The In-House Advisor

  • Arbitration Clauses in Electronic Agreements May Be Difficult to EnforceOctober 09, 2018

    Electronic agreements have become a staple of today’s e-commerce world, and such agreements generally are as enforceable as those written on parchment and signed with a quill pen. One notable exception, however, is where the proponent of such an agreement seeks to enforce an arbitration provision. In that case, more may be required than simply having a clause stating that all disputes must be resolved through arbitration at the AAA, JAMS, or some other organization. Indeed, that is the hard lesson the defendants in Cruz v. Jump City Everett LLC (34 Mass.L.Rep. 586) learned earlier this year.

    In 2015, after visiting the defendants’ recreational trampoline facility with his two minor children, Elmer Cruz filed suit in Suffolk Superior Court, claiming that he suffered an injury at the establishment. The defendants moved to dismiss that claim, contending that Mr. Cruz had affixed his electronic signature to a “Participant Agreement” that included a clause requiring all disputes to be resolved via arbitration. Mr. Cruz countered by submitting an affidavit in which he asserted that (i) he does not speak English; (ii) his son, who does speak English, led Mr. Cruz to a computer screen, where the son entered various information and … Keep reading

  • Key Changes to Massachusetts Noncompetes – Part IIAugust 27, 2018

    In Part I of Key Changes to Massachusetts Noncompetes, I outlined some of the most significant new mandates that will apply to all noncompete agreements executed on or after October 1. In this post, I want to discuss some of the practical implications of the new law and how in-house counsel might address them.

    • The new law does not apply to covenants not to solicit customers, clients, or vendors of the employer

     

    While this may not sound like a significant exception, in many instances, it provides the ultimate loophole. For example, if your company uses noncompetes primarily or exclusively to prevent your sales force from competing against you, simply revising those agreements so that they are structured as nonsolicitation agreements may give you most, if not all, of the functional protections of a noncompete – but without having to worry about any of the requirements of the new law.

    • Noncompete agreements entered at the outset of employment only are valid if they are provided to the employee by the earlier of a formal offer of employment or 10 business days prior to the commencement of employment

     

    In light of this, it is critical that in-house counsel … Keep reading

  • Key Changes to Massachusetts Noncompetes – Part IAugust 15, 2018

    Over the years, I have written blog posts related to a plethora of nuances concerning noncompetition agreements. While the signing into law last Friday of new legislation on noncompetes does not eviscerate them (despite advocacy on the part of some for such a result), there are a number of new mandates that significantly change the legal landscape – but only for noncompete agreements entered into on or after October 1, 2018. Here are what I believe to be the most significant changes to Massachusetts noncompete law:

    I. The definition of noncompetes does NOT include, and the new law will NOT apply to:

    • A. Covenants not to solicit or transact business with customers, clients, or vendors of the employer
    • B. Noncompetes in the context of the sale of a business or substantial assets thereof, when the individual is a “significant” equity holder and will receive “significant” consideration for the transaction
    • C. Noncompetes in connection with a separation agreement, if the employee is given seven days to rescind the agreement
    • D. Covenants not to solicit or hire employees of the employer

    II. To be valid, a noncompete MUST meet ALL of the following conditions:

    • A. The noncompetition period may
    Keep reading

  • The Supreme Court Rules That Class Action Waivers Are EnforceableJuly 30, 2018

    As I noted in a prior post, the differences between arbitration and litigation go well beyond the fact that arbitration generally is a quicker and less expensive process. As such, there are a host of reasons why a company may want certain disputes – including, but not limited to, those brought by its own employees – resolved through arbitration. Similarly, companies almost always want to avoid the risk of being sued in a class action. Recently, the U.S. Supreme Court, in its consolidated decision in Epic Systems Corp. v. Lewis; Ernst & Young LLP v. Morris; and NLRB v. Murphy Oil USA, Inc., ruled that class action waivers are enforceable.

    As Justice Gorsuch noted at the outset, while the three consolidated cases had different facts, they each essentially revolved around the same related questions:

    Should employees and employers be allowed to agree that any disputes between them will be resolved through one-on-one arbitration? Or should employees always be permitted to bring their claims in class or collective ac­tions, no matter what they agreed with their employers?

    In the Ernst & Young case, Stephen Morris entered into an employment agreement with E&Y, stating that (i) all … Keep reading

  • Are You Accepting an Offer or Not?June 28, 2018

     

    We all learned pretty early on in law school that for a contract to be formed, there has to be an offer and acceptance. We also were taught that if, in responding to an offer, a party accepted some terms and proposed additional ones, that party was making a counter-offer, was deemed to have rejected the original offer, and no contract was formed. In the real world, it usually is clear whether an offer is being accepted or a counter-offer is being made. Nevertheless, and as the defendant in APB Realty, Inc. v. Georgia-Pacific LLC recently learned, a lack of precision in responding to an offer can lead to confusion as to whether or not a contract has been formed.

    In APB Realty, Georgia-Pacific was offering 88 rails cares for sale, “where is, as is.” APB was interested in buying those rails cars, and it made the following offer to Georgia-Pacific’s broker:

         Total for all 88 x Log Stake Railcars $1,636,000 (Including 16% Buyer’s Premium).

    Shortly thereafter, the broker responded as follows:

    Here are the two options that [Georgia-Pacific] has brought back for us to close the deal on.

    Option 1, basically states that for $61K, you

    Keep reading

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