Smooth Transitions

Smooth Transitions

addressing the Legal issues arising from the departure of employees & Business breakups

The Perils of Instant Messaging

Posted in HR Issues
A IM example.

A IM example.

When instant messaging first came out, employment lawyers warned employers about the perils of such products and the good advice that they should have some policy on their use.  Back then, IM software was typically downloaded and then used by the employee to talk to their friend outside of the workplace and sometimes in the workplace.  My how times change.  Many business from law firms to consulting firms now have IM platforms in place and encourage their use by employees.  They are less formal than emails (good and bad) and the way in which the messages themselves is stored or retained varies.  Messages can be used amongst employees but there are certain platforms that allow for dialogue with folks offsite like customers and even friends.  I’m not going to address whether such an IM platform makes sense for your business, only some suggestions on what to do if it is in place.

  1. Have a written policy in place.  (Just like social media make sure there is something that addresses its use.  A current social media or email policy may be a start for a policy.)
  2. Communications amongst employees should be for business purposes.  (Is this always going to happen no – the exact same thing with email.  But the ultimate purpose of IMing and even email is for the business.)
  3. If there are going to be communications with customers or clients make sure there is an appropriate policy.  (No confidential information in messages.  Some industries will restrict communications such as FINRA.)
  4. Retention policy.  (Have one that is in place and enforced.)

When one of my clients tells me they have an IM platform I immediately start thinking about discovery (I know that’s sad).  I think about the opposing lawyer asking a witness about whether he or she talked with the Plaintiff about [insert issue of dispute from discrimination to breach of contract etc. etc] via IM.  Then I anticipate receiving a request for production for that information and finding out that it is or is not maintained.  From there it goes to reviewing IMs that may or may not be problematic.

Regardless of my angst, make sure there is policy in place.  Make sure that policy meets your business needs and is enforced.

 

Blurred Lines – FaceBook Solicitations?

Posted in Non-Solicitation Agreements

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A few months ago I confronted another FaceBook related case where we were arguing over what level of FaceBook activity constituted a solicitation in violation of a non-solicitation covenant.  I’ve previously discussed this issue and given the sage advice that you’ll know it when you see it.  I’m not so sure that’s such sage advice , but I think it really shows the tension and struggles of lawyers to want to address all the potential forms of solicitations that are out there.

That’s more a personal problem. But here is my dilemma – Facebook continues to evolve with the level of interaction it permits.  We started off with the status update that folks still use today to tell us about new jobs, the birth of a child, or even very mundane things like a picture of what you are about to eat.  We can also “check-in” when we are somewhere interesting (hopefully), upload pictures or videos, tag individuals to certain events or pictures, and like posts from others.  The point is the technology is never ending and evolving.  (Just like technology has always done.) So the FaceBook solicitation conundrum is this.  At what point does a poster go from providing “information” to making a solicitation?

I think the majority might agree that a post that states a new job title is probably not a solicitation – a direct FaceBook message asking a former images (1)customer to come and talk about your company’s product line is.  That’s not too difficult. Now what if there is a post about an upcoming meeting in a week or so where a new product is going to be unveiled?  A former employee who is marketing the product did not create the post but instead likes it and then tags someone who was their former customer/friend at the previous place of employment.  There’s no language inviting the customer to the meeting or asking that they attend – they’re just tagged.  That’s a little tougher but the purpose of the tag is clear.  To try and get that former customer to the new company presentation.  I would argue that is a solicit.

What if the former employee simply likes the new meeting event information and then that information appears in their news feed?  Now the former employee is introducing the solicitation by liking the post.  But, the initial decision for the former customer to become friends with the former employee was the customers – you don’t have to be friends with anybody on FaceBook – it’s optional.  Why should the former employee being penalized for having lots of Facebook friends they worked with?

So the lines are becoming blurrier and a sophisticated FaceBook user can exploit the blurred lines.  Some folks will recommend that a non-solicit should be tailored to address social media, probably not a bad idea, but the employer will never be able to address every potential type of solicit as Facebook and other platforms evolve.

TRO Tips/Thoughts

Posted in Injunction

          

Just a few random thoughts on Non-Compete/Non-Solicit TROs after some recent experiences:

  1. Hopefully the other side is represented by counsel – Despite popular belief the ex parte TRO is in many instances much harder to get than one where the other side is represented by counsel. It’s just easier when the other side has a lawyer and frankly it shouldn’t matter if the case merits an injunction.
  2. The Verification – Be very careful with what your client verifies.  There is no way to undo swearing to something under oath and the other side is always looking for inconsistencies in your story.
  3. The Basics – prove up the agreement at issue and meet your injunction elements (imminent harm, probable right to relief, no adequate remedy at law.)
  4. Are your damages capable of being calculated ?- if so, get ready for an argument that there is an adequate remedy at law.
  5. The pleadings are important but it’s the order that matters – what is the other side prohibited from doing?
  6. Be conservative in the relief you are requesting.
  7. Consider expedited discovery – in Texas you’ve got 14 days (with one 14 day extension) before the temporary injunction hearing.
  8. Most non-compete/non-solicit cases are won or lost the the injunction stage – most cases don’t go on past this.
  9. It’s going to be expensive.
  10. You never get a second chance at a first impression – especially with the Court.

Defining Victory in Non-Compete Cases

Posted in Non-Compete Agreements

                 

The reality of the litigation world is the vast majority of cases are settled.  That means there is no trial, there is no summary judgment, and there is no ultimate decision by the court that resolves the case.  I had a professor in law school that said a trial was the ultimate failure in the system because good lawyers and rational parties would properly evaluate the risks involved in their respective positions and reach the appropriate settlement.  As high minded as that comment sounded in law school, it is accurate.  Many cases proceed to trial because of a misevaluation by one of the parties.

So what does that mean in the world of non-compete cases? Parties have to define what a “victory” is for them prior to moving forward with a lawsuit or application for temporary restraining order/injunction.  As certain as a party may be that their non-compete or non-solicit is enforceable you can never lose sight of the fact that  initially (the temporary restraining order stage) a single individual (the judge) will be deciding whether that agreement is enforceable based on fairness.  That does not always correspond to what the legally right outcome is.  That first decision will define the rest of the case.

The tricky part in defining what victory is sticking with that definition of victory.  More often than not there is what I would call “scope-creep” where the ultimate objection is blurred and doesn’t resemble what was first discussed.  This is dangerous for  the relationship between lawyer/client. 

So what is a victory in post-employment covenant litigation?  Obviously that depends upon the situation.  The objective can range from full enforcement of the provision, to putting the person out of business, to restricting the area in which they work, to agreeing to a list of customers that the former employee cannot contact.  It is not easy to make a non-compete stick, no matter how well it was written, drafted, or considered. 

Remember that a non-compete agreement is a restraint of trade, and is permitted only by statute or common law.  Employers need to be both reasonable and pragmatic when it comes to enforcement.  You never know what you are going to get at the court house and that judge sees your non-compete agreement for the very first time and is asked to enter a temporary restraining order.
 

New Firm – Weinstein Radcliff LLP

Posted in HR Issues

                                               

Today is Day 1 of Weinstein Radcliff LLP.  We look forward to working with you in the future.  My new contact information is below:

Weinstein Radcliff LLP
6688 N. Central Expressway | Suite 675
Dallas, Texas 75206
P: 214.865.6130 | F: 214.865.6140
rradcliff@weinrad.com | weinrad.com
 

 

At-Will Employment SuperBowl Style

Posted in HR Issues

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Seattle Employer Question: Can I fire my employee because he wears a Broncos jersey to work?

Generic Lawyer: Yes.

Generic Lawyer:  Should you? No.

The headlines that accompany the story behind this back and forth are a little misleading.  Last Sunday, a Seattle employer told his his staff they could wear football attire to support the team, presumably the Seahawks.  Instead of wearing a Seahawks jersey, 17 year old Nathaniel Wentz wore a Bronco’s jersey, his favorite team.  When he arrived at work he was told to go home and change – he was not fired.  Instead of returning to work he quit and the rest as they say is history.

At-will employment in Texas is a fairly simple proposition.  I can fire you for any non-discriminatory reason and you can quit for any reason.  Yes, there are some exceptions.  So, an employee could be fired for wearing the wrong jersey to work, which did not occur in this case.  Really, this case illustrates the power the employee has to quit – Wentz unhappy that his employer told him he could not sport his Broncos jersey decided to quit, as he is permitted to do.  It is the other side of the at-will doctrine.

The Seattle employer, Odyssey 1 is in the business of  indoor childrens’ games like laser tag and jungle gyms.  I doubt its owners were anticipating a national story about their jersey policy but so it goes.  My guess is they might make a different decision if they had to do it over again and let young Wentz keep his jersey on the day.  After all, this was before the SuperBowl match up was even decided.

 

The Death of Anonymity Courtesy of Facebook

Posted in Social Media

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The Alabama mother of three who appeared to have a few too many at the OU/BAMA game and then took on a group of OU undergrads illustrates just how quickly one can go (courtesy of the internet) from mild mannered fan/mother to internet sensation.  I some how doubt that Michelle Pritchett envisioned diving into a crowd of OU fans and then kicking them but she has come forward and said they were taunting her son and she would do it again if necessary.  

Unruly fans are nothing new.  The ability of stories like this to go viral is.  You at this point should be wondering why I am talking about this in a law blog?  Good question.  The reason is almost every single person with any internet presence (Facebook, work website with a bio, Linked In, even results from your latest 5k race etc. etc.) should expect that information to be mined by others.  This could be lawyers, employers (lots of issues with this), friends, family, or OU fans trying to track down who jumped on them.

Back to Pritchett.  So an OU fan with very good iphone skills films the event and posts it.  Then some more clever folks set the event to different music themes like Miley Cyrus’ wrecking ball and wrestling commentary.  Somehow someone get Prtichett’s name and the facebook searches begin and volia she is identified.

The same thing goes on to a lesser extent and certainly not a viral level everyday.  I suspect we all have done this type of internet research on competitors, potential clients, and witnesses.  It’s just human nature and a lot of folks like posting all sorts of information about themselves on the internet.  

So, Mrs. Pritchett is neither the first nor the last to receive such scrutiny.  As our internet biographies continue to grow the anonymity/privacy we once had disappears.  I’m not sure if this is a good or a bad thing.  What do you think?

Texas Non-Competes in 2014

Posted in Non-Compete Agreements

                         

 

 

Not Much in 2013

I kind of feel like a broken record when it comes to Texas non-compete development over the last few years. Since the Marsh opinion I have been anticipating more significant developments in the non-compete and post-employment covenant world as employers attempt to use different types of consideration as the basis for these types of agreements. We just haven’t seen those types of cases role through the lower courts but that is a slow process.

Regardless, employers will continue to use non-competes as employees continue to change jobs and new jobs are created. That fact will remain as there are always employment transitions. The beginning of the year is always a high turnover time period because end-of-year bonuses have been paid and employers are more apt to hire at the beginning of the year as opposed to the end.

So what am I focused on in 2014 – two things.   The first is the use of non-planning provisions in employment agreements. The second is the Texas legislature’s adoption of the uniform trade secrets act.  Today we address the anti-planning provision.

Anti-Planning Provisions

An anti-planning provision looks like this:

The Restricted Parties also agree during the Restricted Period not to acquire, own or have an ownership interest in, manage, operate, or be employed or engaged by, any person or entity that conducts or plans to conduct a business that is in Competition with the [Purchasing Company].

This comes from an employment agreement that the Dallas Court of Appeals confronted earlier in the year.  It provides yet another tool for employers to consider as part of their employment agreements.

Often times that employee will engage in what I will call “gray area” activities as they prepare to compete. This could mean many thing like: (1) preparing a website; (2) preparing a business entity; (3) maybe suggesting to current customers of an intention to move; (4) maybe discussing a potential new venture with current employees; and (5) preparing new business cards and stationery. Regardless, the point is Texas law permits employees to go a long way in terms of preparing to compete. But what if you had a provision in place that essentially said you could not engage in some of this conduct and that what often times falls within “gray areas” is contractually prohibited?

Then fast-forward to a non-compete lawsuit where the employer is seeking to impose a temporary injunction against a competing employee. Though the anti-planning provision may not be enforceable, but  at least the employer could point to its provisions and identify conduct that the employee violated as they prepared to compete.

As the court attempts to balance the equities, it will be faced with a situation where not only did the employee breach the post-employment covenants but he or she also breached their agreement at the time they were employed. Again, something for employers to consider.

 

 

 

2013 & Recruiters

Posted in Placement Professionals

The more things change…

The old adage goes that the more things change the more they stay the same. For Texas placement professionals there have been no landmark cases or significant changes in the law this year, but the standard issues remain and have become more magnified in the areas of post-employment covenants and the use of social media by recruiters.

Non-Competes and Non-Solicits

Recruiters continue to use non-solicitation and non-compete agreements for their employees. As we have discussed here at length, those types of agreements have gotten easier over the years to enforce in Texas, not harder. Any recruiter that has employees or any employee recruiter should seriously consider the ramifications of using or being subject to such agreements. Assuming that they are properly drafted and comply with the Texas non-compete statute there is a high likelihood that they will be enforceable.

Any departing recruiter should seriously consider trying to negotiate their way out of such an agreement if that is an option. Of course, the best way to handle one is to never sign it, but in most cases that is not an option.  The takeaway is recruiters will continue to use them and they will become standard in any contract.

Social Media

Along the same lines, there have been a number cases this year dealing with the use of social media and whether status updates on Linked In or a tweet about a new employment position somehow violated a non-solicitation provision. There is no one-size-fits-all answer for these types of questions and they will be dependent upon the facts in the case.

As I have written in other places, these types of posts usually will fall into gray areas but you usually know a solicitation when you see it. Employers must remember the power of social media and the ability of employees to leverage all of their contacts quite easily simply through Facebook posts or Linked In posts.

Anti-Planning Provisions

Employers are starting to use anti-planning provisions in employment agreements.   Put another way the employment agreement specifies what and employee cannot do prior to terminating their employment. These are on the “cutting-edge”.   Few courts have dealt with the enforceability of these provisions.  Generally, a Texas employee can prepare to compete as long as they are not doing so during company time etc. Recruiters should start to consider these types of anti-planning provisions if they make sense.

Trade Secrets Act

Finally, the Texas legislature adopted the uniform trade secrets act.  It provides some additional remedies including the right to attorney’s fees for prevailing employers who are successful in establishing the improper use of a trade secret. There have been no cases as the statute is brand new. We will monitor that as time progresses.
 

Texas Arbitration – How much is too much?

Posted in Arbitration

                         

Sometimes parties ignore arbitration provisions…

We’ve talked here previously about the pros and cons of arbitration and alternatives to arbitration such as jury trial waivers. That determination is really tied to the type of disputes an employer might have, the frequency of disputes, and other circumstances that are subjective.

Believe it or not there are some instances where parties to a lawsuit might ignore an arbitration provision. Maybe the issue is cost or the amount in controversy – again the reasons may vary but there are instances where parties file and defend lawsuits with arbitration provisions in place that would control the dispute.

Sometimes parties change their minds about the provisions they ignored…

The problem comes when one of those parties decides midway through the litigation that they want to compel arbitration. Then the court is left with a question of how much litigation is too much meaning the parties have waived their right to arbitration.

Texas Court still like arbitration provisions…

Recently in a San Antonio Court of Appeals case, the Court compelled arbitration in a case that was pending for 2 and a half years.  The high points from the opinion:

  1. Texas courts really like arbitration;
  2. To show waiver of an arbitration provision a party has to show the other side (a) invoked the judicial process and (b) it would be prejudiced by arbitration;
  3. Here the lawsuit had been ongoing 2 and half years, the parties engaged in discovery, transferred the case to San Antonio, and they were set for trial;
  4. The Court held that the was no showing or prejudice and ordered arbitration; and
  5. Texas courts really like arbitration.

Ouch.  The case was transferred, the parties conducted discovery, trial was a few months away and the Court still said arbitration wasn’t waived.  If you find yourself in this predicament how do you avoid this type of an opinion?  That’s tough.  First, make sure you’ve offered evidence of prejudice. Second, is there some way you can get the party to agree to waive the agreement on the record? Third, compel arbitration yourself.  There aren’t really any good answers.  Bottom line is a company can be subjected to arbitration even years after the lawsuit was filed.  Keep that reality in the back of your mind.

 

 

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