March 2008

Bear Not Entirely Without Tooth and Claw

by Lee Gesmer on March 31, 2008

Recognizing that the Massachusetts Suffolk Business Litigation Session (BLS) is an unreceptive venue for securities firms attempting to enforce restrictive coveneants against former employees, Bear Stearns has sued the former Executive Director of its Private Client Services Group in Federal District Court in Boston. The employee, a 20 year veteran of Bear Stearns, fled to Morgan Stanley on Monday, March 17, 2008, the day after Bear Stearns’ $2/share bail-out sale to Morgan Stanley was announced.

The Bear Stearns employee, Douglas Sharon, had an agreement with Bear Stearns that required him to provide 90 days notice of resignation. According to Bear Stearns, Sharon provided notice and left on the same day. Moroever, Bear Stearns asserts that Sharon took confidential and trade secret customer/client information with him, much of which was copied the weekend just prior to March 17th. Then, according to Bear Stearns, he used this information to contact his former clients at Bear Stearns.… Read the full article

But on the other hand ….

by Lee Gesmer on March 12, 2008

In contast to the Suffolk Business Litigation noncompete cases discussed below, in National Engineering v. Grogan Massachusetts Superior Court Judge Maureen B. Hogan, sitting in Middlesex County, enforced a six month noncompete provision between a recruiting and staffing firm, and its former employee, Travis Grogan.

The heart of Judge Hogan’s decision is as follows:

Other than his employment at NESC, had no experience in the staffing industry. All of his knowledge of the business was gained through training provided by NESC and by working at NESC. His relationships with the customers and accounts of NESC were all developed and maintained while he was employed at NESC, through use of the resources and confidential information of NESC. The success of NESC’s business is grounded upon relationships and good will with its corporate customers and Managed Service Providers, developed through its sales executives, such as Grogan. NESC is entitled to protect its good will and relationships with its customers and accounts through the non-compete covenants to which agreed.

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Smith Barney/Citigroup: Darn, Foiled Again!

by Lee Gesmer on March 11, 2008

Albert Einstein once said that “the definition of insanity is doing the same thing over and over again and expecting different results.”

By this measure, Smith Barney has a problem.

In a recent case decided by Judge Gants in the Suffolk Business Litigation Session, Smith Barney sought a preliminary injunction against Michelle Griffin, who had held several positions with Smith Barney, culminating in “financial advisor.” When Ms. Griffin began at Smith Barney (then Shearson Lehman) in 1994, she had signed an agreement in which she promised not to solicit Smith Barney clients for six months after leaving. In fact, just before and after resigning to join N.Y. Life, she solicited many of her clients, attracting Smith Barney’s ire.

However, Judge Gants teed up the the case with the following comments:

This Court has heard many of these kinds of cases. The pattern is similar in all cases. A stock broker, or person seeking to become a stock broker, joins a brokerage house, signs a non-solicitation agreement and also agrees to keep certain information confidential.

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Many lawyers in Massachusetts would agree that Massachusetts Federal District Court Judge William Young is one of the most erudite judges in the district. Yet, he has written relatively few copyright law decisions in his 23 years on the federal bench. A Westlaw search shows that he has authored fewer than ten substantive copyright decisions.

In a decision issued on February 28th in the case Situation Management Systems v. ASP Consulting Group, Judge Young undertook the question that has caused many lawyers to call copyright law one of the most metaphysical of practice areas: how to draw the line between expression that is protected by the law, and that which is not. In this decision, Judge Young concluded that Situation Management System’s (“SMS”) workshop training materials, aimed at improving business and personal productivity, did not make the grade.

Judge Young found that the challenged texts, created by two former employees of SMS who had formed a competing business, had been created very quickly, indicating that the former employees had not started from scratch, but had likely used the SMS materials as a starting point.… Read the full article