreements which are often signed at the commencement of employment, employers also need to consider the impact of the DTSA when entering into a separation agreement with a departing employee, or negotiating a settlement agreement with a former employee who has filed a claim or threatened to file a claim against the company. If these “back-end” agreements contain provisions that seek to govern the use of trade secrets or confidential information (or incorporate earlier such agreements by reference), then the DTSA notice provisions will need to be incorporated into those agreements.

What Type of Notice Is Required? The DTSA requires the immunity provisions and protected disclosures made as part of anti-retaliation litigation provision be described in detail as part of this notice duty. The DTSA expressly allows an employer to provide the required notice by making reference in the agreement to a separate policy document where the employer sets forth its policies on whistleblower protections, including the new DTSA provisions, so long as a copy of the policy is provided to the affected employees. Some companies may opt to develop a policy rather than incorporate detailed language in the agreement itself. Either approach is fine.

Consequences of Non-Compliance. If a contract does not contain the required DTSA notice provisions and no compliant whistleblower policy has been developed and referenced in the agreement, then the DTSA imposes a penalty that limits the employer’s available remedies in subsequent trade secret litigation.

The good news is that a noncompliant agreement continues to be enforceable in full force against the former employee, but the trade secret owner will not be able to recover the exemplary damages (two times the actual damages awarded) nor will it be able to recover its attorneys’ fees and litigation costs, even if it proves willful misconduct.

Since most cases filed against a disloyal employee will include multiple claims, in addition to one under the DTSA, e.g., a violation of the Virginia Uniform Trade Secrets Act or a breach of contract claim, it is possible that attorneys’ fees may be recoverable by the employer under one of those other claims. As a consequence, the only real “penalty” to an employer who does not include the DTSA notice provision as required may only be the loss of a double-damage recovery.

Concluding Remarks

At this point, employers should examine all contracts that the company uses to protect or govern the disclosure or use of confidential information, as well as their supporting policies. The review must include all agreements and policies, not just those applicable to your own employees, but also those used with independent contractors, consultants and other vendors who are granted access to or help develop the company’s confidential information and trade secrets.

Each employer must evaluate whether the notice language under the DTSA whistleblower and retaliation claimant protections needs to be incorporated into agreements to preserve the full scope of remedies available if a misappropriation occurs. This includes a review of termination agreements and exit processing procedures to ensure that appropriate protocols are in place not only to secure the return of confidential and trade secret information but to make sure that any agreements entered into at that juncture, even if they merely incorporate by reference earlier non-disclosure agreements, incorporate the use of the notice language needed to safeguard rights provided by the DTSA.

It is important when drafting changes to your employee agreements that close attention is given to the full details of the immunity and anti-retaliation provisions of the DTSA in order that the disclosure made will be fully compliant. Employers desiring assistance with developing and implementing that language may contact David Paxton or any member of Gentry Locke’s Employment Law Team for assistance.

[1] 18 U.S.C. §1833(b)(3)(D) (“This paragraph shall apply to contracts and agreements that are entered into or updated after the date of enactment of this section.”)

[2] Notably, the DTSA notice provisions only apply to agreements entered into with an “employee” which is defined as an “individual.” In today’s world, many “individuals” form an entity, e.g., LLC or PLLC, through which they provide consulting services. On its face, an agreement with a LLC that limits or governs the use of trade secrets and confidential information would not technically be covered by the DTSA notice requirement since the LLC is not an “individual.” However, the business realities and prudence strongly suggest that even if the non-disclosure agreement is with a LLC or other business entity where there is one key individual from that entity who will be performing most of the services, the DTSA notice provisions should be included.

Protecting Critical Company Assets – Part I: DTSA Basics for Employers

Friday, June 17th, 2016

On May 11, 2016, President Obama signed the Defend Trade Secrets Act of 2016 (DTSA) which amends the Economic Espionage Act of 1996 (EEA) (18 U.S.C. § 1831, et. seq.). The EEA has allowed federal prosecutors to bring criminal charges for the theft of trade secrets, but until the DTSA, there was no federal civil claim for damages or equitable relief. The DTSA addresses this problem and grants private companies (and other trade secret owners) the right to bring a civil suit to protect their trade secrets and recover damages, so long as the trade secret relates to a product or service that is used in or intended to be used in interstate or foreign commerce.[1]

Trade secrets are an important form of intellectual property, but unlike patents, copyrights and trademarks, they are not registered with the federal government. A “trade secret” can be any form of business or scientific information that derives independent value from not being generally known or readily accessible to another through proper means so long as the owner has taken reasonable measures to keep it secret.[2] The DTSA modifies the definition of “trade secret” previously used in the EEA and in most state statutes under the Uniform Trade Secrets Act (UTSA). Under the DTSA, a trade secret owner is required to show that the protected information is not generally known or readily accessible to “another person who can obtain economic value from the disclosure or use of the information.” The prior definition in the EEA was a broader proscription of “the public” at large, as opposed to a person who can use it and obtain economic value. Whether this definitional change will have any real significance in future cases is hard to predict at this point, but it will require the owner to identify the “secret” and establish clearly the economic value of the specified information.

In many respects, the DTSA is similar to the provisions of the Virginia Uniform Trade Secrets Act (VUTSA) and affords very similar remedies (e.g., injunctive relief to prevent actual or threatened misappropriation, damages, exemplary damages and attorneys’ fees for willful and malicious misappropriation).[3] On the other hand, the DTSA introduces several new features that could be significant considerations as determinations are made as to what claims to pursue.

Seizure Procedure. First, the DTSA provides a unique remedy for a trade secret owner, but it will only be available in “extraordinary” circumstances where there is a demonstrable risk that the trade secret is about to be disseminated or destroyed. While the VUTSA allows a court to issue a temporary injunction, the DTSA now permits an owner to institute an ex parte proceeding (one where the other side is not there) to establish its need to send in law enforcement personnel to seize the “trade secret” to prevent its propagation or dissemination.[4] While use of this civil seizure remedy will not likely apply in the routine case, where there is an imminent risk of destruction of the material or other pertinent factors, employers will now have the opportunity to convince a federal judge shortly after filing the lawsuit that law enforcement personnel should be sent to seize a computer containing the data or other property from another company’s office or private residence. The details of how this process will work, its limitations and the risks and consequences of misuse will be addressed in a subsequent article.

Federal Jurisdiction. By allowing trade secret claims to be filed directly in federal court without having to prove diversity of citizenship, the DTSA also gives the trade secret owner the ability to more easily engage in multi-state and international discovery. This can be a real benefit when key witnesses or parties live and/or work in another state. Depositions and document production often must happen on an expedited basis in these cases.

Injunctive Relief. While the DTSA provides the new civil seizure remedy for owners, the DTSA limits the types of injunctive relief that a federal court may issue against a former employee. Under the DTSA, the federal court cannot stop a person from going to work for a competitor. Instead, the injunction can only place restrictions on what that individual can do for the competitor, and those restrictions will need to be based on evidence of threatened misappropriation and “not merely based on information the person knows.”[5] Further, the injunction issued by the federal court cannot conflict with applicable state law that prohibits restraints on the practice of a lawful profession, trade or business. This latter provision is a nod to states (like California) that have statutes prohibiting the use of restrictive covenants or non-competes. In Virginia, there are currently no statutory restrictions that will trigger this provision.

Whistleblower Protection. Other new features of the DTSA are its immunity and anti-retaliation provisions. These provisions are designed to protect whistleblowers who disclose trade secrets in confidence to federal or state government agencies or an attorney when reporting suspected unlawful conduct,[6] or make confidential disclosures to their own attorneys or court officials in connection with anti-retaliation lawsuits.[7] The DTSA provides that such persons are immune from criminal and civil liability if the disclosure is made in confidence and “solely for” the purpose of reporting or investigating a suspected violation of law. To ensure this provision is enforced, the DTSA imposes a new notice obligation on employers which will be the subject of our next article in this series.[8]

While new whistleblower protection provisions are provided, the DTSA does not authorize unlawful actions, and will not be construed to limit liability for an act that is otherwise prohibited by law, such as gaining access by unauthorized means.[9] So, a person who trespasses or steals information, or exceeds his/her authorized level of access to computer systems, may still be held accountable for their improper and unauthorized conduct.

No Preemption. The DTSA does not preempt (replace or override) Virginia’s UTSA.[10] The question of whether to bring a claim under both statutes or only one will need to be decided in each case based on its unique circumstances.

International Application. The DTSA also contains a number of provisions that are designed to combat international economic espionage, including a provision that makes it clear that conduct occurring outside the United States is covered if the bad actor is a U.S. citizen, a permanent resident alien of the United States, or is a business entity organized under the laws of the United States, including states and territories.[11]

Concluding Points

In short, passage of the DTSA is a positive development and provides a new avenue by which trade secret owners can combat misappropriation. It is too early to tell how the federal courts will respond to some of the issues that will arise, and what unintended consequences will inevitably flow from this new federal legislation. For certain, employers must review their existing employment agreements and policies and determine what changes may be required. These issues will be addressed in our next article in this series. Stay tuned to our next articles.

If you have questions about the DTSA, the Virginia Uniform Trade Secrets Act or other concerns regarding your rights as an employer to protect your critical company assets, please contact David Paxton or any other member of the Gentry Locke Employment Team.

[1] 18 U.S.C. § 1836(b). Notably, on May 27, 2016, the Council of the European Union announced that it had adopted a new Directive setting out the rules for the protection of trade secrets and confidential information of EU companies. This Directive had been in the works for two years. Member states now have two years to incorporate the provisions of this EU Directive into their domestic laws. A comparison of the DTSA to the EU Directive will be the subject of a subsequent article in this series.

[2] 18 U.S.C. § 1839(3)(B).

[3] A detailed comparison of the DTSA and the VUTSA will be provided in a subsequent article in this series.

[4] 18 U.S.C. § 1836(b)(2)

[5] 18 U.S.C. § 1836(b)(3)(A). Some commentators see this provision of the DTSA as a repudiation of the “inevitable disclosure” doctrine and worry that federal courts may become unwilling to enforce “reasonable” non-compete agreements that would prohibit employment with a direct competitor for a designated period. These issues will be addressed in future articles.

[6] 18 U.S.C. § 1833(b)(1)

[7] 18 U.S.C. § 1833(b)(2)

[8] 18 U.S.C. § 1833(b)(3)

[9] 18 U.S.C. § 1833(b)(5). This issue of when an employee can access, take and disclose confidential information to the government for the purpose of reporting a violation of law arises in many contexts and will be addressed in subsequent articles. See US ex rel Cieszyski v. Life Watch Servs. Inc., 2016 U.S. Dist. LEXIS 60993 (N.D. Ill. May 9, 2016) (Dismissed claim against employee who disclosed protected patient information to the government. The employee had no right to access this information as part of his job but the disclosure was made as part of a False Claims Act investigation).

[10] 18 U.S.C. § 1833(b)(5)

[11] These provisions will be addressed in the article analyzing the EU Directive in the next month.

Summer Reading: Some New Employment Law Developments to Know

Tuesday, June 14th, 2016

Happy (almost) summer. Before you head to the beach for a well-deserved vacation, we post this short article to update you on several substantive developments in the employment law world.

New Overtime Regulations Effective December 1. As you know, the DOL has published its new overtime regulations that will take effect December 1,2016.  The key provision is that an employee needs to earn at least $47,476 per year to be exempt from the federal overtime requirements.  Gentry Locke recently hosted a webinar on the new regulations.  Please contact us if we can assist your organization in any way.

EEOC Publication on Leave as ADA Accommodation.  What should you do if you have an employee who is not eligible for FMLA leave, or has exhausted his FMLA leave, and seeks additional leave for a purported medical impairment or condition?  On May 9, 2016, the EEOC published a resource document articulating its position as to the “prevalence of employer policies that deny or unlawfully restrict the use of leave as a reasonable accommodation” under the ADA.  This issue continues to be a priority for the EEOC.  Generally stated, the EEOC’s position is that an employer is obligated to engage in an “interactive process” with the employee and will likely be required to provide additional leave unless the employer can prove that doing so would create an “undue hardship.”

New FMLA Compliance Guide.  On April 25, 2016, the DOL published “The Employer’s Guide to the Family Medical Leave Act” to provide employers with a fresh and reader friendly outlook of the FMLA process.  While it does not address some of the more complicated questions facing employers, it is a useful document that we commend to you.

EEOC Initiative to Expand Title VII to Cover LGBT Individuals.  In March, the EEOC filed lawsuits against private sector employers in federal court contending that discrimination against individuals based on their sexual orientation or gender identity is unlawful “gender” discrimination under Title VII of the Civil Rights Act of 1964. (I wrote about this trend 3 years ago.)   It is my judgment that the courts are increasingly likely to adopt the EEOC’s position.  Are your managers trained sufficiently as to issues that might arise in the workplace as to employees who are gay, lesbian or transgender? 

Federal “Defend Trade Secrets Acts of 2016.”  On May 11, 2016, the “Defend Trade Secrets Act” (DTSA) became law.  The law creates a new federal civil cause of action for trade secret misappropriation.  The DTSA also includes, however, affirmative protection to whistleblowers who may rely upon trade secrets to disclose purported misconduct to government officials and/or legal counsel.  Does your company require employees to sign confidentiality or non-disclosure agreements?  If so, for any such agreements or amendments presented to employees after May 11, 2016, you need to add language to inform the employee about the whistleblower protections in the law.  If you do not include the new notice language, the company’s ability to recover attorney’s fees or exemplary damages will be forfeited.  Let us know if we can help you with the necessary notice language or if you have other questions about your non-competition or non-disclosure agreements.  (In the near term, we will also be posting a series of more comprehensive articles on protecting a company’s assets under Federal and Virginia law.)

NLRB Enforcement of Protected Concerted Activity (PCA) by Employee(s).  The NLRB continues its aggressive pursuit of unfair labor practice claims in which employers take disciplinary action against employees for allegedly engaging in “protected concerted activity” (PCA) as to their terms and conditions of employment.  I recently wrote an article regarding a recent case in Virginia that illustrates the NLRB’s overreach.

2016 Election.  I have heard that there is some sort of election in November.  Seriously, the Presidential election will once again be critical for many reasons.  Given the landscape to date, it is almost certain that there will be strong and conflicting opinions by your employees as to the candidates and their positions. You should generally be aware of the conduct of your employees, and ensure that there are no violations of your EEO policies (e.g., no discrimination or harassment against employees on basis of national origin, religion, gender).

Employment Law Training for Supervisors.  While we have your attention, we remind you that we regularly provide employment law training to company managers with an overview of the pertinent employment laws and risks, and practical recommendations to minimize your company’s legal risks.  Please contact us if your company has any interest in such training.

Protecting Critical Company Assets – New Federal Initiatives

Monday, June 13th, 2016

In 1986, Virginia adopted a version of the Uniform Trade Secrets Act (VUTSA),[1] and employers have relied upon the VUTSA for years to protect some of their most important and sensitive intellectual property and know-how. As business operations have expanded outside of Virginia and the United States, differences in how trade secret laws have been applied have often resulted in an ineffective patchwork of protections.[2] As a result, many employers have continued to rely on written employment agreements that not only protect confidential information and trade secrets, but also limit the solicitation of customers and co-workers, and in some cases, impose non-competition restrictions. These agreements are designed to give businesses a measure of stability and afford some uniformity in their approach to protecting their intellectual property and assets against disloyal employees.

As the workforce has become increasingly mobile, and hand-held or wearable devices make it easy to abscond with large amounts of confidential information, employers of all sizes have begun to look for effective ways to prevent unfair competition and theft and for good reason. A recent study revealed that more than 50% of employees who left or lost their positions kept confidential corporate data without permission, and 40% planned to use it in their new job. More startlingly, 56% of the individuals surveyed did not believe it was a crime to use a competitor’s trade secrets.[3] So, it should not be surprising that a recent White House report indicated that nearly 30 million American workers are currently covered by non-compete agreements,[4] or that a 2013 Wall Street Journal survey reported that there had been a significant rise in the prevalence of non-compete litigation.[5] Given all of this attention, it is little wonder that the federal government has decided to weigh into this important, yet complex area with several new initiatives.

On May 5, 2016, the White House released a 16-page report that is critical of the use of non-compete agreements based on an earlier U.S. Treasury Department’s report (March 2016) that discussed the adverse economic effects of the use of non-compete agreements. The White House suggests that there is widespread misuse of non-competes, and it is hurting the economy. This is a clear signal from the current Administration (and others who are aligned with it) that there is a plan to attack the use of non-compete agreements in a broad range of jobs.[6] Then, on May 11, 2016, President Obama signed the Defense of Trade Secrets Act of 2016 (DTSA) which created, for the first time, a new federal court claim that affords civil remedies for the misappropriation of trade secrets.

In a series of articles to be published over the next two months, we will examine these recent federal actions, and explore their likely impact on Virginia employers. We will focus first on the DTSA and its counterpart, the Virginia Uniform Trade Secrets Act. We will then examine the White House’s critiques of the use of non-compete agreements, and look at how these issues have played out in several recent Virginia cases.

If you have questions regarding your employment agreements or non-disclosure agreements; have concerns over what steps can be taken to minimize the risk associated with the misappropriation of trade secrets; have the need to enforce an existing non-compete/non-solicitation/non-disclosure agreement; or have a need to take action against someone who has or is threatening to misappropriate your trade secrets, please feel free to call W. David Paxton or any of the members of Gentry Locke’s Employment team.

[1] Va. Code §§ 59.1-336, et. seq. All but two states (New York and Massachusetts) have adopted some version of the Uniform Trade Secrets Act.

[2] For example, the 4th Circuit upheld the dismissal of claims brought against former employees and a competitor who were alleged to have downloaded the company’s proprietary information before resigning at the direction of the competitor, and then used the information to solicit the business of a customer successfully. WEC Carolina Energy Solutions, LLC v. Miller, 687 F.3d 1999 (4th Cir. 2012).

[3] Press Release: Symantec Study Shows Employees Steal Corporate Data and Don’t Believe It’s Wrong (Feb. 6, 2013).

[4] Non-Compete Agreements: Analysis of Usage, Potential Issues and State Responses, White House, May 5, 2016.

[5] Litigation Over Noncompete Clauses is Rising, Wall Street Journal (Aug. 14, 2013).

[6] Earlier this week, on June 8, 2016, the Illinois Attorney General filed suit against Jimmy John’s challenging the company’s use of non-compete agreements that seek to prevent store workers from working at another sandwich shop if it is located within three miles of a Jimmy John’s store. The Attorney General argues there is no legitimate business interest to be protected and the agreements are unenforceable as a matter of public policy under Illinois law. See People of the State of Illinois, ex rel Lisa Madigan v. Jimmy John’s Enterprises, LLC, et al, Case No. 2016-CH-07746, Circuit Court of Cook County, Illinois.