In an important recent decision in the Business Litigation Session of the Massachusetts Superior Court, Judge Kenneth W. Salinger rejected Merrimack College's attempt to hold its auditor KPMG, LLP liable for its failure to discover an employee's fraud.
The question of whether a spouse may be called as a witness in a civil case recently came up in the civil litigation surrounding the sexual assault allegations against comedian Bill Cosby. People often reflexively (and mistakenly) think that the issue is governed by the spousal privilege. In fact, in Massachusetts the spousal privilege is only applicable in criminal cases where one spouse is the defendant. M.G.L. c. 233 sec. 20, cl. 1. In those circumstances, the spousal privilege can be invoked by a witness to avoid being compelled to testify against his or her spouse. Com. v. Szerlong, 457 Mass. 858, 865 (2010). The testifying spouse can also choose to waive the privilege if the spouse wants to testify. Because the spousal privilege is applicable only in criminal proceedings, it is essentially irrelevant in civil litigation.
I attended a recent Federal Bar Association breakfast that was hosted by a thoughtful member of the federal bench in Massachusetts. He raised an important question about juror comprehension: Should each juror have a personal copy of the Court's jury instructions and read along with the judge throughout the charge?
Communications between a client and a lawyer for the purpose of seeking or providing legal advice are generally confidential and neither the client nor the lawyer can be compelled to disclose them. The protection that applies to such communications is called the "attorney-client privilege." The rationale behind the attorney-client privilege is to ensure that clients are able to tell their lawyers all of the facts relevant to the advice the client seeks, no matter how embarrassing or damaging those facts might be, to ensure that the client is able to obtain the best possible legal advice and to enable the lawyer to provide advice that is tailored to the client's specific situation.
In the recent case of Fitzgerald v. The Chateau Restaurant Corp., No. 14-01990-J, 2016 WL 344155 (Mass. Sup. Ct. Jan. 4, 2016), a former manager at The Chateau Burlington and The Chateau Andover restaurants filed a putative class action against parent company The Chateau Restaurant Corporation, Inc. and several related corporations which owned individual Chateau restaurants in the Massachusetts Italian restaurant chain. In his complaint, the Plaintiff alleged that he was routinely denied the opportunity to take his off-site meal break--because of a company policy that if only one manager was on site, that manager could not leave the restaurant--yet he still had his pay automatically deducted to account for such a thirty-minute meal break. Id. at *1-2. Fitzgerald filed a putative class action on behalf of himself and other similarly situated hourly managers at any Chateau restaurant location during the six-year period preceding the commencement of the action, alleging violation of the Massachusetts Wage Act, violation of the Massachusetts Overtime Act, breach of contract and unjust enrichment. Id.
I recently participated in a panel discussion for a mediation course at a local law school. A well-known full time mediator and a U.S. federal magistrate judge who regularly conducts mediations in the federal court were with me. A highly engaged class of law students asked us to address a range of practical questions on the mediation process.
Articles XII and XV of the Massachusetts Constitution guarantee the right to a trial by jury, but the choice of whether to exercise that right is a strategic decision that often depends upon the facts and circumstances of a case. A case where the judge serves as fact-finder is referred to as a bench trial or a jury-waived trial. When choosing between a jury trial and a bench trial, lawyers and their clients must first evaluate factors like the strength and complexity of the legal claims and defenses, the makeup of the parties, and the location of the trial. The identity of the trial judge may also be a consideration for a party deciding whether to proceed with a jury trial or a bench trial.
Massachusetts General Laws Chapter 93A, § 2 ("Chapter 93A") states: "Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful." From that simple statement, numerous acts and practices can serve as the basis for a suit alleging a violation of c. 93A. Under the definitions of Chapter 93A, any person involved in trade or commerce, including corporate persons, can sue and be sued for violating the statute.
Suffolk Superior Court in Boston is home to an innovative session called the Business Litigation Session, commonly abbreviated as "BLS". Brought about by the advocacy of administrative judges, civil litigators, and leaders in the business community, the BLS has served as a statewide forum for the resolution of complex commercial disputes since 2000.
Mass. Gen. Laws ch. 93A § 11 allows corporate plaintiffs to recover up to treble damages and attorneys fees from defendants who engage in unfair or deceptive trade practices. To invoke this powerful statute, however, the plaintiff must show that "the center of gravity of the circumstances that give rise to the claim is primarily and substantially within the Commonwealth." Kuwaiti Danish Comput. Co. v. Digital Equip. Corp., 438 Mass. 459, 473 (2003). A court will determine whether a plaintiff has done so "after making findings of fact, and after considering those findings in the context of the entire [Chapter 93A] § 11 claim." Id.
Evaluating the enforceability of a non-compete agreement under Massachusetts law involves an inherent degree of uncertainty. This is because courts use subjective standards to determine whether to enforce a non-compete agreement based on whether it is: (1) reasonable in scope, length of time, and geographic area; (2) protective of a legitimate interest of the employer; and (3) supported by adequate consideration. Thus, enforceability depends on the facts of a particular case. Employers can increase the likelihood that a non-compete agreement will be enforced as written by tailoring non-compete agreements based on the guidance of past court decisions. To that end, non-compete agreements should be limited to a duration of no more than 1-2 years. The geographic scope of a non-compete agreement should be limited to the area actually served by the employer or where the employer has specific plans to expand. Non-compete agreements should also be presented to employees before hiring. If the employee is already employed, employers should include some form of additional consideration, such as a raise or one time payment, for added certainty that a non-compete agreement will be enforced as written.
Cases often turn on the scope of an exception. Recently the Massachusetts Supreme Judicial Court clarified the "sharply limited" scope of the derivative attorney-client privilege, an exception to the basic rule that disclosure of otherwise privileged communications waives the client's right to prevent disclosure of those communications to third parties, whether in litigation or otherwise - even if that disclosure proves fatal to the client's case. See DaRosa v. City of New Bedford, 471 Mass. 446, 463 (2015). The SJC recognized that exception in a 2009 decision, holding that a third party's involvement in otherwise privileged communications would not waive that privilege where "the [third party's] presence is 'necessary' for the 'effective consultation' between client and attorney" such as where the third party's "role is to clarify or facilitate communications between attorney and client." Comm'r of Rev. v. Comcast Corp., 453 Mass. 293, 307-08 (2009).
A Massachusetts Superior Court judge recently ruled that, when ABC Corporation merged with and acquired XYZ Corporation, ABC Corporation held XYZ Corporation's attorney-client privilege over pre-merger communications with counsel, even when those communications related to the merger itself. The decision is captioned Novack v. Raytheon Co., 2014 WL 7506205 (Oct. 24, 2014).
The Commonwealth's highest court, the Massachusetts Supreme Judicial Court, recently answered that question in the affirmative. On September 15, 2014, the Court decided Massachusetts State Automobile Dealers Association, Inc. v. Tesla Motors MA, Inc., 469 Mass. 675 (2014), in favor of Tesla, an electric vehicle manufacturer with roots in Silicon Valley. In 2012, not long after Tesla began operations in Massachusetts, a statewide motor vehicle dealership organization and two dealerships brought a lawsuit against Tesla in the Norfolk Superior Court.
As discussed in a previous blog post, a well-drafted shareholder or employee agreement is extremely important to clarify the rights and duties of an employee who is also a minority shareholder of a Massachusetts close corporation. The need for a clear agreement is especially important if there is a dispute concerning the termination of a minority shareholder/employee. Where no agreement exists, or if the applicable agreement does not entirely govern the rights and duties of the parties in a particular situation, the obligations are governed by their fiduciary duties to each other, which may be unclear depending on the circumstances.
Arbitration clauses are common in corporate agreements, but can an employee invoke her company's arbitration clause in a contract with a plaintiff to compel arbitration? In a recent decision, the First Circuit held a defendant employee could do just, calling the plaintiff's arguments to the contrary "illogical and impractical." Grand Wireless, Inc. v. Verizon Wireless, Inc., No. 13-1149, 2014 WL 1054418 at *9 (1st Cir., Mar. 19, 2014).
How should counsel and parties prepare for the mediation of a business litigation case? For counsel, the process of mediation requires an entirely different mindset and style than he or she is accustomed to in court proceedings. In fact, a common mistake that inexperienced practitioners make is to prepare for mediation as though it were an adversarial court proceeding. Counsel should resist those natural impulses and instead focus on what the client needs to make the most of the opportunity presented at the mediation - that is, to get a good settlement.
A recent Superior Court decision warns employers of the pitfalls that result from using non-compete agreements that contain consistent terms. In ARS Services, Inc. v. Morse, 2013 WL 2152181 (Super.Ct. 2013), Judge Edward P. Leibensperger considered whether to issue a preliminary injunction to a company that sought to enforce a non-compete agreement against a former employee who began competing directly against it in its existing market.
It can take years for a case to proceed from a complaint to a judgment. In Massachusetts, however, the injustice of a delayed judgment is remedied somewhat by an award of pre and post-judgment interest on money damages. This blog focuses on prejudgment interest, which is intended to compensate plaintiffs wrongfully deprived of the use of money to make them whole for that loss. Unless a claim is brought pursuant to a specific statute that provides a different interest rate, prejudgment interest accrues at the high rate of 12% under Massachusetts law.
In many parts of the world, cash payments to government officials are not only routine, but required to do business. While some foreign governments may turn a blind eye to such practices, the United States does not. Under the Foreign Corrupt Practices Act (FCPA), both U.S. and non-U.S. persons and entities may incur civil and criminal liability, even for actions that take place outside U.S. territory. To ensure compliance with the law, anyone doing business overseas should be familiar with the provisions of FCPA.