Weather gurus are predicting snow, sleet, and rain for our area over the weekend.  Although my kids are hoping for the white fluffy stuff, this amateur prognosticator is predicting a downpour.  In keeping with this theme, the week’s biggest employment news is Robinson Cano’s $240 million deal with the Seattle Mariners (who are well accustomed to rainy skies).  But our sights here at Suits by Suits are on matters a little less lucrative:

• You still have a chance to win free admission to our Dec. 10 webinar, “Whistleblower Watch: Big Issues in the Latest Whistleblower Cases Under Dodd-Frank, Sarbanes-Oxley, and the Internal Revenue Code.”  For more details on this prize, click here.
• The First Circuit affirmed a summary judgment ruling in favor of Strine Printing Company against a former sales representative who claimed that his firing resulted in an “oleaginous mass of perceived wrongs.”  The decision addresses a number of employment-related claims, including unjust enrichment, breach of an implied or express employment contract, and misrepresentation.
• We’ve previously covered the exploits of Larry Conners.  Despite his year-long non-compete agreement, the St. Louis newsman is headed back to TV – as a pitchman.  He’ll be a spokesman for John Beal Roofing.
• Jeff Green of Bloomberg Businessweek brought us the latest trend in executive hiring – the “golden hello.”  These are multi-million dollar signing bonuses designed to entice new candidates to join the team.  Among them: the $45 million that Zynga paid to entice an industry vet, Don Mattrick.  Some are skeptical of the arrangements, noting that they don’t correlate with successful performance.
• A Louisiana appellate court has affirmed the dismissal of a lawsuit by former professors at Louisiana College, writes Charles Huckabee of the Chronicle of Higher Education.  The professors claimed that they should have been able to use certain books in teaching classes on religion and values, which were prohibited by the college’s administration.  The court refused to intervene on the ground that it was a religious dispute not proper for court involvement.
• Dominic Patton of Deadline Hollywood covered Jeff Kwatinetz’s suit against Prospect Park.  The producer and talent manager wants a Los Angeles Superior Court judge to decide whether a noncompete provision in his agreement with Prospect Park can permissibly bar him from competing for five years.   

• Breach of Contract
• Civil Litigation
• Executive Compensation
• Noncompete Agreements ‎
• Summary Judgment

LASIK eye surgery requires a precise surgeon.  If the surgery is unsuccessful, it can result in under- or over-correction, dry eyes, or infection. 

LasikPlus of Texas, a Houston eye clinic, recently found out that it should have exercised similar precision when drafting its noncompete agreements.  Instead, the Fourteenth Court of Appeals ruled last week that because LasikPlus failed to include required language in its noncompete agreement, one of its doctors can open a competing clinic two miles from its front door.  See LasikPlus of Texas, P.C. v. Mattioli, No. 14-12-01155-CV (Tex. Ct. App. Nov. 21, 2013).  We suspect there was not a dry eye in the house after that decision.

The covenant at issue in the case was part of LasikPlus’s employment agreement with Dr. Frederico Mattioli.  Under the covenant, Dr. Mattioli, for the eighteen months following termination of his employment, could not open a competing clinic within 20 miles or solicit LasikPlus’s clients.  Dr. Mattioli could only terminate the agreement with 120 days’ notice, or 30 days’ notice if LasikPlus was already in breach.

In October 2012, Dr. Mattioli told LasikPlus that he would be leaving within the month to start his own practice less than two miles away.  LasikPlus sued Dr. Mattioli, seeking an injunction to bar him from opening the practice.  The employment agreement expressly entitled LasikPlus to an injunction in these circumstances.  Further, if the covenant was deemed unreasonable in scope of time or location, other language allowed the court to reform the covenant and enforce it to the degree it would be reasonable.

Yet Dr. Mattioli still succeeded in defeating LasikPlus’s request for an injunction, because the clinic left out a critical piece of the covenant. 

• Breach of Contract
• Civil Litigation
• Noncompete Agreements ‎
• Preliminary Injunction

In the case filed earlier this year in federal court in Virginia by spinal implant seller DePuy Synthes Sales, Inc. against two former employees and their current employer, DePuy’s competitor Sky Surgical, Inc., DePuy claims that Sky Surgical and the former employees conspired to breach the fiduciary duties that the former employees owed to DePuy by selling spinal implants to DePuy’s customers after they left DePuy.  (DePuy also claims that Sky Surgical tortiously interfered with the former employees’ non-competes – the subject of our post on Tuesday.)  We may think that quitting a company means quitting fiduciary duties, so that anything that the two former employees did after they left DePuy could not be breaching a duty to DePuy.   But it’s not that simple.  Not in Virginia, anyway.

• Fiduciary Duties
• Noncompete Agreements ‎

Twitter’s founders are cashing in on Wall Street, and journalists are piggybacking on the news with articles like this one, which recaps 10 “surprising superstars” of the social network.  No, Suits by Suits didn’t make the cut, but you can still follow us at @suitsbysuits, where we’ll bring you 140-word tweets about news related to executive-employer disputes.  These are the kinds of stories we track:

• The Texas Supreme Court heard argument this week in Exxon Mobil’s dispute with former executive William Drennen.  Jeremy Heallen of Law360 (subscription required), wrote that after Drennen retired from Exxon (@exxonmobil) and went to work for competitor Hess, Exxon claimed that he had forfeited his restricted stock under a “detrimental-activity provision” in his incentive plan.  Exxon is seeking reversal of the lower court’s holding that the forfeiture violated Texas law, which disfavors “unreasonable” noncompetition agreements.
• AIG has settled a $274 million dispute with former real estate executive Kevin Fitzpatrick, reported (@nateraymond) Nate Raymond of Reuters.  The terms are confidential, but Fitzpatrick’s lawyer says that he is “very happy.”  Given the potential dollar amounts between $0 and $274 million, it’s easy to guess why.
• Rachel Louise Ensign of the Wall Street Journal (@RachelEnsignWSJ) (subscription required) covered a developing trend this week: more whistleblowers are coming from corporate compliance departments.  As one example, Ensign described Meng-Lin Liu’s case against Siemens AG, which we covered here.  The possibility of lucrative awards under the Dodd-Frank Act’s whistleblower program may be sparking the trend, although as Ensign points out, compliance officers are subject to additional restrictions under that program.
• In other whistleblower news, the Senate approved a bill to prohibit companies from retaliating against whistleblowers who report violations of the antitrust laws.  Jennifer Koons of Main Justice (@jenkoons) said that the bill passed with bipartisan support.  “Bipartisan” – does anyone still remember that concept?
• Newscaster Larry Conners is still trying to get back on television, despite a prior ruling that his noncompete agreement prohibited him from working for other TV stations in the St. Louis market for a year.  Conners’s attorney asked the judge to modify that ruling, which restricted Conners to radio work, wrote (@STLSherpa) Joe Holloman of the St. Louis Times-Dispatch.  We’ve previously examined Conners’s case here and here.

• Dodd-Frank Act
• Executive Compensation
• Noncompete Agreements ‎
• Whistleblowers

Regular readers here at Suits by Suits know that we’ve continued to monitor the status of proposed changes to the law governing the enforceability of covenants not to compete in Massachusetts, from the state legislature’s proposal to restrict such covenants to six months in length to more recent pronouncements by Gov. Deval Patrick (D) that his administration would like to ban the enforcement of all such clauses, moving Massachusetts into the same space currently occupied by the state of California.

One question we get here pretty frequently regards the political and business implications of states that are moving in this direction.  Certainly, it is generally regarded as an article of faith that enforcing non-competes is pro-business, and states that are considering restricting or outright banning such clauses are prioritizing fairness concerns above economic growth.  (This intuition is undoubtedly reinforced by the fact that the most high-profile discussions are coming from one of the most liberal states in the union, Massachusetts.)  But is this intuition correct?  Many would argue that the case for and against non-competes is considerably more complex; read on.

• Noncompete Agreements ‎

The federal government is closed, but the Suits by Suits news continues to roll in:

• Johnson & Johnson shareholders are amending their derivative suit against the company and its directors, alleging that the company didn’t act properly when it decided that the lawsuit was not in J&J’s best interest.  According to Joshua Alston of Law360 (subscription required), the shareholders argue that an investigation conducted by K&L Gates was a whitewash and that former CEO Bill Weldon shouldn’t have been paid $175 million over a six-year period.  On the bright side, Weldon may have had a better tenure than the similarly well-compensated Alex Rodriguez.
• In more J&J news, subsidiary DePuy Synthes sued three of its former sales reps and their new company, Globus Medical, Inc., for allegedly violating noncompete agreements.  Brad Perriello of Mass Device described the allegations, which accuse Globus of recruiting the reps “in an effort to rapidly build its own business . . . by appropriating and capitalizing on the goodwill, customer relationships, and confidential information that DePuy Synthes necessarily entrusts to its sales employees.” 
• It’s not hard to translate how Rosetta Stone wants this forum dispute to come out.  Carolina Bolado of Law360 (again, subscription required) reports that competitor Open English sued the company, along with several new hires, in Florida for allegedly breaching noncompete agreements.  Rosetta filed a lawsuit in the employees’ home state of California seeking a declaration that the agreements weren’t violated, and has now asked the Florida judge to dismiss in favor of that lawsuit.  Open English, meanwhile, argues that it won the race to the courthouse and is entitled to take its legal talents to South Beach.
• Big whistleblower news last week, as the SEC announced an award of $14 million to a whistleblower under its Dodd-Frank bounty program.  Further details were not forthcoming, as the law protects recipients of bounties from having their identities revealed.  Given all the press about miserable lottery winners, this could be a very good thing for them.
• A Virginia sheriff’s deputy is suing his former boss, claiming that he was fired after he reported that another officer slapped an inmate at the county jail.  Rhonda Simmons of the Culpeper Star-Exponent writes that the deputy, who is pursuing a wrongful termination claim, was rehired after the sheriff who fired him was voted out of office.

• Executive Compensation
• Noncompete Agreements ‎
• Whistleblowers
• Wrongful Termination

Joseph Guinn’s case started with a phone call.  Leigh Sargent, the president of Applied Composites Engineering (“ACE”), made the call.  Randy Sutterfield, an executive at AAR Aircraft Services, Inc. (“AAR”), was on the other end of the line.

The subject of Sargent’s call was Guinn, who at the time was employed by ACE as an airline mechanic, but who had given notice that he intended to leave ACE and join AAR.  Sargent told Sutterfield in no uncertain terms that “Guinn was under the terms of a non-compete agreement and that he believed that it was a violation [for] him to come work for [AAR].”  Guinn v. Applied Composites Engineering, Inc. (Ind. Ct. App. Sept. 30, 2013).  After some more pressure from ACE, and an (un)friendly reminder that ACE was one of AAR’s customers, AAR knuckled under and fired Guinn.

Unsatisfied with this capitulation, ACE sued both AAR and Guinn.  It claimed that Guinn had breached his employment agreement by accepting the job with AAR, and that AAR had intentionally induced the breach.  Guinn, now without any job at all, didn’t take this lying down.  He countersued ACE for interfering with his own contractual relationship with AAR.

• Breach of Contract
• Civil Litigation
• Noncompete Agreements ‎

Here at the Suits by Suits Global Operations Center, we’re a bit bummed that our beloved Washington Nationals Baseball Club has now exhausted any chance it ever had of making the playoffs, as have the almost-local Baltimore Orioles.  All is not lost, however, because now we can turn our undivided focus to our Washington football team – the one with the name that is something of a point of dispute.  The football season here will be exciting, even if it is off to a rough start. 

Glum as our sporting life may be, it’s a worthwhile distraction from the possibility of a government shutdown, although perhaps not as fun as our other new Washington fad: debating the merits of green eggs and ham. 

In any event, news of disputes between employers and executives – and news in related areas – continues to come in over our electronic transom.  Here are the highlights:

• Here’s a story related to the Affordable Care Act that you may not have expected: a whistleblower suit arising out of the District of Columbia’s work to establish one of the exchanges called for by the new law.  This week, a federal judge in D.C. allowed Jennifer Campbell’s suit against the District to proceed.  Campbell, who seeks $5 million, alleges she was fired after she spoke out publicly about problems with a contract to set up the insurance exchange. 
• We’ve written about former TV anchorman Larry Connors’ suit against his employer and the non-compete clauses at the heart of it.  But non-competes are apparently common in the radio business too: this interesting article looks at a few different ones being used in the Atlanta market. 
• Not sure how well this translates (sorry), but language education company Rosetta Stone is trying to dismiss a Florida lawsuit brought against it by competitor Open English.  Open English alleges two employees violated non-compete clauses and stole trade secrets when they joined Rosetta Stone.   Shortly after Open English sued Rosetta Stone in Florida, Rosetta Stone filed its own case against Open English in California; Rosetta Stone argues that the Florida case should be thrown out to allow the California case to go forward.  The parties disagree over whether Florida or California law would apply to the dispute, as well – what’s Californian for “conflict of laws?”
• Esteemed colleague P. Andrew Torrez wrote last year about this suit against Abercrombie & Fitch, alleging the clothing retailer violated Title VII by discriminating against employees who wore hijabs; now, the case is apparently settled for just over $70,000 – details here and here.   

• Noncompete Agreements ‎
• The Inbox
• Whistleblowers

Last month, we took a look at one aspect of the lawsuit brought by former news anchor Larry Conners, who had been terminated by KMOV-TV 4 in St. Louis, Missouri after posting various political comments to his Facebook page.  Specifically, we discussed the implications of the Missouri court’s denial of Conners’s motion for a Temporary Restraining Order (TRO) seeking to invalidate Conners’s non-compete clause in order to permit him to seek another TV job in St. Louis.  To refresh your memory:  we concluded that the court’s refusal to grant a TRO did not necessarily indicate that the clause would ultimately be held enforceable – given the heavy burden a litigant must meet in order to get a TRO – but several aspects of Missouri law seemed to weigh in favor of the clause’s enforceability.  (Our full reasoning is set forth here.)  We also told you that Conners would be headed back to court to argue his case on the merits.

• Noncompete Agreements ‎

Last week, the Virginia Supreme Court reversed a trial court’s ruling that a non-compete agreement was unenforceable on its face as a matter of law.  The VSC held that the trial court should not have decided the enforceability of the agreement on a demurrer (more about what that means below) because, in Virginia, whether a non-compete is enforceable (or valid) turns on whether it is “reasonable under the particular circumstances of the case” – that is, whether it is “narrowly drawn to protect the employer’s legitimate business interest, is not unduly burdensome on the employee’s ability to earn a living, and is not against public policy.”  According to the VSC, this means that the particular circumstances of the case matter, and that the enforceability of a non-compete should not be decided “in a factual vacuum.”

• Civil Litigation
• Motions to Dismiss
• Noncompete Agreements ‎
• The Basics