Smooth Transitions : Rob Radcliff : Texas Non-Compete Lawyer & Attorney : Gruber Hurst Johansen & Hail LLP Law Firm : Dallas Employment & Employee Departures : Smooth Transitions Law Blog

Happy Holidays to you and your family.  Below are a few of my favorite deposition clips:

This back and forth is priceless:

 The masked man deposition:

My all time favorite with Texas legend Joe Jamail:

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It's that time of year - the NFL season is drawing to a close and fantasy football leagues are in the midst of the playoffs.  Fantasy leagues are as popular as ever and cover all sports, not just football.  Fantasy leagues based on the NFL are by far the most popular and in many instances are comprised of co-workers and in some cases the use of company resources like email.

Which leads us to the firing of four employees in Fidelity Investments' Westlake, Texas office for playing Fantasy football.  Fidelity's take on the firing:

We have clear policies that relate to gambling. Participation in any form of gambling through the use of Fidelity time or equipment or any other company resource is prohibited. In addition to being illegal in a lot of places, it can also be disruptive. We want our employees to be focused on our customers and clients.

One of those fired, Cameron Pettigrew, knew that Fidelity did not permit playing fantasy on company time but claimed he never used company email for the league.  Fidelity did find two instant messages that included fantasy content.  Pettigrew explained:

One of my buddies sent me something about how bad Trent Edwards was playing or something like that, So they called me in and talked to me for about 90 minutes on everything I ever knew about fantasy football. They interrogated me as though I was some sort of international gambling kingpin. Then they released me for the day, and I was like, 'OK.’ I never thought they’d fire me for this, but, the next day, I get the call saying I had been terminated.

Tough time of year to be fired and Pettigrew knew he wasn't allowed to play at work, but was he really playing?  The Ft. Worth Star Telegram asked its readers if Fidelity overreacted:

Did Fidelity overreact by firing fantasy football players?
(1) No. (19%, 60 votes)
(2)Yes. (57%, 185 votes)
(3)Depends. (There's no way outsiders can know the whole story.) (24%, 78 votes) 

It seems unlikely that Pettigrew and his cohorts have any legal challenges to the firing as Texas is an at-will employment state.   If a company has a policy against playing in a fantasy league during work time, don't play.
 

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Tiger Woods'  use of text messaging underscores the repercussions such communications can have, especially when the messages are released from the recipient to a third party.  Apparently, Tiger sent text messages to one of the women he is alleged to have had an affair with and she has offered the texts as proof.  Tiger isn't the first to down by way of the text message, as former Detroit Mayor Kwame Brown can attest to, and odds are he won't be the last. 

Text messaging may appear to be "safe" for communications of this sort but it is not.  In addition to the Tiger example, texting can be front and center in lawsuits.  Consider a scenario where two employees decide to leave their employer and take valuable customer information with them.  They coordinate their departure through text messages because they believe this is safe communication as opposed to email.  Is it?  Can the employer obtain the texts through discovery?  

There are three potential sources to obtain text messages: the phone, the phone company, or the recipient. Once texts are deleted from the phone, it "sticks around" as described in Slate:

until enough new information is added to fill that memory, your old text message will remain on your device. If you used a SIM card to store your text messages before you erased them, then there might be space for the remains of 30 or so deleted messages; if the messages are downloaded directly to your phone, several hundred deleted messages could stick around on your device. Eventually, of course, the deleted messages will disappear as memory is filled with new messages, photos, or videos.

Phone providers have different policies on how long they maintain text files: AT&T Wireless keeps messages for 48 hours while Sprint keeps them on its server for approximately two weeks.  So it is unlikely that text messages can be obtained from the phone company unless you know about the messages near the time they were sent.

The third source, the recipient could keep the text forever.  They could print out the text, save it, or send it to other people.  The point is once you release the text message, just like an email, you have effectively published it to the world. 

The party to a lawsuit may have a difficult time obtaining text messages through discovery but should include requests for these types of communications.  Also, in appropriate instances, discovery should be directed to potential third-party recipients of such messages.

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Verizon and AT&T nonsuited lawsuits pending in New York and Atlanta today which largely stemmed over the companies' respective 3G phone service.  Verizon filed a declaratory judgment lawsuit in July requesting a New York court to find Verizon's claim that its 3G network was the most reliable was accurate.   AT&T filed a lawsuit in November claiming Verizon's "There's a A Map for That" ad campaign was misleading.  It also attempted to obtain a temporary restraining order shutting down the ad campaign but the Court denied the request. 

Verizon's campaign was a response to AT&T's iphone success  and the "There's an app for that" campaign.  It is unclear why the lawsuits were dismissed. The Judge's denial of AT&T's application for a temporary restraing order certainly did not bode well for future success in the Atlanta suit.

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Petsmart recently sued a St. Louis petshop over a former employee's alleged violation of a noncompete.  The agreement prevents Chris Lee, a co-owner of A Walk in the Park, from working at a petshop within a five-mile radius of any Petsmart location in St. Louis.  There are 12 Petsmart locations in St. Louis.  Lee, a dog groomer, claims the noncompete prevents him from working.

A Walk in the Park has tried to foster some grassroots opposition to the lawsuit. The following briefly appeared on the company's website:

WE NEED YOUR HELP!

A Walk in the Park is currently under attack. We hosted our Grand Opening Party on Sunday, November 8th from 2-6pm and posted that information on our website (awalkintheparkgrooming.com). At 2pm on that Sunday, in front of our guests, we were served by Petsmart’s attorneys. Petsmart, Inc. is suing us under a “non-compete” clause and threatens to shut our doors.

The entire posting goes into much greater detail.  We'll continue to monitor the suit.

Happy Thanksgiving to you and your family.

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An update on Larry Johnson:  He's found refuge with the team of last resort, the Cincinnati Bengals. 

A good question was raised in response to the Larry Johnson post last week:

Would incidents like this be reduced if companies had a social media policy in place and provided guidance on acceptable use? It's seems as though having a policy that's made available and signed by employees could make it easier to terminate employees that cause harm via social media.

Most companies have some type of policy that cover internet use which is usually applicable to social media.  They range, as we have discussed, from some that outright prohibit social media use to those that actively encourage social media use.  It depends on the business.  As suggested, having a policy in place that an employer can point to  makes legal scrutiny of a termination much easier to defend. 

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Most people wouldn't mind the life of an NFL running back.  Get paid millions of dollars to play a game.  Larry Johnson was a number 1 draft pick of the Kansas City Chiefs in 2003.  He made the pro bowl and in August 2007 signed a contract that was to pay him $45 million dollars through 2012, the biggest contract in Chiefs' history.

Along the way Larry was arrested a few times, was sued, and even got into social networking.  The latter would be his downfall.  Johnson maintains a website, blog, and has a twitter account.  Twitter has been a big player this year in the life of the professional athlete.  Players have used it to criticize coaches, management, and fans.  Johnson was no exception.

First he took on his Coach Todd Haley.  Then he had a few exchanges with Chiefs' fans:

Along the way Johnson made a slur about gays and seemed to alienate everyone.  He was suspended by the Chiefs and on the day he was to return was waived - purportedly for another tweet.  It also didn't help that 32,000 Chiefs' fans signed a petition demanding his waiver.

Johnson is an extreme example of an employer's reaction to inappropriate social media use.  Employers should not tolerate employees engaging in verbal warfare with customers a.k.a. fans.   Johnson cost himself a few million dollars exercising his free speech.

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Over the last few weeks I've been involved in defending and applying for temporary restraining orders in non-compete/trade secret cases in Houston and Dallas County District Courts.  A few observations on those proceedings:

• It is much easier to get injunctive relief in Texas since after the Texas Supreme Court's rulings in  Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 651 (Tex. 2006) and Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding.  Courts are well aware that the Texas Supreme Court has eliminated many of the technical arguments that were previously used to defeat non-competes on their face.   That being said, you still have to satisfy the statute.
• Companies have become much smarter about drafting non-competes and non-disclosure agreements.  The majority of agreements I see satisfy Texas law.  They generally have a one year duration, have a reasonable geographic limitation, and in most instances are ancillary to a promise to provide some type of trade secret.
• Courts want  to see "blood".  Not literally, but Courts need to see inequitable conduct from the alleged non-compete violator.  Did they take trade secrets out the door with them? Are they calling on former customers within days of leaving?  Are they trying to take employees with them?  A mere suspicion is not enough to support a temporary injunction and the Texas Supreme Court has not recognized inevitable disclosure. 

Depending upon your perspective, the good news is non-competes are easier to enforce from a legal standpoint.  That notwithstanding, a party seeking a temporary injunction to enforce a non-compete needs to have its facts lined up to justify this type of relief.

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In July we discussed IBM's non-compete case against former director David Johnson.  The trial court denied IBM's injunction and IBM appealed to the Second Circuit.  The Second Circuit denied IBM's appeal. 

The summary order addressed IBM's failure to show a likelihood of success on the merits:

We do not reach the question because IBM failed to make sufficient showings that it had a likelihood of success on the merits or that a balance of the hardships tipped decidedly in its favor.  The district court's conclusions on these issues were well-supported by the court's findings that Johnson was extremely credible, and that IBM's designated witness was much less credible chiefly because IBM's designated witness lacked familiarity with documents bearing on the controversy.

So, Johnson will continue to work with Dell which recently announced plans to purchase Perot Systems Corp. for $3.9 billion.  Johnson was the former director of mergers and acquisitions at IBM and started at Dell 4 months before the Perot acquisition was announced. 

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