How The Grinch Stole Christmas Vacation
As we rapidly approach the holiday time of year, it’s worth remembering that not all lawyers lack a sense of humor or a talent for poesy. In fact, some have both . . . .
Employee Shareholder Gets Upper Hand In "Triple Freeze-Out" Case
Minority Shareholders/Fiduciary Duty. Massmanian v. Duboise, decided in September by Judge Ralph Gants in the Suffolk County Business Litigation Session, proves once again that when a party to litigation angers a judge, they can be forced to pay a high price.
In this case the plaintiff Massmanian was a 30% minority shareholder and employee in North/Win. After he filed suit accusing the majority shareholders of diverting North/Win’s profits and assets to another company (a serious breach of fiduciary duty, if true), North/Win terminated Massmanian for insubordination and neglecting his duties. Massmanian then asked the court to issue a preliminary injunction reinstating him. In opposing this motion, North/Win, and its lawyers made some serious strategic errors:
- First, they demanded that all North/Win employees sign a Confidentiality Agreement which (among other things) barred employees from disclosing “matters related to the lawsuit Massmanian has filed against the company, even in a legal proceeding.” This Agreement was demanded upon pain of termination, and one employee was terminated for failing to sign it. The court characterized this as “heavy-handed overreaching” and an improper attempt to prevent employees from testifying in the case.
- Second, when asked about the Confidentiality Agreement North/Win’s lawyers made false statements to the Court.
The upshot of all this was one very angry judge, who lambasted North/Win and its lawyers, and went on to describe North/Win’s actions as a “triple freeze-out,” (1) denying Massmanian lifetime employment, (2) giving North/Win the right to trigger its option to purchase Massmanian’s shares and (3) denying him access to information relevant to his status as a minority shareholder. The judge took the highly unusual step of ordering North/Win to reinstate Massmanian and enjoining North/Win from terminating his employment.
This case illustrates extremely bad judgment by North/Win (and possibly its lawyers, if they approved the Confidentiality Agreement), and North/Win is paying the price for it.
Google and Turing’s Cathedral
Technology. Science historian George Dyson visited Google recently, upon the 60th anniversary of John von Neumann’s proposal for a digital computer. His musings, in the form of a short essay published by Edge, are provocative and fascinating.
My visit to Google? Despite the whimsical furniture and other toys, I felt I was entering a 14th-century cathedral – not in the 14th century but in the 12th century, while it was being built. . . .
Bag and Baggage
Denise Howell at Bag and Baggage complimented my firm’s various blogs (1,
Politics, Sausages and Computer File Formats
Technology. Did you ever think you’d see politicians debating software file formats?
Massachusetts has become embroiled in a politicized debate over a state agency’s decision to move away from Microsoft’s proprietary standards and require that all state employees, commencing in 2007, save documents in two state-approved file formats: Adobe Acrobat PDF files and the OASIS Open Document Format for Office Applications.
The logic behind this issue is simple: if Massachusetts moves to Oasis OpenDocument, anyone with Internet access will be able to read state documents. As things now stand, if a document was created with Word or Excel (representing the two most common applications, word processing and spreadsheets), a citizen would need to have a licensed copy of Microsoft software to read the document. Of course, Microsoft claims that its Office formats are sufficiently open to satisfy the Commonwealth’s requirements.
Needless to say, there have been all kinds of business and political cross-currents swirling around this issue since it first emerged, and it has thrust the Massachusetts Information Technology Division (or ITD), which usually labors in obscurity, into the spotlight.
A comprehensive backgrounder on the entire issue was written by my partner Andy Updegrove, and is available here.
All of this came to a head (or perhaps the first of several heads), on October 31st, when the Massachusetts Senate Committee on Post Audit and Oversight held a standing-room only hearing to question and investigate ITD’s decision.
Dan Bricklin attended the hearing, and provides both written observations and a recording here.
Laws and sausages, indeed.
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