July 2021 List of Important Recent and Upcoming Cases
When we published our February newsletter, COVID-related closures were still commonplace, vaccines were only first making their way to the general public, and life felt as uncertain as ever. We had no idea how quickly things would change, following the CDC’s updated guidance in May. Now businesses are reopening at a rapid pace, and the courts are following suit. Several of the cases we were watching have now been decided, so we have included updates below in the latest edition of our “Top Five to Ten,” alongside other recent cases of importance to executives and professionals — including one just decided under the Massachusetts Non-Competition Agreement Act — and a “heads up” regarding a pair of important cases likely to be decided soon – one about wage and hour laws, and the other about the Massachusetts Personnel Record Statute.
1. Employer Cannot Escape the Consequences of Its Own Unlawful Conduct
Town of Brookline v. Alston, 487 Mass. 278 (2021)
The Supreme Judicial Court reaffirmed the principle that employers cannot rely upon their own unlawful conduct — circumstances of their own making — to defend and justify a related termination decision. After plaintiff, a Black firefighter, complained of his White supervisor’s use of the “N-word,” that supervisor was promoted, and plaintiff was “shunned, isolated and mocked” by his colleagues. As a result, plaintiff ended up on medical leaves of absence and had difficulty returning to work, which culminated in his termination.
The Town argued the plaintiff was not terminated because of any discriminatory or retaliatory bias, but simply because he was unable to return to work. Rejecting that argument, the SJC held that where the municipality created an “intolerable workplace environment,” which caused the employee’s inability to work, that inability “is not just cause for his or her termination.”
In a powerful footnote, the SJC declared: “We emphasize today what should no longer need to be said in 2021 — the use of “n—-r” has absolutely no place in any workplace environment in the Commonwealth….” The footnote provided a stark reminder that the utterance of certain words — standing alone — can be so heinous and offensive as to violate anti-discrimination laws.
2. Unfair and Deceptive…Employees?
Governo Law Firm LLC v. Bergeron, 487 Mass. 188 (2021)
Massachusetts General Laws Chapter 93A protects consumers and businesses from deceptive business practices when engaged in trade or commerce. It is well-established that Chapter 93A does not apply to employer-employee disputes that arise out of the employment relationship. However, as the SJC held here, deceptive acts during employment — such as stealing your employer’s confidential material — may support a Chapter 93A claim arising from actions taken outside of the employment relationship — such as competing against your employer.
In this case, a number of attorney-employees took electronic data from their firm while employed, and then left employment and launched a new competing firm using the stolen data. The firm brought claims against their former employees, including for violation of Chapter 93A. At trial, the judge instructed the jury that Chapter “93A does not apply to anything a defendant did toward Governo Firm while they were still employed there. So, anything that happened before [their employment ended], whether it was negotiations, copying of materials, anything else [,] that’s all irrelevant for purposes of” the Chapter 93A claim.
The SJC, however, held the jury instructions went too far, and ordered a new trial on the Chapter 93A claim. The Court clarified that even though a violation of Chapter 93A may not arise out of conduct within an employment relationship, the statute may be violated by an employee’s acts in the marketplace, e.g., competing against his or her employer. In such an instance, evidence of deception may be drawn from conduct within an employment relationship. As the Court noted, “[t]hat the individuals were employees at the time of the misappropriation does not shield them from liability” under the statute.
3. Digital Arbitration Agreements
Kauders v. Uber Tech. Inc., 486 Mass. 557 (2021)
Disputes regarding the enforceability of arbitration agreements are commonplace. One common issue is whether the employee received sufficient notice and assented to the resolution of disputes via arbitration. Employers may burrow such agreements deep in a digital policy manual or intranet, only drawing passing attention to arbitration provisions. Although not an employment case, the Kauders decision provided meaningful and detailed insight into whether and when such digital agreements to arbitrate are enforceable.
As a legal matter, the SJC adopted a two-prong test for assessing online or “app” contract formation, focusing on whether there is: (1) reasonable notice of the contract’s terms; and (2) reasonable manifestation of assent to those terms. In a more practical sense, the Court dove deep into the user interface to provide guidance on what will — and will not — pass muster.
The Court held that “browsewrap agreements” — where terms and conditions are only accessible via hyperlink — are typically unenforceable because “there is no assurance that the user was ever put on notice of the existence of the terms or the link to those terms.” By contrast, the SJC noted, “clickwrap agreements” — which require the user to check a box indicating assent or clicking “I Agree” to the terms and conditions — are commonly enforceable. Ultimately, of course, determining whether a particular contract will be binding is a highly fact-intensive and case-specific analysis.
4. Direct Evidence of Discrimination
Zampierollo-Rheinfeldt v. Ingersoll-Rand de P.R., Inc., 999 F.3d 37 (1st Cir. 2021)
We spend a lot of time reminding our readers — and clients — that discrimination and retaliation can be proven through circumstantial evidence. For example, see our article, “’But I Can’t Prove It.’ Yes You Can, With Circumstantial Evidence.” Sometimes though, an employee can show direct evidence of discrimination. This is evidence that, if believed, results in the inescapable, or at least highly probable, inference that the employer acted with an unlawful motive. Where an employee presents direct evidence, he or she will prevail unless the employer can show by a preponderance of the evidence that it would have taken the same action even without the unlawful motive.
In Zampierollo-Rheinfeldt, the fifty-five-year-old plaintiff was fired as part of a re-organization / reduction-in-force. At the time, the plaintiff was told he was being terminated because his employer wanted to “‘rejuvenate the region,’ was seeking the ‘rejuvenation of the team,’ … in addition to wanting to reduce its costs.”
The First Circuit Court of Appeals held that there was nothing ambiguous about the use of the word “rejuvenate” and that it qualified as direct evidence of age discrimination from which a jury could find for the plaintiff. This case is an important reminder that direct evidence encompasses more than a sign saying, “Irish need not apply,” or a decision-maker saying “you are fired because you are too old.”
5. Held Unenforceable – A New Non-Compete Case
KPM Analytics N. Am. Corp. v. Blue Sun Scientific, LLC, No. 21-cv-10572 (D. Mass. July 15, 2021)
Since its passage in 2018, there have been almost no written decisions analyzing the Massachusetts Noncompetition Agreement Act. On July 15, 2021, the Federal Court in Massachusetts issued such a decision.
As we have written before, the Act set forth a number of requirements for all non-competes signed after October 1, 2018. But while the Act contains strong language about what a noncompete must have to be enforceable, the Act also allowed courts to “reform or otherwise revise a noncompetition agreement so as to render it valid and enforceable….” This led many experts to fear that even where a non-compete did not comply with the Act, a judge would salvage the restriction by reforming it.
In this recent decision, though, the court did not reform the document and instead held the entire noncompetition restriction was unenforceable. As the noncompete did not expressly state that the employee had the right to consult with counsel prior to signing, and did not contain garden leave or other mutually agreed upon consideration for not competing, the court held that the noncompete did not comply with the Act and granted judgment for the employee.
Cases to Watch
6. Rights Under the Personnel Record Statute
Meehan v. Med. Info. Tech., Inc., SJC-13117
Under Massachusetts General Laws Chapter 149, § 52C, employees in Massachusetts have the right to request a copy of their Personnel Record, which broadly includes “any record kept by an employer that identifies an employee, to the extent that the record is used or has been used, or may affect or be used relative to that employee’s qualifications for employment, promotion, transfer, additional compensation or disciplinary action.” That same statute also entitles an employee to submit a rebuttal to certain information, such as, for example, negative performance evaluations.
In Meehan, an employee was fired for submitting such a rebuttal. The plaintiff argued his termination was unlawful because it was in violation of a well-defined Massachusetts public policy. Such “well-defined” public policies might include asserting a legally guaranteed right, refusing to do what the law forbids, raising concerns about public safety, or identifying public fraud. If a plaintiff can establish that her or his termination violated such a policy, a narrow exception to the at-will employment doctrine may apply.
The Supreme Judicial Court will decide whether submitting a rebuttal pursuant to the Personnel Record statute constitutes a “well-defined” public policy that could make a termination unlawful.
7. Who is Your Employer?
Misra v. Credico (USA) LLC, SJC-13106
Who your employer is and how many employers you have can have significant influence on your legal rights. For example, if you are not paid your owed wages for your work at a small local subsidiary of a multi-national corporation, is the subsidiary liable? The parent company? Both? We expect those questions, and others like it, to be addressed by the SJC in the coming months.
In Misra, a group of employees brought claims for failure to pay the minimum wage and failure to pay required overtime, seeking to hold several corporate entities liable, including Credico (USA) LLC. Credico argued that it was not plaintiffs’ employer because it did not tell the plaintiffs how to do their job — failing to meet the standard of the common law “right to control” test. The plaintiffs, however, contended that the court should analyze this question using the “ABC” test — the statutory standard for employer statutes under the Massachusetts Independent Contractor Statute, M.G.L. c. 149, § 148B — which places the burden on the defendant to establish all of the following: that (a) the plaintiffs were free from defendant’s direction and control; (b) the plaintiffs were performing a service outside the usual scope of business of the defendant; and (c) the plaintiffs regularly performed for others the same type of work they performed for the defendant.
In the coming months, the SJC is expected to decide which test should be used when determining who is an employer in the wage and hour context. Stay tuned!