Friday, February 21st, 2014
Rule 37(e) of the Federal Rules of Civil Procedure advises courts not to impose sanctions on a party for failing to provide (in discovery) electronically stored information (ESI) that was lost as a result of the routine, good-faith operation of an electronic information system. This “safe harbor” provision allows companies and individuals to delete their electronic information on a routine basis, but this provision only applies when a duty to preserve the information has not been triggered. In other words, if there is a duty to preserve the ESI, then you must stop any routine deletion procedures.
Consequently, if a duty to preserve has been triggered, then you cannot delete your e-mails or any other relevant electronic (or hard copy) files. So, when is the ‘duty to preserve’ triggered?
The duty to preserve arises as soon as there is an “anticipation of litigation.” Zubulake v. UBS Warburg, LLC, 220 FRD 212, (S.D.N.Y. 2003) (“Zubulake IV”). In other words, “when a party reasonably should know that the evidence may be relevant to anticipated litigation.” Silvestri v. GMC, 271 F.3d 583 (4th Cir. 2001).
The following are some occasions when the duty to preserve has definitely been triggered:
- You have received a letter from a lawyer, a government investigator, or another party advising you that you have information that is relevant to possible claims or litigation.
- You have received a litigation hold memorandum from your counsel or someone within an organization or company with which you are affiliated.
- You expect that you or your company may want to file a claim or lawsuit, and you have information that will be relevant to the claim or litigation.
- You learn of an incident that will likely result in litigation and you have information relevant to that incident.
When any of those scenarios occur, then you should take active steps to insure that all reasonably accessible and relevant ESI (and hard copy documents) are protected and preserved. The following are some simple, but important steps to be sure that you properly comply with a duty to preserve that has been triggered:
- Identify potential sources of relevant information and evidence.
- Develop a list of custodians of the ESI so that you can communicate that all of their relevant ESI should be preserved.
- Meet with your employees, colleagues, and IT department to learn where all of the applicable relevant ESI is stored.
- Determine the relevant time period for the ESI that you need to preserve.
- Prepare a litigation hold memorandum, which might include the following: (1) a description of the hold’s purpose and the duty to preserve; (2) a warning of the consequences for any failures to comply with the hold; (3) a description of the ESI or hard copy documents that must be preserved, include the custodians identified, the locations of the ESI, and the relevant time periods; and (4) a directive that all applicable document destruction policies be halted.
- Distribute, enforce and monitor the litigation hold memorandum.
- Obtain signatures from the recipients of the hold confirming that they received it.
- Update the litigation hold memorandum if the scope of the relevant ESI changes.
- Release the litigation hold memorandum when the litigation is concluded or the claim has been resolved.
Wednesday, February 19th, 2014
With the explosion of new handheld mobile devices such as the iPad, many employees want to use their devices in conjunction with their work. Many employers find this attractive; it reduces IT budgets and allows workers to use platforms with which they are familiar. For this reason, many employers allow employees to “Bring their Own Device,” or BYOD.
The statistics demonstrate that BYOD is a growing trend. According to a recent study by Cisco, 78% of employees use their own device in connection with their work, and 70% of organizations allow employees to use their own devices. However, despite this increase in BYOD, few employers have policies in place to govern this arrangement. In fact, another study by F5 Networks, Inc. estimated that 75% of organizations do not have a BYOD policy.
BYOD presents a wide array of potential problems for employers. One of the most serious concerns is security; lost or stolen devices could contain a significant amount of confidential or proprietary information. Even more troubling, a lost or stolen device with few security safeguards could allow an outsider access to the entire IT infrastructure of the organization.
Security is not the only concern. Allowing BYOD invites a host of privacy concerns; if employees are using their devices for a blend of work-personal communications and activities, disputes may arise between the organization and its employee if the organization wishes to access the device or monitor its use. When an employee leaves an organization, they will take their device with them. When they do so, their former employer may find it difficult to access the device to ensure that all company information is deleted.
A BYOD policy may also increase an employer’s exposure to harassment allegations if employees use their mobile devices to harass or stalk other employees. If employees misuse devices that are under the supervision and control of the employer, an employer could face liability for this misuse.
Many of the problems outlined above may be addressed through a well-crafted BYOD policy. A BYOD policy should address issues such as:
- Who is responsible for maintenance and cost of the mobile device?
- An agreement on the part of the employee to remove any applications identified by the employer
- A plan for lost or stolen devices
- Clarification of employee privacy on the device, both during and after employment
- Employer expectations for responsible use of the device
A BYOD policy must be customized to the employer and the unique circumstances under which the BYOD policy operates. Taking the time to develop and implement such a policy is a responsible step that any organization should take before BYOD presents a problem.
Tuesday, February 11th, 2014
There is no question that wage and hour claims continue to be on the rise, and that collective actions, in particular, pose a significant legal and financial risk to employers. However, a recent unanimous decision by the U.S. Supreme Court will likely reduce the number of wage and hour claims filed, particularly against unionized employers who have certain provisions in their collective bargaining agreements.
It has long been debated whether employees should be paid for time spent putting on and taking off protective gear (also referred to as “donning and doffing”). The high court has now given us some clarity on this issue, at least for unionized employers. In Standifer v. U.S. Steel Corp., No. 12-417, the U.S. Supreme Court recently held that an employer did not have to pay employees for time spent changing into and out of certain protective gear when their collective bargaining agreement did not provide for compensation for such time. There is no doubt that this decision is a significant (and long overdue) victory for unionized employers.
Under the Fair Labor Standards Act (FLSA), employees must generally be paid for time spent putting on and taking off protective clothing if they are required by law or by the employer to change into such clothing at the work site. However, Section 3(o) of the FLSA provides that in a unionized setting, time spent “changing clothes” may be excluded from compensable time by a collective bargaining agreement or by a custom or practice of non-compensation for such activities. The U.S. Supreme Court clarified the meaning and scope of “changing clothes” in this context. The Court held that “clothes” means “items that are both designed and used to cover the body and are commonly regarded as articles of dress.” Although the Court distinguished between “clothes” and “equipment and devices” that are worn (i.e, safety glasses, hard hat, ear plugs), it ultimately concluded that because the donning and doffing of such equipment and devices did not comprise the majority of the period in this case, such time was still not compensable even though these items were not considered “clothes” in the context of Section 203(o).
Although the U.S. Supreme Court focused its attention on changing clothes in the context of Section 203(o) of the FLSA for unionized employers, there are nuances in this decision that may serve as a springing board for other courts to extend this rationale to non-union employers in the future. However, it is important to note that this decision is only applicable to unionized employers at this time. Therefore, non-unionized employers should continue to pay their employees for donning and doffing as normally such time is compensable under the FLSA.
We strongly recommend that unionized employers examine their collective bargaining agreements, and if there is no provision regarding the compensability of time spent donning and doffing, they should consider adding specific language stating that time spent putting on and taking off protective clothing and gear is not compensable.
For further information regarding wage and hour issues, please contact Lindsey Coley (540.983.9376 or coley@gentrylocke.com) or any other member of the Employment Practice Group at Gentry Locke Rakes & Moore.
Please note: This page is provided for general informational purposes only and is a marketing publication of Gentry Locke Rakes & Moore, LLP. It is intended to alert visitors to developments in the law and is does not constitute legal advice or a legal opinion on any specific facts or circumstances. You are urged to consult your own lawyer concerning your situation and specific legal questions you may have.
Friday, February 7th, 2014
This article, written by Employment Law Partner Paul Klockenbrink, was written for Gentry Locke’s Virginia OSHA Law News blog at www.VaOSHALawNews.com.
If you’re in the construction industry, you’ve already heard many ways in which your business needs protection through its agreements, policies, contracts, and implementing the right OSHA policies.
Like any business, you want to stay in business. In addition to what you’ve already read on this blog, labor and employment issues always loom on the horizon threatening to drain your resources from all angles. Fortunately, my colleagues and I will be spending a whole day on these topics at our upcoming 2014 Labor & Employment Law Symposium, in Lynchburg on March 12th and in Roanoke on March 18th. Keep in mind, one of the first things requested in a lawsuit is “what training the Company or its management has received” on the various federal laws at issue. The failure to have a good answer (or any answer) exponentially increases your Company’s financial exposure. Therefore, we strongly recommend that someone from your Company attend this event.
Below are the “hot” topics we will be addressing at our upcoming symposium, most of which are painfully relevant to the construction industry.
The Era of the Whistleblower
Many people believe OSHA is only concerned about workplace safety issues, and are unaware that this agency has been tasked with the responsibility to enforce 22 federal regulatory schemes in a wide range of industries. Understanding the process involved is critical as the Administration has now set up a whole website (www.whistleblowers.gov) to solicit and encourage claims. In addition to OSHA, there is a rising tide of claims against employers who have any interaction with the government under the False Claims Act, and every employer and HR professional needs to understand what “qui tam” means, and the consequences of qui tam claims.
Wage & Hour Claims under the FLSA
Wage and hour claims under the Fair Labor Standards Act have again hit a record high. These claims are the proverbial low-hanging fruit for lawyers who will represent your employees. In the never-ending stream of wage and hour litigation, some of the less-expected sand traps include the misclassification of employees, off-the-clock work (including working through lunch breaks, the use of smart phones and laptops) and the miscalculation of overtime. Employers have to aggressively attack these claims early in the process.
Workers’ Comp, FMLA and the ADA
These three laws interact and can create a triangular nightmare. It’s inevitable that employees will get sick, injured, give birth, or have to provide care for an ailing loved one. The problems often arise when the employee appears to be milking the system with never-ending leaves of absence. An understanding of these laws is required so you can know when and how, if necessary, to terminate these employees. FMLA and ADA obligations are regularly part of the process when an employee files a workers’ compensation claim. Navigating this process successfully can keep your company on solid ground.
Technology in the Workplace
In a year that brought us Edward Snowden and the NSA hacking scandals, attention is increasingly focused on the proper limits of privacy and supervision of technology. Employers have rights and responsibilities in policing and managing social media, employee tracking, and there are myriad implications for “Bring Your Own Device” (BYOD) policies. Electronic retention of documents and electronic media can also bite you in the rear. If you’re not aware of the steps that your business will need to take to preserve and process electronic evidence for litigation, you’re already at a disadvantage.
Defusing Violent Workplace Situations
Anger is increasingly being acted out in violent confrontations that impact people on the job, in schools, and other public places. Are there factors that, when present, might indicate the likelihood of a violent workplace incident? In some cases, the right policies or the right person in the right place has worked to defuse or de-escalate such situations to a safe, nonviolent resolution. A police department representative from Lynchburg (March 12th) and the City of Roanoke (March 18th) will provide expert advice at our upcoming events.
Sex Discrimination: What it Looks Like in 2014
Over twenty years have passed since the 1991 testimony by Anita Hill before the Senate Judiciary Committee, and yet in 2014 sexual harassment and sexual discrimination issues continue to perplex the Courts and create difficulties for employers. Sexual harassment and sexual discrimination claims now include gender orientation, transgender issues, gender stereotyping and gender identity, as well as caregiver discrimination. There are unique investigatory and retaliation issues that arise once complaints are made. If you’re not proactively training your supervisors and reacting properly to complaints made by employees, you could be headed for serious legal trouble.
The Labor Board Comes Alive in 2014
The National Labor Relations Board (NLRB) now has a full complement of 5 confirmed members for the first time in a decade. They are poised to issue new opinions and new rules that should be of concern to all businesses, whether union or non-union. For example, the NLRB will likely enact new pro-union election rules. In addition, company handbooks and email and social media policies will continue to be under siege. There are ways for companies to remain union-free, and strategies you can implement to avoid liability under the National Labor Relations Act.
2014 – The Current State of Employee Benefits
The world of employee benefits is in flux with a lot of critical developments in play. With the confusion over the Affordable Care Act and the Supreme Court overturning the Defense of Marriage Act, there are a lot of questions about how benefit plans work and what employers need to do to be in compliance in 2014. This is where experienced Employee Retirement Income Security Act (ERISA) attorneys can identify potential pitfalls on the benefits horizons, and help your business steer clear of them.
In the employment law arena, an ounce of prevention is truly worth a pound of cure. The courts and federal agencies are no longer recommending that training be done, rather, they are mandating that training be done. If your organization does not do at least the bare minimum of training, it will open the door to not only embarrassing testimony at trial, but also the very real possibility of an award of punitive damages against your organization. Our 2014 Labor & Employment Law Symposium will identify a number of very key issues for the construction industry. We will also highlight where deficiencies may exist in your organization, so they can be addressed to prevent any future claims — or at the very least, minimize the risks.
Monday, February 3rd, 2014
As I was watching the Super Bowl last night, it occurred to me that defense matters. Just ask Peyton Manning.
So, if you are a lawyer representing an owner or a general contractor who has been sued for a delay claim, then there are some ‘low-hanging fruit’ easy defenses that might apply to your case. A thorough Virginia construction lawyer should always check to see whether any of the following applies to their case:
- Lack of Proper Notice. The contractor or subcontractor failed to give timely notice of the delay claim as required by the contract or Virginia law. Although a lack of notice is not always fatal to a claim, an owner or general contractor can often use a lack of notice defense to defend against a delay claim.
- Proving Causation. The contractor or subcontractor cannot separate the delay impact caused by owner or general contractor from various other factors that may have caused the delay. On large projects, it can be very difficult to parse out who is responsible for what amount of a delay.
- Delay was not on the Critical Path. The contractor or subcontractor cannot show that the delay was on their critical path. When defending a delay claim, it is important to carefully analyze the schedule’s critical path to assess whether or not the delay at issue really impacted the completion date for the whole project.
- No Damages for Delay Clause. If the contractor’s or subcontractor’s contract included a provision stating that there will be no damages for a delay (or limited damages for a delay), then: (1) you have another solid defense to oppose a delay claim; and (2) either the contractor/subcontractor or you, as its lawyer, was very wise to include that provision. Just like the ‘Lack of Proper Notice’ defense above — this is a defense based on a contractual limitation.
Even if you use these defenses successfully, we still recommend refraining from making any ‘Richard Sherman outbursts’ in open court.
Friday, January 31st, 2014
When Congress passed amendments to the Americans with Disabilities Act in 2008 (“ADAAA”), it was reacting, in part, to a series of Supreme Court decisions. One of those decisions, Toyota Motors Manufacturing, Kentucky Inc. v. Williams (2002), adopted a strict construction of the term “disability,” and ruled that a “temporary impairment” could not qualify as a disability. Many lower courts applied Toyota Motors to mean that an impairment that did not last for more than 12 months did not qualify as a “disability.” In amending the ADA, Congress made clear it was overruling Toyota Motors and made it clear that the terms “disability” and “substantially limits” were to be interpreted broadly. Congress directed the EEOC to revise its regulations to render them consistent with the new broaden scope of the ADA.
In response, the EEOC adopted regulations that provided that an impairment lasting less than six months could constitute a disability if the impairment was “sufficiently severe.” 29 C.F.R. § 1630.2(j)(1)(ix). As part of its regulatory guidance, the EEOC observed that a person with bad back and a 20 pound lifting restriction that lasts for “several months” was sufficiently impaired to be considered “disabled” under the revised ADA. Since then, lower courts have wrestled with how to apply this new law.
The Fourth Circuit Court of Appeals[1] became the first appellate court to take up the issue of when a “temporary impairment” will qualify as a “disability.” The Court ruled that the EEOC’s regulations were reasonable and courts should defer to the regulations in this area. As a result, the Court had little difficulty finding that an employee who fell and suffered serious injuries requiring multiple surgeries on both legs and who was temporarily limited in his ability to walk for six months was “disabled” under the ADA. As a result, the Court reversed and reinstated the lawsuit challenging his dismissal. Summers v. Altarum Institute Corp., ( Jan. 23, 2014).
The Summers decision leads to at least three practical consequences. First, employers must realize that temporary conditions which significantly impact ordinary life functions, like walking, sleeping, etc., are likely to be protected under the ADA as a disability, even though they are temporary in nature. The employer in Summers argued that this new temporary impairment rule under the ADAAA should only apply if the temporary impairment is the result of an underlying condition that is permanent in nature. The Court rejected this argument and found no basis for this type of distinction. As a result, any injury suffered on or off the job, which results in a significant but temporary impairment of two months or more, is likely to be found a disability.
The second lesson from Summers is that engaging in the interactive process with an employee who is temporarily impaired is now essential. An employer’s failure to be able to prove that it engaged in this process in good faith with a “disabled” employee makes it very difficult to defend a subsequent ADA claim. In Summers, within three weeks after the accident, the injured employee, who was on short-term disability leave, requested the opportunity to work from home and to gradually increase his hours of work until he could return on a full time basis. The company never responded to his request at all. Instead, six weeks after his injury, the employer simply informed Summers that the company was terminating his employment in order to place a new employee in his job who could work at the customer site, which was viewed as a requirement.
Third, Summers brings into sharp focus the intersection between workers’ compensation and federal law (ADA and FMLA). Employers should consider being more proactive in the resolution of worker compensation claims rather than simply allowing the insurance company to settle the “comp” claim. Any time a workers’ compensation claim is settled, consideration should also be given to resolving potential claims under the ADA and FMLA, especially when the employee will be leaving the employment of the company.
In closing, the days are gone when management can simply say that temporary impairments do not qualify for protection under the ADA. While not every broken leg or other temporary condition will qualify as a disability, if a 20 pound lifting restriction that lasts for two months can qualify, it will be difficult to successfully prove that many other temporary impairments that last for two months or more are not a disability. At this point, employers are better served to operate on an assumption that the ADA applies to most conditions and to be sure that HR and managers together engage in (and can document) the interactive process with the injured worker. The key for an employer in this situation is to show it engaged in a discussion and consideration of potential accommodations.[2] A court is less likely to second guess a decision to deny a specific accommodation than a situation where no discussion ever occurred.
For additional assistance on matters involving the ADA and other employment issues, please contact David Paxton (540.983.9334; paxton@gentrylocke.com) or the other members of the Employment Law Practice Group.
[1] This is the federal appellate court that decides federal cases tried in Maryland, North Carolina, South Carolina, Virginia and West Virginia.
[2] Employers must also keep in mind that transferring a disabled employee to a vacant position for which they are “minimally qualified” is an accommodation that should be considered. The EEOC has aggressively taken the position that a transfer to a vacant position must be provided as an accommodation, even if the disabled employee is not the most qualified for the job. At least one federal appeals court has agreed. EEOC v. United Airlines, 693 F.3d 760 (7th Cir. 2012), cert. denied 133 S. Ct. 2734 (May 28, 2013).
Tuesday, January 14th, 2014
This article, written by Gentry Locke Partner Todd Leeson, was published in “Virginia Human Resources Today” magazine (Winter/Spring 2004). Read the formatted PDF. Todd will also be presenting on hot topics in employment law, and on recent trends at the NLRB at Gentry Locke’s 2014 Labor & Employment Law Symposium.
Employees are filing record numbers of retaliation and whistleblower claims. This short article provides some recommendations to employers to minimize their legal risks. First, here are some facts.
- For the fourth consecutive year, retaliation claims are the leading category of charges filed with the Equal Employment Opportunity Commission (EEOC). In other words, there are more retaliation charges than race or sex discrimination charges. In 2012 alone, retaliation claims comprised over 38% of all charges filed with the EEOC.
- Dozens of additional federal laws also protect workers against retaliation for complaining about alleged unlawful practices or conduct. The Department of Labor, primarily through OSHA, has helpful guidance on its website as to the various laws and rights. www.whistleblowers.gov.
- Recently enacted federal laws such as Sarbanes-Oxley, as well as the Affordable Care Act, also contain whistleblower protections. The government has made it a priority to protect “whistleblowers” from retaliation by their employers.
So, what should employers do to minimize their legal risks? Here are five suggestions.
- Publish a Robust Retaliation Policy. I recommend that you have a separate, stand-alone policy that sets forth the company’s commitment that it will not take any adverse action against any person because that person engaged in conduct protected under the law. The policy should also assure employees that they can lodge complaints about purported unlawful activity, or provide information as part of an investigation, without fear of any retaliation. Any employee who believes he/she has experienced retaliation must promptly inform management or human resources of the concern so that the company can investigate it. The company will take corrective action if it determines that there has been a violation of company policy.
- Train Management. Having a solid policy and complaint process is not enough. You must train management to understand the policy and to comply with it.
- Don’t Retaliate! How would one of your managers react if he was accused of violating the law? Moreover, what if the employee who lodged the complaint had performance problems and the manager denied any improper conduct? This is where HR professionals need to exercise dispassionate oversight and good judgment. Companies can and should take appropriate corrective action against persons who violate company policy, even if the person previously engaged in protected activity. Make sure, however, the company can justify its decision for a legitimate, non-retaliatory reason. Ask yourself: Why is the manager asking HR to terminate this employee today?
- Insulate the Decision Maker. Assume that an employee who had previously engaged in “protected activity” is subsequently alleged to have engaged in conduct in violation of company policy. If possible, empower the person who will investigate and/or decide whether to take adverse action against the employee to make an independent investigation. Similarly, if feasible, insulate the decision maker from knowledge that the employee had previously engaged in protected activity.
- Follow Up. If an employee has engaged in protected activity (i.e., lodged a complaint about purported unlawful conduct), human resources should regularly follow-up with that employee, and then memorialize the facts. (“On [date], I met with Mary to ask her if she was experiencing any further problems or had any concerns. She responded no. I reminded her that she should come see me or contact anyone else in HR immediately if she had any questions or concerns. She said that she understood.”)
Want additional advice? I will be presenting a strategic session on this topic at the 2014 Virginia State SHRM Conference in April at The Homestead. I hope to see you there.
Friday, December 27th, 2013
We thought it might be good to review some issues that could result in claims on construction projects. Knowing what indicators to look for will help contractors spot problem areas that could develop into claims if not addressed and dealt with promptly.
As discussed in other posts, good record-keeping is key to proving a claim. So, when these issues come up, a contractor needs to be very diligent in recording this information in its daily logs and project documents.
There are many common trends that we see that cause claims on projects. The following list sets out the causes that we see most often result in disputed claims:
- Extra work caused by changes in the scope or complexity of the work. For instance, a differing site conditions claim comes up when the scope or complexity of the work has been increased due to a meaningful difference in the way the site was described in the contract documents versus reality. “How were we supposed to know that there were rocks in the subsurface in Southwest Virginia?”
- Unplanned disruptions, suspensions, or stop work orders.
- Contract acceleration. “When you said to be done by Christmas, I thought you meant next Christmas.”
- Labor, material or equipment problems or shortages. “We’re out of glue.”
- Architect-related delays – errors and omissions in drawings and specifications leading to RFI’s and design confusion, as well as delays in contract administration. “Don’t blame me.”
- Weather delays – “It’s beginning to look a lot like Christmas”
- Site congestion, limited site access, or a lack of coordination among various subcontractors and a lack of coordination by the general contractor. “Who’s on first?”
If these issues come up on your project, then a claim is likely to follow whether you have a claim or expect to receive one.
Friday, November 8th, 2013
The Daily Beast is running a Q&A with Richard Posner called “How I Write.”
Judge Posner is a brilliant and prolific writer. As a person who writes for a living, I was naturally intrigued. Also, I picked up the link from U of R Professor Kevin Walsh‘s Twitter feed (@kevincwalsh). Professor Walsh has a habit of sharing fascinating arcana, like the story behind the terrifying hat that Justice Scalia wore to the inauguration.
Unfortunately, except for one incredible line, the Posner article is a bit of a let-down. Here’s the line:
“Well, I don’t like the Supreme Court. I don’t think it’s a real court. I think of it as basically…it’s like a House of Lords.”
Hilarious. Also, Judge Posner writes about 90 opinions a year and considers the average SCOTUS justice’s workload to be “ridiculous.” But aside from those zingers, there’s not much substance for practitioners (and in fairness, practicing lawyers likely were not the article’s target audience).
Even so, here is the titular explanation of how Posner writes: “I don’t really have any routines. Well, if I’m at home or in the office I have a desk and a computer. And I write.”
Not super helpful. Judge Posner is brilliant and prolific because he’s brilliant and prolific. Got it.
I am neither, but I write for a living and somehow manage to churn out enough marginally competent work product to keep the lights on (this blog excepted).
Here’s how I write briefs:*
- Review. I review the record (on appeal) or the pertinent facts (in the trial court) to get up to speed.
- Brainstorm. I brainstorm potential appeal points and arguments, writing all of them down in a mind map/whirly-bird outline. Sometimes it’s color coded. I find that worrying too much about the law at this point will limit my creativity. For now, it’s just facts and equity and trying to generate as many ideas as possible. If I come up with a factually compelling argument for a fair result, I will most likely be able to find a legal framework to support it.
- Research. Now that I have all of these great ideas about what the trial court might have done wrong, I do some legal research to see which (if any) have merit.
- Brainstorm Some More. More brainstorming now that I know the law. Also, at this stage I start formulating specific arguments . . .
- Review/Research Again…and then I inevitably have to learn more facts and law to test my new arguments.
- Outline. Taking my color-coded absurdity of a mind map, which has now been highlighted and overwritten beyond legibility, I draft a very careful, full-sentence outline of my brief. This step is tough. I try to draw connections from all of the various strands of my brainstorming, drop the stuff that doesn’t work, and present the stuff that does work in the clearest, shortest way possible.
- Write. This is the fun part. It goes by very quickly once I’ve outlined, and I try to do it all in one sitting. I use Dragon NaturallySpeaking 11.0 with a silly headset to dictate my brief directly onto a screen. The software is amazing and fast. I look utterly ridiculous, but it works. I guess this is the “writing” part.
- Edit. This is by far the hardest step, and the key to good writing. I think that Stephen King said that a good writer can cut half the words from his first draft. I’m not quite at that level, but I do cut loads of material from my first drafts–so much that I actually create an “Outtakes” document to store it, just in case it might be useful later. But here’s the real challenge with this part of the process: the stuff that’s the most fun to write–the clever turns of phrase, the biting comeback–is often the least useful to the Court, which just wants to learn what it needs to know to get to a legally correct result. The Court is not interested in how clever you are, or what a fine young writer you have become. It just wants results.
See? Talent is overrated. Sure, I may not be brilliant like Judge Posner, and following this routine will certainly keep me from ever being as prolific, but even a chump like me can learn to write
* Again, to be excruciatingly clear: This is how I write briefs. I give blog posts minimal thought or editing. They’re lucky if they get a spell check.
Friday, October 18th, 2013
On September 12, 2013, the Supreme Court of Virginia surprised many by ruling that a motion to dismiss (demurrer) is not the proper procedure to challenge the enforceability of a noncompete agreement when a lawsuit is filed to enforce the agreement. Instead, the Court ruled that when one argues that the restrictive covenant is overbroad on its face and unenforceable as a matter of law, the court cannot issue a ruling solely on the pleadings but it must have a factual record. In Assurance Data, Inc. v. Malyevac, a unanimous Supreme Court reversed the trial court’s decision to grant a demurrer which found the restraint unenforceable. The Supreme Court said, “each case involving the enforceability of a restraint on competition must be determined on its own facts,” and pointed out that the employer bears the burden of proving the restrictions are legitimate and reasonable. Prior to this decision, noncompete cases were frequently decided at an early pleading stage before the parties engaged in discovery. Assurance Data is likely to be a game changer in the strategic process of evaluating options since summary judgment is rare in state court in Virginia.
In a federal case decided a week earlier in Alexandria, Judge Cacheris ruled that a former employer had stated valid claims for misappropriation of trade secret information, as well as claims alleging violations of the Virginia Computer Crimes Act, breach of contract and breach of fiduciary duty. In Marsteller v. ECS Federal, Inc., the judge ruled that in order to establish a claim under Virginia’s Uniform Trade Secret Act (Va. Code § 59.1-336, et. seq.), the plaintiff need only plead and prove that “(1) the information in question constitutes a trade secret and (2) the defendant misappropriated it.” The court went on to note that the case law makes it clear that “just about anything can constitute a trade secret under the right set of facts.”
Marsteller, the executive, started this legal action by suing her former employer under Title VII and on other employment-related claims. ECS, the former employer, responded with a counterclaim alleging that Marsteller had improperly acquired the company’s trade secrets when she copied certain materials onto external storage devices and then retained the information after she left. The court found the following information eligible for “trade secret” status: (i) management systems documentation generated and used to secure ISO certification, and (ii) certain documents containing pipeline information that laid out the company’s business development plans. The company alleged that this information was not publicly available nor readily ascertained by those outside the company, and it had taken the steps to protect this information by storing it on a password protected server.
The noteworthy part of the court’s analysis came when Judge Cacheris set forth what it takes to establish the “misappropriation” element of the claim. Although Virginia courts have not recognized the theory of “inevitable disclosure,” the Marsteller decision moves trade secret analysis in that direction. Judge Cacheris ruled that a “misappropriation” claim can be stated simply by establishing that the trade secret was “improperly acquired.” A showing of an improper use or disclosure is not necessarily required for a claim.
The former executive argued that the trade secret counterclaim should be dismissed because no disclosure or use of the trade secret was expressly alleged. The court rejected her claim, noting that “improper acquisition of a trade secret, even in the absence of the allegation of use or disclosure, is sufficient” to state a claim. The court also rejected the former executive’s attempt to dismiss the other state law claims as being pre-empted by the Virginia Uniform Trade Secret Act. Since the executive disputed whether the information in question actually constituted a “trade secret,” the court allowed all of the state law claims to proceed as alternative theories of relief.
There are least two take-aways from these decisions. First, if a violation of an agreement containing a restrictive covenant or the improper acquisition of a trade secret is properly alleged, then the case will move forward beyond a motion to dismiss. Courts are going to be more reluctant to dismiss cases at the initial pleading stage. This change gives the party moving for enforcement greater early leverage than previously existed. Second, for all parties, the costs associated with litigating trade secret and noncompete cases will now go up significantly. While there may be other procedural devices that a party may try to use to challenge the legal enforceability of a noncompete restriction, courts will have a much harder time ruling on these types of dispositive motions early in a case before evidence has been developed through discovery, or without holding an evidentiary hearing.
While the costs of litigation of these types of claims are often high, courts are becoming less afraid to award costs and attorney’s fees, even against individuals. In one recent case, Tech Systems, Inc. v. Pyles (August 2013), after the plaintiff obtained a jury verdict against its former HR director for sabotaging the company’s records and disclosing confidential information, the court awarded more than $340,000 in attorney’s fees and costs to the former employer under the Virginia Computer Crimes Act. In Tech Systems, the magistrate judge found that the former HR director had destroyed evidence by deleting incriminating emails sent from her company-issued Blackberry phone.
If you have questions regarding trade secrets, your company’s rights or your rights as an executive under employment agreements containing restrictive covenants, noncompete or nonsolicitation provisions, or nondisclosure agreements, please contact David Paxton at 540.983.9334, or any member of Gentry Locke’s Employment law or Litigation team; Greg Haley, Michael Finney, Todd Leeson, Paul Klockenbrink, John Thomas, or Abigail Murchison
