The Attorneys General of ten states are investigating fast food franchisors for their alleged use of “no poach” provisions in their franchise agreements, according to a press release by the New Jersey Attorney General’s Office, and as reported by NPR. In a July 9, 2018 letter, the Attorneys General for New Jersey, Massachusetts, California, Washington, D.C., Illinois, Maryland, Minnesota, New York, Oregon, Pennsylvania, and Rhode Island requested information from eight fast food companies about their alleged use of such provisions. The letter states that the Attorneys General “have learned that certain franchise agreements used in our States and the District of Columbia . . . may contain provisions that impact some employees’ ability to obtain higher paying or more attractive positions with a different franchisee.” In other words, the agreements purportedly prohibit one franchisee of a particular brand from hiring employees of another franchisee of the same brand. Continue Reading State Attorneys General Investigate Fast Food Franchisor “No Poach” Agreements
Marc McGovern, the mayor of Cambridge, Massachusetts (home to many of the Commonwealth’s established and emerging pharmaceutical, biotech, and other life sciences companies), published an op-ed in today’s Boston Globe regarding the noncompete reform movement in Massachusetts (about which we have previously reported). Unsurprisingly, given that Cambridge has been referred to as the “People’s Republic of Cambridge,” Mayor McGovern comes out strongly in favor of severe restrictions on the use of employee noncompete agreements, stating, among other things, that “noncompetes are unfair to employees.” Among other things, Mayor McGovern proposes that noncompete agreements be banned outright, or at least severely limited; and if the latter, that employers be required to pay 100% of the employee’s salary during the restricted period (known as “garden leave” pay). In his words: Continue Reading Mayor of the “People’s Republic of Cambridge” Steps Into The Massachusetts Noncompete Reform Fray
Earlier this month, the Texarkana Court of Appeals took the extraordinary measure of affirming an award of plaintiff attorney’s fees against a defendant for willful and malicious misappropriation of trade secrets in an amount that was ultimately more than 50 times higher than the plaintiff’s actual awarded damages.
Samuel D. Orbison worked for an oil and gas company, Ma-Tex Rope Company, Inc., for five years and signed an employment agreement containing a non-competition agreement, a non-disclosure agreement, and a non-solicitation agreement. During his tenure with Ma-Tex, Orbison became the coordinator of Ma-Tex’s recertification department until he resigned and began working for its competitor, American Pipe Inspections, Inc. (API), in the same position he had filled with Ma-Tex. When Ma-Tex learned that Orbison had begun soliciting recertification work from Ma-Tex’s customers, it sued Orbison and API for, among other claims, breach of contract and misappropriation of trade secrets. Continue Reading In Trade Secret Misappropriation Case, Texas Court of Appeals Affirms Attorney’s Fees Award Approaching $220,000 where Actual Damages Were $4,000
Democratic U.S. Senators Elizabeth Warren (D-MA), Chris Murphy (D-Conn.), and Ron Wyden (D-Ore.) introduced legislation on April 26, 2018, entitled the Workforce Mobility Act (“WMA”). Although the text of the WMA is not yet available, according to various press releases, it would prohibit the use of covenants not to compete nationwide. In Senator Warren’s press release announcing her co-sponsorship of the bill, Senator Warren stated that “[t]hese clauses reduce worker bargaining power, stifle competition and innovation, and hurt Americans striving for better opportunities. I’m glad to join Senator Murphy to put an end to these anti-worker, anti-market agreements.” Continue Reading Democratic U.S. Senators Seek to Abolish Non-Compete Agreements
For the third year in a row, the Washington state legislature failed to pass non-compete legislation, declining to take action on two separate bills that would have severely restricted employers’ ability to enforce former employees’ non-competition agreements. Continue Reading Washington State’s Legislature Rains on Non-Compete Critics’ Parade Yet Again
Continuing our annual tradition, we present the top developments/headlines for 2017/2018 in trade secret, computer fraud, and non-compete law.
1. Notable Defend Trade Secrets Act Developments
Just two years after its enactment, the Defend Trade Secrets Act (“DTSA”) continues to be one of the most significant and closely followed developments in trade secret law. The statute provides for a federal civil cause of action for trade secret theft, protections for whistleblowers, and new remedies (e.g., ex parte seizure of property), that were not previously available under state trade secret laws. Continue Reading Top Developments/Headlines in Trade Secret, Computer Fraud, and Non-Compete Law in 2017/2018
This post originally appeared on the Workplace Class Action blog.
Seyfarth Synopsis: On February 1, 2018, the U.S. District Court for the Middle District of North Carolina entered an order granting in part, and denying in part, the plaintiff’s motion for class certification in a no-hire antitrust case entitled Seaman v. Duke University, 1:15-CV-462, at 1-2 (M.D.N.C. Feb. 1, 2018) (A copy of the decision can be found here.) The case was brought against Duke University, Duke University Health System (collectively “Duke”), and various University of North Carolina entities and one of its executives (collectively “UNC”). The complaint alleged that the defendants had entered into an agreement not to hire each other’s medical faculty employees in violation of federal antitrust laws. With some notable exceptions it has been difficult for plaintiffs to achieve class certification in wage suppression cases such as Seaman. The ruling is a “must read” for employers, as the Court’s reasoning and conclusions make it difficult to predict whether this case will be helpful to the plaintiffs’ bar in other cases.
Background To The Case
Seaman, an Assistant Professor of Radiology at Duke, contended that she applied for a position at UNC in 2015. She alleged that she was denied consideration due to an agreement among the Duke and UNC defendants that they would not hire each another’s medical faculty employees unless the hire involved a promotion. Seaman alleged that this agreement not only suppressed the compensation of defendants’ medical faculty members, but also their other skilled medical employees. Thus, Seaman sought to certify a class consisting not only of defendants’ medical faculty members, but also their physicians, nurses, and skilled medical staff. Id. at 1-2. Continue Reading Court Certifies Class In Duke-UNC No-Hire Workplace Antitrust Lawsuit
In Seyfarth’s first webinar in its 2018 Trade Secrets Webinar Series, Seyfarth attorneys Michael Wexler, Robert Milligan, and Joshua Salinas presented 2017 National Year In Review: What You Need to Know About the Recent Cases/Developments in Trade Secrets, Non-Compete, and Computer Fraud Law. The panel reviewed noteworthy cases and other legal developments from across the nation over the last year in the areas of trade secrets and data theft, non-competes and other restrictive covenants, and computer fraud. Plus, they provided their predictions for what to watch for in 2018.
As a conclusion to this well-received webinar, we compiled a summary of takeaways:
- While the Defend Trade Secrets Act provides for an ex parte seizure order, courts have been very unwilling to provide such relief except in extraordinary circumstances.
- In light of recent state laws and appellate court decisions at both the federal and state level in 2017, choice of venue and choice of law provisions must be carefully considered and strategically implemented.
- The ABA’s May 4, 2017, Ethics Opinion encourages lawyers to have an open exchange of communication with their clients about the securities measures their firms are taking to safeguard the clients’ confidential information.
Throughout 2017, Seyfarth Shaw’s dedicated Trade Secrets, Computer Fraud & Non-Competes Practice Group hosted a series of CLE webinars that addressed significant issues facing clients today in this important and ever-changing area of law. The series consisted of six webinars:
- 2016 National Year in Review: What You Need to Know About the Recent Cases/Developments in Trade Secrets,
Non-Compete and Computer Fraud Law
- Simple Measures for Protecting Intellectual Property and Trade Secrets
- Protecting Confidential Information and Client Relationships in the Financial Services Industry
- Protecting Your Trade Secrets in the Pharmaceutical Industry
- Trade Secret Protection: What Every Employer Needs to Know
- Protecting Trade Secrets in the Social Media Age
The Massachusetts legislature is back at it again. Under new leadership, the Joint Committee on Labor & Workforce Development recently scheduled a hearing for October 31, 2017 on the non-compete reform bills proposed in January of this year. While we know little about the hearing, the bills to be discussed are presumably Senate Bill S.988 and companion House Bill H.2366. These identical bills were filed in January 2017 by the same legislators who began this process back in 2009, Senator William Brownsberger and Representative Lori Ehrlich.
As we previously reported, the proposed law brings many past proposals to the table with some new additions as well. We also reported in July and November of 2016 that the House and the Senate were unable to bridge their differences and agree on a compromise bill that year. For a detailed overview of the bills likely to be discussed in the upcoming hearing, please see our prior report.
We will continue to monitor these developments and report back with any updates. Perhaps 2017 is finally the year for non-compete and trade secret reform in Massachusetts after all. Readers of this blog know all too well, however, that this may just be another of the many attempts that the Massachusetts Legislature is unable to see through to its fruition.