Application of California Law in Non-Compete Litigation?

In a recent East Coast/West Coast conflict, courts in Massachusetts consider the application of California Law in a non-compete litigation. Massachusetts courts are not the only courts to come up against this particular issue either. Other courts around the country have also been asked to study the application of California law in litigation based on non-competition agreements. Generally speaking, non-competition agreements are not enforceable in California. So, employees who have worked in another state or in situations where the agreement contains a forum selection clause outside of the state of California are rushing to file in California court or present other state courts with the argument that California state law should be applicable. Either action would offer them the hope of avoiding mobility restrictions.

The Business Litigation Session of the Suffolk Superior Court in Massachusetts recently found themselves asking the question, “Should California law regarding non-compete agreements be applied to cases and agreements outside of the state?”

The issue was considered in connection with the case FTI, LLC, et al. v. Duffy, et al. in which three of the plaintiffs’ former employees resigned. Shortly after resigning they filed suit in California seeking a ruling that the non-compete agreements were unenforceable. Five months later, the plaintiffs filed suit in Massachusetts alleging a breach of the non-compete agreements, as well as other violations (i.e. trade secret misappropriation, breach of fiduciary duty, unfair competition, etc.) The defendants moved to stay the case pending resolution of the California suit. One former employee also moved to dismiss the claims citing a lack of personal jurisdiction. 

The Massachusetts court did not stay the case. In situations when duplicative lawsuits are filed in multiple jurisdictions, the later-filed action is typically stayed, but courts have discretion and can give preference to the later-filed action when doing so best serves the interests involved in the case. In this case, the court held that the two seemingly duplicative lawsuits actually had minimal overlap. The California case sought to void the non-compete agreement. The Massachusetts case focused on other claims. Additionally, the agreement was governed by Maryland law and a court in California would have no greater expertise or ability to apply Maryland law than a Massachusetts court. The court held that Massachusetts had an equally strong interest in the case due to the fact that the plaintiffs alleged defendants committed a number of business torts during the time of employment cited by court documents.

The Massachusetts court also denied the employee’s argument that the case lacked personal jurisdiction. The court found that the employee had sufficient minimal contacts through his supervision of six employees in the state, regular travel to the state of Massachusetts in order to fulfill supervisory duties, and that he billed more than 130 hours to the company while working in Boston in the year 2014 alone. The court also found that since the employee filed a suit in California (revealing that he was willing to travel across the nation to litigate a case) he would not be unfairly burdened by the need to defend himself in a Massachusetts court simply because he resided in New York.

If you have questions about California state law and how it applies to your non-compete agreement, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Years-Long Fight Between Billionaire Siebel and Former Salesman Receives Jury Verdict

Tech billionaire Thomas Siebel’s legal battle with a former Massachusetts salesman nears an end with jury’s verdict after four years of litigation. The highly contentious and long legal battle resulted in a jury that found Siebel did not owe Gregg Carman, former salesman, additional pay.

The San Jose jury delivered their verdict against former salesman for C3 loT, Gregg Carman. Carman filed suit claiming that he was shortchanged on commissions. The company was able to convince a majority of the jury that Carman did not have a reasonable expectation of receiving additional commissions totaling several hundred thousand dollars. The claim was defeated under “quantum meruit,” a legal theory presented by Siebel’s legal counsel.

Counterclaims the company made against Carman alleging that he misrepresented the nature of deals with a couple utility companies he closed while on the job and actually owed Siebel’s company around $120,000 were also unanimously rejected by the jury. While the jury did agree that Carman was fired either for complaining about his pay or so the company could avoid paying him additional commissions, they did not agree that he had been wrongfully terminated according to California labor law.

Many companies would have quickly settled this type of claim outside of court or in mediation, but Siebel fought the case vigorously after refusing to pay the compromise amount of $360,000 suggested by Carman. In fact, Siebel has a record of aggressively litigating in his defense. His legal representation stated that it was about the principle for Siebel. He does not settle illegitimate claims for compensation.

Under fiscal year 2014, Carman stood to be provided over $1 million in commissions according to the company’s policy. The deals with the two utility companies were actually closed in FY 2015. Carman was not informed of change to the commission policy for FY 2015 until after the deals closed. The policy change left him with approximately ¼ of what he would have received if the deals closed during the previous fiscal year.

The Defendant convinced the jury that this type of policy change (even their retroactive nature) is standard practice in the industry and that Carman, as an experienced salesman in the industry, should have been understood the situation. Wrongful termination damages are trebled under California law so C3 faced a potential $8 million in damages and attorney fees at trial. The plaintiff and his legal representation did not deny the possibility of an appeal.

If you are struggling to get your employer to fulfill agreed upon payment arrangements or if you have been wrongfully terminated, please get in touch with one of the experienced employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

California Guard Veterans Told to Repay Enlistment Bonuses

Close to a decade ago the Pentagon used a classic maneuver to entice soldiers to reenlist: hefty bonuses. Now, officials are demanding that thousands of those vets pay the money back. One California veteran affected by the situation is Christopher Van Meter. He was awarded the Purple Heart after being thrown from an armored vehicle during a deployment to Iraq. When the moment came for him to retire back in 2007 after serving for 15 years in the Army, he was encouraged to reenlist. According to Van Meter, he was encouraged with a reenlistment bonus of about $15,000. About a decade later, officials realized that Van Mater and many others like him were not technically eligible to receive the bonuses they were given to reenlist.

Bonus Eligibility: In recent news, bonus eligibility has been discussed – particularly the fact that only soldiers holding certain assignments (i.e. intelligence, noncommissioned officer posts, civil affairs, etc.) were eligible for the bonuses. Investigation into the situation uncovered both fraud and mismanagement by California Guard officials who were desperately offering the bonuses in order to meet their enlistment target numbers.

In 2011, the California Guard incentive manager, retired Master Sgt. Toni Jaffe, pleaded guilty to filing false claims of $15.2 million. During the course of her admission, she stated that from Fall 2007 through Fall 2009, she routinely submitted fictitious claims on behalf of California National Guard members to pay bonuses to members she knew were not eligible, and to pay off officer’s loans she knew were ineligible for loan repayment. She was sentenced to 30 months in federal prison. Three other officers involved pleaded guilty, were required to pay restitution and put on probation. As a result, thousands of soldiers are now being asked to pay a hefty price for the fraudulent/fictional claims. Millions in enlistment bonuses are basically being recalled.

Van Meter, mentioned above, was shocked to receive a letter stating he owed $46,000: a combination of $15,000 enlistment bonus, a student loan repayment amount and an officer bonus…plus a processing fee. After his retirement in 2013, he had three years to pay back the debt. That meant monthly payments of more than $1,300 –leaving Van Meter struggling to provide the basics for his family. They were eventually forced to refinance their mortgage in order to pay off the staggering debt that they didn’t even know they had accumulated. The Van Meter family is one of many in similar situations. Some claim that approximately 9,700 current and retired soldiers have been told to repay some or all of the bonuses they received years ago, but the military auditor handling the process, Col. Michael Piazzoni, stated that the number was lower.

According to Piazzoni, 11,000 soldiers were included in the audit. 1,100 were discovered as receiving unauthorized distributions that need to be repaid. 5,400 soldiers were discovered to have missing paperwork or proper documentation of eligibility and have to pay back the money they received. Approximately 4,000 soldiers were found to be eligible for the payments as they were distributed. The process is not yet complete, but auditors have already confirmed 2,300 instances of unauthorized bonus payments to about 2,000 soldiers. The total comes to $22 million in unauthorized bonuses. That number includes 1,100 soldiers who received unauthorized money and the soldiers from the 5,400 who were unable to show proof of eligibility. The remaining recipients will need to produce the proper documentation proving their eligibility for the funds or they could be held liable to repay the amounts back to the Defense Department.

The audit and recoupment is being handled through a federal program jointly administered by the National Guard Bureau and the Department of the Army. The California National Guard has stated that it does not have the authority to waive the debts and that their hands are tied in this situation. As of now, there is no law passed by Congress to waive the debts so they stand, leaving the California National Guard in a difficult position as there isn’t much they can do to advocate for their soldiers. Affected soldiers are able to petition to have a debt waived. The military does hole the authority to waive an individual repayment, but only on a one-by-one basis. There is no authority held by the military to issue a blanket waiver to cover all soldiers affected by this situation.

Soldiers are being encouraged to take advantage of the appeals process while the Pentagon, the Army, the National Guard Bureau, the California Army National Guard and other relevant authorities and institutions work together to work towards a resolution. Soldiers affected who have petitioned for debt forgiveness have been denied, Van Mater multiple times. Van Meter is just one California vet who accepted an incentive payment in good faith. Many of them paid a heavy price for their military service; many even experienced severe injuries after reenlisting. And now, years later they are offered processing fees, interest charges, wage garnishment, tax liens and fines. It’s possible that Congress will take action to resolve the issue when members return from election recess.

If you have questions or concerns regarding enlistment bonuses, or proving your eligibility for bonuses please get in touch with one of the experienced southern California employment law attorneys at Blumenthal, Nordrehaug & Bhowmik. 

Desperate Housewives Star Files Retaliation Lawsuit

Many have heard of the popular TV series called the Desperate Housewives. Of those who watch the show, almost all should be familiar with Nicollette Sheridan. She has been called the most “risqué” of the women on the show. In most recent news, she may be better known for her recently filed lawsuit.

According to Sheridan, she got into a verbal argument on set with the writer/creator of the show, Marc Cherry. She claims that the argument ended when Cherry slapped her. According to Sheridan, this was battery. According to Cherry, this was stage direction.

Sheridan responded to the incident by complaining to the network as well as the show’s producer. The next year, her character, Edie Britt, was killed in the midst of the show. Sheridan saw this as retaliation for her complaints regarding the “battery” on set the previous year and filed a lawsuit claiming such. The lawsuit was twice dismissed by trial courts and revived twice by the court of appeal.

What secret, sordid detail led to such an intriguing on again, off again response from the courts? It’s not nearly as intriguing as one might expect from a plaintiff known for being “spicy.” In fact, it’s downright boring. The question that is causing the confusion is this: Did Sheridan have to file an administrative complaint with the Labor Commission before suing?

According to the court of appeals, she did not have to file such a complaint. Their decision was based on a brand-new labor code stating:

“A person is not required to exhaust administrative remedies…unless the section under which the action is brought expressly requires it.” The sections referenced in this case are not seen to “expressly require” it as they use the term “may” instead of “shall” in regards to filing a claim with the Labor Commission. The court of appeals does not feel that the word “may” indicates a mandatory requirement. This resulted in the reinstatement of her case allowing Sheridan the opportunity to seek resolution in court.

If you need to discuss on the job battery or if you have other questions regarding southern California employment law, please get in touch with the experienced attorneys at Blumenthal, Nordrehaug & Bhowmik.  

7 Tips on Negotiating Severance

If you suspect or are completely aware that you are about to be presented with a separation agreement at work, you might want to start thinking about your severance package. What’s important to you? What do you expect? What can you accept? What can you NOT accept? If you have no idea where to start when attempting to outline a basic needs and wants list for your soon to be presented severance package, take a few minutes to figure it out before you are asked for a decision on the matter.

Here are 7 Things to Consider in Relation to Any Severance:

1. Know both sides of the agreement: Don’t just know what you’re getting from the company; know what the company is getting from you. And vice versa. You separation agreement signature is worth money since it limits the number legal issues you, the “terminated employee”, can bring against the company.
2. The range of potential financial outcomes is “wide”: Top executives can usually expect to see their severance terms spelled out in their contract of employment. For others, from corporate ranks to upper-level management, things are more unclear. Informal guidelines and the rule of thumb come into play. The rough average is two weeks of pay for every year of employment (it can range from 1-4 weeks depending upon the circumstances at hand).
3. What you get depends on specific factors: Tenure on the job, performance records, reason for the termination, etc. can all come into play when the numbers are being discussed.
4. Work History: The first thing you probably want to examine with an employment lawyer in relation to severance negotiations are any documents that are available that chart your history at the company and how well you performed for them on the job. Documentation could determine whether you have a discrimination case to pursue or not. At the very least, hints of untoward behavior could lead to increased leverage for you during negotiations.
5. Your knowledge of company flexibility: It’s useful if you have some knowledge regarding what is off limits and what you can openly ask for when negotiating your severance. Some things are simply outside of your boss’s control. For instance, your boss can’t make exceptions to laws in place. There’s also not a lot of leeway regarding employee benefits. But many employers have funds earmarked for outplacement services.
6. Tap into relationships: If it’s useful, call relationships you have with bosses, human resource directors, etc. into play during negotiations. It can make a difference. If you have a close relationship with the boss or someone who will be on the other side of the severance negotiation table use it. And make sure to let you employment lawyer know that the relationship exists, too.
7. Look to the future: It’s not all about money. This agreement could affect your long-term career. You want to consider future job references and work history, etc. before you sign off on the severance.

Remember, at that first meeting when you are presented with your severance, you’ll be in shock. Even if it’s not a complete surprise, don’t sign anything. Try to politely request a meeting at a later date to wrap things up and get in touch with an employment law attorney at Blumenthal, Nordrehaug & Bhowmik to handle your severance negotiation. 

Starbucks Agreed to Pay up to $3M Settlement for Mileage Reimbursement Suit

An agreement is in place for Starbucks to pay up to $3 million to settle the lawsuit based on allegations that the popular coffee house did not reimburse named California employees for mileage related expenses incurred while on the job. Employers who typically incur mileage expenses while on the job include: store managers, assistant managers, and shift supervisors. These employees working at Starbucks stores located in California employed from March 2003 through March 2008 are eligible for payments of $30-75 each.

Attorney’s fees are included in the $3 million settlement as well as an undisclosed amount given to the representative plaintiff as an incentive award and a payment to the California Labor and Workforce Development Agency of $25,000.

In the documentation, Starbucks agreed to class-action status for settlement purposes along – they do not accept liability. Within the settlement paperwork it was agreed that the plaintiff and plaintiff’s attorneys are not to respond to questions from the media. The only exception is to allow them to refer to court documents on file. Jonelle Lewis filed the lawsuit in March 2007. She had worked at Starbucks since December of 2005. She resigned within one month of filing the lawsuit. The lawsuit filed by Lewis claimed that she consistently used her personal vehicle for work purposes (i.e. bank deposits, obtaining supplies, etc.) She also claimed that she attempted to request reimbursement for the mileage, but that Starbucks’ response was not to reimburse as a matter of “policy.”

If you feel you that company “policy” in your workplace is conflicting with your rights as outlined in employment law, get in touch with the experts at Blumenthal, Nordrehaug & Bhowmik.

Federal Aviation Administration Authorization Act vs. California’s Meal and Rest Break Requirements

Initially, wage and hour putative class action brought by the same truck drivers was dismissed. Alleged claims were based on violations of California’s meal break laws. The class action was dismissed on the ground that the Federal Aviation Administration Act (FAAAA) preempted California meal break laws. It was the second time in recent months that a court upheld the argument that California’s break laws are preempted by the FAAAA. The FAAAA specifically preempts state laws when there is a significant impact on the “routes, service or prices” of motor carriers.

Truck drivers received a boost recently as their attempt to revive the class action suit against Vitran Express Inc. was supported by the Ninth Circuit court’s decision that the Federal Aviation Administration Act did not preempt California’s meal and rest break requirements. Many are watching the progress of the case.

Additional Background on the Case:

Plaintiffs were former truck drivers of Performance Food Group, Inc. (PFG), located in California. Plaintiffs claimed that PFG arranged delivery routes in order to ensure excellent customer service and timely delivery of cargo without taking into account “time pressure” on the truckers who were being given delivery windows and other policies that prevented them from taking meal breaks.

If you have questions about the California meal break laws, ask the experts at Blumenthal, Nordrehaug & Bhowmik.