If you’re fascinated with India, as I am, there’s an interesting series of articles described as an “innovation tour,” of India by Vinit Nijhawan, Executive-in-Residence in the Boston University School of Management. In a series of “dispatches” Nijhawan “takes readers on a journey, from New Delhi’s teeming cell phone (and cell phone unlocking) marketplace to Chandigarh, home to a great engineering college and a nascent life sciences industry forming . . . around agricultural products”, to quote from Xconomy.
Linux.com, one of the leading open source software web sites, recently interviewed my partner, Andy Updegrove, and wrote a very complementary article (part of its Portrait Series). The article focuses on Andy’s involvement with open source software, and also touches on many highlights in Andy’s career, including the role he played in the creation of the MIT License in the early ’90’s (one of the first, and most popular open source software licenses). Andy had drafted that license for our client, the X Consortium, and it was only years later that he realized that the license had been adopted by many open source projects, eventually becoming known as the MIT License. The interview also includes his views on open source and open standards (where he has played a significant role), his work as counsel to the Linux Foundation, and several other highlights of his career.
U.S. District Court Judge William Young’s recent decision in Talentburst, Inc. v. Collabera, Inc. is worth study. Talentburst is the former employer of Raj Pallerla. While employed by Talentburst, Pallerla signed a noncompete agreement with Talentburst. He then resigned and went to work for Collabera, Inc. For ease of reading I’ll refer to these three parties as Former Employer, New Employer and Employee.
When the Former Employer discovered that its Employee had gone to work for New Employer, it pursued an unorthodox legal strategy: rather than sue the employee for breach of the noncompete agreement, it sued only the new employer, alleging that the New Employer had “aided and abetted” a breach of fiduciary duty by the Employee. It also claimed that by hiring the Employee the New Employer “interfered” with the noncompete contract. The case was filed in Massachusetts Superior Court, but the Former Employer was able to “remove” it to federal court (based on diversity jurisdiction). To the Former Employer’s misfortune, the case was drawn by Judge Young, who was almost certain to give the case closer scrutiny than it would have received in state court.
The Former Employer filed a motion to dismiss, which is usually a long shot. However, Judge Young allowed the motion and dismissed the suit on the basis of the complaint alone. In his decision Judge Young reasoned that the Employee, who was a non-managerial “worker bee,” did not owe a fiduciary duty to his employer. The New Employer could not have interfered with a non-existent fiduciary duty, and therefore this claim failed.
As to the tortious interference claim, the judge zeroed in on the requirement of “improper means or motive.” Mere advancement of one’s economic interests is not, however, “improper,” and since the Former Employer couldn’t make anything more than a “generalized” allegation of improperness, this claim failed as well.
I have a few observations about this case.
First, in addition to Massachusetts appellate precedent, Judge Young relied heavily on “unpublished” Superior Court decisions (using Westlaw citations when available). I can’t think of a federal district court decision that has made as much use of Massachusetts trial court decisions as this one. However, Judge Young is a former Massachusetts trial court judge, and he often expresses his great respect for that court. The use of state court decisions is also a function of the Business Litigation Session, which has produced many more written decisions than other sessions of the trial court.
Second, Judge Young rejected the Former Employer’s argument that it was not required to make anything more than a generalized allegation of improper means/motive at the pleading stage, holding the plaintiff to the higher pleading standard established by the Supreme Court in the Bell Atlantic v. Twombly decision in 2007. As noted in this post, this standard has now been adopted by the Massachusetts Superior Court as well. Although Twombly was an antitrust case, this is another example of its broad application, extending here so far as to bar a state tort claim; before Twombly, this case likely would have survived dismissal. It probably would have survived dismissal if it had remained in state court.
Third, and lastly, what the plaintiff/Former Employer had in mind when it sued the New Employer but not its Former Employee (against whom it appears it had the stronger claim) continues to elude me, but the strategy clearly back-fired in a major way.
Bottom line: This case is important precedent in the area of employee breaches of fiduciary duty, by reason of its careful legal analysis and the gravitas of the judge who authored it. I expect the case to become part of every business lawyer’s legal arsenal when issues of employee fiduciary duty are raised.
If my partner Andy Updegrove (he’s the one on the right) is not the most knowledgeable lawyer on the planet about ODF/OOXML standard adoption issues (1,2,3), I would be more than a little surprised. Here is a Q & A with Andy that Redmond Developer News has published, where he discusses the ongoing appeals process related to these standards. A link to the article on scribd.com is below, and here is a link to the article online. If you know absolutely nothing about this controversy, click here to read several articles Andy has published on the topic.
I would be remiss if I didn’t provide a link to the Boston Herald blog on the Entwistle case, which is being tried in Middlesex Superior Court in Massachusetts. The case has attracted international attention due to the horrific and gruesome facts of the case, and that the defendant, who is accused of the cold-blooded murder of his wife and infant daugher, is British. The Boston Herald is “live blogging” this trial.
The Massachusetts employment bar is abuzz with word that a Massachusetts Commission Against Discrimination (MCAD) Commissioner has publically stated that the Massachusetts Maternity Leave Act (MMLA) will apply to new parents of either sex. This means that new fathers would be entitled to eight weeks of unpaid leave upon the birth or adoption of their child. (The MMLA applies to employers with six or more employees).
This all unfolded in a strange manner, to say the very least. There has been no formal written announcement. The MCAD online regs have not been changed to include fathers. The underlying statute still refers only to “female employees”, and makes no mention of fathers. There has been no formal press release or request for comment or feedback from the Massachusetts business community. Legislation by adminstrative fiat.
Apparently, the MCAD Commissioner announced this at a speaking event at a law firm in Boston in early June. His comments were confirmed in a follow-up interview by Massachusetts Lawyers Weekly, which quotes the Commissioner as follows:
I’m not going to tell you how we are going to come out on every case, because it depends on the facts and circumstances presented,” he said. “But what we are saying is that if a man now walks in and makes a complaint, we are going to take that complaint and investigate it – which, yes, is something that wouldn’t have happened in the past.
This is all a bit weird, but then again, this is Massachusetts. Maybe now that California has followed Massachusetts’ precedent and made same sex marriage legal (judicial fiat, in both states), Massachusetts regulators felt they needed to do this to keep one step ahead.
Will there be a court challenge to this new policy? You can bet your life on it. Massachusetts employment lawyers are already jockeying to be the lucky lawyer to bring that case.
See Xconomy article here for details. Quoting from the article:
Employee Non-Compete Agreements: Protecting Innovation or Stifling It?
Thursday, June 19th, 3:00-7:00 pm
Ames Courtroom, 2nd floor of Austin Hall, Harvard Law School
There will be a panel discussion, followed by a cocktail reception. Anyone is free to attend. You just have to register by June 12 (a week before the event) by emailing your name, title and company to Amar Ashar at the Berkman Center: email@example.com.
The “Oyez” web site now presents oral arguments before the Supreme Court in multimedia: As you listen to the argument you see a synchronized transcript, and a photo of the judge or lawyer speaking appears every time there is a change in speaker. This multimedia presentation makes the experience of listening to these arguments much easier and more pleasant. Link here.
The Massachusetts Appeals Court has made its unpublished decisions available here. This is particularly helpful, since these decisions are difficult to obtain, and on February 25, 2008, the Court issued a ruling permitting unpublished decisions to be cited for their “persuasive value.” This modified a 23 year old court rule that unpublished decisions could not be cited as legal authority.
Massachusetts Federal District Court Judge F. Dennis Saylor, IV has issued a written decision in Commerce Bank and Trust Co. v. TD Banknorth, Inc. (see below). Judge Saylor found a likelihood of confusion between “Commerce Bank” and “TD Commerce Bank,” and issued a preliminary injunction in favor of the plaintiff. While this decision is unexceptional, it is a helpful road map to trademark law in this district, and is another example of Judge Saylor’s crisp and comprehensive writing style.
Here is an example of just how complex electronic discovery can become when the stakes are high, and the lawyers are prepared to negotiate an extremely detailed discovery protocol. This document is from the ConnectU v. Facebook litigation, in which ConnectU alleges that the founders of Facebook misappropriated ConnectU ideas and technology. The Order is signed by Magistrate Collings, who is known to be one of the most experienced and sophisticated judges in the Federal District of Massachusetts when it comes to issues of electronic discovery. I’m sure that even he was challenged by this document.