On May 21, 2018, the U.S. Supreme Court held in Epic Systems Corp. v. Lewis that employment agreements containing waivers of the right to bring class or collective actions over employment-related disputes are enforceable under the Federal Arbitration Act (FAA). In so doing, the Court rejected the National Labor Relation Board’s position that such waivers violate the National Labor Relations Act (NLRA) – a position subject to much controversy in the courts and federal agencies. Continue Reading U.S. Supreme Court Approves Use of Class Waivers in Employment Agreements
I know I’m dating myself, but as a lawyer of a certain age, I like a legal agreement to be in paper, with handwritten signatures. The growing use of electronic agreements and signatures is certainly easy and convenient, but it still gives me a little queasy feeling – like the agreement doesn’t really exist. (Don’t even get me started on bitcoin…) I don’t mean to suggest that electronic agreements and signatures aren’t valid. They certainly can be, as I discussed in detail in a prior blog post, Electronic Signatures v. Handwritten Signatures. But, as I also explained in that post, the use of electronic methods does open the door to questions about whether employees actually entered into the agreements in question, as happened in the recent case of Gupta v. Morgan Stanley Smith Barney, LLC. Continue Reading Wait – That E-mail Is a Legal Agreement?
The issue of whether employees can be required to sign arbitration agreements that contain waivers of their right to file a class or collective action over employment-related disputes is one that has drawn much attention – and much conflict – in recent years. The Obama administration, it seemed, steadfastly opposed such waivers. Under the Trump administration, which (regardless of your politics) has had a slow and bumpy transition of federal agency leadership, the agencies do not appear to be operating from the same playbook – as evidenced by recent actions by the National Labor Relations Board, (NLRB), the Department of Justice (DOJ), and the Consumer Financial Protection Board (CFPB). Continue Reading The Government Seems Confused About Class Action Waivers
Teenagers! In the world of social media, they seem to have no sense of privacy. They will share anything and everything with their multitude of Facebook “friends.” And in one case, doing that cost the teenager’s father $80,000 for breach of the confidentiality provision in his settlement agreement.
In Gulliver Schools Inc. v. Snay, a headmaster sued his school for age discrimination and retaliation. The parties settled for a total of $150,000 – $10,000 in back wages, $80,000 in other compensation, and $60,000 for attorney’s fees. The settlement agreement included a confidentiality provision, stating that the headmaster “shall not directly or indirectly, disclose, discuss or communicate to any entity or person, except his attorneys or other professional advisors or spouse any information whatsoever regarding the existence or terms of this Agreement…. A breach…will result in disgorgement of the Plaintiff[‘]s portion of the settlement Payments.”
So it appears that, practically before the ink was dry on his signature, the headmaster told his daughter about the settlement, because she immediately posted on her Facebook page: “Mama and Papa Snay won the case against Gulliver. Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT.” This charming comment was shared with her 1200 Facebook “friends,” many of whom had attended Gulliver or were current students there. Unsurprisingly (because really, kids, social media is not private!), Gulliver found out about the posting and notified the headmaster that he had breached the agreement. Therefore, the school initially refused to pay the monies that were to go directly to the headmaster, although it paid the attorney’s fees. It later paid the $10,000 in wages, but continued to withhold the $80,000.
The Florida Court of Appeals agreed with the school that there had been a breach – the headmaster had “violated the agreement by doing exactly what he had promised not to do” by telling his daughter that the case had been settled. And then she “did precisely what the confidentiality agreement was designed to prevent, advertising to the Gulliver community that Snay had been successful in his age discrimination and retaliation case against the school.” Bottom line, the daughter’s Facebook post cost her father $80,000.
From management’s perspective, this case illustrates the importance of a strong confidentiality provision – and making sure that plaintiffs understand what that actually means. From a parental perspective, I would have grounded my daughter for the next ten years.
Sometimes court decisions read like blues songs. Such is the case with Dolan v. McQuaid.
Effie Dolan and Christopher McQuaid met in 1997 and fell in love. Eventually they were engaged to be wed. It is unclear whether Chris bought Effie a diamond ring. They did, however, acquire a Diamond Car Wash and Effie worked with Chris to build this business venture for three long years. Effie wrote a business plan, drew up contracts, devised a logo; she even created a website. She was sure she would be the future Mrs. McQuaid and benefit from the fruits of this Diamond.
Well, being a blues song, you know what happened. Effie’s man done her wrong. Chris did not follow through on the wedding plan or the business venture. He refused to share the profits of Diamond Car Wash with Effie or to compensate her for her efforts. She sued, claiming that Chris made an enforceable promise to her (for the benefits of the car wash, not the marriage). The trial judge ruled against Effie and threw out her case. She appealed.
The Court of Appeals ruled that Effie had no enforceable contract – oral or written. Effie worked for an indefinite thing called love – the terms of the business plan at Diamond were not clear and defined. She bargained for marriage not dollars. And a contract must be a clear, bargained-for exchange. The Court also ruled promissory estoppel – the legal theory that can provide a recovery in the absence of a contract based on a definite promise – was equally unavailable to Effie. Again, there was no definite promise in Diamond Car (and the definite promise – marriage – was unenforceable).
But, “not so fast” said the Court. The tort of unjust enrichment permits a party to recover for the value of a benefit that was conferred upon another, retained, and by right should be repaid. Unjust enrichment arises from actions, and the measure of recovery is to disgorge the defendant from the value of the benefit that was conferred upon him which should, says the law, leave him no better or worse off than he otherwise should be. So the case was remanded. Effie may now argue to a jury her value to Diamond Car Wash – and Chris.
So, how would this blues song go? I’ll call it “The Tale of Diamond Car Wash (or Don’t Mess With a Smart Gal)”
Chris McQuaid, Chris McQuaid, he done his Effie Wrong.
Chris McQuiad, Chris McQuaid, he done his Effie Wrong.
Bought a Diamond Car Wash. Made Effie work all day long.
Effie Dolan was a smart gal, she made that Diamond Shine.
Wrote a bunch of contracts. She raised the bottom line.
But book smarts don’t mean nothing, when you been two timed.
Effie sued for justice; she sued to make Chris pay.
Trial judge said “no contract.” Told Effie, “go away.”
Effie wouldn’t take it. She had to have her day.
High Court rescued Effie, Told Chris, “She has a case”
“What you took from Effie, she asks that you replace.”
Diamond ring may be the answer, to make this go away.
The moral of the story: don’t mess with a smart gal.
She’ll chase you ‘til she gets you; you may end up in jail.
So watch out what you promise, ‘cause Effie will not fail.