Our “Top Five to Ten” List of Important Recent Cases

In an effort to keep our newsletter readers abreast of recent developments and legal trends, we are continuing our “top five to ten” list of cases of importance to executives and professionals.  This time, we are covering cases addressing the following topics: (1) the enforceability of an employer’s choice of law and forum provision in a restrictive covenant agreement; (2) how Massachusetts’s status as a “pretext only jurisdiction” is increasing the number of trials in discrimination cases; and (3) how the terms of a written employment agreement may reduce the viability of ultra-contractual claims.

Also included in our list you will find our “Heads Up” regarding: (4) a constitutional challenge to the restriction on an employer’s right to ask a job candidate about her (or his) salary history; and (5) a case pending at the Massachusetts Supreme Judicial Court regarding, among other things, whether racially “separate but equal” work units are lawful – we expect the answer to be “no.”  Click here to learn more.

RESTRICTIVE COVENANTS – AN EMPLOYER’S CHOICE OF LAW AND FORUM MAY NOT BE HONORED

1. Oxford Global Resources, LLC v. Hernandez, 480 Mass. 462 (2018)

Mr. Hernandez was employed in California by Oxford Global Resources (Oxford), a company headquartered in Massachusetts.  As a condition of employment, he signed a confidentiality, non -solicitation and non-competition agreement (the Agreement).  The Agreement stated that it would be governed by Massachusetts law and that all lawsuits arising from the Agreement would be brought in Massachusetts courts.  After Mr. Hernandez left to work for a competitor in California, and allegedly violated the Agreement, Oxford filed suit against him in Massachusetts – but that suit was dismissed on the grounds of forum non conveniens.  Oxford appealed, and the Massachusetts Supreme Judicial Court (the Court) took jurisdiction.

The Court held that Oxford’s choice of law provision was unenforceable where California substantive law would apply under the Massachusetts choice of law principles and where the application of Massachusetts substantive law would violate the fundamental public policy of California favoring open competition and employee mobility.

The Court also held that the dismissal on the ground of forum non conveniens was not an abuse of discretion.  While recognizing that the judicial forum agreed to by the parties was Massachusetts, the Court agreed with the lower court that both private and public concerns had to be considered.  The Court held, among other things, that California’s public policy to protect its residents was such that the action should be resolved in a California court.

DISCRIMINATION LAW – EXPECT MORE TRIALS IN MASSACHUSETTS, A “PRETEXT ONLY JURISDICTION”

2. Scarlett v. City of Boston, 93 Mass.App.Ct. 593 (2018)

After the City of Boston declined to renew Ms. Scarlett’s teaching contract, she filed suit for, among other things, race discrimination.  Before the case could come to trial, the lower court issued summary judgment in the employer’s favor.  Ms. Scarlett appealed.  Based on precedent from the Supreme Judicial Court, Massachusetts’s highest court, establishing Massachusetts as a “pretext only jurisdiction”, the Appeals Court reversed the lower court’s ruling as to the race discrimination claim – allowing the case to proceed to trial.

In so holding, the Appeals Court reiterated that, in Massachusetts, an employer seeking to avoid trial “faces a high burden” because “the question of the employer’s state of mind (discriminatory motive) is elusive” and rarely is established other than by circumstantial evidence, making pre-trial dispositions “disfavored.”  Here, Ms. Scarlett demonstrated that one of the many reasons given by the City for her non-renewal was false and therefore could not be the real reason, i.e., that such reason was “a pretext” for the non-renewal.  From that alone, “a jury could infer that the remaining rationales proffered were also false.”  Because Massachusetts is a “pretext only jurisdiction,” that was enough for Ms. Scarlett to have her case heard by a jury.

CONTRACT LAW – WHEN THE TERMS OF AN EMPLOYMENT CONTRACT TRUMP OTHER CLAIMS

3. Biewald v. Seven Ten Storage Software, Inc., — Mass.App.Ct. — (2018)

Mr. Biewald, an at-will salesperson, had a contract under which he had the right to earn commissions at a certain level.  He employer terminated the contract, diminished the commission entitlement, and eventually terminated his employment when the parties could not come to an agreement on a new commission plan.  Mr. Biewald pursued several claims, including for breach of the covenant of good faith and fair dealing and for retaliatory termination under the Wage Act. Before trial, the lower court entered summary judgment on these claims on behalf of the employer, which judgment was affirmed on appeal.  The Appeals Court held that, under the circumstances of this case, the employer’s contractually authorized diminishment of the commission entitlement did not breach the covenant of good faith and fair dealing and, as to the termination, the employer did not have to keep Mr. Biewald employed indefinitely when terms for a new agreement could not be reached.

WAGE ACT – IS THE PROHIBITION AGAINST ASKING ABOUT WAGE HISTORY CONSTITUTIONAL?

4. HEADS UP – The Attorney General of Massachusetts filed an amicus brief in support of the constitutionality of a Philadelphia ordinance restricting inquiry regarding a job candidate’s wage history. The case in which this is being challenged is Greater Philadelphia Chamber of Commerce v. City of Philadelphia Commission on Human Relations, No. 18-2175, 18-2176 (3d Cir. 2018).  The arguments made by the Attorney General included that: use of wage history perpetuates the gender wage gap; the gender wage gap is due, in large part, to factors that are not gender-neutral and do not reflect job qualifications; state and local governments have a substantial interest in eradicating the gender wage gap and are entitled to deference in fashioning remedies; limiting pre-hire inquiries is a narrowly tailored remedy directly aligned with such eradication.  Stay tuned….

DISCRIMINATION LAW – IS “SEPARATE BUT EQUAL” LAWFUL IN THE WORKPLACE?

5. HEADS UP – Yee v. Massachusetts State Police, No. SJC-12485, is a case currently pending before the Massachusetts Supreme Judicial Court. Officer Yee’s request for a transfer to a specific work unit was denied for reasons, he alleges, that were discriminatory based upon his race.  One of the questions in the case is whether the lower court’s allowance of summary judgment on behalf of the employer should be sustained because there was no evidence that the work unit to which Officer Yee sought transfer was more advantageous than that in which he continued to work.  In other words, even if his race was the reason he was denied the transfer, is Officer Yee’s without a remedy?  Could “separate but equal” work units be lawful?  Presumably not as the deprivation of a civil right is, itself, an actionable “harm” but, until the Court rules, this seems to be a gray area in Massachusetts law.  Again, stay tuned….