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Archive for June, 2020

Massachusetts Superior Court Rules Non-Compete Agreement Fully Enforceable Despite Minor Change in Job Duties Between Signing and Enforcement of Agreement

Posted on: June 22nd, 2020

By: Janet Barringer and Zinnia Khan

The Massachusetts Superior Court’s recent decision in Now Business Intelligence, Inc. v. Sean Donahue, et al., held minor changes in an employee’s job duties will not create a “new employment contract” so as to invalidate or obviate the employee’s existing non-compete agreement with the employer. This decision reveals the best course of action for employers is to require employees to sign new non-competes in connection with substantial job changes. If there is any doubt or ambiguity as to whether a job change is “substantial” or “material,” we recommend consulting with counsel.

The decision in Now Business Intelligence, Inc. v. Sean Donahue, et al., centered on whether the employer, Now Business Intelligence, Inc. (“NBI”), may hold its former employee, Sean Donahue (“Donahue”), liable for breaching a non-compete agreement, thereby interfering with NBI’s business relations or whether the nature of Donahue’s job had transformed since he had first been hired and entered into the non-compete agreement so as to now invalidate the agreement under the “material change” doctrine. NBI maintained its former employee breached the non-compete agreement, thereby violating the Massachusetts Consumer Protection Law (Chapter 93A).

By way of background in a case from more than fifty years ago, F.A. Bartlett Tree Expert Co. v. Barrington, 353 Mass. 585 (1968), Massachusetts law declares the “material change” doctrine may be invoked by a former employee to support that a restrictive covenant in an employment agreement, such as a non-compete clause, is no longer enforceable because substantial changes to the nature of the employee’s job have occurred since the time the employee entered into the employment agreement. 

In the recent NBI case, Donahue was a former Project Manager at NBI, a technology-based consulting company placing information technology specialists inside of client companies to assist with, manage or solve their technology issues. Immediately prior to his first day on the job at NBI, Donahue executed a non-compete and confidentiality agreement. During his first year at NBI, Donahue was assigned to assist NBI client Raytheon with its implementation of SharePoint, a proprietary Microsoft technology requiring specialized knowledge to implement and operate. 

In or about July 2016, approximately eleven months after he signed his non-compete agreement, Raytheon cut short Donahue’s assignment due to its decision to pause SharePoint implementation. At this stage of Donahue’s employment, Donahue and NBI’s respective accounts of his ensuing job duties began to differ. NBI maintained Donahue was experiencing a slow work period while his job title, key job duties and rate of pay did not change. In contrast, Donahue claimed his position with NBI changed entirely from a Project Manager to a Sales Representative and included new duties such as recruiting customers for NBI and attending sales meetings.  In or about August 2017, Donahue voluntarily left NBI to start his own consulting business.  When NBI discovered Donahue, after his departure from NBI, provided SharePoint services to NBI’s former clients, including Raytheon, NBI sued Donahue to enforce the non-compete agreement. As a defense to NBI’s claims, Donahue invoked the “material change” doctrine and claimed the changes to his job beginning in July 2016 were material thereby invalidating his non-compete agreement with NBI. 

The Superior Court agreed with NBI there were no material changes to Donahue’s job while at NBI which would invalidate his non-compete agreement. The Court noted after his Raytheon assignment concluded, Donahue’s job title at NBI did not change, he was not asked to sign a new non-compete agreement, he was nether promoted nor demoted, his rate of pay remained the same and SharePoint-related tasks remained a significant portion of his billable work. Additionally, the NBI court determined certain changes to Donahue’s regular job duties, such as the need for occasional client pitches, were not a basis for finding the non-compete enforceable under Bartlett Tree. Further, NBI emphasized changes to an employee’s job must be material for the “material change” doctrine to apply, and cited Bartlett Tree as an example. In Bartlett Tree, the employee’s job changed significantly over an eighteen year period, including a promotion, different employment titles, different job duties, changes in remuneration and changes in sales area. These changes, taken together, showed a clear new employment contract and that the original employment contract was “abandoned and rescinded by mutual consent.”

The NBI v. Donahue decision is helpful for employers because it reaffirms only “material” job changes invalidate an existing employment agreement. Even so, employers must remain aware of the “material change” doctrine and the potential it holds for invalidating employment agreements. As a practical matter, it can be burdensome to require employees to enter into a new non-compete each time his or her position changes. Yet, if employees do not sign new agreements following a change in job duties or circumstances that is later deemed to be “material,” then a pre-existing non-compete may be deemed unenforceable.  

The best course of action for employers is to require key employees to sign new non-competes in connection with substantial job changes. If there is any doubt or ambiguity as to whether a job change is “substantial” or “material,” we recommend consulting with counsel.

If you have questions or would like more information, please contact Janet Barringer at [email protected] or Zinnia Khan [email protected].

States Target Infrastructure Investment to Spark Economic Recovery

Posted on: June 22nd, 2020

By: Thomas Hay

Government leaders and industry groups are contemplating a major investment in infrastructure in the anticipated “Phase 4” coronavirus relief package. Last week, the American Public Works Association (APWA) called upon Congress to include infrastructure investment as a key component in the next COVID-19 recovery package. Congress will likely pursue the next federal stimulus bill in July.

In the meantime, numerous states have begun their own infrastructure investments to boost the economy. With hopes of speeding up New York’s economic recovery, Governor Andrew Cuomo recently announced plans to fast-track several major NYC regional infrastructure projects. One of the infrastructure projects aims to transport “low-cost renewable power downstate and production upstate” with the addition of new transmission cables which will run across the state. The project will also include an expedited power cable running from Quebec to NYC. The power cable will transport hydropower to the city. Other planned infrastructure projects include an ongoing upgrade to LaGuardia airport and several railway expansions, including an AirTrain link from LaGuardia to local NYC rail lines.

In Massachusetts, the state Senate recently voted to approve a bill for financing to improve municipal roads and bridges and create a new oversight board for the Massachusetts Bay Transit Authority. The bill authorizes increased funding to cities and towns for roadwork through the apportionment of state resources. If passed, the proposed $300-million investment could aid the economy by financing critical local infrastructure projects to advance the statewide transportation system.

In California, the recently proposed Sustainable Transportation COVID-19 Recovery Act seeks to exempt sustainable transportation projects from the lengthy environmental protection reviews mandated by the California Environmental Quality Act (CEQA). Lawsuits brought under CEQA can delay projects by 1-5 years. The proposed bill focuses on transportation projects involving public transit, pedestrians, and bicycle traffic in order to provide environmentally friendly and sustainable public transportation options for commuters. In addition, the California High-Speed Rail Authority recently announced more than 4,000 construction jobs have been created to build the 119-mile long high-speed rail line.

These and other state initiatives, along with federal programs, will create significant opportunities for the construction industry as it recovers from the impacts of the pandemic.

If you have questions or would like more information, please contact Thomas Hay at [email protected].

Additional Information:

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients.  Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest.  As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you. We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**

Hurricanes, Pandemics, and Shortages, Oh My: Considerations for Hurricane Season in the Time of Coronavirus

Posted on: June 18th, 2020

By: Anastasia Osbrink

According to forecasters with the Climate Prediction Center at the National Oceanic and Atmospheric Administration (“NOAA”), a division of the National Weather Service, the 2020 hurricane season has a 60% chance of being an “above-normal season.” (See https://www.noaa.gov/media-release/busy-atlantic-hurricane-season-predicted-for-2020.)

This forecast is based on several factors. According to the NOAA, there are “warmer-than-average sea surface temperatures in the tropical Atlantic Ocean and Caribbean Sea,” including record high temperatures in the Gulf of Mexico. That “coupled with reduced vertical wind shear, weaker tropical Atlantic trade winds, and an enhanced west African monsoon all increase the likelihood for an above-normal Atlantic hurricane season.” Hurricanes are formed when “a weather disturbance, such as a thunderstorm, that pulls in warm surface air from all directions” combines with “water at the ocean’s surface that is at least 80° Fahrenheit.” (https://oceanexplorer.noaa.gov/facts/hurricanes.html.) Warm sea water gives hurricanes their strength. Therefore, the warmer the seawater, the more fuel they get, and the stronger these storms can become. Additionally, hurricanes lose strength if high-altitude winds shear apart the top of the storm. Hence, reduced vertical wind shear and weaker tropical Atlantic trade winds will also enable stronger storms to form. (https://oceanexplorer.noaa.gov/facts/hurricanes.html.) Regarding the fourth of these conditions, a stronger west African monsoon season “allows wind patterns coming off Africa to more easily spin up storms.” (https://www.noaa.gov/stories/whirlwind-of-atlantic-hurricane-season-what-gives.) Additionally, as the NOAA explains, “El Nino Southern Oscillation (ENSO) conditions are expected to either remain neutral or to trend toward La Nina, meaning there will not be an El Nino present to suppress hurricane activity.” (https://www.noaa.gov/media-release/busy-atlantic-hurricane-season-predicted-for-2020.) The NOAA notes that when “similar conditions” have been present in the past, they have produced more active seasons than when these conditions are not present. In fact, this is the first time since records of hurricanes have been kept where there were three named storms before the official start of hurricane season on June 1st.

There is, though, another factor that will have an impact during this season’s hurricanes and storms – Coronavirus and COVID-19 – for several reasons.

First, during these initial months of response to Coronavirus and COVID-19, staples like toilet paper, water, disinfectants, and first-aid items often have been out of stock at stores and online. With storms heading their way, certain population centers will have to respond to the inevitable rush for food, bottled water, and other crucial supplies.

Second, many people living along the Southeastern Seaboard and the Gulf Coast rely on various businesses that provide hurricane preparation and storage services, such as window boarding, sandbagging, and securing of personal property. With many businesses struggling to remain open or maintain their workforce due to the pandemic, such services may be more difficult to find.

Third, if people have to head to evacuation centers, which are enclosed spaces crowded with people, the virus and COVID-19 may be more likely to spread.

Finally, as cities and states respond, they will need to put more time, effort, and resources into planning and setting up these centers to ensure social distancing can be practiced. One solution is more centers with more volunteers. Additional personal protective equipment (“PPE”) will be needed such as extra masks, gloves, hand sanitizer, and washing stations.

Some of the resources available to respond to these risks are provided in the following links:

https://www.ready.gov/hurricanes

https://www.cdc.gov/coronavirus/2019-ncov/index.html

https://www.fema.gov/news-release/2020/06/01/prepare-2020-hurricane-season-now

https://www.weather.gov/wrn/hurricane-preparedness

If you have any questions or would like more information, please contact Anastasia Osbrink at [email protected].

Additional Information:

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients.  Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest.  As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you. We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**

The End of Qualified Immunity?

Posted on: June 18th, 2020

By: Christopher S. Lee

Since its genesis in Pierson v. Ray, the qualified immunity doctrine has never been shy of critics. If you were to talk to the late Justice William Douglas (the lone dissenter in Pierson) about the growing movement striving to abolish immunity at the forefront of American jurisprudence today, it is hard to imagine that he would be at all surprised. The remaining eight justices in Pierson would tell you how qualified immunity is a pinnacle of public service and that a “policeman’s lot should not be so unhappy that he must choose between being charged with dereliction of duty if he does not arrest when he has probable cause and being mulcted in damages if he does.” Pierson v. Ray 386 U.S. 547 (1967). Yet, the intensity of the debates involving the qualified immunity doctrine has arguably reached its apex, and as of May 15, 2020, there were thirteen cert petitions pending in the United States Supreme Court urging the Court to reconsider the doctrine of qualified immunity. In light of the social movement sweeping the globe in relation to civilian-police relations, could this be the end of the road for qualified immunity?

The Supreme Court’s recent activity related to these thirteen cert petitions is instructive. Over the last few years, public interest groups, scholars, and lower judges have, metaphorically speaking, made a quiet whisper (at least in contrast to the raucous roar of the present movement) to the Supreme Court to reconsider the doctrine of qualified immunity. As a number of cert petitions continued to roll into the Supreme Court challenging the doctrine of qualified immunity, the Court nonchalantly, yet repeatedly rescheduled the conferences for these cases. It is certainly uncommon in recent history for the Court relist important petitions before deciding to grant or deny in the way it has done with these qualified immunity cert petitions. Many scholars and policy analysts speculate that this suggests the Court had been delaying these early petitions so it could consider them alongside several other high-profile cases raising the same issue.

At the May 15, 2020 conference, the Supreme Court ruled on three of the thirteen cases (the other ten were rescheduled to a later conference) denying cert in all three cases without comment from any of the justices. It was a move that stunned critics of qualified immunity, as Kelsay v. Ernst and Jessop v. City of Fresno are two of the three cases that were denied cert, and importantly, involved fairly liberal applications of qualified immunity in comparison to the thirteen cert petitions pending before the Court. Would this suggest that the Court was leaning towards upholding the doctrine in its entirety? Displaying the unusual continued delay on ruling on these cert petitions, the Court again delayed consideration of its qualified immunity docket on May 21, 2020, then again on June 4, 2020. It is hard not to believe that the tragic deaths of George Floyd, Breonna Taylor, and Ahmaud Arbery, and the social movements their deaths have fueled, have played a role in these delays and been weighing heavily in the minds of the justices. Also, what about the push from the legislative branch and bipartisan legislation that was presented to Congress earlier this month calling for “The End of Qualified Immunity?” Would not this be running in their minds as well?

It appeared to be a golden opportunity for the Court to steal the spotlight and exercise its inherent authority to weigh in the issue. Yet on the morning of June 15, 2020, the Supreme Court denied all of the remaining cert petitions raising the question of whether qualified immunity should be reconsidered; Justice Clarence Thomas was the only justice who expressed any desire to grant the cert petitions. Thus, the issue will not be heard in the Court’s term this October.

It is not entirely clear what motivated the Court to deny the petitions in the overwhelming fashion that it did. Citing to their prior criticisms of the doctrine, many anticipated that Justices Gorsuch, Sotomayor, and Ginsberg would also have been motivated to granted cert. It is impossible to know what is motivating the justices in their collective decision.  One hypothesis is that the Supreme Court, having seen the growing sentiment in Congress to pass legislation limiting and/or eliminating qualified immunity, decided to let the issue be resolved by the legislature. Perhaps the Court does not wish to further weigh into an issue that at its very core alleges the judiciary of having been too involved in policymaking in the first place.

With the judiciary out of the equation at least for the time being, all eyes will now turn to the remaining two branches of government. The sentiment around the oval office and chatter amongst advisors close to President Trump is that the president is unenthusiastic about legislation proposing to abolish qualified immunity. While proponents of qualified immunity unanimously view the rejection of the qualified immunity petitions as a win, we will nonetheless continue to monitor the activity of Congress and the ongoing debate as to qualified immunity in American jurisprudence.  If Congress does not act now, qualified immunity will likely be at the forefront during the Court’s next term.   

If you have questions or would like more information, please contact Christopher Lee at [email protected].

A Summary of the Executive Order on Policing and “Instances of Misconduct”

Posted on: June 18th, 2020

By: Jake Loken

Seeking to address the “instances in which some [law enforcement] officers have misused their authority, challenging the trust of the American people, with tragic consequences,” President Trump issued the Executive Order on Safe Policing for Safe Communities, on June 16, 2020, as a way to “redouble our efforts as a Nation to swiftly address instances of misconduct.”

The executive order contains four major points:

  1. Creation of a “credentialing body” to be used to certify law enforcement agencies seeking federal grant funding have certain policies in place, such as the prohibition of chokeholds, unless “use of deadly forces is allowed by law;”
  2. Creation of a database to share information related to excessive use of force;
  3. Request for the Attorney General and Secretary of Health and Human Services to develop “co-responder programs” where mental health professionals and law enforcement officers respond together to calls, and to create a report on “community-support models addressing mental health, homelessness, and addiction;” and
  4. Request for the Attorney General to propose legislation that “enhance[s] the tools and resources available to improve law enforcement practices and build community engagement.”

The executive order does not address qualified immunity, does not use the words “racism” or “bias” or comment on such issues, and does not address some of the vocal ideas heard at protests—such as the phrase “Defund the Police.”

Regarding some of the specifics of the four major points contained in the order:

First, the order focuses on the creation of a “credentialing body” that will be used to certify law enforcement agencies seeking discretionary grant funding from the Department of Justice have certain policies and standards. Notably, law enforcement agencies seeking grant funding should have “use-of-force policies [that] prohibit the use of chokeholds… except in those situations where the use of deadly force is allowed by law.” Other policies law enforcement agencies should have include: “training regarding use-of-force and de-escalation techniques; performance management tools, such as early warning systems that help to identify officers who may require intervention; and best practices regarding community engagement.”

Second, the order seeks the creation of a database “concerning instances of excessive use of force related to law enforcement matters.” The database is to be shared between law enforcement agencies and only “aggregated and anonymized data from the database” is to be made public. The database is to also include a way to track “terminations or de-certifications of law enforcement officers, criminal convictions of law enforcement officers for on-duty conduct, and civil judgments against law enforcement officers for improper use of force.” Only law enforcement agencies that submit information to this database can obtain discretionary grant funding from the Department of Justice.

Third, the order requests the Attorney General and the Secretary of Health and human Services to work to develop “co-responder programs” where social workers and mental health professionals are to “arrive and address situations together” with law enforcement officers. Also, the Secretary of Health and Human Services is requested to “survey community-support models addressing mental health, homelessness, and addiction” and summarize the survey in a report to the President within 90 days of the signing of the executive order. The report “shall include specific recommendations regarding how appropriated funds can be reallocated to support widespread adoption of successful models and recommendations for additional funding.”

Fourth, the order requests the Attorney General propose legislation that “enhance[s] the tools and resources available to improve law enforcement practices and build community engagement.” The legislation should assist law enforcement agencies with the implementation of the credentialing body, database, and co-responder programs as found in the order. The legislation should also provide for “improved use-of-force policies and procedures, including scenario-driven de-escalation techniques,” the retention and recruitment “of high-performing law enforcement officers,” law enforcement officers having access to confidential “mental health services,” and the creation of “programs aimed at developing or improving relationships between law enforcement and the communities they serve.”

If you have any questions about this executive order or other government-related matters, please contact Jake Loken at [email protected] or any other member of FMG’s Government Law group.