William Horwitz Authors Articles for New Jersey Law Journal and BNA’s Corporate Counsel Weekly

William Horwtiz, counsel in the Labor & Employment practice group, recently authored articles for both the New Jersey Law Journal and BNA’s Corporate Counsel Weekly.

William’s article for the New Jersey Law Journal titled, “Third Circuit Rides the Class-Action Arbitration Waive”, discusses the case of Quilloin v. Tenet HealthSystem Philadelphia, in which the Third Circuit, following the U.S. Supreme Court’s lead and its own precedent, endorsed the validity of class-action waivers in predispute employment arbitration agreements.  Bill outlines the facts of the case and the court’s reasoning and says that the case offers helpful guidance for employers rolling out new arbitration agreements and employers with existing agreements.  He also notes that Quilloin holds that class-action waivers are en­forceable and employers should consider including them in arbitration agree­ments, adding that employers should also “include a provision requiring the parties to submit arbitrability issues to the arbitrator.”

William’s article for BNA’s Corporate Counsel Weekly, “In Case Involving Employer’s Poor Handling of Sexual Harassment Allegation, Second Circuit Resolves Two Novel Issues”, William discusses the case of Townsend v. Benjamin Enterprises, Inc., in which the U.S. Court of Appeals for the Second Circuit resolved two issues of first impression.  In outlining the facts of the case and the court’s observations, William notes that the most important takeaway from the decision may be the important guidance for employers of how not to address sexual harassment in the workplace.

To read the complete article, “Third Circuit Rides the Class-Action Arbitration Waive”, click here.

To read the complete article,  “In Case Involving Employer’s Poor Handling of Sexual Harassment Allegation, Second Circuit Resolves Two Novel Issues”, click here.

Recent Fee Shifting Cases Caution Against Diving into Non-Compete/Trade Secret Litigation Where the Facts Supporting a Violation are Unknown or Questionable

By:  Mark E. Furlane

Two recent cases highlight the down side of running into court with guns blazing but without the horses to prevail, or at least without the facts sufficient to survive the bad faith standard of the Uniform Trade Secret Act.  In Sasco v Rosendin Electric, Inc., 143 Cal.Rptr.3d 828 (July 11, 2012), the Appellate Court affirmed the lower court’s judgment of $ 484,943.46 in attorneys’ fees and costs pursuant to California’s Uniform Trade Secrets Act, observing:

Speculation that the individual employees must have taken trade secrets from SASCO based on their decision to change employers does not constitute evidence of misappropriation.  Nor does speculation that Rosendin’s success in obtaining the Verizon Tustin contract was based on the theft of trade secrets constitute evidence of misappropriation.…..Having reviewed the parties’ respective papers, the court found there was no evidence of trade secret misappropriation.

In Loparex, LLC v. MPI Release, LLC, 2012 WL 3065428 (S.D. Ind., July 27, 2012) the District Court was even more direct in awarding the prevailing party, MPI,  $475,000 in attorneys fees and nearly $29,000 in costs under the Illinois Uniform Trade Secret Act.  The Court found that Loparex pursued the trade secret misappropriation claims in “bad faith.”  The Court also determined there was no evidence that the employees had misappropriated any trade secrets in its diversion of a former Loparex customer.  The Court went on to award fees against Loparex’s former lead counsel as well, under 28 U.S.C § 1927, for bad faith prosecution of the case.

These cases do not mean that attorneys’ fees will be shifted where a plaintiff can show that trade secrets are at issue and the plaintiff has a good faith factual basis to conclude that those trade secrets were being misappropriated or there was a threatened misappropriation.  The plaintiff bringing a trade secrets action does not get assessed the other party’s attorneys fees by losing, but only when the plaintiff loses and a claim of misappropriation is made in bad faith.  In these two cases, there was no reasonable basis for bringing the claims, let alone continuing to pursue the litigation after it was clear to everyone that the plaintiffs’ claims were meritless.

In addition to a statutory basis for attorneys fees under the Uniform Trade Secrets Acts adopted in many states, there are  other statutory fee shifting statutes that may apply.  For instance, Montana’s Declaratory Judgment Act, § 27–8–313, may provide a statutory basis for awarding attorneys’ fees as supplemental relief if such an award is determined to be necessary and proper.  See, e.g., Mungas v. Great Falls Clinic, LLP. 354 Mont. 50, 221 P.3d 1230 (2009)(fees not awarded because the facts not deemed to warrant it).  More frequently, however, fee shifting awards come from a well drafted employment agreement.  Ohio Learning Centers, LLC v. Sylvan Learning, Inc.,  2012 WL 1067668 (D. Md., March 27, 2012).  The Sylvan Court quoted the relevant contract language:

[I]n the event either [SLI] or [OLC] institutes a suit or action to enforce any term or provision of [the License] Agreement, the most prevailing party in the suit or action, or on appeal, shall be entitled to recover from the losing party a reasonable attorney fee to be set by the trial or appellate court in addition to costs or disbursements provided by law.

At the summary judgment phase the Court found the fee award premature because “ at this stage in the litigation it is not yet clear that the Defendants will be ‘the most prevailing party’ in this case.”  Note that the Court is enforcing the parties’ agreement as written.  The Court also noted that the fee-shifting provision in the License Agreement only provides for an award of “reasonable” fees.  And since evidence of the reasonableness of the fees had not yet been submitted by the putative prevailing party, the Court stated that it could not conduct the requisite analysis.

The take away:  make sure you have the horses before filing suit, or at least be reasonably assured you will have those horses harnessed by the time the smoke of your rush to court clears.

Lawrence Del Rossi and Joshua Rinschler Publish Article on an ‘Awkward Theory’ of Personal Liability for Supervisory Employees Under the NJLAD

Associates Lawrence J. Del Rossi and Joshua D. Rinschler’s article, Aiding and Abetting Your Own Conduct – An ‘awkward theory’ of personal liability for supervisory employees under the N.J. Law Against Discrimination (NJLAD), was published in the July 16, 2012 edition of the New Jersey Law Journal.  Their article takes a look at what is becoming a common practice in wrongful discharge cases brought under the NJLAD where terminated employees are not only suing their employer, but also naming as an individual defendant the supervisor who made the decision to terminate.  Their complete article appears below.

Aiding and Abetting Your Own Conduct – New Jersey Law Journal – Larry Del Rossi and Joshua Rinschler – 7-16-12

 

 

New Jersey District Court Denies Employer’s Motion to Dismiss Plaintiff’s Cause of Action After Employee’s Supervisor Gains Unauthorized Access to Employee’s Facebook Account

By: Jerrold J. Wohlgemuth

In Ehling v. Monmouth-Ocean Hospital Service Corp., the District Court in New Jersey recently denied the employer’s motion to dismiss the plaintiff’s cause of action for invasion of privacy in connection with a supervisor having gained unauthorized access to her private Facebook account.  The plaintiff nurse, who was also the union president at the hospital, had posted comments on her Facebook wall about the news story out of Washington, D.C. in 2009 concerning the killing of a security guard at the Holocaust Museum by a white supremacist in which she expressed her opinion or rant that the paramedics in D.C. should have let the shooter die rather than help him after he was shot during the incident:  “He survived [and] I blame the DC paramedics.  I want to say 2 things to the DC  medics.  1.  WHAT WERE YOU THINKING?  and 2.  This was your opportunity to really make a difference!  WTF!!!!  And to the other guards…. go to target practice.”  The supervisor apparently wanted access to plaintiff’s Facebook comments because of her leadership role with the union, and convinced a co-worker to give him access to her private account so he could copy her postings. When he saw the comments about the D.C. incident he sent a copy to the State Board of Nursing suggesting that it represented an improper disregard for patient safety.

On the employer’s motion to dismiss the invasion of privacy claim on the grounds that there can be no expectation of privacy with respect to Facebook postings, the court decided that the question whether the plaintiff had a reasonable expectation of privacy was for a jury to decide based on the circumstances, including the number of “friends” who had access to her Facebook wall where the plaintiff claimed that she had restricted access to her friends but did not provide access to any supervisors or members of management.  The court did not address the separate question whether a rant expressing an opinion about a news report could be considered an expression of one’s “private affairs” subject to protection under invasion of privacy law, and did not address the fact that Facebook specifically includes in its Privacy Policy a disclaimer to the effect that there is no guarantee of privacy and that users make postings at their own risk inasmuch as anyone with access can copy or share comments with anyone they choose.

Georgia’s Pro-Employee Restrictive Covenant Law Is Back (If Only Briefly)

By: David J. Woolf

Just when it seemed safe for companies with employees in Georgia to try to enforce their restrictive covenant agreements, the Eleventh Circuit has brought back to life – if only for one last hurrah – the old Georgia law that made non-competition and other restrictive covenant agreements virtually impossible to enforce.  The Court did so in Becham, et al. v. Synthes USA, et al., No. 11-14495, 2012 U.S. App. LEXIS 11225 (11th Cir. June 4, 2012), by holding that Georgia’s first attempt to re-write the State’s non-competition law was unconstitutional and that the second attempt did not apply to the agreement at issue.

The backdrop, well known to those who practice in Georgia, is a frustrating one for employers who have attempted to enforce restrictive covenant agreements.  For years, Georgia statutory and constitutional law disfavored non-competition and other restrictive covenants and, through a very narrow view of what is reasonable and a refusal to reform overly broad agreements, made them nearly impossible to enforce.  This changed beginning in 2009 when the Georgia legislature approved a law allowing the enforcement of previously unenforceable covenants, by, among other things, creating presumptively reasonable time periods for restrictions, removing the requirement of an expiration date for certain confidentiality covenants, and, perhaps most importantly, giving Georgia courts the ability to reform overly broad agreements.  The law was subject to a constitutional amendment permitting the change, which occurred on November 2, 2010 through Georgia’s citizens’ ratification of the amendment.

The confusion then began.  The new law went into effect on November 3, 2010, the day after the constitutional amendment was ratified.  The constitutional amendment, however, did not take effect until January 1, 2011.  Fortunately, the Georgia General Assembly recognized the gap and passed a second law that repealed the first law and authorized a second, virtually identical law effective May 11, 2011.  Problem solved, right?

Not so fast.  Unfortunately for Synthes, the restrictive covenants at issue were reaffirmed on December 1, 2010, after the effective date of the first law, but before the effective date of the second law.  The Eleventh Circuit thus focused on the first law and held that, because the law was implemented before the constitutional amendment went into effect, it “was unconstitutional and void the moment it went into effect.”  The Court then went back to “old” Georgia law, and like so many agreements before it, found Mr. Becham’s restrictive covenant agreement unenforceable.

Although the result was an unfortunate one for Synthes, the impact can be managed going forward by making note of the critical May 11, 2011 date.  Restrictive covenant agreements entered into on or after May 11, 2011 will be subject to the second new law, and hence subject to more favorable court review.  Agreements entered into prior to that date, even if after the November 2, 2010 constitutional amendment, will be judged under “old,” pro-employee Georgia law.  Employers of Georgia employees will therefore want to make sure that their restrictive covenant agreements are effective on or after May 11, 2011 and, where they are not, arrange for the execution of new agreements.

New Jersey’s Highest Court Rejects “Absolute Liability” Standard for Employee Assault of Patient

By: Lynne Anne Anderson and Jerrold Wohlgemuth

The New Jersey Supreme Court in Davis v. Devereux Foundation, 209 N.J. 269 (2012), recently rejected an attempt to impose absolute liability against a residential health care facility for a criminal assault committed by an employee against a resident patient.  The Court determined that the facility should be held to the traditional reasonable duty of care towards its patients.   Further, the traditional “scope of employment” analysis should be applied to determine whether the employer could be held liable for the tortious conduct of its employee.

In Davis, a resident counselor employed by Devereux, a residential institution for the developmentally disabled, engaged in a pre-meditated act of aggression when she assaulted a residential patient by pouring boiling water on him.  The counselor was arrested and imprisoned for criminal assault, and the patient’s guardians obtained a default judgment against her for assault in the ensuing civil action.

The family also brought a civil action against the health care facility.  Reversing the trial court’s grant of summary judgment in favor of the facility, the Appellate Division remanded for trial and imposed an absolute liability standard on the employer under the common law “non-delegable duty” analysis, which imposes a duty on the master to protect those entrusted to its care in an in loco parentis relationship, such as a school or health care facility, and subjects the master to liability for the acts of its employees whenever they fail to meet their duty of care.  Under that common law approach, the non-delegable duty imposed on the employer cannot be satisfied by any level of care taken by the employer in hiring or supervision of its staff, but is based solely on the level of care taken by the employee.

The Supreme Court reversed and reinstated summary judgment in favor of the health care facility.  The Court observed that the “non-delegable duty” would unfairly impose absolute liability on the employer regardless of the level of care engaged in by the employer.  “Once an employee has committed a tortious act, the duty would effectively impose absolute liability upon residential institutions” even if the employer had acted reasonably in screening applicants and supervising its employees.

The Court instead determined that traditional principles of the duty of reasonable care should be followed with respect to the actions of employees of facilities responsible for in loco parentis care.  The Court observed that such facilities are expected to take reasonable measures to assure that their staff members are not endangering the safety of the patients entrusted to their care, and that liability for the tortious acts of their employees would be determined under traditional “scope of employment” principles.  Finding in this case that Devereux acted reasonably in screening individuals prior to hiring, and in supervising the relationship of its employees with the residential patients, the Court determined that the facility had met its duty of care to its patients.  The Court further determined that the counselor had acted far outside the scope of her employment in pouring boiling water on the patient where she acted out of personal anger and frustration, and not in any way to further the interests of her employer.