Business Lit. Session

The Road Goes on Forever, But the Lawsuits Never End: ConnectU, Facebook, Their Entourages

January 18, 2010

The ConnectU/Facebook legal saga is truly astounding.  Imagine a mature Oak tree.  Now give the it properties of Kudzu vine (the “vine that ate the South”).  Each branch of this tree is another lawsuit involving ConnectU, Facebook, the principals, and their lawyers. Now, a new branch has burst forth.  Wayne Chang has sued ConnectU and its lawyers in Superior Court Business Litigation Session in Suffolk County, Boston, claiming that Chang is entitled to as much as 50% of the value of the ConnectU/Facebook settlement (so called, since ConnectU has challenged the finality of the settlement). You can read about the ConnectU/Facebook saga here, or wait until the movie comes out. Here is the complaint in the Chang case, and apologies to Robert Earl Keen. Chang v. Winklevoss Complaint

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Judge Ralph Gants: SJC’s Gain Will Be BLS’s Loss

December 1, 2008

Today’s Boston Globe reports that Governor Deval Patrick will nominate Superior Court Judge Ralph Gants to the seat on the Supreme Judicial Court now vacated by Justice John Greaney. This is a great nomination – Judge Gants is truly a superstar of the Massachusetts Superior Court – without question one of the best, if not the best, minds on the state trial court. He has reportedly been on the “short list” of potential nominees for the last few weeks, and there was little question in my mind that he was the outstanding choice on that list. I expect his nomination to the SJC to be approved by the legislature in a heart beat. Judge Judith Fabricant has been the number 2 judge in this session (the BLS2 session) since Judge Van Gestel’s retirement, but it’s unclear if she will provide what has become a tradition of leadership and excellence in the relatively short period of time since the BLS was created, or even whether she is interested in taking on the responsibility of leading the BLS. Being the “BLS1 Judge” is a significant commitment, and not every judge is well suited to this responsibility. Most of Judge Fabricant’s experience (before her appointment to the Superior Court in 1996) was as a criminal prosecutor and then an assistant attorney general. Whether she feels that she has the depth of experience appropriate…

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As Allen van Gestel's Tenure at Head of Business Session Draws to a Close, the Boston Globe Comments . . .

November 7, 2007

The Globe article begins: Judge Allan van Gestel dismisses the buzz that is making its away around Boston’s legal community that he is stepping down from the state’s business court that he shaped so effectively over the last seven years because he ruffled the feathers of his fellow judges and his bosses with his concerns about the future of the court. He is not, however, backing down a bit about those concerns. [click here to continue reading] To read Judge van Gestel’s letter to the the adminstrative judges (described in the Globe article) click here. To read the administrative judges’ response, click here.

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Judge Van Gestel to Retire at Year End

January 24, 2007

At a Boston Bar Association lunch program today, Judge Allan Van Gestel informed the audience that he would not put himself on the “recall” list at the end of this year. In other words, at the age of 71 Judge Van Gestel will be retiring from the bench at the close of 2007, after running the session (with the help of some other Superior Court Judges) since its formation in 2000. For some background on the recall issue, click here. It looks like Judge Gants (who has been the second judge in the BLS (“BLS2”) for the last year or so) has been groomed to take the helm of the BLS after Judge Van Gestel departs, although this is by no means a certainty. If Judge Gants does take over BLS1, it remains to be seen who will take his place in BLS2.

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Judge Gants Issues Decision on Waiver of Attorney-Client Privilege When Client Uses Password-Protected, Web-Based Email on a Company Computer

September 18, 2006

Litigation. Lawyers love to argue about attorney-client privilege. What could be juicier than to find out what your adversary in litigation said to his or her attorney, believing it to be covered by this privilege, a privilege that is so sacrosanct that the Supreme Court has ruled that it extends beyond the grave? Nevertheless, the attorney-client privilege can easily be lost or waived. For example, if the communication is revealed to a non-attorney third party, it risks waiver. The world of computer technology and email has given rise to new grist for the waiver doctrine. Most companies inform their employees (in employee manuals, for example) that communications utilizing the company’s internal email system are open to review and examination by the employer. According, it is established law that an employee who uses her employer’s email system to communicate with an attorney has waived the privilege. Most lawyers, aware of this, instruct their clients who wish to communicate from work to use an Internet-based email system, such as Google’s Gmail or Yahoo Mail. The theory is that since the employer doesn’t have access to these emails and the emails are protected by a user name and password, they retain their privilege. This assumption was challenged in a recent case before Judge Gants, sitting in the Massachusetts Business Litigation Session. In this case, NERA v. Evans, the former employer argued that since,…

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Covenant Not-to-Compete Not Enforceable Against English-Challenged Russian Immigrant

August 4, 2006

It’s a bad day when your client wants you to enforce a noncompete agreement against a $10/hour Russian immigrant with “a very limited command of English,” who sends most of her earnings back to her son and elderly parents in Russia, and who, after a year of at-will employment and with no further payment of consideration, was told that unless she signed the noncompete agreement she’d be fired the next day. Nevertheless, that’s what the plaintiff’s lawyer faced in Zabota Community Center, Inc. v. Frolova. Not surprisingly, Judge Allan van Gestel of the Suffolk County Business Litigation Session threw the book at the plaintiff in this case, denying the motion for every reason conceivable. You can read the case here (pdf file).

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A New Twist on Forum Selection: The BLS

July 20, 2006

Business Litigation Session. The July 17, 2006 issue of Massachusetts Lawyers Weekly has an article suggesting that some attorneys are agreeing in contracts that claims arising from those contracts must be filed in the Suffolk County Business Litigation Session (BLS). The article reports that Judge Allan Van Gestel, the presiding judge of the session, recently made public comments that, assuming the conditions and requirements of the session are satisfied, such clauses are likely to be enforced. This certainly adds a new option to the forum selection issue, and, given some of the difficulties and hazards of litigating outside of the BLS, should be seriously considered by lawyers negotiating business agreements that fall within the rules permitting cases to be heard in that venue. For more details on those requirements, see here and here.

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What Did You Say Your Trade Secrets Were?

March 27, 2006

Trade Secrets, Procedure. Warning: if you’re seeking discovery in a trade secret case in the Suffolk Business Litigation Session make sure that you have (a) provided the court with a detailed description of your trade secrets, and (b) filed a protective order that strictly complies with the Uniform Rules of of Impoundment. For a recent decision making these points, written by Judge Allan Van Gestel in the Suffolk Business Litigation Session, click [here]. The decision, Tourtellotte Solutions, Inc. v. Tradestone Software, Inc., was featured on the front page of Massachusetts Lawyers Weekly last October. In a nutshell, the plaintiff asked for expedited discovery (in other words, the right to take discovery on a schedule faster than allowed in the ordinary course by the rules of civil procedure), so that the plaintiff could obtain evidence necessary to bring a preliminary injunction against the defendant. The plaintiff’s basic claim was that the defendant had engaged in “software misappropriation,” a term that Judge Van Gestel stated “sounds very much like trade secret misappropriation.” The judge denied the motion, stating: “a detailed description of what is claimed to be a trade secret must be provided and a protective order of some sort needs to be worked out.” Neither conclusion is surprising in the least. Many decisions in trade secret cases have held that the plaintiff must identify its trade secrets with particularity. The courts…

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Massachusetts Business Court Sanctions Company for Pursuing Frivolous Case to Enforce Noncompete Agreement

March 21, 2006

Noncompete Agreements. If I had a dollar for every time a client who had been sued asked me if they could recover attorney’s fees or damages if they won, I’d have, well, probably hundreds of dollars. Even when a lawsuit proves to be frivolous the Massachusetts courts have traditionally been extremely reluctant to turn the tables on a plaintiff and make it pay damages for the harm its suit has caused to the defendant. Every once in a while, however, a judge shows some courage and punishes a company the judge concludes has brought a frivolous case. In January 2006 Judge Gants, in the Suffolk Business Litigation Session, turned the tables on Brooks Automation, a Massachusetts company with a billion dollar-plus market valuation, ordering it to pay over $600,000 in damages for bringing a frvolous lawsuit against a former employee. After a trial Judge Gants concluded that the suit was devoid of both any reasonable factual support or any arguable basis in law. A link to the decision is [here]. Judge Gants found that the suit, which Brooks brought against a former employee and a new company he had formed to compete with Brooks (but which was not, as yet, actually competing), had been filed with “reckless disregard” for its merits and to disrupt a potential relationship between the former employee and one of Brooks’ customers (Brooks actually emailed the…

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Noncompete Litigation in the Massachusetts Courts: 2005 Year in Review (Part I)

March 8, 2006

Noncompete Agreements. Our firm used to write “year in review” articles [link], and I decided it was time for a reprise. Here is a year-in-review summary of the most significant Massachsetts state court cases from late 2004 through calender year 2005 involving the attempted enforcement of noncompete or nonsolicitation contracts. Rather than getting bogged down in the detailed facts of the cases I’ll provide a quick summary of the key facts and legal issues that led to the outcome in each case. The goal is to get a feel for how judges are approaching these kinds of cases – what works and doesn’t work in the state courts when employers are attempting to enforce noncompete/nonsolicitation agreements against former employees. L-3 Communications v. Reveal Imaging [link] involved a complex series of corporate sales, the result of which was that the defendant-employees were several corporate acquisitions down the road from the companies with whom they had signed their agreements years earlier. Their new employer, who had “acquired” the employees via acquisitions, had failed to require the employees to enter into new agreements. Tough luck for the plaintiffs, as Judge Van Gestel concluded in the Suffolk Business Litigation Session in a decision issued on December 2, 2004. One of the employees had signed a noncompete agreement with a company that wasn’t even a predecessor-in-interest with the plaintiff. Another group of employees had signed…

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It’s Hard to Fire the President . . .

November 20, 2005

Minority Shareholder/Fiduciary Duty. . . . of your company, that is. OK, here the facts, minus the legal jargon. You’re a businessman with a successful company. You meet someone that wants to go into business with you in a related area. You start a new company, making sure that you hold a majority interest (52.5%). Your new “partner” gets 37.5%, and the rest of the stock goes to a couple of employees. Although your partner is a minority shareholder he’s running the business, so you make him president of the company. Almost ten years go by, and although the company is making money you’re unhappy with your partner. He’s bad at finances, and tensions arise over bookkeeping and other business issues. Eventually you reach your boiling point, and one morning you fire your minority partner. Simple enough you think. After all, you own a majority of the company, what’s stopping you from doing this? In O’Connor v. U. S. Art Co., a recent case decided by Judge Allen Van Gestel in the Suffolk County Business Law Session, the minority shareholder was awarded $218,000 in damages based on these facts. The judgment was against the other three shareholders, personally. Here’s the rub: in Massachusetts, shareholders in “close” corporations (nonpublic companies with a small number of shareholders) owe each other a fiduciary duty. You can’t fire a minority shareholder unless you have…

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Employee Shareholder Gets Upper Hand In "Triple Freeze-Out" Case

November 7, 2005

Minority Shareholders/Fiduciary Duty. Massmanian v. Duboise, decided in September by Judge Ralph Gants in the Suffolk County Business Litigation Session, proves once again that when a party to litigation angers a judge, they can be forced to pay a high price. In this case the plaintiff Massmanian was a 30% minority shareholder and employee in North/Win. After he filed suit accusing the majority shareholders of diverting North/Win’s profits and assets to another company (a serious breach of fiduciary duty, if true), North/Win terminated Massmanian for insubordination and neglecting his duties. Massmanian then asked the court to issue a preliminary injunction reinstating him. In opposing this motion, North/Win, and its lawyers made some serious strategic errors: First, they demanded that all North/Win employees sign a Confidentiality Agreement which (among other things) barred employees from disclosing “matters related to the lawsuit Massmanian has filed against the company, even in a legal proceeding.” This Agreement was demanded upon pain of termination, and one employee was terminated for failing to sign it. The court characterized this as “heavy-handed overreaching” and an improper attempt to prevent employees from testifying in the case. Second, when asked about the Confidentiality Agreement North/Win’s lawyers made false statements to the Court. The upshot of all this was one very angry judge, who lambasted North/Win and its lawyers, and went on to describe North/Win’s actions as a “triple freeze-out,” (1)…

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