Smooth Transitions Law Blog
Addressing the legal issues arising from the departure of employees & business breakups

October 2010

DFW AMA Marketing Jam
October 28, 2010

For those that attended the DFW AMA Marketing Jam, here is my presentation. 

Here are some relevant links as well:

The FTC’s Settlement of the Reverb Case

New FTC Guidelines Affecting Social Media

The Digital Millennium Copyright Act

 

Thanks for attending.

 

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Social Media

Why you should scrub departing employees’ emails.
October 22, 2010

                                       

 In a recent entry in the Delaware Employment Law blog, Molly DiBanca recounts the story of a employee who gives two weeks notice of intent to resign and then proceeds to email confidential and proprietary information to his new employer from his work email account. Note to employers, lock down or at least seriously monitor a departing employee’s work email account. If they are going to take information they may be emailing it from their work account to a hotmail account. Of course, this employee was audacious enough to actually send the email from the work account to the competitor.

What about when email is not used? Can the IT department monitor flashdrive downloads or printouts or in the middle of the night ? IT can and should monitor this type of strange activity. At the same time also monitor the employee’s whereabouts if entry (or exit) into the workplace requires some type of access card or other device. I don’t mean to sound like big brother, but  we are talking about protecting business assets..
 

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Trade Secrets

Seriously: A Dallas Court Gets Invovled in the Sale of Liverpool FC
October 19, 2010

                        

 

It’s not every day that a Dallas district court spars with the High Court in London over the sale of the Liverpool Football Club.  But, that is exactly what happened last week.  For those who are not familiar with Tom Hicks, he is presently the owner of the NHL’s Dallas Stars, formerly the owner of the Texas Rangers, and now former Liverpool co-owner.   

 

Last week, Hicks’ business entities instituted a law suit here in Dallas to essentially stop the sale of Liverpool FC.  (The petition and temporary restraining order are below for review.)   Liverpool was founded in 1892 and is worth approximately $822 million according to Forbes.  With significant debt owed to the Royal Bank of Scotland, Hicks made the decision to sell Liverpool.  The details and goings on of the proposed sale are set forth within the petition. 

 

Utimately, the board of directors of the company that owns Liverpool was set to approve the sale of the club to strangely enough, John Henry and the New England Sports Group – the owners of the Boston Red Sox.  

 

In response to the impending sale, Hicks filed the aforementioned lawsuit stating that “Plaintiffs bring this suit to save them from an epic swindle at the hands of rogue corporate directors and their co-conspirators.”  Hicks didn’t think Henry was going to pay enough for the team.

 

On Wednesday of last week, Judge Jim Jordan of the 160th Court here in Dallas entered a temporary restraining order that prevented the sale from going through.  In response, the following day, the British High Court entered an anti-suit injunction giving Hicks a deadline to end the Texas suit.  (Take a look at the Guardian newspaper’s blog on the events for more detail.)   Ultimately, Hicks gave up on the TRO but has vowed to fight another day.  The sale to Henry went through.

 

 It is amazing that a Texas court would intervene in such a dispute.  It would be akin to a British court meddling with the sale of the Cowboys.  But, it highlights the nature of a temporary restraining order proceeding in Texas.  With verified affidavits, a Plaintiff can apply for a TRO without the other side being there – even when it comes to the sale of a British football club.  

Liverpool Petition & TRO

http://d1.scribdassets.com/ScribdViewer.swf?document_id=39562090&access_key=key-1ui0dcinptxlnyt3em14&page=1&viewMode=list

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Injunction

DFW Marketing Jam
October 17, 2010

I will be speaking at the DFW AMA Marketing Jam next week.  Please see below for details:

DFW AMA Marketing Jam Roundtable Flyer

http://d1.scribdassets.com/ScribdViewer.swf?document_id=39546957&access_key=key-1wtrfzrlg7nttr9qh3dt&page=1&viewMode=list

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Social Media

Coaches & Non-Competes
October 13, 2010

                                       

College football is big money.  Not surprisingly, football programs that pay millions of dollars to their coaches would like to keep them  from moving to other schools.  For instance, Arkansas coach Bobby Petrino has a contract that prevents him from going to another school within the Southeastern Conference’s western division.  But, programs also want to tie down assistant coaches.

Programs on the rise or established programs generally have a bevy of up and coming assistant coaches.  Texas defensive coordinator Will Muschamp is a star coordinator.  Head Coach Mack Brown anointed Muschamp his eventual successor.  Of course Mack has not told anyone when he plans to step down.

Muschamp is a University of Georgia graduate and former player.  Georgia coach Mark Richt has had a terrible season.  Rumors are abound that Georgia may target Muschamp as a replacement. 

Texas defensive coordinator Will Muschamp

Could Texas craft a non-compete agreement that would prevent Muschamp from leaving?  Probably not.  To begin with, Texas would have to draft a clause that prevents Muschamp from going to Georgia.  Would that be reasonable in scope?  Keeping a coach from going to work for a conference competitor is one thing, but preventing him going to a school Texas rarely plays is another.   

The bigger question is could a non-compete be crafted under Texas law for a football coach that is ancillary to an otherwise enforceable agreement?  Non-competes are typically used to protect trade secrets and other proprietary information.  There aren’t really any secrets when it comes to coaching.  As a result, it would seem unlikely that a court would find an interest worth protecting vis-à-vis a non-compete.

So it seems unlikely that Texas could enforce a non-compete against Muschamp.  But, other states have more relaxed non-compete laws that might permit the enforcement of such a provision.  Especially, if the Judge happens to be an alum from that particular school – just kidding.

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Non-Compete Agreements

Top 5 Defenses to Non-Competes
October 7, 2010

                    

 

It is always nice to get a different perspective on non-compete agreements, especially from the employee’s side.  Florida employment lawyer Donna Hallman provides her top five ways to get out of a non-compete agreement in a recent article.  They include:

1.    The employer breaches the contract;

2.    There is no legitimate interest to enforce;

3.    Your agreement is for too long of a time period;

4.    The so called “confidential information” is readily available to the public; and

5.    Public health and safety would not be served. 

It’s interesting how employers and lawyers attempt to carve out non-compete agreements that address many of the defenses alleged set forth by Donna.  With respect to number 1, "an employer breaches the contract", clauses are frequently drafted where a breach by the employer is  identified as a basis not to disallow the non-compete provision. Whether such a clause works depends on the breach.

As to number 3, "the agreement is for too long a time period", Texas courts are permitted to shorten the non-compete term and make the agreement enforceable. 

Numbers 2 and 4 seem to always be the best defenses now.  Basically the claim is that what gives rise to the non-compete is not protectable.  To put it another way, I didn’t give you any information, training, or other propriety information that would give rise to the necessity for a non-compete in the first place.  The agreements have become easier to enforce in Texas, and this has become one of the last remaining defenses to non-compete agreements

Here are a few more for the list:

6.    Don’t sign the non-compete in the first place (Duh);

7.    If you are going to sign a non-compete, make sure it’s in a jurisdiction where it’s very difficult to enforce like California; and

8.    Include a buy-out provision in your non-compete so you can get buy your way out of enforcement.

 

 

 

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Non-Compete Agreements

A lawyer’s dream – Facebook Discovery
October 5, 2010

                                          

There have been numerous discussions here regarding individuals chronicling their daily lives through the use of Facebook, Twitter, blogs and other social media. We can provide location information through foursquare or talk about our job through a Facebook status update or Twitter tweet. The possibilities are endless and lawyers are beginning to focus on social media outlets in the discovery process.  

In a recent post by 3 Geeks and a Law Blog, the authors examine a defense attorney’s request for social media information related to a personal injury plaintiff.  Specifically, the Court addressed whether the defendant was entitled to the current and historical Facebook and MySpace pages of the plaintiff.  The defendant claimed it has reason to believe the plaintiff had posted pictures and information clearly demonstrating he was not suffering injuries or a loss of enjoyment of life – a claim in the lawsuit.

 

The Court agreed and ordered that the plaintiff provide a properly executed consent that would allow for obtaining Facebook and MySpace information. The discovery requests were narrowly tailored and sought information specifically related to the plaintiff’s alleged damages. It was not a fishing expedition.  What if the defense attorney wants more general information?  She could use Twitter or Facebook entries basically to recreate a time line of events for various plaintiffs and defendants in cases.  The same goes with other information offered in social media outlets, like blogs, foursquare, and LinkedIn.  It will be interesting to see how Courts handle these type of discovery issues.   A rule of thumb – assume everything posted or authored on these sites is discoverable.

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Social Media



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